UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4975
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MFS MULTIMARKET INCOME TRUST
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(Exact name of registrant as specified in charter)
500 Boylston Street, Boston, Massachusetts 02116
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(Address of principal executive offices) (Zip code)
Susan S. Newton
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
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(Name and address of agents for service)
Registrant's telephone number, including area code: (617) 954-5000
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Date of fiscal year end: October 31
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Date of reporting period: April 30, 2005
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ITEM 1. REPORTS TO STOCKHOLDERS.
MFS(R) MULTIMARKET INCOME TRUST 4/30/05
SEMIANNUAL REPORT
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M F S(SM)
INVESTMENT MANAGEMENT(R)
SEMIANNUAL REPORT
LETTER FROM THE CEO 1
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PORTFOLIO COMPOSITION 2
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MANAGEMENT REVIEW 3
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PERFORMANCE SUMMARY 5
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DIVIDEND REINVESTMENT AND
CASH PURCHASE PLAN 8
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PORTFOLIO OF INVESTMENTS 9
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FINANCIAL STATEMENTS 26
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NOTES TO FINANCIAL STATEMENTS 32
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REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM 45
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RESULTS OF SHAREHOLDER MEETING 46
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PROXY VOTING POLICIES AND INFORMATION 47
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QUARTERLY PORTFOLIO DISCLOSURE 47
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CONTACT INFORMATION BACK COVER
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LETTER FROM THE CEO
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Dear Shareholders,
[Photo of Robert J. Manning]
As a professional investor for more than 20 years, I've often been asked to
name the single most important factor in investment success. My answer is
always the same: diversification. At MFS we talk about applying a disciplined
diversification(SM) strategy to a portfolio as a three step process: allocate
among the major asset classes; diversify within each asset class; and
rebalance regularly to avoid unnecessary risk.
Individual investors sometimes assume that the amount they're putting away is
too small to allow for diversification. My response would be that a good
investment plan, developed with the help of an investment professional, should
provide a way to properly diversify your contributions.
Remember that the purpose of diversification is to own investments that
historically have not moved in sync with each other - in the hope that, in any
given period, underperforming holdings will be somewhat counteracted by other
outperforming holdings. If none of your asset classes did badly in the past
year or so, you're probably not properly diversified.
Americans today have more of their wealth tied up in the markets than in any
previous period of our history, but we are not yet making the most of our
opportunities. While neither asset allocation nor diversification can
guarantee a profit or protect against a loss, I would voice the opinion that,
to a large extent, a failure to have a plan, diversify contributions, and
rebalance a portfolio annually has been behind many U.S. investors" failure to
reach their long-term financial goals.
For more information on how to apply a disciplined diversification(SM)
strategy to your portfolio, I would urge you to contact your own investment
professional. You may also want to refer to information on the subject on our
Website, MFS.COM.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
June 15, 2005
The opinions expressed in this letter are those of MFS, and no forecasts can
be guaranteed.
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PORTFOLIO COMPOSITION
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PORTFOLIO STRUCTURE*
Bonds 94.4%
Cash & Other Net Assets 5.2%
Stocks 0.2%
Convertible Preferred 0.2%
MARKET SECTORS*
High Grade Corporates 27.7%
------------------------------------------------
High Yield Corporates 26.4%
------------------------------------------------
International Government Bonds 17.7%
------------------------------------------------
Commercial Mortgage-Backed
Securities 10.2%
------------------------------------------------
Emerging Market Bonds 10.0%
------------------------------------------------
Cash & Other Net Assets 5.2%
------------------------------------------------
Asset Backed Securities 1.2%
------------------------------------------------
Mortgage-Backed Securities 0.8%
------------------------------------------------
U.S. Government Agencies 0.3%
------------------------------------------------
Domestic Convertibles 0.2%
------------------------------------------------
Domestic Equities 0.2%
------------------------------------------------
Residential Mortgage Backed Securities 0.1%
------------------------------------------------
CREDIT QUALITY OF BONDS**
AAA 27.5%
------------------------------------------------
AA 2.5%
------------------------------------------------
A 6.1%
------------------------------------------------
BBB 22.1%
------------------------------------------------
BB 28.4%
------------------------------------------------
B 11.2%
------------------------------------------------
CCC 2.0%
------------------------------------------------
CC 0.2%
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PORTFOLIO FACTS
Average Duration 4.7
------------------------------------------------
Average Life 8.6 yrs.
------------------------------------------------
Average Maturity*** 11.2 yrs.
------------------------------------------------
Average Credit Quality**** BBB+
------------------------------------------------
Average Short Term Credit Quality A-1
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COUNTRY WEIGHTINGS
United States 64.4%
------------------------------------------------
Germany 8.4%
------------------------------------------------
Great Britain 2.6%
------------------------------------------------
Canada 2.3%
------------------------------------------------
Mexico 2.1%
------------------------------------------------
Ireland 2.0%
------------------------------------------------
Russia 1.9%
------------------------------------------------
France 1.8%
------------------------------------------------
Spain 1.7%
------------------------------------------------
Other 12.8%
------------------------------------------------
* For purposes of this graphical presentation, the bond component includes
both accrued interest amounts and the equivalent exposure from any
derivative holdings, if applicable.
** Each security is assigned a rating from Moody's Investors Service. If not
rated by Moody's, the rating will be that assigned by Standard & Poor's.
Likewise, if not assigned a rating by Standard & Poor's, it will be based
on the rating assigned by Fitch, Inc. For those portfolios that hold a
security which is not rated by any of the three agencies, the security is
considered Not Rated. Holdings in U.S. Treasuries and government agency
mortgage-backed securities, if any, are included in a "AAA"-rating
category. Percentages are based on the total market value of investments
as of 4/30/05.
*** The average maturity shown is calculated using the final stated maturity
on the portfolio's holdings without taking into account any holdings
which have been pre-refunded to an earlier date or which have a mandatory
put date prior to the stated maturity. The average life shown takes into
account these earlier dates.
**** The Portfolio Average Credit Quality rating is based upon a market
weighted average of portfolio holdings.
Percentages are based on net assets as of 4/30/05, unless otherwise noted.
The portfolio is actively managed, and current holdings may be different.
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MANAGEMENT REVIEW
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SUMMARY OF RESULTS
To gauge performance of this portfolio, we use a variety of benchmarks
reflecting the varying results of the different markets in which we invest.
For the six months ended April 30, 2005, the MFS Multimarket Income Trust's
performance at net asset value surpassed three of the five benchmarks.
The fund trailed the Citigroup World Government Bond Non-Dollar Hedged Index
and the J.P. Morgan Emerging Markets Bond Index Global benchmarks.
MARKET ENVIRONMENT
The U.S. fixed-income market experienced a flattening of the yield curve
during the six-month period. (A yield curve for bonds shows the relationship
between yield and time to maturity.) The U.S. Federal Reserve Board raised its
target federal funds rate four times, continuing its steady drumbeat of
quarter-point rate hikes that had begun on June 30, 2004. But while the Fed
seemed committed to a course of gradually raising short-term rates, several
factors caused long-term rates to stagnate or retreat.
Job growth, which had shot up in the spring of 2004, ebbed and flowed during
the period; uncertainty about the employment situation helped to push down
yields on longer-dated bonds. Another factor that held long-term rates down
was overseas demand for U.S. Treasuries, especially from foreign central
banks. However, moderate GDP growth and inflation concerns kept shorter-term
interest rates moving up. For the period as a whole, the net effect was a
substantial flattening of the yield curve as short-term rates rose
significantly while long-term rates were generally flat to down.
PERFORMANCE RELATIVE TO THE TRUST'S BENCHMARKS
The trust's shorter stance on duration (sensitivity to changes in interest
rates) aided results relative to the trust's benchmarks. The trust also enjoyed
a yield advantage over the benchmarks. Performance was also enhanced by
exposure to the euro and the yen. Investments in high-quality European, United
Kingdom and Pacific Rim nations added to results as interest rates fell in
those nations. At a sector level, the trust benefited from positioning in
telecommunications, electric utilities and TIPS (Treasury Inflation Protected
Securities).
Over the period spreads between corporate and U.S. Treasury bonds widened. The
trust's exposure to "BBB"- and "BB"-rated credit detracted from relative
performance. Bonds of auto companies and those of their suppliers were hard
hit. In October, General Motors" credit rating was downgraded to the lowest
investment-grade level by Standard and Poor's. Speculation that the company
may lose its investment-grade rating grew further when the company lowered its
guidance for the second quarter. At this point a subsequent downgrade to junk
status was being priced into offerings by GM and Ford. After period end,
Standard and Poor's cut both companies" rating to junk bond status. Our
underweighted position in mortgages also dampened results for the period.
Respectfully,
/s/ Peter C. Vaream
Peter C. Vaream
Portfolio Manager
Note to Shareholders: Effective 10/31/04, the Lehman Brothers U.S. Credit
Index and the Lehman Brothers Government/Mortgage Index were added to the
trust in place of the Lehman Brothers Aggregate Bond Index.
The views expressed in this report are those of the portfolio manager only
through the end of the period of the report, as stated on the cover, and do not
necessarily reflect the views of MFS or any other person in the MFS
organization. These views are subject to change at any time based on market and
other conditions, and MFS disclaims any responsibility to update such views.
These views may not be relied upon as investment advice or as an indication of
trading intent on behalf of any MFS fund. References to specific securities are
not recommendations of such securities and may not be representative of any MFS
fund's current or future investments.
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PERFORMANCE SUMMARY THROUGH 4/30/05
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All results are historical. Investment return and principal value will
fluctuate, and shares, when sold, may be worth more or less than their
original cost. More recent returns may be more or less than those shown. Past
performance is no guarantee of future results.
PRICE SUMMARY
--------------------------
Six months ended 4/30/05
--------------------------
Date Price
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Net asset value 10/31/04 $6.94
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4/30/05 $6.83
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New York Stock Exchange price 10/31/04 $6.30
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2/02/05 (high)* $6.47
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3/23/05 (low)* $5.95
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4/30/05 $6.20
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* For the period November 1, 2004 through April 30, 2005.
--------------------------
Six months ended 4/30/05
--------------------------
TOTAL RETURN VS BENCHMARKS
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New York Stock Exchange price** 1.50%
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Net asset value** 1.50%
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Citigroup World Government Bond Non-Dollar Hedged Index# 4.02%
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Lehman Brothers Aggregate Bond Index# 0.98%
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Lehman Brothers U.S. Credit Index# 0.57%
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Lehman Brothers Government/Mortgage Index# 1.16%
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Lehman Brothers High Yield Index# 0.08%
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J.P. Morgan Emerging Markets Bond Index Global# 3.51%
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** Includes reinvestment of dividends and capital gains distributions.
# Source: Standard & Poor's Micropal, Inc.
INDEX DEFINITIONS
Citigroup World Government Bond Non-Dollar Hedged Index - is a market
capitalization weighted index that tracks the currency-hedged performance of
the major government bond markets, excluding the U.S. Country eligibility is
determined based upon market capitalization and investability criteria.
Lehman Brothers Aggregate Bond Index - measures the U.S. investment grade,
fixed rate bond market, with index components for government and corporate
securities, mortgage pass-through securities, and asset-backed securities.
Lehman Brothers U.S. Credit Index - measures publicly issued, SEC-registered,
U.S. corporate and specified foreign debentures and secured notes that meet
specified maturity, liquidity, and quality requirements.
Lehman Brothers Government/Mortgage Index - measures debt issued by the U.S.
Government as well as mortgage-backed pass-through securities of Ginnie Mae
(GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC).
Lehman Brothers High Yield Index - measures the universe of non-investment
grade, fixed rate debt. Eurobonds, and debt issues from countries designated
as emerging markets (e.g., Argentina, Brazil, Venezuela, etc.) are excluded.
The J.P. Morgan Emerging Markets Bond Index Global (the EMBI Global) - tracks
total returns for dollar-denominated Brady Bonds, Eurobonds, traded loans and
local market debt instruments issued by sovereign and quasi-sovereign entities
of emerging markets countries.
NOTES TO PERFORMANCE SUMMARY
The trust's shares may trade at a discount to net asset value. Shareholders do
not have the right to cause the trust to repurchase their shares at net asset
value. The trust's shares also may trade at a premium to their net asset
value. When trust shares trade at a premium, buyers pay more than the asset
value underlying trust shares, and shares purchased at a premium would receive
less than the amount paid for them in the event of the trust's liquidation. As
a result, the total return that is calculated based on the net asset value and
New York Stock Exchange price can be different.
The trust's monthly distributions may include a return of capital to
shareholders. Distributions that are treated for federal income tax purposes
as a return of capital will reduce each shareholder's basis in his or her
shares and, to the extent the return of capital exceeds such basis, will be
treated as gain to the shareholder from a sale of shares. Returns of
shareholder capital have the effect of reducing the trust's assets and may
increase the trust's expense ratio.
KEY RISK CONSIDERATIONS
The portfolio invests in derivative securities, which may include futures and
options. These types of instruments can increase share price fluctuation.
The portfolio invests in foreign and/or emerging markets securities, which are
more susceptible to interest rates, currency exchange rates, economic, and
political risks.
The portfolio invests in government-guaranteed securities. These guarantees
apply to the underlying securities only and not to the prices and yields of
the portfolio.
The portfolio invests in high yield or lower-rated securities, which may
provide greater returns but are subject to greater-than-average risk.
The portfolio can invest a relatively high percentage of its assets in one or
more issuers, thereby making it more susceptible to any single economic,
political or regulatory occurrence.
These risks can increase share price volatility.
In accordance with Section 23(c) of the Investment Company Act of 1940, the
trust hereby gives notice that it may from time to time repurchase shares of
the trust in the open market at the option of the Board of Trustees and on
such terms as the Trustees shall determine.
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DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
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The trust offers a Dividend Reinvestment and Cash Purchase Plan that allows
you to reinvest either all of the distributions paid by the trust or only the
long-term capital gains. Purchases are made at the market price unless that
price exceeds the net asset value (the shares are trading at a premium). If
the shares are trading at a premium, purchases will be made at a discounted
price of either the net asset value or 95% of the market price, whichever is
greater. Twice each year you can also buy shares. Investments may be made in
any amount over $100 in January and July on the 15th of the month or
shortly thereafter.
If your shares are in the name of a brokerage firm, bank, or other nominee,
you can ask the firm or nominee to participate in the plan on your behalf. If
the nominee does not offer the plan, you may wish to request that your shares
be re-registered in your own name so that you can participate.
There is no service charge to reinvest distributions, nor are there brokerage
charges for shares issued directly by the trust. However, when shares are
bought on the New York Stock Exchange or otherwise on the open market, each
participant pays a pro rata share of the commissions. The automatic
reinvestment of distributions does not relieve you of any income tax that may
be payable (or required to be withheld) on the distributions.
