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
-------------------------------------------------------------------------------
MFS MULTIMARKET INCOME TRUST
-------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
500 Boylston Street, Boston, Massachusetts 02116
-------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Stephen E. Cavan
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
-------------------------------------------------------------------------------
(Name and address of agents for service)
Registrant's telephone number, including area code: (617) 954-5000
-------------------------------------------------------------------------------
Date of fiscal year end: October 31, 2003
-------------------------------------------------------------------------------
Date of reporting period: October 31, 2003
-------------------------------------------------------------------------------
ITEM 1. REPORTS TO STOCKHOLDERS.
MFS(R) Mutual Funds
ANNUAL REPORT 10/31/03
MFS(R) MULTIMARKET
INCOME TRUST
A path for pursuing opportunity
[graphic omitted]
[logo] M F S(R)
INVESTMENT MANAGEMENT
--------------------------------------------------------------------------------
MFS(R) PRIVACY POLICY: A COMMITMENT TO YOU
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Privacy is a concern for every investor today. At MFS Investment Management(R)
and the MFS funds, we take this concern very seriously. We want you to
understand our policies about every MFS investment product and service that we
offer and how we protect the nonpublic personal information of investors who
have a direct relationship with us and our wholly owned subsidiaries.
Throughout our business relationship, you provide us with personal information;
we maintain information and records about you, your investments, and the
services you use. Examples of the nonpublic personal information we maintain
include
o data from investment applications and other forms
o share balances and transactional history with us, our affiliates, or others
o facts from a consumer reporting agency
We do not disclose any nonpublic personal information about our customers or
former customers to anyone except as permitted by law. We may share information
with companies or financial institutions that perform marketing services on our
behalf or to other financial institutions with which we have joint marketing
arrangements.
Access to your nonpublic personal information is limited to appropriate
personnel who provide products, services, or information to you. We maintain
physical, electronic, and procedural safeguards that comply with applicable
federal regulations.
If you have any questions about MFS" privacy policy, please call 1-800-225-2606
any business day between 8 a.m. and 8 p.m. Eastern time.
Note: If you own MFS products or receive MFS services in the name of a third
party such as a bank or broker-dealer, their privacy policy may apply to you
instead of ours.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------
MFS(R) MULTIMARKET INCOME TRUST
The trust seeks to provide a high level of current income through investments
in fixed-income securities.
New York Stock Exchange Symbol: MMT
-------------------------------------------------------------------------------
To view MFS" statement concerning regulatory issues affecting the mutual fund
industry and the firm, please visit www.mfs.com.
-------------------------------------------------------------------------------
TABLE OF CONTENTS
----------------------------------------------------
MFS PRIVACY POLICY
----------------------------------------------------
LETTER FROM THE CHAIRMAN 1
----------------------------------------------------
MFS ORIGINAL RESEARCH(R) 2
----------------------------------------------------
MANAGEMENT REVIEW 3
----------------------------------------------------
PERFORMANCE SUMMARY 6
----------------------------------------------------
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN 8
----------------------------------------------------
RESULTS OF SHAREHOLDER MEETINGS 9
----------------------------------------------------
PORTFOLIO OF INVESTMENTS 10
----------------------------------------------------
FINANCIAL STATEMENTS 28
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 34
----------------------------------------------------
INDEPENDENT AUDITORS" REPORT 45
----------------------------------------------------
TRUSTEES AND OFFICERS 46
----------------------------------------------------
FEDERAL TAX INFORMATION 48
----------------------------------------------------
CONTACT INFORMATION 49
--------------------------------------------------------------------------------
LETTER FROM THE CHAIRMAN
--------------------------------------------------------------------------------
Dear Shareholders,
[Photo of Jeffrey L. Shames]
In our view, the past year has been a promising one for investors. Financial
markets have improved steadily, spurred by indications of a global economic
recovery.
These developments make this an encouraging time for MFS and for our
shareholders. But we also think it's a time to reinforce the fundamentals of a
sound investment strategy.
At MFS, we think in any market environment the best approach for investors is
disciplined diversification. This method of investing involves three simple
steps. First, allocate your holdings across the major asset classes. Second,
diversify within each class so that you get exposure to different investment
styles, such as growth and value, and market sectors, such as government and
corporate bonds. Finally, to respond to the way market activity can shift the
value of your accounts, rebalance your accounts on a routine schedule, such as
once per year. Doing so will help you maintain your desired allocation across
each asset class.
These investing fundamentals are often lost when markets are on an upswing. At
such times, it's easy to be tempted to shift your holdings in the current,
"hottest" performing investment. History suggests, however, that it is
difficult to predict year after year what the best performing sector or market
will be. While it is true that the past cannot offer any guarantees for the
future, the markets historically have demonstrated the benefits of taking the
prudent approach and spreading your assets across a variety of holdings. For
investors with long-term goals such as college or retirement, a balanced
approach usually makes the most sense. As always, your investment professional
can help you identify an appropriate mix of investments for your needs.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman
MFS Investment Management(R)
November 20, 2003
The opinions expressed in this letter are those of MFS and no forecasts can be
guaranteed.