To enroll in or withdraw from the plan, or if you have any questions, call
1-800-637-2304 any business day from 8 a.m. to 8 p.m. Eastern time. Please
have available the name of the trust and your account and Social Security
numbers. For certain types of registrations, such as corporate accounts,
instructions must be submitted in writing. Please call for additional details.
When you withdraw from the plan, you can receive the value of the reinvested
shares in one of two ways: a check for the value of the full and fractional
shares, or a certificate for the full shares and a check for the fractional
shares.
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PORTFOLIO OF INVESTMENTS (unaudited) - 4/30/05
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The Portfolio of Investments is a complete list of all securities owned by your trust. It is
categorized by broad-based asset classes.
Bonds - 95.7%
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ISSUER PAR AMOUNT $ VALUE
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Advertising & Broadcasting - 2.2%
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Allbritton Communications Co., 7.75%, 2012 $ 955,000 $ 909,638
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Azteca Holdings S.A. de C.V., 10.75%, 2008 20,254 20,659
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Azteca Holdings S.A. de C.V., 12.25%, 2008 15,000 15,975
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Clear Channel Communications, Inc., 6.5%, 2005 EUR 275,000 356,156
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DIRECTV Holdings LLC, 8.375%, 2013 $ 1,934,000 2,093,555
----------------------------------------------------------------------------------------------
Echostar DBS Corp., 6.375%, 2011 3,805,000 3,757,438
----------------------------------------------------------------------------------------------
Innova S. de R.L., 9.375%, 2013 469,000 512,969
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Intelsat Ltd., 8.625%, 2015## 580,000 588,700
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Lamar Media Corp., 7.25%, 2013 2,370,000 2,441,100
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News America Holdings, 7.7%, 2025 517,000 608,218
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Paxson Communications Corp., 0% to 2006, 12.25% to 2009 1,000,000 930,000
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$ 12,234,408
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Aerospace - 0.1%
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Rolls-Royce PLC, 6.375%, 2007 EUR 300,000 $ 415,335
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Airlines - 0.6%
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Continental Airlines, Inc., 6.545%, 2019 $ 2,265,332 $ 2,223,830
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Continental Airlines, Inc., 7.566%, 2020 1,049,526 853,274
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$ 3,077,104
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Asset Backed & Securitized - 11.4%
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ARCap, Inc., 6.1%, 2045## $ 2,000,000 $ 1,837,786
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Airplane Pass-Through Trust, 10.875%, 2019* 246,925 741
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Amresco Commercial Mortgage Funding I, 7%, 2029 3,570,000 3,713,966
----------------------------------------------------------------------------------------------
Asset Securitization Corp., 8.2905%, 2029 1,877,956 1,949,492
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CPS Auto Receivables Trust, 2.89%, 2009## 568,873 560,962
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Chalet Finance 1 PLC, FRN, 2.333%, 2013 EUR 300,000 386,471
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Commercial Mortgage Acceptance Corp., 5.44%, 2030## $ 3,500,000 3,544,294
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Countrywide Asset-Backed Certificates, 4.575%, 2035 614,000 616,403
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Credit Suisse First Boston Mortgage Securities Corp.,
6.38%, 2035 2,384,781 2,584,218
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Crest Ltd., 7%, 2040## 2,000,000 1,932,578
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DEPFA Bank, 5.5%, 2010 EUR 960,000 1,377,615
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DLJ Commercial Mortgage Corp., 6.04%, 2031 $ 2,000,000 2,019,365
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Deutsche Mortgage & Asset Receiving Corp., 7.5%, 2031 1,847,000 1,728,278
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Europa Ltd., FRN, 2.455%, 2027 EUR 101,132 129,991
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Falcon Franchise Loan LLC, 3.8089%, 2025^^ $ 8,963,850 1,564,639
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First Union National Bank Commercial Mortgage Trust,
1.2077%, 2043##^^ 30,785,490 1,399,767
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First Union-Lehman Brothers Bank of America,
0.7035%, 2035^^ 73,915,453 1,571,132
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First Union-Lehman Brothers Commercial Mortgage Trust,
7%, 2029## 1,847,000 2,079,528
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First Union-Lehman Brothers Commercial Mortgage Trust,
7.5%, 2029 1,846,973 2,143,695
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GE Capital Commercial Mortgage Corp., 6.496%, 2033 2,384,781 2,595,792
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GMAC Commercial Mortgage Securities, Inc., 6.02%, 2033 2,542,000 2,416,170
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GMAC Commercial Mortgage Securities, Inc.,
7.9078%, 2034## 1,853,000 2,057,526
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Granites Mortgages PLC, FRN, 5.15%, 2042 EUR 350,000 472,931
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J.P. Morgan Chase Commercial Mortgage Securities Corp.,
3.1538%, 2046 $ 2,592,895 2,593,278
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Lehman Brothers Commercial Conduit Mortgage Trust,
1.1576%, 2030^^ 19,201,249 612,577
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Morgan Stanley Capital I, Inc., 6.86%, 2010 2,215,000 2,289,842
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Morgan Stanley Capital I, Inc., 1.5982%, 2039##^^ 14,915,475 1,267,815
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Mortgage Capital Funding, Inc., 7.214%, 2007 2,250,000 2,331,191
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Mortgage Capital Funding, Inc., 1.0131%, 2031^^ 21,764,339 443,834
----------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., 6.337%, 2031 2,384,781 2,503,677
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Multi-Family Capital Access One, Inc., 6.65%, 2024 124,528 133,946
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Nationslink Funding Corp., 5%, 2009 1,400,000 1,408,775
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Prudential Securities Secured Financing Corp.,
7.3941%, 2013## 2,581,000 2,823,262
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RMAC PLC, FRN, 2.334%, 2036## EUR 230,000 295,930
----------------------------------------------------------------------------------------------
Structured Asset Securities Corp., 4.67%, 2035 $ 4,570,839 4,530,286
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TIAA Retail Estate CDO Ltd., 7.17%, 2032## 3,099,037 3,238,527
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$63,156,280
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Automotive - 2.9%
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Affinia Group, Inc., 9%, 2014## $ 120,000 $106,800
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Continental AG, 6.875%, 2008 EUR 100,000 145,405
----------------------------------------------------------------------------------------------
DaimlerChrysler N.A. Holdings Corp., 8.5%, 2031 $ 1,251,000 1,428,663
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DaimlerChrysler Note, 5.625%, 2007 EUR 100,000 134,124
----------------------------------------------------------------------------------------------
Ford Motor Credit Co., 5.625%, 2008 $ 410,000 386,710
----------------------------------------------------------------------------------------------
Ford Motor Credit Co., 5.7%, 2010 1,102,000 995,996
----------------------------------------------------------------------------------------------
Ford Motor Credit Co., 7.875%, 2010 2,058,000 1,980,613
----------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 6%, 2006 EUR 375,000 475,635
----------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 5.125%, 2008 $ 315,000 293,616
----------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 6.125%, 2008 315,000 303,546
----------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 6.75%, 2014 475,000 397,927
----------------------------------------------------------------------------------------------
General Motors Corp., 8.375%, 2033 2,787,000 2,121,409
----------------------------------------------------------------------------------------------
Lear Corp., 8.11%, 2009 4,725,000 4,773,006
----------------------------------------------------------------------------------------------
Navistar International Corp., 7.5%, 2011 995,000 940,275
----------------------------------------------------------------------------------------------
TRW Automotive, Inc., 9.375%, 2013 1,317,000 1,363,095
----------------------------------------------------------------------------------------------
TRW Automotive, Inc., 11%, 2013 130,000 139,750
----------------------------------------------------------------------------------------------
$15,986,570
----------------------------------------------------------------------------------------------
Banks & Credit Companies - 2.9%
----------------------------------------------------------------------------------------------
ATF Bank Kazakhstan, 9.25%, 2012## $ 27,000 $26,736
----------------------------------------------------------------------------------------------
Banco Mercantil del Norte S.A., 5.875%, 2014## 3,159,000 3,159,000
----------------------------------------------------------------------------------------------
Bank of Ireland, 7.4%, 2049 EUR 500,000 774,306
----------------------------------------------------------------------------------------------
Chuo Mitsui Trust & Banking Co., 5.506% to 2015,
5.70% to 2049## $ 642,000 613,713
----------------------------------------------------------------------------------------------
Credit Suisse Group, 7.974%, 2010 EUR 265,000 410,007
----------------------------------------------------------------------------------------------
HBOS Capital Funding LP, 6.071% to 2014, 5.11% to 2049## $ 1,543,000 1,633,685
----------------------------------------------------------------------------------------------
J.P. Morgan Chase & Co., 5.125%, 2014 2,755,000 2,780,329
----------------------------------------------------------------------------------------------
Kazkommerts International B.V., 10.125%, 2007 128,000 138,368
----------------------------------------------------------------------------------------------
Kazkommerts International B.V., 10.125%, 2007## 122,000 131,882
----------------------------------------------------------------------------------------------
Kazkommerts International B.V., 7%, 2009## 40,000 39,400
----------------------------------------------------------------------------------------------
Kazkommerts International B.V., 8.5%, 2013 84,000 86,520
----------------------------------------------------------------------------------------------
Kazkommerts International B.V., 8.5%, 2013## 329,000 338,870
----------------------------------------------------------------------------------------------
Mizuho Financial Group, Inc., 4.75%, 2014## EUR 127,000 172,323
----------------------------------------------------------------------------------------------
Mizuho Financial Group, Inc., 5.79%, 2014## $ 1,633,000 1,689,371
----------------------------------------------------------------------------------------------
National Westminster Bank PLC, 6.625% to 2009,
4.2763% to 2049 EUR 330,000 484,446
----------------------------------------------------------------------------------------------
RBS Capital Trust II, 6.425% to 2034, 5.1525% to 2049 $ 833,000 899,237
----------------------------------------------------------------------------------------------
SG Capital Trust I, 7.875% to 2010, 5.15375% to 2049 EUR 300,000 462,731
----------------------------------------------------------------------------------------------
Turanalem Finance B.V., 8%, 2014## $ 2,031,000 1,997,996
----------------------------------------------------------------------------------------------
VTB Capital S.A., 7.5%, 2011 49,000 51,734
----------------------------------------------------------------------------------------------
$ 15,890,654
----------------------------------------------------------------------------------------------
Broadcast & Cable TV - 4.2%
----------------------------------------------------------------------------------------------
CSC Holdings, Inc., 8.125%, 2009 $ 1,969,000 $ 2,018,225
----------------------------------------------------------------------------------------------
Charter Communications, Inc., 8.625%, 2009 1,000,000 722,500
----------------------------------------------------------------------------------------------
Continental Cablevision, Inc., 9.5%, 2013 7,341,000 7,786,496
----------------------------------------------------------------------------------------------
Cox Communications, Inc., 4.625%, 2013 1,744,000 1,659,702
----------------------------------------------------------------------------------------------
Lenfest Communications, Inc., 10.5%, 2006 500,000 532,257
----------------------------------------------------------------------------------------------
Mediacom Broadband LLC, 9.5%, 2013 490,000 469,175
----------------------------------------------------------------------------------------------
Rogers Cable, Inc., 5.5%, 2014 3,475,000 3,075,375
----------------------------------------------------------------------------------------------
TCI Communications Financing III, 9.65%, 2027 5,000,000 5,649,470
----------------------------------------------------------------------------------------------
TCI Communications, Inc., 9.8%, 2012 1,135,000 1,446,110
----------------------------------------------------------------------------------------------
$ 23,359,310
----------------------------------------------------------------------------------------------
Brokerage & Asset Managers - 1.2%
----------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc., 5.7%, 2012 $ 2,665,000 $2,793,973
----------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter, Inc., 6.6%, 2012 2,538,000 2,779,361
----------------------------------------------------------------------------------------------
Refco Finance Holdings LLC, 9%, 2012## 860,000 928,800
----------------------------------------------------------------------------------------------
$6,502,134
----------------------------------------------------------------------------------------------
Building - 0.2%
----------------------------------------------------------------------------------------------
Building Materials Corp. of America, 7.75%, 2014 $ 1,140,000 $1,104,375
----------------------------------------------------------------------------------------------
Business Services - 0.4%
----------------------------------------------------------------------------------------------
Iron Mountain, Inc., 7.75%, 2015 $ 460,000 $439,300
----------------------------------------------------------------------------------------------
Xerox Corp., 7.625%, 2013 1,590,000 1,697,325
----------------------------------------------------------------------------------------------
$2,136,625
----------------------------------------------------------------------------------------------
Chemicals - 1.6%
----------------------------------------------------------------------------------------------
Akzo Nobel N.V., 5.625%, 2009 EUR 100,000 $ 141,068
----------------------------------------------------------------------------------------------
BCP Crystal Holdings Corp., 9.625%, 2014 $ 413,000 455,333
----------------------------------------------------------------------------------------------
Equistar Chemicals LP, 10.625%, 2011 1,225,000 1,365,875
----------------------------------------------------------------------------------------------
Hercules, Inc., 6.75%, 2029 1,890,000 1,838,025
----------------------------------------------------------------------------------------------
Huntsman International LLC, 10.125%, 2009 575,000 596,563
----------------------------------------------------------------------------------------------
Kronos International, Inc., 8.875%, 2009 EUR 95,000 129,566
----------------------------------------------------------------------------------------------
Linde Finance B.V., 6% to 2013, 5.50138% to 2049 EUR 101,000 140,972
----------------------------------------------------------------------------------------------
Lyondell Chemical Co., 11.125%, 2012 $ 1,445,000 1,650,913
----------------------------------------------------------------------------------------------
Nalco Co., 7.75%, 2011 695,000 708,900
----------------------------------------------------------------------------------------------
Nova Chemicals Corp., 6.5%, 2012 1,325,000 1,339,906
----------------------------------------------------------------------------------------------
Rhodia S.A., 8.875%, 2011 560,000 523,600
----------------------------------------------------------------------------------------------
Rockwood Specialties Group, Inc., 7.5%, 2014## 100,000 97,000
----------------------------------------------------------------------------------------------
$ 8,987,721
----------------------------------------------------------------------------------------------
Conglomerates - 0.1%
----------------------------------------------------------------------------------------------
Invensys PLC, 9.875%, 2011## $ 310,000 $306,900
----------------------------------------------------------------------------------------------
Thyssenkrupp Finance B.V., 7%, 2009 EUR 100,000 144,233
----------------------------------------------------------------------------------------------
$451,133
----------------------------------------------------------------------------------------------
Construction - 0.6%
----------------------------------------------------------------------------------------------
D.R. Horton, Inc., 8%, 2009 $ 1,630,000 $ 1,770,550
----------------------------------------------------------------------------------------------
M / I Homes, Inc., 6.875%, 2012## 1,325,000 1,291,875
----------------------------------------------------------------------------------------------
$ 3,062,425
----------------------------------------------------------------------------------------------
Consumer Goods & Services - 0.5%
----------------------------------------------------------------------------------------------
ASSA ABLOY AB, 5.125%, 2006 EUR 30,000 $ 40,177
----------------------------------------------------------------------------------------------
Church & Dwight Co., Inc., 6%, 2012## $ 805,000 780,850
----------------------------------------------------------------------------------------------
K2, Inc., 7.375%, 2014 975,000 992,063
----------------------------------------------------------------------------------------------
Remington Arms Co., Inc., 10.5%, 2011 195,000 185,250
----------------------------------------------------------------------------------------------
Sodexho Alliance S.A., 5.875%, 2009 EUR 100,000 140,532
----------------------------------------------------------------------------------------------
Werner Holding Co., Inc., 10%, 2007 $ 600,000 417,000
----------------------------------------------------------------------------------------------
$ 2,555,872
----------------------------------------------------------------------------------------------
Containers - 0.6%
----------------------------------------------------------------------------------------------
Crown European Holdings S.A., 9.5%, 2011 $ 1,580,000 $ 1,706,400
----------------------------------------------------------------------------------------------
Owens-Brockway Glass Container, Inc., 8.875%, 2009 515,000 548,475
----------------------------------------------------------------------------------------------
Owens-Brockway Glass Container, Inc., 8.25%, 2013 925,000 980,500
----------------------------------------------------------------------------------------------
Pliant Corp., 13%, 2010 190,000 142,500
----------------------------------------------------------------------------------------------
$ 3,377,875
----------------------------------------------------------------------------------------------
Defense Electronics - 0.2%
----------------------------------------------------------------------------------------------
L-3 Communications Corp., 5.875%, 2015 $ 1,435,000 $ 1,366,838
----------------------------------------------------------------------------------------------
Electronics - 0.3%
----------------------------------------------------------------------------------------------
Flextronics International Ltd., 6.5%, 2013 $ 1,880,000 $ 1,795,400
----------------------------------------------------------------------------------------------
Emerging Market Quasi-Sovereign - 1.4%
----------------------------------------------------------------------------------------------
Gaz Capital S.A., 8.625%, 2034 $ 77,000 $ 88,257
----------------------------------------------------------------------------------------------
Gazprom OAO, 9.625%, 2013 980,000 1,149,050
----------------------------------------------------------------------------------------------
Gazprom OAO, 8.625%, 2034## 1,425,000 1,635,188
----------------------------------------------------------------------------------------------
Pemex Finance Ltd., 9.69%, 2009 814,500 903,077
----------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 8.625%, 2022 534,000 618,105
----------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 9.5%, 2027## 114,000 141,702
----------------------------------------------------------------------------------------------
Petroliam Nasional Berhad, 7.75%, 2015 1,634,000 1,980,944
----------------------------------------------------------------------------------------------
Petronas Capital Ltd., 7.875%, 2022## 987,000 1,213,670
----------------------------------------------------------------------------------------------
$7,729,993
----------------------------------------------------------------------------------------------
Emerging Market Sovereign - 6.0%
----------------------------------------------------------------------------------------------
Banco de La Republica Oriental del Uruguay, 10.5%, 2006 UYU 992,519 $ 42,857
----------------------------------------------------------------------------------------------
Central Bank of Dominican Republic, 9.5%, 2006 $ 68,000 66,810
----------------------------------------------------------------------------------------------
Dominican Republic, 9.04%, 2013 6,000 5,505
----------------------------------------------------------------------------------------------
Federal Republic of Brazil, FRN, 8%, 2014 6,736,137 6,715,053
----------------------------------------------------------------------------------------------
Federal Republic of Brazil, 8.875%, 2019 - 2024 1,583,000 1,566,030
----------------------------------------------------------------------------------------------
Federal Republic of Brazil, 4.25%, 2024 329,000 299,390
----------------------------------------------------------------------------------------------
Federal Republic of Brazil, 11%, 2040 60,000 67,950
----------------------------------------------------------------------------------------------
Republic of Argentina, 8%, 2008* EUR 217,000 82,365
----------------------------------------------------------------------------------------------
Republic of Argentina, FRN, 3.01%, 2012 $ 5,186,000 4,317,345
----------------------------------------------------------------------------------------------
Republic of Argentina, FRN, 6%, 2023* 290,000 168,200
----------------------------------------------------------------------------------------------
Republic of Argentina, FRN, 7.278%, 2049* EUR 60,000 20,844
----------------------------------------------------------------------------------------------
Republic of Colombia, 10.75%, 2013 $ 502,000 569,017
----------------------------------------------------------------------------------------------
Republic of Colombia, 11.75%, 2020 424,000 515,160
----------------------------------------------------------------------------------------------
Republic of Ecuador, 8%, 2030 12,000 9,600
----------------------------------------------------------------------------------------------
Republic of El Salvador, 8.25%, 2032 53,000 54,590
----------------------------------------------------------------------------------------------
Republic of Guatemala, 8.125%, 2034## 24,000 24,960
----------------------------------------------------------------------------------------------
Republic of Panama, 9.375%, 2023 - 2029 1,872,000 2,203,265
----------------------------------------------------------------------------------------------
Republic of Panama, 8.875%, 2027 195,000 218,400
----------------------------------------------------------------------------------------------
Republic of Peru, 8.75%, 2033 705,000 743,775
----------------------------------------------------------------------------------------------
Republic of Philippines, 9.375%, 2017 72,000 76,320
----------------------------------------------------------------------------------------------
Republic of Philippines, 10.625%, 2025 34,000 36,678
----------------------------------------------------------------------------------------------
Republic of South Africa, 9.125%, 2009 477,000 550,935
----------------------------------------------------------------------------------------------
Republic of South Africa, 8.5%, 2017 944,000 1,170,560
----------------------------------------------------------------------------------------------
Republic of Turkey, 7.25%, 2015 1,476,000 1,431,720
----------------------------------------------------------------------------------------------
Republic of Turkey, 11.875%, 2030 28,000 36,680
----------------------------------------------------------------------------------------------
Republic of Turkey, 8%, 2034 87,000 83,085
----------------------------------------------------------------------------------------------
Republic of Ukraine, 6.875%, 2011 100,000 103,500
----------------------------------------------------------------------------------------------
Republic of Venezeula, 8.5%, 2014 116,000 114,260
----------------------------------------------------------------------------------------------
Republic of Venezuela, 9.25%, 2027 24,000 23,652
----------------------------------------------------------------------------------------------
Russian Federation, 3%, 2008 - 2011 3,528,000 3,243,862
----------------------------------------------------------------------------------------------
Russian Federation, 11%, 2018 1,193,000 1,703,485
----------------------------------------------------------------------------------------------
Russian Federation, FRN, 5%, 2030 963,000 1,023,862
----------------------------------------------------------------------------------------------
Russian Ministry of Finance, 12.75%, 2028 62,000 105,952
----------------------------------------------------------------------------------------------
State of Qatar, 9.75%, 2030 754,000 1,127,230
----------------------------------------------------------------------------------------------
United Mexican States, 6.625%, 2015 875,000 926,625
----------------------------------------------------------------------------------------------
United Mexican States, 8.125%, 2019 1,523,000 1,783,433
----------------------------------------------------------------------------------------------
United Mexican States, 8.3%, 2031 107,000 125,324
----------------------------------------------------------------------------------------------
United Mexican States, 7.5%, 2033 2,015,000 2,181,238
----------------------------------------------------------------------------------------------
$ 33,539,517
----------------------------------------------------------------------------------------------
Energy - Independent - 1.6%
----------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 7.5%, 2014 $ 2,775,000 $ 2,906,813
----------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 6.875%, 2016 1,495,000 1,487,525
----------------------------------------------------------------------------------------------
Forest Oil Corp., 7.75%, 2014 950,000 992,750
----------------------------------------------------------------------------------------------
Newfield Exploration Co., 6.625%, 2014 390,000 386,100
----------------------------------------------------------------------------------------------
Ocean Energy, Inc., 4.375%, 2007 908,000 906,880
----------------------------------------------------------------------------------------------
Plains Exploration & Production Co., 7.125%, 2014 1,080,000 1,123,200
----------------------------------------------------------------------------------------------
Vintage Petroleum, Inc., 8.25%, 2012 950,000 1,023,625
----------------------------------------------------------------------------------------------
$ 8,826,893
----------------------------------------------------------------------------------------------
Energy - Integrated - 0.5%
----------------------------------------------------------------------------------------------
Amerada Hess Corp., 7.3%, 2031 $ 1,555,000 $ 1,777,451
----------------------------------------------------------------------------------------------
Siberian Oil Co., 10.75%, 2009 359,000 399,280
----------------------------------------------------------------------------------------------
Tyumen Oil Co., 11%, 2007 614,000 680,773
----------------------------------------------------------------------------------------------
$ 2,857,504
----------------------------------------------------------------------------------------------
Entertainment - 1.1%
----------------------------------------------------------------------------------------------
AMC Entertainment, Inc., 9.5%, 2011 $ 599,000 $ 593,010
----------------------------------------------------------------------------------------------
Liberty Media Corp., 5.7%, 2013 2,799,000 2,646,662
----------------------------------------------------------------------------------------------
Loews Cineplex Entertainment Corp., 9%, 2014## 1,165,000 1,118,400
----------------------------------------------------------------------------------------------
News America, Inc., 6.2%, 2034 533,000 537,746
----------------------------------------------------------------------------------------------
Six Flags, Inc., 9.75%, 2013 950,000 831,250
----------------------------------------------------------------------------------------------
Turner Broadcasting System, Inc., 8.375%, 2013 419,000 507,639
----------------------------------------------------------------------------------------------
$ 6,234,707
----------------------------------------------------------------------------------------------
Financial Institutions - 1.5%
----------------------------------------------------------------------------------------------
Berkshire Hathaway Finance Corp., 5.1%, 2014 $ 4,500,000 $ 4,557,618
----------------------------------------------------------------------------------------------
Capital One Bank, 4.25%, 2008 1,296,000 1,280,534
----------------------------------------------------------------------------------------------
International Lease Finance Corp., 5%, 2010 2,458,000 2,470,297
----------------------------------------------------------------------------------------------
MBNA Europe Funding PLC, 6.5%, 2007 EUR 150,000 206,207
----------------------------------------------------------------------------------------------
$ 8,514,656
----------------------------------------------------------------------------------------------
Food & Non-Alcoholic Beverages - 0.5%
----------------------------------------------------------------------------------------------
Allied Domecq Financial Services PLC, 5.875%, 2009 EUR 125,000 $ 172,186
----------------------------------------------------------------------------------------------
Burns, Philp & Co. Ltd., 9.75%, 2012 $ 590,000 643,100
----------------------------------------------------------------------------------------------
Chaoda Modern Agriculture Holdings, 7.75%, 2010## 53,000 48,760
----------------------------------------------------------------------------------------------
Coca-Cola Erfrischungsgetranke, 5.875%, 2005 EUR 600,000 776,289
----------------------------------------------------------------------------------------------
Smithfield Foods, Inc., 7%, 2011 $ 950,000 971,375
----------------------------------------------------------------------------------------------
$ 2,611,710
----------------------------------------------------------------------------------------------
Forest & Paper Products - 2.1%
----------------------------------------------------------------------------------------------
Abitibi-Consolidated, Inc., 6.95%, 2006 $ 1,563,000 $ 1,566,908
----------------------------------------------------------------------------------------------
Abitibi-Consolidated, Inc., 7.75%, 2011 1,580,000 1,461,500
----------------------------------------------------------------------------------------------
Buckeye Technologies, Inc., 8.5%, 2013 795,000 826,800
----------------------------------------------------------------------------------------------
Corporacion Durango S.A. de C.V., 7.5%, 2012 41,550 34,902
----------------------------------------------------------------------------------------------
Georgia-Pacific Corp., 9.375%, 2013 1,975,000 2,199,656
----------------------------------------------------------------------------------------------
International Paper Co., 5.375%, 2006 EUR 140,000 186,369
----------------------------------------------------------------------------------------------
MDP Acquisitions PLC, 9.625%, 2012 $ 895,000 886,050
----------------------------------------------------------------------------------------------
MeadWestvaco Corp., 6.8%, 2032 679,000 716,658
----------------------------------------------------------------------------------------------
Norske Skog Canada Ltd., 7.375%, 2014 1,210,000 1,137,400
----------------------------------------------------------------------------------------------
Packaging Corp. of America, 5.75%, 2013 2,500,000 2,443,708
----------------------------------------------------------------------------------------------
Sino-Forest Corp., 9.125%, 2011## 19,000 19,903
----------------------------------------------------------------------------------------------
UPM Kymmene Corp., 6.125%, 2012 EUR 100,000 146,980
----------------------------------------------------------------------------------------------
$ 11,626,834
----------------------------------------------------------------------------------------------
Gaming & Lodging - 2.6%
----------------------------------------------------------------------------------------------
Aztar Corp., 7.875%, 2014 $ 460,000 $ 481,850
----------------------------------------------------------------------------------------------
Boyd Gaming Corp., 6.75%, 2014 1,140,000 1,122,900
----------------------------------------------------------------------------------------------
Caesars Entertainment, Inc., 8.125%, 2011 1,270,000 1,422,400
----------------------------------------------------------------------------------------------
Host Marriott LP, 7.125%, 2013 950,000 961,875
----------------------------------------------------------------------------------------------
MGM Mirage, Inc., 8.375%, 2011 2,530,000 2,688,125
----------------------------------------------------------------------------------------------
Mandalay Resort Group, 9.375%, 2010 950,000 1,040,250
----------------------------------------------------------------------------------------------
NCL Corp., 11.625%, 2014## 1,000,000 1,025,000
----------------------------------------------------------------------------------------------
Pinnacle Entertainment, Inc., 8.75%, 2013 505,000 507,525
----------------------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd., 8%, 2010 1,720,000 1,874,800
----------------------------------------------------------------------------------------------
Scientific Games Corp., 6.25%, 2012## 125,000 122,500
----------------------------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc., 7.875%, 2012 1,955,000 2,143,169
----------------------------------------------------------------------------------------------
Station Casinos, Inc., 6.5%, 2014 870,000 867,825
----------------------------------------------------------------------------------------------
$ 14,258,219
----------------------------------------------------------------------------------------------
Industrial - 0.6%
----------------------------------------------------------------------------------------------
Amsted Industries, Inc., 10.25%, 2011## $ 575,000 $ 615,250
----------------------------------------------------------------------------------------------
JohnsonDiversey Holding, Inc., 0% to 2007, 10.67% to 2013 1,465,000 1,157,350
----------------------------------------------------------------------------------------------
Valmont Industries, Inc., 6.875%, 2014 1,270,000 1,244,600
----------------------------------------------------------------------------------------------
Williams Scotsman, Inc., 9.875%, 2007 205,000 201,413
----------------------------------------------------------------------------------------------
Williams Scotsman, Inc., 10%, 2008 205,000 217,300
----------------------------------------------------------------------------------------------
$3,435,913
----------------------------------------------------------------------------------------------
Insurance - 1.1%
----------------------------------------------------------------------------------------------
AIG SunAmerica Global Financing, 6.9%, 2032## $ 1,192,000 $ 1,398,417
----------------------------------------------------------------------------------------------
Genworth Financial, Inc., 6.5%, 2034 1,192,000 1,348,609
----------------------------------------------------------------------------------------------
Prudential Financial, Inc., 5.1%, 2014 1,985,000 2,007,057
----------------------------------------------------------------------------------------------
Prudential Funding Corp., 6.6%, 2008## 1,230,000 1,309,768
----------------------------------------------------------------------------------------------
$6,063,851
----------------------------------------------------------------------------------------------