-------------------------------------------------------------------------------
MFS ORIGINAL RESEARCH(R)
-------------------------------------------------------------------------------
THE HUMAN SIDE OF MONEY MANAGEMENT
For nearly 80 years MFS has been offering investors clear paths to pursuing
specific investment objectives. Today, millions of individuals and thousands
of institutions all over the world look to MFS to manage their assets with
insight and care.
Our success, we believe, has to do with the fact that we see investors as
people with plans, not just dollars to invest.
When you invest with MFS, you invest with a company dedicated to helping you
realize your long-term financial goals.
INVESTORS CHOOSE MFS FOR OUR
o global asset management expertise across all asset classes
o time-tested money management process for pursuing consistent results
o full spectrum of investment products backed by MFS Original Research(R)
o resources and services that match real-life needs
TURNING INFORMATION INTO OPPORTUNITY
Sound investments begin with sound information. MFS has been doing its own
research and analyzing findings in-house for decades. The process we use to
uncover opportunity is called MFS Original Research(R).
MFS ORIGINAL RESEARCH INVOLVES:
o meeting with the management of 3,000 companies each year to assess their
business plans and the managers" ability to execute those plans
o making onsite visits to more than 2,000 companies annually to gain first-hand
knowledge of their operations and products
o analyzing financial statements and balance sheets
o talking extensively with companies" customers and competitors
o developing our own proprietary estimates of companies" earnings
-------------------------------------------------------------------------------
MANAGEMENT REVIEW
-------------------------------------------------------------------------------
MARKET ENVIRONMENT
The bond market for the 12 months ended October 31, 2003, was influenced by
accommodative worldwide monetary policies and low interest rates paid on
government bonds. As the global economies began to respond to stimulative
monetary policies, investors became less risk averse and turned toward
investments they had avoided in 2002. As a result, high-yield corporate bonds
and emerging market debt outperformed government debt and high-grade corporate
bonds. Generally, over the past year, lower-rated bonds outperformed higher-
rated issues.
Although global interest rates on October 31, 2003, were not that different
from what they had been at the end of October 2002, they were volatile during
that 12-month period. For example, the 10-year U.S. Treasury bond reached
3.10% in June 2003 - a four decade low. However, interest rates on the 10-year
Treasury then backed up from late June through August until they reached 4.60%
in September 2003.
------------------------------------------------
TOP 5 PORTFOLIO ALLOCATIONS
AS OF 10/31/03
HIGH-YIELD CORPORATES 30.7%
------------------------------------------------
HIGH GRADE CORPORATES 24.4%
------------------------------------------------
INTERNATIONAL SOVEREIGNS 16.5%
------------------------------------------------
EMERGING MARKETS DEBT 9.2%
------------------------------------------------
COMMERCIAL MORTGAGE-BACKED 8.3%
------------------------------------------------
The portfolio is actively managed, and current
holdings may be different.
------------------------------------------------
TRUST POSITIONING
MFS Multimarket Income Trust is one of our more highly diversified closed-end
offerings. Investments include U.S. government bonds, international bonds,
high-grade and high-yield corporate bonds, and emerging market bonds.
The biggest shift in portfolio holdings was to increase the trust's holdings
in high-yield bonds from nearly 18% at the start of the period to more than
30% of the portfolio. We also expanded our holdings in high-grade corporate
bonds and emerging market debt. In the process, we sliced the size of our
investments in U.S. Treasury securities, cut back positions in U.S. government
agency bonds, and dramatically reduced trust holdings of mortgage-backed
securities.
CONTRIBUTORS TO PERFORMANCE
The most significant performance drivers were the trust's investments in the
single-B to triple-B quality categories, especially the lower ratings in that
range. When the economy began exhibiting positive signs in 2002, these higher-
yielding issuers found it easier to gain access to the capital they needed to
keep their businesses expanding. That renewed access also helped allay
investor concerns about the group's ability to meet future obligations,
especially as the U.S. economy continued to improve in 2003.
The strongest industry sectors were industrials and telecommunications.
Both groups had fallen out of favor with investors in 2002 for reasons that
included structural problems, the threat of potential defaults, and limited
access to capital. As the economy improved, investors realized that the
default threat was not as severe as they had anticipated. Also, the capital
markets loosened, and that easing proved to be a watershed event. That
financing pulled companies such as Charter Communications back from the brink
of bankruptcy.
Our positioning of international holdings also helped returns. We favored
German government bonds, which performed well during the period. Our decision
to avoid Japanese bonds also benefited the trust, especially when interest
rates on those bonds rose by 1.15% from 0.45% to 1.6%, before ending the
period at roughly 1.4%.