Insurance - Property & Casualty - 0.3%
----------------------------------------------------------------------------------------------
Allianz AG, FRN, 5.5%, 2049 EUR 140,000 $ 195,877
----------------------------------------------------------------------------------------------
Fund American Cos., Inc., 5.875%, 2013 $ 1,464,000 1,490,460
----------------------------------------------------------------------------------------------
$1,686,337
----------------------------------------------------------------------------------------------
International Market Quasi-Sovereign - 0.2%
----------------------------------------------------------------------------------------------
Kreditanstalt fur Wiederaufbau, 4.75%, 2006 EUR 750,000 $ 995,788
----------------------------------------------------------------------------------------------
Vattenfall Treasury AB, 6%, 2010 EUR 125,000 181,336
----------------------------------------------------------------------------------------------
$ 1,177,124
----------------------------------------------------------------------------------------------
International Market Sovereign - 16.9%
----------------------------------------------------------------------------------------------
Canada Housing Trust, 4.65%, 2009 CAD 435,000 $ 358,821
----------------------------------------------------------------------------------------------
Commonwealth of Australia, 6%, 2017 AUD 1,212,000 995,799
----------------------------------------------------------------------------------------------
Federal Republic of Germany, 3.5%, 2008 EUR 8,141,000 10,813,955
----------------------------------------------------------------------------------------------
Federal Republic of Germany, 4%, 2009 EUR 716,000 968,867
----------------------------------------------------------------------------------------------
Federal Republic of Germany, 4.5%, 2009 EUR 5,660,000 21,590,982
----------------------------------------------------------------------------------------------
Federal Republic of Germany, 3.75%, 2015 EUR 273,000 361,504
----------------------------------------------------------------------------------------------
Federal Republic of Germany, 6.25%, 2030 EUR 425,000 745,444
----------------------------------------------------------------------------------------------
Government of Canada, 5.5%, 2009 CAD 617,000 526,229
----------------------------------------------------------------------------------------------
Government of Canada, 5.25%, 2012 CAD 1,370,000 1,171,428
----------------------------------------------------------------------------------------------
Government of Canada, 4.5%, 2015 CAD 189,000 153,419
----------------------------------------------------------------------------------------------
Government of New Zealand, 7%, 2009 NZD 902,000 686,694
----------------------------------------------------------------------------------------------
Government of New Zealand, 6.5%, 2013 NZD 5,877,000 4,475,937
----------------------------------------------------------------------------------------------
Kingdom of Netherlands, 5.75%, 2007 EUR 2,263,000 3,092,965
----------------------------------------------------------------------------------------------
Kingdom of Netherlands, 3.75%, 2009 EUR 2,965,000 3,977,063
----------------------------------------------------------------------------------------------
Kingdom of Norway, 6.5%, 2013 NOK 3,389,000 643,112
----------------------------------------------------------------------------------------------
Kingdom of Spain, 6%, 2008 EUR 1,857,000 2,620,167
----------------------------------------------------------------------------------------------
Kingdom of Spain, 5.35%, 2011 EUR 4,501,000 6,569,268
----------------------------------------------------------------------------------------------
Republic of Finland, 3%, 2008 EUR 2,918,000 3,814,592
----------------------------------------------------------------------------------------------
Republic of Finland, 5.375%, 2013 EUR 2,255,000 3,340,224
----------------------------------------------------------------------------------------------
Republic of France, 4.75%, 2007 EUR 4,113,000 5,568,282
----------------------------------------------------------------------------------------------
Republic of France, 4%, 2009 EUR 215,000 291,533
----------------------------------------------------------------------------------------------
Republic of France, 5%, 2012 - 2016 EUR 607,000 878,532
----------------------------------------------------------------------------------------------
Republic of France, 6%, 2025 EUR 204,000 340,700
----------------------------------------------------------------------------------------------
Republic of Ireland, 4.25%, 2007 EUR 5,031,000 6,765,924
----------------------------------------------------------------------------------------------
Republic of Ireland, 4.6%, 2016 EUR 499,000 707,937
----------------------------------------------------------------------------------------------
Republic of Italy, 4.5%, 2005 EUR 4,745,000 6,109,301
----------------------------------------------------------------------------------------------
United Kingdom Treasury, 5.75%, 2009 GBP 1,226,000 2,459,935
----------------------------------------------------------------------------------------------
United Kingdom Treasury, 8%, 2015 GBP 1,591,000 3,920,321
----------------------------------------------------------------------------------------------
$ 93,948,935
----------------------------------------------------------------------------------------------
Machinery & Tools - 0.9%
----------------------------------------------------------------------------------------------
AGCO Corp., 9.5%, 2008 $ 1,810,000 $ 1,895,975
----------------------------------------------------------------------------------------------
Case New Holland, Inc., 6%, 2009## 950,000 876,375
----------------------------------------------------------------------------------------------
Manitowoc Co., Inc., 10.5%, 2012 767,000 853,288
----------------------------------------------------------------------------------------------
Terex Corp., 9.25%, 2011 620,000 672,700
----------------------------------------------------------------------------------------------
United Rentals, Inc., 6.5%, 2012 590,000 561,975
----------------------------------------------------------------------------------------------
$ 4,860,313
----------------------------------------------------------------------------------------------
Medical & Health Technology & Services - 1.5%
----------------------------------------------------------------------------------------------
AmerisourceBergen Corp., 7.25%, 2012 $ 950,000 $ 1,026,000
----------------------------------------------------------------------------------------------
Baxter International, Inc., 9.5%, 2008 2,296,000 2,619,187
----------------------------------------------------------------------------------------------
DaVita, Inc., 6.625%, 2013## 300,000 297,000
----------------------------------------------------------------------------------------------
HCA, Inc., 8.75%, 2010 1,900,000 2,138,123
----------------------------------------------------------------------------------------------
HCA, Inc., 6.375%, 2015 1,515,000 1,520,466
----------------------------------------------------------------------------------------------
InSight Health Services Corp., 9.875%, 2011 630,000 598,500
----------------------------------------------------------------------------------------------
$ 8,199,276
----------------------------------------------------------------------------------------------
Metals & Mining - 0.7%
----------------------------------------------------------------------------------------------
Foundation PA Coal Co., 7.25%, 2014 $ 1,015,000 $ 1,042,913
----------------------------------------------------------------------------------------------
Peabody Energy Corp., 6.875%, 2013 340,000 351,900
----------------------------------------------------------------------------------------------
Peabody Energy Corp., 5.875%, 2016 1,220,000 1,183,400
----------------------------------------------------------------------------------------------
Phelps Dodge Corp., 8.75%, 2011 501,000 601,689
----------------------------------------------------------------------------------------------
U.S. Steel Corp., 9.75%, 2010 795,000 874,500
----------------------------------------------------------------------------------------------
$ 4,054,402
----------------------------------------------------------------------------------------------
Mortgage Backed - 0.8%
----------------------------------------------------------------------------------------------
Fannie Mae, 6%, 2016 - 2017 $ 1,543,555 $ 1,600,381
----------------------------------------------------------------------------------------------
Fannie Mae, 6.5%, 2031 - 2032 2,935,206 3,055,540
----------------------------------------------------------------------------------------------
$ 4,655,921
----------------------------------------------------------------------------------------------
Natural Gas - Distribution - 0.6%
----------------------------------------------------------------------------------------------
AmeriGas Partners LP, 8.875%, 2011 $ 2,065,000 $ 2,240,525
----------------------------------------------------------------------------------------------
AmeriGas Partners LP, 7.25%, 2015## 1,030,000 1,030,000
----------------------------------------------------------------------------------------------
$ 3,270,525
----------------------------------------------------------------------------------------------
Natural Gas - Pipeline - 2.5%
----------------------------------------------------------------------------------------------
ANR Pipeline Co., 8.875%, 2010 $ 440,000 $ 477,290
----------------------------------------------------------------------------------------------
CenterPoint Energy Resources Corp., 7.875%, 2013 3,683,000 4,337,661
----------------------------------------------------------------------------------------------
Colorado Interstate Gas Co., 5.95%, 2015## 85,000 82,025
----------------------------------------------------------------------------------------------
Enterprise Products Operating LP, 6.65%, 2034 2,000,000 2,095,892
----------------------------------------------------------------------------------------------
Kinder Morgan Energy Partners LP, 7.4%, 2031 2,775,000 3,290,101
----------------------------------------------------------------------------------------------
Magellan Midstream Partners LP, 5.65%, 2016 1,123,000 1,137,130
----------------------------------------------------------------------------------------------
Southern Natural Gas Co., Inc., 8.875%, 2010 1,040,000 1,130,376
----------------------------------------------------------------------------------------------
Williams Cos., Inc., 8.75%, 2032 1,000,000 1,150,000
----------------------------------------------------------------------------------------------
$ 13,700,475
----------------------------------------------------------------------------------------------
Oil Services - 0.3%
----------------------------------------------------------------------------------------------
Grant Prideco, Inc., 9%, 2009 $ 950,000 $ 1,035,500
----------------------------------------------------------------------------------------------
GulfMark Offshore, Inc., 7.75%, 2014## 760,000 767,600
----------------------------------------------------------------------------------------------
$ 1,803,100
----------------------------------------------------------------------------------------------
Oils - 0.6%
----------------------------------------------------------------------------------------------
Citgo Petroleum Corp., 6%, 2011 $ 950,000 $ 923,875
----------------------------------------------------------------------------------------------
Hurricane Finance B.V., 9.625%, 2010 26,000 28,080
----------------------------------------------------------------------------------------------
Premcor Refining Group, Inc., 7.5%, 2015 950,000 1,021,250
----------------------------------------------------------------------------------------------
Valero Energy Corp., 6.875%, 2012 1,331,000 1,463,267
----------------------------------------------------------------------------------------------
$ 3,436,472
----------------------------------------------------------------------------------------------
Pharmaceuticals - 0.2%
----------------------------------------------------------------------------------------------
Schering-Plough Corp., 6.5%, 2033 $ 1,002,000 $ 1,162,227
----------------------------------------------------------------------------------------------
Pollution Control - 0.2%
----------------------------------------------------------------------------------------------
Allied Waste North America, Inc., 7.875%, 2013 $ 945,000 $ 919,013
----------------------------------------------------------------------------------------------
Veolia Environnement, 5.875%, 2008 EUR 250,000 350,849
----------------------------------------------------------------------------------------------
$ 1,269,862
----------------------------------------------------------------------------------------------
Printing & Publishing - 0.8%
----------------------------------------------------------------------------------------------
Bertelsmann U.S. Finance, Inc., 4.625%, 2010 EUR 148,000 $ 200,674
----------------------------------------------------------------------------------------------
Cenveo, Inc., 9.625%, 2012 $ 1,050,000 1,118,250
----------------------------------------------------------------------------------------------
Dex Media East LLC, 9.875%, 2009 1,235,000 1,352,325
----------------------------------------------------------------------------------------------
Dex Media West LLC, 9.875%, 2013 567,000 629,370
----------------------------------------------------------------------------------------------
MediaNews Group, Inc., 6.875%, 2013 895,000 868,150
----------------------------------------------------------------------------------------------
Pearson PLC, 6.125%, 2007 EUR 135,000 183,852
----------------------------------------------------------------------------------------------
Reed Elsevier Capital, Inc., 5.75%, 2008 EUR 125,000 175,270
----------------------------------------------------------------------------------------------
$ 4,527,891
----------------------------------------------------------------------------------------------
Railroad & Shipping - 0.4%
----------------------------------------------------------------------------------------------
Societe Nationale des Chemins de Fer Francais, 7.5%, 2008 EUR 750,000 $ 1,098,553
----------------------------------------------------------------------------------------------
TFM S.A. de C.V., 10.25%, 2007 21,000 22,260
----------------------------------------------------------------------------------------------
TFM S.A. de C.V., 9.375%, 2012## 817,000 821,085
----------------------------------------------------------------------------------------------
TFM S.A. de C.V., 12.5%, 2012 325,000 373,750
----------------------------------------------------------------------------------------------
$ 2,315,648
----------------------------------------------------------------------------------------------
Retailers - 1.1%
----------------------------------------------------------------------------------------------
Couche-Tard, Inc., 7.5%, 2013 $ 365,000 $ 374,125
----------------------------------------------------------------------------------------------
Gap, Inc., 8.8%, 2008 2,710,000 3,131,706
----------------------------------------------------------------------------------------------
Limited Brands, Inc., 5.25%, 2014 2,294,000 2,188,393
----------------------------------------------------------------------------------------------
Rite Aid Corp., 8.125%, 2010 635,000 619,125
----------------------------------------------------------------------------------------------
$ 6,313,349
----------------------------------------------------------------------------------------------
Special Products & Services - 0%
----------------------------------------------------------------------------------------------
Telemig Celular Participacoes S.A., 8.75%, 2009## $ 18,000 $ 18,450
----------------------------------------------------------------------------------------------
Specialty Stores - 0%
----------------------------------------------------------------------------------------------
LVMH Moet Hennessy Louis Vuitton, 4.625%, 2011 EUR 125,000 $ 170,376
----------------------------------------------------------------------------------------------
Supermarkets - 0.2%
----------------------------------------------------------------------------------------------
Roundy's, Inc., 8.875%, 2012 $ 825,000 $ 853,875
----------------------------------------------------------------------------------------------
Supranational - 0.2%
----------------------------------------------------------------------------------------------
European Investment Bank, 5.375%, 2012 EUR 750,000 $ 1,104,106
----------------------------------------------------------------------------------------------
Telecommunications - Wireless - 1.2%
----------------------------------------------------------------------------------------------
Centennial Communications Corp., 10.125%, 2013 $ 645,000 $ 704,663
----------------------------------------------------------------------------------------------
Crown Castle International Corp., 7.5%, 2013 635,000 676,275
----------------------------------------------------------------------------------------------
Dolphin Telecom PLC, 11.5%, 2008* 2,352,262 0
----------------------------------------------------------------------------------------------
Mobile TeleSystems OJSC, 9.75%, 2008## 19,000 20,520
----------------------------------------------------------------------------------------------
Mobile TeleSystems OJSC, 8.375%, 2010## 320,000 328,000
----------------------------------------------------------------------------------------------
Nextel Communications, Inc., 5.95%, 2014 2,080,000 2,106,000
----------------------------------------------------------------------------------------------
Nextel Communications, Inc., 7.375%, 2015 420,000 447,300
----------------------------------------------------------------------------------------------
Rogers Wireless, Inc., 6.375%, 2014 950,000 909,625
----------------------------------------------------------------------------------------------
Rogers Wireless, Inc., 7.5%, 2015 980,000 1,005,725
----------------------------------------------------------------------------------------------
Vodafone Group PLC, 5.75%, 2006 EUR 140,000 188,926
----------------------------------------------------------------------------------------------
$ 6,387,034
----------------------------------------------------------------------------------------------
Telecommunications - Wireline - 5.4%
----------------------------------------------------------------------------------------------
AT&T Corp., 7.3%, 2011 $ 450,000 $ 513,563
----------------------------------------------------------------------------------------------
AT&T Corp., 8%, 2031 1,715,000 2,135,175
----------------------------------------------------------------------------------------------
Axtel S.A. de C.V., 11%, 2013 27,000 27,945
----------------------------------------------------------------------------------------------
BellSouth Corp., 6.55%, 2034 3,213,000 3,554,915
----------------------------------------------------------------------------------------------
Citizens Communications Co., 9.25%, 2011 1,785,000 1,932,263
----------------------------------------------------------------------------------------------
Citizens Communications Co., 6.25%, 2013 1,420,000 1,324,150
----------------------------------------------------------------------------------------------
Deutsche Telekom International Finance B.V., 8.125%, 2012 EUR 130,000 214,156
----------------------------------------------------------------------------------------------
Deutsche Telekom International Finance B.V., 8.75%, 2030 $ 3,313,000 4,439,450
----------------------------------------------------------------------------------------------
Eircom Funding PLC, 8.25%, 2013 1,130,000 1,220,400
----------------------------------------------------------------------------------------------
France Telecom S.A., 7.2%, 2006 105,000 108,038
----------------------------------------------------------------------------------------------
Global Telesystems, Inc. 10.875%, 2008* 166,238 0
----------------------------------------------------------------------------------------------
OTE Telecommunications PLC, 6.125%, 2007 EUR 195,000 265,745
----------------------------------------------------------------------------------------------
Qwest Corp., 7.875%, 2011## $ 1,890,000 1,918,350
----------------------------------------------------------------------------------------------
Qwest Corp., 8.875%, 2012## 950,000 1,007,000
----------------------------------------------------------------------------------------------
Qwest Services Corp., 13.5%, 2010## 395,000 444,375
----------------------------------------------------------------------------------------------
SBC Communications, Inc., 5.1%, 2014 3,395,000 3,396,538
----------------------------------------------------------------------------------------------
Telecom Italia Capital, 6%, 2034## 2,020,000 2,000,854
----------------------------------------------------------------------------------------------
Telecom Italia S.p.A., 5.625%, 2007 EUR 300,000 405,542
----------------------------------------------------------------------------------------------
Verizon New York, Inc., 7.375%, 2032 $ 4,590,000 5,225,903
----------------------------------------------------------------------------------------------
$ 30,134,362
----------------------------------------------------------------------------------------------
Tobacco - 0.4%
----------------------------------------------------------------------------------------------
Altria Group, Inc., 5.625%, 2008 EUR 75,000 $ 102,945
----------------------------------------------------------------------------------------------
R.J. Reynolds Tobacco Holdings, Inc., 7.25%, 2012 $ 2,008,000 2,088,320
----------------------------------------------------------------------------------------------
$ 2,191,265
----------------------------------------------------------------------------------------------
Transportation - Services - 0.1%
----------------------------------------------------------------------------------------------
Stena AB, 7%, 2016 $ 552,000 $ 496,800
----------------------------------------------------------------------------------------------
U.S. Government Agencies - 0.3%
----------------------------------------------------------------------------------------------
Small Business Administration, 5.34%, 2021 $ 1,559,996 $ 1,605,579
----------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 3.0%
----------------------------------------------------------------------------------------------
U.S. Treasury Notes, 3.625%, 2008### $ 10,316,505 $ 11,096,288
----------------------------------------------------------------------------------------------
U.S. Treasury Notes, 2%, 2014 5,193,338 5,391,942
----------------------------------------------------------------------------------------------
$ 16,488,230
----------------------------------------------------------------------------------------------
Utilities - Electric Power - 7.9%
----------------------------------------------------------------------------------------------
BVPS II Funding Corp., 8.68%, 2017 $ 820,000 $ 928,470
----------------------------------------------------------------------------------------------
Beaver Valley Funding Corp., 9%, 2017 4,562,000 5,460,657
----------------------------------------------------------------------------------------------
CMS Energy Corp., 8.5%, 2011 550,000 588,500
----------------------------------------------------------------------------------------------
Calpine Corp., 8.75%, 2013## 645,000 445,050
----------------------------------------------------------------------------------------------
CenterPoint Energy, Inc., 7.25%, 2010 1,250,000 1,376,941
----------------------------------------------------------------------------------------------
Compania Nacional de Transmision Electrica S.A.
(Transelec), 7.875%, 2011 700,000 796,893
----------------------------------------------------------------------------------------------
DPL, Inc., 6.875%, 2011 3,382,000 3,601,830
----------------------------------------------------------------------------------------------
Duke Capital Corp., 8%, 2019 1,652,000 2,016,198
----------------------------------------------------------------------------------------------
Dynegy Holdings, Inc., 9.875%, 2010## 410,000 414,100
----------------------------------------------------------------------------------------------
Empresa Nacional de Electricidad S.A., 8.35%, 2013 1,852,000 2,089,975
----------------------------------------------------------------------------------------------
Enersis S.A., 7.375%, 2014 1,272,000 1,340,309
----------------------------------------------------------------------------------------------
FirstEnergy Corp., 6.45%, 2011 1,955,000 2,099,658
----------------------------------------------------------------------------------------------
MSW Energy Holdings LLC, 7.375%, 2010 1,045,000 1,039,775
----------------------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., 3.5%, 2008 2,437,000 2,361,273
----------------------------------------------------------------------------------------------
National Grid Group Finance PLC, 5.25%, 2006 EUR 200,000 266,669
----------------------------------------------------------------------------------------------
Nevada Power Co., 5.875%, 2015## $ 1,965,000 1,906,050
----------------------------------------------------------------------------------------------
NorthWestern Corp., 5.875%, 2014## 1,695,000 1,722,339
----------------------------------------------------------------------------------------------
PSEG Energy Holdings LLC, 7.75%, 2007 863,000 884,575
----------------------------------------------------------------------------------------------
RWE Finance B.V., 5.375%, 2008 EUR 6,000 8,303
----------------------------------------------------------------------------------------------
Reliant Resources, Inc., 9.25%, 2010 $ 490,000 501,025
----------------------------------------------------------------------------------------------
Reliant Resources, Inc., 9.5%, 2013 575,000 596,563
----------------------------------------------------------------------------------------------
System Energy Resources, Inc., 5.129%, 2014## 2,605,001 2,575,851
----------------------------------------------------------------------------------------------
TECO Energy, Inc., 7.5%, 2010 950,000 1,014,125
----------------------------------------------------------------------------------------------
TXU Corp., 6.375%, 2006 3,943,000 4,032,214
----------------------------------------------------------------------------------------------
TXU Corp., 6.5%, 2024## 3,322,000 3,278,917
----------------------------------------------------------------------------------------------
Texas Genco LLC 6.875%, 2014# 265,000 259,700
----------------------------------------------------------------------------------------------
W3A Funding Corp., 8.09%, 2017 1,937,760 2,132,156
----------------------------------------------------------------------------------------------
$ 43,738,116
----------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $512,613,229) $530,729,906
----------------------------------------------------------------------------------------------
Stocks - 0.2%
----------------------------------------------------------------------------------------------
ISSUER SHARES $ VALUE
----------------------------------------------------------------------------------------------
Apparel Manufacturers - 0.1%
----------------------------------------------------------------------------------------------
Sind Holdings, Inc.*+ 5,720 $ 600,600
----------------------------------------------------------------------------------------------
Forest & Paper Products - 0%
----------------------------------------------------------------------------------------------
Corporacion Durango S.A. de C.V.* 2,068 $ 1,303
----------------------------------------------------------------------------------------------
Printing & Publishing - 0%
----------------------------------------------------------------------------------------------
Golden Books Family Entertainment, Inc.* 39,950 $ 0
----------------------------------------------------------------------------------------------
Tobacco - 0.1%
----------------------------------------------------------------------------------------------
Reynolds American, Inc. 2,302 $ 179,487
----------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $2,128,573) $ 781,390
----------------------------------------------------------------------------------------------
Convertible Preferred Stock - 0.2%
----------------------------------------------------------------------------------------------
Automotive - 0.2%
----------------------------------------------------------------------------------------------
Ford Motor Co. Capital Trust II, 6.5% (Identified Cost,
$1,177,235) 22,511 $ 876,803
----------------------------------------------------------------------------------------------
Preferred Stock - 0%
----------------------------------------------------------------------------------------------
Real Estate - 0%
----------------------------------------------------------------------------------------------
HRPT Properties Trust, "B", 8.75% (Identified Cost,
$139,485) 5,100 $ 135,456
----------------------------------------------------------------------------------------------
Warrants - 0%
----------------------------------------------------------------------------------------------
STRIKE FIRST
ISSUER PRICE EXERCISE SHARES $ VALUE
----------------------------------------------------------------------------------------------
Banco Central del Uruguay
(Emerging Market Sovereign)* N/A N/A 1,250,000 $ 0
----------------------------------------------------------------------------------------------
DWC Construction Co., Inc.
(Utilities - Other)* KRW373.00 6/29/01 112,911 33,578
----------------------------------------------------------------------------------------------
DWC Trading (Utilities - Other)* KRW373.00 6/29/01 44,711 22,241
----------------------------------------------------------------------------------------------
Loral Space & Communications Ltd.
(Business Services)* $0.14 1/28/97 1,625 5
----------------------------------------------------------------------------------------------
Loral Space & Communications Ltd.
(Business Services)* 0.14 1/28/97 700 2
----------------------------------------------------------------------------------------------
Thermadyne Holdings Corp.
(Machinery & Tools)* 20.78 5/29/03 777 155
----------------------------------------------------------------------------------------------
Total Warrants (Identified Cost, $38,522) $55,981
-----------------------------------------------------------------------------------------------
Convertible Bond - 0%
-----------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
-----------------------------------------------------------------------------------------------
Banks & Credit Companies - 0%
-----------------------------------------------------------------------------------------------
Fortis Capital Co., 6.25%, 2049 (Identified Cost, $135,348) EUR 155,000 $213,391
-----------------------------------------------------------------------------------------------
Put Options Purchased - 0%
-----------------------------------------------------------------------------------------------
NUMBER
ISSUE/EXPIRATION/STRIKE PRICE OF CONTRACTS $ VALUE
-----------------------------------------------------------------------------------------------
U.S. Treasury Bonds Futures - May 2005 @ $111.00 (Premiums
Paid, $520) 1 $422
-----------------------------------------------------------------------------------------------
Short-Term Obligation - 2.3%
-----------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
-----------------------------------------------------------------------------------------------
General Electric Capital Corp., 2.95%, due 5/02/05,
at Amortized Cost< $ 12,833,000 $12,831,948
-----------------------------------------------------------------------------------------------
Repurchase Agreement - 0%
-----------------------------------------------------------------------------------------------
Morgan Stanley, 2.95%, dated 4/29/05, due 5/02/05, total to
be received $3,001 (secured by various U.S. Treasury and
Federal Agency obligations in a jointly traded account),
at Cost $ 3,000 $3,000
-----------------------------------------------------------------------------------------------
Total Investments.SM. (Identified Cost, $529,067,860) $545,628,297
-----------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.6% 9,091,824
-----------------------------------------------------------------------------------------------
Net Assets - 100.0% $554,720,121
-----------------------------------------------------------------------------------------------
* Non-income producing security.
^^ Interest only security for which the trust receives interest on notional principal
(Par amount). Par amount shown is the notional principal and does not reflect the cost
of the security.
## SEC Rule 144A restriction.
### Security segregated as collateral for open futures contracts.
+ Restricted Security.
(&) As of April 30, 2005, the trust had 5 securities representing $601,341 and 0.11%
of net assets that were fair valued in accordance with the policies adopted by
the Board of Trustees.
< The rate shown represents an annualized yield at time of purchase.
FRN= Floating Rate Note.
N/A= Strike price and first exercise date have not been made available by the issuer.
Abbreviations have been used throughout this report to indicate amounts shown
in currencies other than the U.S. dollar. All amounts are stated in U.S.
dollars unless otherwise indicated. A list of abbreviations is
shown below.
ARS = Argentine Peso KRW = Korean Won
AUD = Australian Dollar MXN = Mexican Peso
BRL = Brazilian Real NOK = Norwegian Krone
CAD = Canadian Dollar NZD = New Zealand Dollar
CHF = Swiss Franc PLN = Polish Zloty
CLP = Chilean Peso RUB = Russian Ruble
CNY = Chinese Yuan Renminbi SEK = Swedish Krona
COP = Colombian Peso SGD = Singapore Dollar
CZK = Czech Koruna SKK = Slovakian Koruna
DKK = Danish Krone THB = Thailand Baht
EUR = Euro TRY = Turkish Lira
GBP = British Pound TWD = Taiwan Dollar
HUF = Hungarian Forint UYU = Uruguayan Peso
ILS = Israeli Sheqel ZAR = South African Rand
JPY = Japanese Yen
SEE NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES (unaudited)
--------------------------------------------------------------------------------------------------
This statement represents your trust's balance sheet, which details the assets
and liabilities composing the total value of your trust.
AT 4/30/05
ASSETS
Investments, at value (identified cost, $529,067,860) $545,628,297
--------------------------------------------------------------------------------------------------
Cash 35,990
--------------------------------------------------------------------------------------------------
Receivable for forward foreign currency exchange contracts 732,823
--------------------------------------------------------------------------------------------------
Receivable for daily variation margin on open futures
contracts 74,500
--------------------------------------------------------------------------------------------------
Receivable for investments sold 5,472,458
--------------------------------------------------------------------------------------------------
Interest and dividends receivable 9,804,073
--------------------------------------------------------------------------------------------------
Other assets 78,890
--------------------------------------------------------------------------------------------------
Total assets $561,827,031
--------------------------------------------------------------------------------------------------
LIABILITIES
Payable to dividend disbursing agent $210,528
--------------------------------------------------------------------------------------------------
Payable for forward foreign currency exchange contracts 455,090
--------------------------------------------------------------------------------------------------
Payable for forward foreign currency exchange contracts
subject to master netting agreements 32,638
--------------------------------------------------------------------------------------------------
Payable for investments purchased 5,747,193
--------------------------------------------------------------------------------------------------
Payable for trust shares reacquired 120,515
--------------------------------------------------------------------------------------------------
Payable to affiliates
--------------------------------------------------------------------------------------------------
Management fee 27,365
--------------------------------------------------------------------------------------------------
Transfer agent and dividend disbursing costs 28,616
--------------------------------------------------------------------------------------------------
Administrative fee 199
--------------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 484,766
--------------------------------------------------------------------------------------------------
Total liabilities $7,106,910
--------------------------------------------------------------------------------------------------
Net assets $554,720,121
--------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Paid-in capital $621,870,854
--------------------------------------------------------------------------------------------------
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 16,670,405
--------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (74,729,628)
--------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment
income (9,091,510)
--------------------------------------------------------------------------------------------------
Net assets $554,720,121
--------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
(87,644,754 issued, less 6,388,302 treasury shares) 81,256,452
--------------------------------------------------------------------------------------------------
Net asset value per share
(net assets of $554,720,121/81,256,452 shares of
beneficial interest outstanding) $6.83
--------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF OPERATIONS (unaudited)
--------------------------------------------------------------------------------------------------
This statement describes how much your trust received in investment income and
paid in expenses. It also describes any gains and/or losses generated by trust
operations.
SIX MONTHS ENDED 4/30/05
NET INVESTMENT INCOME
Income
---------------------------------------------------------------------------------------------------
Interest $16,850,773
---------------------------------------------------------------------------------------------------
Dividends 46,533
---------------------------------------------------------------------------------------------------
Total investment income $16,897,306
---------------------------------------------------------------------------------------------------
Expenses
---------------------------------------------------------------------------------------------------
Management fee $1,929,743
---------------------------------------------------------------------------------------------------
Trustees' compensation 31,646
---------------------------------------------------------------------------------------------------
Transfer agent and dividend disbursing costs 122,556
---------------------------------------------------------------------------------------------------
Administrative fee 25,489
---------------------------------------------------------------------------------------------------
Custodian fee 159,697
---------------------------------------------------------------------------------------------------
Printing 37,175
---------------------------------------------------------------------------------------------------
Postage 140,191
---------------------------------------------------------------------------------------------------
Auditing fees 36,992
---------------------------------------------------------------------------------------------------
Legal fees 5,626
---------------------------------------------------------------------------------------------------
Miscellaneous 72,482
---------------------------------------------------------------------------------------------------
Total expenses $2,561,597
---------------------------------------------------------------------------------------------------
Fees paid indirectly (12,209)
---------------------------------------------------------------------------------------------------
Reduction of expenses by investment adviser (1,266)
---------------------------------------------------------------------------------------------------
Net expenses $2,548,122
---------------------------------------------------------------------------------------------------
Net investment income $14,349,184
---------------------------------------------------------------------------------------------------
Statement of Operations (unaudited) - continued
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) (identified cost basis)
---------------------------------------------------------------------------------------------------
Investment transactions $12,051,526
---------------------------------------------------------------------------------------------------
Written options transactions 1,864
---------------------------------------------------------------------------------------------------
Futures contracts 533,672
---------------------------------------------------------------------------------------------------
Foreign currency transactions (4,713,726)
---------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions $7,873,336
---------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
---------------------------------------------------------------------------------------------------
Investments $(20,002,203)
---------------------------------------------------------------------------------------------------
Futures contracts 94,531
---------------------------------------------------------------------------------------------------
Translation of assets and liabilities in foreign
currencies 3,602,589
---------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments and foreign
currency translation (16,305,083)
---------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and
foreign currency $(8,431,747)
---------------------------------------------------------------------------------------------------
Change in net assets from operations $5,917,437
---------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
---------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENTS OF CHANGES IN NET ASSETS
---------------------------------------------------------------------------------------------------
This statement describes the increases and/or decreases in net assets
resulting from operations, any distributions, and any shareholder
transactions.
SIX MONTHS ENDED YEAR ENDED
4/30/05 10/31/04
(UNAUDITED)
CHANGE IN NET ASSETS
FROM OPERATIONS
Net investment income $14,349,184 $31,176,493
--------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions 7,873,336 11,783,277
--------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments and foreign
currency translation (16,305,083) 3,020,595
-------------------------------------------------------- ------------ ------------
Change in net assets from operations $5,917,437 $45,980,365
-------------------------------------------------------- ------------ ------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(16,053,177) $(32,540,604)
-------------------------------------------------------- ------------ ------------
Net change in net assets from trust share transactions (4,235,140) (8,109,105)
-------------------------------------------------------- ------------ ------------
Total change in net assets $(14,370,880) $5,330,656
-------------------------------------------------------- ------------ ------------
NET ASSETS
At beginning of period $569,091,001 $563,760,345
--------------------------------------------------------------------------------------------------
At end of period (including accumulated distributions in
excess of net investment income of $9,091,510 and
$7,387,517, respectively) $554,720,121 $569,091,001
--------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the trust's financial performance for the semiannual period
and the past 5 fiscal years. Certain information reflects financial results for a single trust share. The total returns in the
table represent the rate by which an investor would have earned (or lost) on an investment in the trust (assuming reinvestment
of all distributions) held for the entire period.
SIX MONTHS YEAR ENDED 10/31
ENDED -----------------------------------------------------------------------------
4/30/05 2004 2003 2002 2001 2000
Net asset value, beginning of
period $6.94 $6.76 $6.32 $6.60 $6.69 $7.03
--------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS#(S)(S)
Net investment income(S) $0.18 $0.38 $0.38 $0.41 $0.51 $0.58
--------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments
and foreign currency (0.10) 0.17 0.46 (0.26) (0.06) (0.40)
--------------------------------- ------ ------ ------ ------ ------ ------
Total from investment
operations $0.08 $0.55 $0.84 $0.15 $0.45 $0.18
--------------------------------- ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $(0.20) $(0.39) $(0.40) $(0.43) $(0.49) $(0.41)
--------------------------------------------------------------------------------------------------------------------------------
From paid-in capital -- -- -- -- (0.05) (0.17)
--------------------------------- ------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.20) $(0.39) $(0.40) $(0.43) $(0.54) $(0.58)
--------------------------------- ------ ------ ------ ------ ------ ------
Net increase from repurchase
of capital shares $0.01 $0.02 $0.00+++ $0.00+++ $0.00+++ $0.06
--------------------------------- ------ ------ ------ ------ ------ ------
Net asset value,
end of period $6.83 $6.94 $6.76 $6.32 $6.60 $6.69
--------------------------------- ------ ------ ------ ------ ------ ------
Per share market value,
end of period $6.20 $6.30 $6.41 $5.69 $6.06 $6.00
--------------------------------- ------ ------ ------ ------ ------ ------
Total return at market
value (%)& 1.50++ 4.62 20.11 0.72 9.83 8.84
--------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEAR ENDED 10/31
ENDED -------------------------------------------------------------------------
4/30/05 2004 2003 2002 2001 2000
RATIOS (%) TO AVERAGE
NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.91+ 0.94 0.94 0.96 1.06 1.06
--------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 5.12+ 5.51 5.76 6.49 7.65 8.23
--------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 38 59 126 152 103 82
--------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $554,720 $569,091 $563,760 $528,945 $554,767 $567,191
--------------------------------------------------------------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the trust for its proportional share of
substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. If this fee had been incurred
by the trust, the net investment income (loss) per share and the ratios would have been:
Net investment income $0.18^ $0.38^ $-- $-- $-- $--
--------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
Expenses## 0.91^+ 0.94^ -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 5.12^+ 5.51^ -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
^ The reimbursement impact per share amount and ratios were less than $0.01 and 0.01%, respectively.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
(S)(S) As required, effective November 1, 2001, the trust has adopted the provisions of the AICPA Audit and Accounting Guide
for Investment Companies and began amortizing premium and accreting market discount on debt securities. The effect of
this change for the year ended October 31, 2002 was to decrease net investment income per share and increase net
realized and unrealized gains and losses per share. The impact of this change calculates to less than $0.01 per share.
In addition, the ratio of net investment income to average net assets decreased by 0.01%. Per share, ratios, and
supplemental data for years prior to October 30, 2002 have not been restated to reflect this change in presentation.
& From time to time the trust may receive proceeds from litigation settlements, without which performance would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
-------------------------------------------------------------------------------
(1) BUSINESS AND ORGANIZATION
MFS Multimarket Income Trust (the trust) is a non-diversified trust that is
organized as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as a closed-end management
investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with U.S.
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 revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
trust can invest in foreign securities. Investments in foreign securities are
vulnerable to the effects of changes in the relative values of the local
currency and the U.S. dollar and to the effects of changes in each country's
legal, political, and economic environment.
INVESTMENT VALUATIONS - Bonds and other fixed income securities (other than
short-term obligations) in the trust's portfolio are valued at an evaluated bid
price as reported by an independent pricing service, or to the extent a
valuation is not reported by a pricing service, such securities are valued on
the basis of quotes from brokers and dealers. Prices obtained from pricing
services utilize both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data without exclusive reliance upon quoted prices or exchange or over-the-
counter prices, since such valuations are believed to reflect more accurately
the fair value of such securities. Equity securities in the trust's portfolio
for which market quotations are available are valued at the last sale or
official closing price as reported by an independent pricing service on the
primary market or exchange on which they are primarily traded, or at the last
quoted bid price for securities in which there were no sales during the day.
Equity securities traded over the counter are valued at the last sales price
traded each day as reported by an independent pricing service, or to the extent
there are no sales reported, such securities are valued on the basis of
quotations obtained from brokers and dealers. Listed options are valued at the
closing price as reported by an independent pricing service on the principal
exchange on which they are traded. Unlisted options are valued by an
independent pricing service or on the basis of quotations obtained from brokers
and dealers. Futures contracts are valued at the settlement price as reported
by an independent pricing service on the primary exchange on which they are
traded. Forward foreign currency contracts are valued using spot rates and
forward points as reported by an independent pricing source. Short- term
obligations with a remaining maturity in excess of 60 days will be valued upon
dealer-supplied valuations. All other short-term obligations in the trust's
portfolio are valued at amortized cost, which approximates market value as
determined by the Board of Trustees. Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. When pricing
service information or market quotations are not readily available, securities
are priced at fair value as determined under the direction of the Board of
Trustees. For example, significant events (such as movement in the U.S.
securities market, or other regional and local developments) may occur between
the time that foreign markets close (where the security is principally traded)
and the time that the trust calculates its net asset value (generally, the
close of the NYSE) that may impact the value of securities traded in these
foreign markets. In these cases, the trust may utilize information from an
external vendor or other sources to adjust closing market quotations of foreign
equity securities to reflect what it believes to be the fair value of the
securities as of the trust's valuation time. Because the frequency of
significant events is not predictable, fair valuation of foreign equity
securities may occur on a frequent basis.
REPURCHASE AGREEMENTS - The trust may enter into repurchase agreements with
institutions that the trust's investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The trust requires
that the securities collateral in a repurchase transaction be transferred to
the custodian in a manner sufficient to enable the trust to obtain those
securities in the event of a default under the repurchase agreement. The trust
monitors, on a daily basis, the value of the collateral to ensure that its
value, including accrued interest, is greater than amounts owed to the trust
under each such repurchase agreement. The trust, along with other affiliated
entities of Massachusetts Financial Services Company (MFS), may utilize a joint
trading account for the purpose of entering into one or more repurchase
agreements.
FOREIGN CURRENCY TRANSLATION - Purchases and sales of foreign investments,
income, and expenses are converted into U.S. dollars based upon currency
exchange rates prevailing on the respective dates of such transactions. Gains
and losses attributable to foreign currency exchange rates on sales of
securities are recorded for financial statement purposes as net realized gains
and losses on investments. Gains and losses attributable to foreign exchange
rate movements on income and expenses are recorded for financial statement
purposes as foreign currency transaction gains and losses. That portion of both
realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed.
DEFERRED TRUSTEE COMPENSATION - Under a Deferred Compensation Plan (the Plan)
independent Trustees may elect to defer receipt of all or a portion of their
annual compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the trust or other MFS funds selected by
the Trustee. Deferred amounts represent an unsecured obligation of the trust
until distributed in accordance with the Plan. Included in other assets, and
accrued expenses and other liabilities, is $73,890 of Deferred Trustees'
Compensation.
WRITTEN OPTIONS - The trust may write call or put options in exchange for a
premium. The premium is initially recorded as a liability, which is
subsequently adjusted to the current value of the option contract. When a
written option expires, the trust realizes a gain equal to the amount of the
premium received. When a written call option is exercised or closed, the
premium received is offset against the proceeds to determine the realized gain
or loss. When a written put option is exercised, the premium reduces the cost
basis of the security purchased by the trust. The trust, as writer of an
option, may have no control over whether the underlying securities may be sold
(call) or purchased (put) and, as a result, bears the market risk of an
unfavorable change in the price of the securities underlying the written
option. In general, written call options may serve as a partial hedge against
decreases in value in the underlying securities to the extent of the premium
received. Written options may also be used as part of an income producing
strategy reflecting the view of the trust's management on the direction of
interest rates.
FUTURES CONTRACTS - The trust may enter into futures contracts for the delayed
delivery of securities or currency, or contracts based on financial indices at
a fixed price on a future date. In entering such contracts, the trust is
required to deposit with the broker, either in cash or securities, an amount
equal to a certain percentage of the contract amount. Subsequent payments are
made or received by the trust each day, depending on the daily fluctuations in
the value of the contract, and are recorded for financial statement purposes as
unrealized gains or losses by the trust. The trust's investment in futures
contracts is designed to hedge against anticipated future changes in interest
or exchange rates or securities prices. Investments in interest rate futures
for purposes other than hedging may be made to modify the duration of the
portfolio without incurring the additional transaction costs involved in buying
and selling the underlying securities. Investments in currency futures for
purposes other than hedging may be made to change the trust's relative position
in one or more currencies without buying and selling portfolio assets.
Investments in equity index contracts or contracts on related options for
purposes other than hedging, may be made when the trust has cash on hand and
wishes to participate in anticipated market appreciation while the cash is
being invested. Should interest or exchange rates or securities prices move
unexpectedly, the trust may not achieve the anticipated benefits of the futures
contracts and may realize a loss.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS - The trust may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties to
meet the terms of their contracts and from unanticipated movements in the value
of a foreign currency relative to the U.S. dollar. The trust may enter into
forward foreign currency exchange contracts for hedging purposes as well as for
non-hedging purposes. For hedging purposes, the trust may enter into contracts
to deliver or receive foreign currency it will receive from or require for its
normal investment activities. The trust may also use contracts in a manner
intended to protect foreign currency-denominated securities from declines in
value due to unfavorable exchange rate movements. For non-hedging purposes, the
trust may enter into contracts with the intent of changing the relative
exposure of the trust's portfolio of securities to different currencies to take
advantage of anticipated changes. The forward foreign currency exchange
contracts are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded as unrealized until the contract
settlement date. On contract settlement date, the gains or losses are recorded
as realized gains or losses on foreign currency transactions.
INVESTMENT TRANSACTIONS AND INCOME - Investment transactions are recorded on
the trade date. Some securities may be purchased on a "when-issued" or "forward
delivery" basis, which means that the securities will be delivered to the trust
at a future date, usually beyond customary settlement time. Interest income is
recorded on the accrual basis. All premium and discount is amortized or
accreted for financial statement purposes in accordance with U.S. generally
accepted accounting principles. All discount is accreted for tax reporting
purposes as required by federal income tax regulations. Dividends received in
cash are recorded on the ex-dividend date. Dividend and interest payments
received in additional securities are recorded on the ex-dividend or ex-
interest date in an amount equal to the value of the security on such date. The
trust may receive proceeds from litigation settlements involving its portfolio
holdings. Any proceeds received are reflected in realized gain/loss in the
statement of operations, or in unrealized gain/loss if the security is still
held by the trust. Legal fees and other related expenses incurred to preserve
and protect the value of a security owned are added to the cost of the
security; other legal fees are expensed. Capital infusions made directly to the
security issuer, which are generally non-recurring, incurred to protect or
enhance the value of high-yield debt securities, are reported as additions to
the cost basis of the security. Costs that are incurred to negotiate the terms
or conditions of capital infusions or that are expected to result in a plan of
reorganization are reported as realized losses. Ongoing costs incurred to
protect or enhance an investment, or costs incurred to pursue other claims or
legal actions, are expensed.
FEES PAID INDIRECTLY - The trust's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
trust. This amount, for the six months ended April 30, 2005, is shown as a
reduction of total expenses on the Statement of Operations.
TAX MATTERS AND DISTRIBUTIONS - The trust's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
Distributions to shareholders are recorded on the ex-dividend date. The trust
distinguishes between distributions on a tax basis and a financial reporting
basis and only distributions in excess of tax basis earnings and profits are
reported in the financial statements as distributions from paid-in capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains. Common
types of book and tax differences that could occur include differences in
accounting for foreign currency transactions, derivatives, defaulted bonds,
straddle loss deferrals, and amortization and accretion on debt securities.
The tax character of distributions declared for the years ended October 31,
2004 and October 31, 2003 was as follows:
10/31/04 10/31/03
Distributions declared from:
--------------------------------------------------------------
Ordinary income $32,540,604 $33,246,025
--------------------------------------------------------------
As of October 31, 2004, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
Undistributed ordinary income $4,386,522
----------------------------------------------------------
Capital loss carryforward (80,031,394)
----------------------------------------------------------
Unrealized appreciation (depreciation) 33,776,450
----------------------------------------------------------
Other temporary differences (15,146,571)
----------------------------------------------------------
For federal income tax purposes, the capital loss carryforward may be applied
against any net taxable realized gains of each succeeding year until the
earlier of its utilization or expiration as follows:
EXPIRATION DATE
October 31, 2008 $(19,380,450)
----------------------------------------------------------
October 31, 2009 (22,359,865)
----------------------------------------------------------
October 31, 2010 (38,291,079)
----------------------------------------------------------
Total $(80,031,394)
----------------------------------------------------------
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The trust has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities.
The management fee is computed daily and paid monthly at an annual rate of
0.34% of the trust's average daily net assets and 5.40% of gross investment
income. Management fees from net assets and gross investment income incurred
for the six months ended April 30, 2005 were at an effective rate of 0.69% of
average daily net assets on an annualized basis.
The trust pays compensation to its Independent Trustees in the form of a
retainer, attendance fees, and additional compensation to Board and Committee
chairpersons, and pays no compensation directly to its Trustees who are
officers of the investment adviser, or to officers of the trust, all of whom
receive remuneration for their services to the trust from MFS. Certain officers
and Trustees of the trust are officers or directors of MFS and MFS Service
Center, Inc. (MFSC). The trust has an unfunded, defined benefit plan for
retired Independent Trustees and an unfunded retirement benefit deferral plan
for current Independent Trustees. Included in Trustees' compensation is $828 as
a result of the change in the trust's unfunded retirement benefit deferral plan
for certain current Independent Trustees and a pension expense of $5,611 for
retired Independent Trustees for the six months ended April 30, 2005.
This trust and certain other MFS funds (the "funds") have entered into a
services agreement (the "Agreement") which provides for payment of fees by the
funds to Tarantino LLC in return for the provision of services of an
Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an
officer of the funds and the sole member of Tarantino LLC. MFS has agreed to
reimburse each of the funds for a proportional share of substantially all of
the payments made by the funds to Tarantino LLC and also to provide office
space and other administrative support and supplies to the ICCO. The funds can
terminate the Agreement with Tarantino LLC at any time under the terms of the
Agreement.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to certain funds
for which MFS acts as investment adviser. Under an administrative services
agreement between the funds and MFS, MFS is entitled to partial reimbursement
of the costs MFS incurs to provide these services, subject to review and
approval by the Board of Trustees. Each fund is allocated a portion of these
administrative costs based on its size and relative average net assets. The
trust paid MFS an administrative fee up to the following annual percentage
rates of the trust's average daily net assets:
BEGINNING OF
PERIOD THROUGH
EFFECTIVE DATE 2/28/05 3/01/05
First $2 billion 0.01120% 0.01626%
---------------------------------------------------------------------------
Next $2.5 billion 0.00832% 0.01206%
---------------------------------------------------------------------------
Next $2.5 billion 0.00032% 0.00056%
---------------------------------------------------------------------------
In excess of $7 billion 0.00000% 0.00000%
---------------------------------------------------------------------------
For the six months ended April 30, 2005, the trust paid MFS $25,489, equivalent
to 0.00909% of average daily net assets, to partially reimburse MFS for the
costs of providing administrative services.
TRANSFER AGENT - Included in transfer agent and dividend disbursing costs is a
fee paid to MFSC, a wholly owned subsidiary of MFS, for its services as
registrar and dividend disbursing agent for the trust. The agreement provides
that the trust will pay MFSC an account maintenance fee of no more than $9.00
and a dividend services fee of $0.75 per reinvestment. These fees amounted to
$82,145 for the six months ended April 30, 2005. Also included in transfer
agent and dividend disbursing costs are out-of-pocket expenses, paid to MFSC,
which amounted to $26,885 for the six months ended April 30, 2005, as well as
other expenses paid to unaffiliated vendors.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than purchased option transactions
and short-term obligations, were as follows:
PURCHASES SALES
U.S. government securities $5,515,290 $26,574,652
--------------------------------------------------------------------------------
Investments (non-U.S. government securities) $203,059,129 $190,487,266
--------------------------------------------------------------------------------
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the trust, as computed on a federal income tax basis, are
as follows:
Aggregate cost$532,072,538
----------------------------------------------------------
Gross unrealized appreciation $25,164,184
----------------------------------------------------------
Gross unrealized depreciation (11,608,425)
----------------------------------------------------------
Net unrealized appreciation (depreciation) $13,555,759
----------------------------------------------------------
(5) SHARES OF BENEFICIAL INTEREST
The trust's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. The Trustees have
authorized the repurchase by the trust of up to 10% annually of its own shares
of beneficial interest.
The trust repurchased and retired 698,700 shares of beneficial interest during
the six months ended April 30, 2005 at an average price per share of $6.18 and
a weighted average discount of 10.13% per share.
The trust repurchased and retired 1,415,400 shares of beneficial interest
during the year ended October 31, 2004 at an average price per share of $5.73
and a weighted average discount of 15.52% per share. Transactions in trust
shares were as follows:
Six months ended 4/30/05 Year ended 10/31/04
SHARES AMOUNT SHARES AMOUNT
Treasury shares reacquired (698,700) $(4,235,140) (1,415,400) $(8,109,105)
--------------------------------------------------------------------------------
(6) LINE OF CREDIT
The trust and other affiliated funds participate in a $1 billion unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made for temporary financing needs. Interest is
charged to each fund, based on its borrowings, at a rate equal to the Federal
Reserve funds rate plus 0.35%. In addition, a commitment fee, based on the
average daily, unused portion of the line of credit, is allocated among the
participating funds at the end of each calendar quarter. The commitment fee
allocated to the trust for the six months ended April 30, 2005, was $391, and
is included in miscellaneous expense. The trust had no significant borrowings
during the six months ended April 30, 2005.
(7) FINANCIAL INSTRUMENTS
The trust trades financial instruments with off-balance-sheet risk in the
normal course of its investing activities in order to manage exposure to market
risks such as interest rates and foreign currency exchange rates. These
financial instruments include written options, forward foreign currency
exchange contracts, and futures contracts. The notional or contractual amounts
of these instruments represent the investment the trust has in particular
classes of financial instruments and does not necessarily represent the amounts
potentially subject to risk. The measurement of the risks associated with these
instruments is meaningful only when all related and offsetting transactions are
considered.
Written Option Transactions
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
Outstanding, beginning of period -- $--
---------------------------------------------------------------
Options written 1 1,864
---------------------------------------------------------------
Options expired (1) (1,864)
---------------------------------------------------------------
Outstanding, end of period -- $--
---------------------------------------------------------------
Forward Foreign Currency Exchange Contracts
-----------
SALES
-----------
NET
IN UNREALIZED
CONTRACTS TO EXCHANGE CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE FOR AT VALUE (DEPRECIATION)
6/07/05 AUD 1,202,024 $915,865 $936,068 $(20,203)
5/04/05-5/09/05 CLP 79,003,750 135,416 135,630 (214)
6/08/05-6/27/05 EUR 73,429,644 95,269,386 94,605,456 663,930
5/09/05 GBP 3,351,850 6,381,922 6,392,681 (10,759)
5/03/05-6/08/05 NOK 13,152,917 2,073,170 2,085,747 (12,577)
6/08/05 NZD 7,068,481 4,996,002 5,153,012 (157,010)
5/18/05 PLN 160,615 50,000 48,204 1,796
5/23/05 TRY 153,945 110,000 109,593 407
------------ ------------ --------
$109,931,761 $109,466,391 $465,370
============ ============ ========
-----------
PURCHASES
-----------
5/11/05 ARS 295,500 $101,721 $101,591 $(130)
5/09/05 BRL 145,000 55,112 57,332 2,220
6/08/05 CHF 1,653,052 1,375,291 1,386,102 10,811
5/04/05-6/03/05 CLP 128,745,000 219,985 220,922 937
6/01/05 CNY 1,830,988 227,198 224,074 (3,124)
5/31/05 COP 236,700,000 100,895 100,454 (441)
5/09/05 CZK 6,265,197 268,872 263,922 (4,950)
5/09/05 DKK 450,944 77,903 77,951 48
6/08/05-6/27/05 EUR 1,924,544 2,508,506 2,479,605 (28,901)
5/25/05 HUF 54,885,360 287,493 278,647 (8,846)
5/04/05 ILS 1,200,000 274,958 274,517 (441)
5/06/05 JPY 19,701,776 189,622 188,002 (1,620)
5/09/05 MXN 5,935,925 527,728 535,652 7,924
5/03/05-6/08/05 NOK 17,830,000 2,848,972 2,828,049 (20,923)
5/18/05 PLN 1,316,354 408,109 395,064 (13,045)
5/18/05 RUB 2,805,000 100,682 100,968 286
5/06/05-6/14/05 SEK 20,130,911 2,941,133 2,819,454 (121,679)
5/25/05 SGD 814,125 494,225 497,701 3,476
5/09/05 SKK 7,572,655 249,923 247,323 (2,600)
5/25/05 THB 7,910,000 199,848 200,661 813
5/23/05 TRY 542,268 394,980 386,038 (8,942)
5/13/05 TWD 3,070,000 97,615 98,354 739
5/25/05 ZAR 1,294,212 211,628 212,379 751
------------ ------------ --------
$14,162,399 $13,974,762 $(187,637)
============ ============ ========
At April 30, 2005, forward foreign currency purchases and sales under master
netting agreements excluded above amounted to a net payable of $32,638 with
Merrill Lynch International.
Abbreviations have been used throughout this report to indicate amounts shown
in currencies other than the U.S. dollar. A list of abbreviations is shown on
page 25.
At April 30, 2005, the trust had sufficient cash and/or securities to cover
any commitments under these contracts.
Futures Contracts
UNREALIZED
DESCRIPTION EXPIRATION CONTRACTS POSITION DEPRECIATION
U.S. Treasury Notes 10
Year Futures June 2005 55 Short $(88,313)
------------------------------------------------------------------------------
U.S. Treasury Notes 2
Year Futures June 2005 243 Short (38,972)
------------------------------------------------------------------------------
$(127,285)
------------------------------------------------------------------------------
At April 30, 2005, the trust had sufficient cash and/or securities to cover
any margin requirements under these contracts.
(8) RESTRICTED SECURITIES
At April 30, 2005, the fund owned the following restricted securities which
are subject to legal or contractual restrictions on resale, excluding
securities issued under Rule 144A, constituting 0.024% of net assets which may
not be publicly sold without registration under the Securities Act of 1933.
The fund does not have the right to demand that such securities be registered.
The value of these securities is determined by valuations furnished by dealers
or by a pricing service, or if not available, in good faith at the direction
of the Trustees.
DATE OF SHARE/PAR
DESCRIPTION ACQUISITION AMOUNT COST VALUE
Sind Holdings, Inc. 12/15/99 5,720 $2,127,667 $600,600
-------------------------------------------------------------------------------
(9) LEGAL PROCEEDINGS
On March 31, 2004, MFS settled an administrative proceeding with the Securities
and Exchange Commission ("SEC") regarding disclosure of brokerage allocation
practices in connection with MFS fund sales (the term "MFS funds" means the
open-end registered management investment companies sponsored by MFS). Under
the terms of the settlement, in which MFS neither admitted nor denied any
wrongdoing, MFS agreed to pay (one dollar) $1.00 in disgorgement and $50
million in penalty to certain MFS funds, pursuant to a plan developed by an
independent distribution consultant. The brokerage allocation practices which
were the subject of this proceeding were discontinued by MFS in November 2003.
The agreement with the SEC is reflected in an order of the SEC. The SEC
settlement order states that MFS failed to adequately disclose to the Boards of
Trustees and to shareholders of the MFS funds the specifics of its preferred
arrangements with certain brokerage firms selling MFS fund shares. The SEC
settlement order states that MFS had in place policies designed to obtain best
execution of all MFS fund trades. As part of the settlement, MFS retained an
independent compliance consultant to review the completeness of its current
policies and practices regarding disclosure to MFS fund trustees and to MFS
fund shareholders of strategic alliances between MFS or its affiliates and
broker-dealers and other financial intermediaries who support the sale of MFS
fund shares. Pursuant to the SEC order, on July 28, 2004, MFS transferred these
settlement amounts to the SEC, and those MFS funds entitled to these settlement
amounts accrued an estimate of their pro rata portion of these amounts. The
final distribution plan was approved by the SEC on January 21, 2005, and the
affected MFS funds received the payment on February 16, 2005.
In addition, in February 2004, MFS reached agreement with the SEC, the New York
Attorney General ("NYAG") and the Bureau of Securities Regulation of the State
of New Hampshire ("NH") to settle administrative proceedings alleging false and
misleading information in certain MFS open-end retail fund ("MFS retail funds")
prospectuses regarding market timing and related matters (the "February
Settlements"). These regulators alleged that prospectus language for certain
MFS retail funds was false and misleading because, although the prospectuses
for those funds in the regulators' view indicated that they prohibited market
timing, MFS did not limit trading activity in 11 domestic large cap stock, high
grade bond and money market retail funds. MFS' former Chief Executive Officer
and former President also reached agreement with the SEC in which they agreed
to, among other terms, monetary fines and temporary suspensions from
association with any investment adviser or registered investment company. These
individuals have resigned their positions with, and will not be returning to,
MFS and the MFS funds. Under the terms of the February Settlements, MFS and the
executives neither admit nor deny wrongdoing.
Under the terms of the February Settlements, a $225 million pool has been
established for distribution to shareholders in certain MFS retail funds, which
has been funded by MFS and of which $50 million is characterized as a penalty.
This pool will be distributed in accordance with a methodology developed by an
independent distribution consultant in consultation with MFS and the Board of
Trustees of the MFS retail funds, and acceptable to the SEC. MFS has further
agreed with NYAG to reduce its management fees in the aggregate amount of
approximately $25 million annually over the next five years, and not to
increase certain management fees during this period. MFS has also paid an
administrative fine to NH in the amount of $1 million, which will be used for
investor education purposes (NH retained $250,000 and $750,000 was contributed
to the North American Securities Administrators Association's Investor
Protection Trust). In addition, under the terms of the February Settlements,
MFS is in the process of adopting certain governance changes and reviewing its
policies and procedures.
Since December 2003, MFS, MFS Fund Distributors, Inc., MFS Service Center,
Inc., MFS Corporation Retirement Committee, Sun Life Financial Inc., various
MFS funds, certain current and/or former Trustees of these MFS funds, and
certain officers of MFS have been named as defendants in multiple lawsuits
filed in federal and state courts. The lawsuits variously have been commenced
as class actions or individual actions on behalf of investors who purchased,
held or redeemed shares of the MFS funds during specified periods, as ERISA
actions by participants in certain retirement plan accounts on behalf of those
accounts, or as derivative actions on behalf of the MFS funds. The lawsuits
relating to market timing and related matters have been transferred to, and
consolidated before, the United States District Court for the District of
Maryland, as part of a multi-district litigation of market timing and related
claims involving several other fund complexes (In re Mutual Funds Investment
Litigation (Alger, Columbia, Janus, MFS, One Group, Putnam, Allianz Dresdner),
No. 1:04-md-15863 (transfer began March 19, 2004)). The market timing cases
related to the MFS complex are Riggs v. MFS et al., Case No. 04-cv-01162-JFM
(direct), Hammerslough v. MFS et al., Case No. 04-md-01620 (derivative) and
Anita Walker v. MFS et al., Case No. 1:04-CV-01758 (ERISA). The plaintiffs in
these consolidated lawsuits generally seek injunctive relief including removal
of the named Trustees, adviser and distributor, rescission of contracts and
12b-1 Plans, disgorgement of fees and profits, monetary damages, punitive
damages, attorney's fees and costs and other equitable and declaratory relief.
Two lawsuits alleging improper brokerage allocation practices and excessive
compensation are pending in the United States District Court for the District
of Massachusetts (Forsythe v. Sun Life Financial Inc., et al., No. 04cv10584
(GAO) (a consolidated action) and Marcus Dumond, et al. v. Massachusetts
Financial Servs. Co., et al., No. 04cv11458 (GAO)). The plaintiffs in these
lawsuits generally seek compensatory damages, punitive damages, recovery of
fees, rescission of contracts, an accounting, restitution, declaratory relief,
equitable and/or injunctive relief and attorney's fees and costs. The various
lawsuits generally allege that some or all of the defendants (i) permitted or
acquiesced in market timing and/or late trading in some of the MFS funds,
inadequately disclosed MFS' internal policies concerning market timing and such
matters, (ii) received excessive compensation as fiduciaries to the MFS funds,
or (iii) permitted or acquiesced in the improper use of fund assets by MFS to
support the distribution of MFS fund shares and inadequately disclosed MFS' use
of fund assets in this manner. The actions assert that some or all of the
defendants violated the federal securities laws, including the Securities Act
of 1933 and the Securities Exchange Act of 1934, the Investment Company Act of
1940 and the Investment Advisers Act of 1940, the Employee Retirement Income
Security Act of 1974, as well as fiduciary duties and other violations of
common law. Insofar as any of the actions is appropriately brought derivatively
on behalf of any of the MFS funds, any recovery will inure to the benefit of
the MFS funds. In February, March, and April 2005, the defendants filed
separate motions to dismiss all claims of the various lawsuits. The parties
continue to brief the issues for the courts and various hearing dates have been
scheduled. Additional lawsuits based on similar allegations may be filed in the
future.
Any potential resolution of these matters may include, but not be limited to,
judgments or settlements for damages against MFS, the MFS funds, or any other
named defendant. As noted above, as part of the regulatory settlements, MFS has
established a restitution pool in the amount of $225 million to compensate
certain shareholders of certain MFS retail funds for damages that they
allegedly sustained as a result of market timing or late trading in certain of
the MFS retail funds, and distributed $50 million to affected MFS funds to
compensate those funds based upon the amount of brokerage commissions allocated
in recognition of MFS fund sales. It is not clear whether these amounts will be
sufficient to compensate shareholders for all of the damage they allegedly
sustained, whether certain shareholders or putative class members may have
additional claims to compensation, or whether the damages that may be awarded
in any of the actions will exceed these amounts. In the event the MFS funds
incur any losses, costs or expenses in connection with such lawsuits, the
Boards of Trustees of the affected MFS funds may pursue claims on behalf of
such funds against any party that may have liability to the funds in respect
thereof.
Review of these matters by the independent Trustees of the MFS funds and their
counsel is continuing. There can be no assurance that these regulatory actions
and lawsuits, or the adverse publicity associated with these developments, will
not result in increased fund redemptions, reduced sales of fund shares, or
other adverse consequences to the MFS funds.
While these developments relate to MFS and the MFS' open-end funds, there can
be no assurance that these developments, or the adverse publicity associated
with these developments, will not result in an increase to the market discount
of the MFS closed-end fund shares or other adverse consequences.
-------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - 4/30/05
-------------------------------------------------------------------------------
To the Trustees and Shareholders of the MFS Multimarket Income Trust
We have reviewed the accompanying statement of assets and liabilities of the
MFS Multimarket Income Trust (the Fund), including the portfolio of
investments, as of April 30, 2005, and the related statements of operations,
changes in net assets, and financial highlights for the six-month period ended
April 30, 2005. These interim financial statements are the responsibility of
the Fund's management.
We conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States),
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying interim financial statements for them to be
in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the statement of changes
in net assets for the year ended October 31, 2004, and financial highlights
for each of the five years in the period ended October 31, 2004, and in our
report dated December 10, 2004, we expressed an unqualified opinion on such
statement of changes in net assets and financial highlights.
ERNST & YOUNG LLP
Boston, Massachusetts
June 8, 2005
------------------------------------------------------------------------------
RESULTS OF SHAREHOLDER MEETING (unaudited) - 4/30/05
------------------------------------------------------------------------------
At the annual meeting of shareholders of MFS Multimarket Income Trust, which
was held on March 23, 2005, the following action was taken:
ITEM 1. The election of eleven as Trustees of the trust.
NUMBER OF SHARES
-----------------------------------
NOMINEE AFFIRMATIVE WITHHOLD AUTHORITY
Lawrence H. Cohn, M.D. 71,540,505.260 1,651,608.152
------------------------------------------------------------------------------
David H. Gunning 71,683,458.994 1,508,654.418
------------------------------------------------------------------------------
William R. Gutow 71,638,461.313 1,553,652.099
------------------------------------------------------------------------------
Michael Hegarty 71,628,599.260 1,563,514.152
------------------------------------------------------------------------------
J. Atwood Ives 71,612,347.987 1,579,765.425
------------------------------------------------------------------------------
Amy B. Lane 71,655,368.824 1,536,744.588
------------------------------------------------------------------------------
Robert J. Manning 71,740,858.187 1,451,255.225
------------------------------------------------------------------------------
Lawrence T. Perera 71,607,406.970 1,584,706.442
------------------------------------------------------------------------------
Robert C. Pozen 71,639,353.080 1,552,760.332
------------------------------------------------------------------------------
J. Dale Sherratt 71,601,698.252 1,590,415.160
------------------------------------------------------------------------------
Laurie J. Thomsen 71,602,413.328 1,589,700.084
------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PROXY VOTING POLICIES AND INFORMATION
-------------------------------------------------------------------------------
A general description of the MFS funds' proxy voting policies and procedures is
available without charge, upon request, by calling 1-800-225-2606, by visiting
the Proxy Voting section of mfs.com or by visiting the SEC's Web site at
http://www.sec. gov.
Information regarding how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is
available without charge by visiting the Proxy Voting section of mfs.com or by
visiting the SEC's Web site at http://www.sec.gov.
-------------------------------------------------------------------------------
QUARTERLY PORTFOLIO DISCLOSURE
-------------------------------------------------------------------------------
The fund will file a complete schedule of portfolio holdings with the
Securities and Exchange Commission (the Commission) for the first and third
quarters of each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed
and copied at the:
Public Reference Room
Securities and Exchange Commission
Washington, D.C. 20549-0102
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-800-SEC-0330. The fund's Form N-Q is available on
the EDGAR database on the Commission's Internet website at http://www.sec.gov,
and copies of this information may be obtained, upon payment of a duplicating
fee, by electronic request at the following e-mail address: publicinfo@sec.gov
or by writing the Public Reference Section at the above address.
A shareholder can also obtain the quarterly portfolio holdings report at
mfs.com.
CONTACT INFORMATION AND NUMBER OF SHAREHOLDERS
INVESTOR INFORMATION
Transfer Agent, Registrar and Dividend Disbursing Agent
Call 1-800-637-2304 any business day from 8 a.m. to 8 p.m. Eastern
time
Write to: State Street Bank and Trust Company
c/o MFS Service Center, Inc.
P.O. Box 55024
Boston, MA 02205-5024
NUMBER OF SHAREHOLDERS
As of April 30, 2005, our records indicate that there are 8,145 registered
shareholders and approximately 41,626 shareholders owning trust shares in
"street" name, such as through brokers, banks, and other financial
intermediaries.
If you are a "street" name shareholder and wish to directly receive our
reports, which contain important information about the trust, please write or
call:
State Street Bank and Trust Company
c/o MFS Service Center, Inc.
P.O. Box 55024
Boston, MA 02205-5024
1-800-637-2304
M F S(SM)
INVESTMENT MANAGEMENT(R)
(C) 2005 MFS Investment Management(R)
500 Boylston Street, Boston, MA 02116.
MMT-SEM-06/05 65M
ITEM 2. CODE OF ETHICS.
The Registrant has amended its Code of Ethics to reflect that the Registrant's
Principal Financial Officer has changed.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable for semi-annual reports.
ITEM 6. SCHEDULE OF INVESTMENTS
A schedule of investments of the Registrant is included as part of the report to
shareholders of the Registrant under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable for semi-annual reports.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable at this time.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
========================================================================================================
MFS MULTIMARKET INCOME TRUST
--------------------------------------------------------------------------------------------------------
(C) TOTAL
NUMBER OF (D) MAXIMUM NUMBER
SHARES (OR APPROXIMATE
PURCHASED AS DOLLAR VALUE)
PART OF OF SHARES THAT
(A) TOTAL PUBLICLY MAY YET BE
NUMBER OF (B) AVERAGE ANNOUNCED PURCHASED UNDER
SHARES PRICE PAID PLANS OR THE PLANS
PERIOD PURCHASED PER SHARE PROGRAMS OR PROGRAMS
========================================================================================================
--------------------------------------------------------------------------------------------------------
11/1/04-11/30/04 213,700 $6.28 213,700 6,707,955
--------------------------------------------------------------------------------------------------------
12/1/04-12/31/04 27,000 $6.34 27,000 6,680,955
--------------------------------------------------------------------------------------------------------
1/1/05-1/31/05 0 n/a 0 6,680,955
--------------------------------------------------------------------------------------------------------
2/1/05-2/28/05 8,600 $6.36 8,600 6,672,355
--------------------------------------------------------------------------------------------------------
3/1/05-3/31/05 191,000 $6.15 191,000 7,979,585
--------------------------------------------------------------------------------------------------------
4/1/05-4/30/05 258,400 $6.11 258,400 7,721,185
--------------------------------------------------------------------------------------------------------
TOTAL 698,700 $6.18 698,700
========================================================================================================
Note: The Board of Trustees approves procedures to repurchase shares annually.
The notification to shareholders of the program is part of the semi-annual and
annual reports sent to shareholders. These annual programs begin on March 1st of
each year. The programs conform to the conditions of Rule 10b-18 of the
securities Exchange Act of 1934 and limit the aggregate number of shares that
may be purchased in each annual period (March 1 through the following February
28) to 10% of the Registrant's outstanding shares as of the first day of the
plan year (March 1). The aggregate number of shares available for purchase for
the March 1, 2005 plan year are 8,170,585.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no material changes to the procedures by which shareholders may send
recommendations to the Board for nominees to the Registrant's Board since the
Registrant last provided disclosure as to such procedures in response to the
requirements of Item 7(d)(2)(ii)(G) of Schedule 14A.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Act) as conducted within
90 days of the filing date of this Form N-CSR, the registrant's principal
financial officer and principal executive officer have concluded that those
disclosure controls and procedures provide reasonable assurance that the
material information required to be disclosed by the registrant on this
report is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and
forms.
(b) There were no changes in the registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the second fiscal quarter covered by the report that has materially
affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Code of
Ethics attached hereto.
(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Act (17 CFR 270.30a-2): Attached hereto.
(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act sent or given during the period covered by the report by or on
behalf of the Registrant to 10 or more persons. Not applicable.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for the purposes of
Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the
liability of that section. Such certification will not be deemed to be
incorporated by reference into any filing under the Securities Act of 1933 or
the Exchange Act, except to the extent that the registrant specifically
incorporates it by reference: Attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant MFS MULTIMARKET INCOME TRUST
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By (Signature and Title)* ROBERT J. MANNING
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Robert J. Manning, President
Date: June 23, 2005
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* ROBERT J. MANNING
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Robert J. Manning, President
(Principal Executive Officer)
Date: June 23, 2005
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By (Signature and Title)* MARIA F. DWYER
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Maria F. Dwyer, Treasurer (Principal Financial
Officer and Accounting Officer)
Date: June 23, 2005
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* Print name and title of each signing officer under his or her signature.