DETRACTORS FROM TRUST PERFORMANCE
The nature of this portfolio is to provide investors with broad
diversification within the fixed-income markets. Relative performance results,
when compared to different benchmark indices, will naturally differ from
benchmark indices that are comprised of just one or very few fixed-income
sectors. For this reporting period ended October 31, 2003, the trust's net
asset value results were lower than its 100% high-yield benchmark index and
the 100% emerging market debt index.
At the time yields on the 10-year U.S. Treasuries were rising, we had 2% to 3%
of the trust's assets invested in that sector and less than 0.5% in U.S.
government agency issues. The value of the trust's Treasury and agency
holdings declined during the summer of 2003 and detracted from overall
performance.
In addition, our high-yield position in the food distributor Fleming Company
hurt performance. Although our holding in Fleming was small, the company's
bonds declined when allegations of accounting irregularities were raised and
the company subsequently filed for bankruptcy.
Respectfully,
/s/ Peter C. Vaream
Peter C. Vaream
Portfolio Manager
-------------------------------------------------------------------------------
Visit mfs.com for our latest economic and investment outlook.
o Under Updates & Announcements, click Week in Review for a summary of recent
investment-related news.
o From Week in Review, link to MFS Global Investment Perspective for our
current view of the world.
-------------------------------------------------------------------------------
The opinions expressed in this report are those of the portfolio manager and
are current only through the end of the period of the report as stated on the
cover. These views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
-------------------------------------------------------------------------------
PERFORMANCE SUMMARY THROUGH 10/31/03
-------------------------------------------------------------------------------
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 different from those shown. Past
performance is no guarantee of future results.
PRICE SUMMARY
-------------------
Year ended 10/31/03
-------------------
Date Price
------------------------------------------------------------------------------
Net asset value 10/31/2002 $6.32
------------------------------------------------------------------------------
10/31/2003 $6.76
------------------------------------------------------------------------------
New York Stock Exchange 10/31/2002 $5.69
------------------------------------------------------------------------------
6/04/2003 (high)* $6.46
------------------------------------------------------------------------------
11/15/2002 (low)* $5.69
------------------------------------------------------------------------------
10/31/2003 $6.41
------------------------------------------------------------------------------
* For the period from November 1, 2002 through October 31, 2003.
------------------------------------------------------------------------------
-------------------
Year ended 10/31/03
-------------------
TOTAL RETURN VS BENCHMARKS
------------------------------------------------------------------------------
New York Stock Exchange price* 20.11%
------------------------------------------------------------------------------
Net asset value 14.04%
------------------------------------------------------------------------------
Citigroup World Government Bond Non-dollar Hedged Index 2.58%
------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index 4.90%
------------------------------------------------------------------------------
Lehman Brothers High Yield Index 33.77%
------------------------------------------------------------------------------
J.P. Morgan EMBI Index Global 27.83%
------------------------------------------------------------------------------
* Includes reinvestment of dividend and capital distributions.
INDEX DEFINITIONS
CITIGROUP WORLD GOVERNMENT BOND NON-DOLLAR HEDGED INDEX - measures the
government bond markets around the world, ex-U.S.
LEHMAN BROTHERS AGGREGATE BOND INDEX - a measure of the U.S. bond market.
LEHMAN BROTHERS HIGH YIELD INDEX - measures the performance of the high-yield
bond market.
J.P. MORGAN EMERGING MARKETS BOND INDEX GLOBAL (THE EMBI GLOBAL) - tracks debt
instruments in the emerging markets (includes a broader array of countries
than the EMBI Plus).
It is not possible to invest directly in an index.
KEY RISK CONSIDERATIONS
Investing in foreign and/or emerging markets securities involves risks
relating to interest rates, currency exchange rates, economic, and political
conditions.
Investments in high yield or lower-rated securities may provide greater
returns but are subject to greater-than-average risk.
The portfolio may invest in derivative securities, which may include futures
and options. These types of instruments can increase price fluctuation.
Because the portfolio invests in a limited number of companies a change in one
security's value may have a more significant effect on the portfolio's value.
Government guarantees apply to the underlying securities only and not to the
prices and yields of the portfolio.
These risks may increase share price volatility. Please see the prospectus for
further information regarding these and other risk considerations.
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.
-------------------------------------------------------------------------------
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
-------------------------------------------------------------------------------
MFS 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 in any amount
over $100 can be made 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, 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.
-------------------------------------------------------------------------------
RESULTS OF SHAREHOLDER MEETING (unaudited) - 10/31/03
-------------------------------------------------------------------------------
At the annual meeting of shareholders of MFS Multimarket Income Trust, which
was held on October 7, 2003, the following actions were taken:
ITEM 1. To elect a Board of Trustees.
NUMBER OF SHARES
-----------------------------------
NOMINEE FOR WITHHOLD AUTHORITY
John W. Ballen 75,485,376.780 1,453,912.590
------------------------------------------------------------------------------
William J. Poorvu 75,484,724.020 1,454,565.350
------------------------------------------------------------------------------
J. Dale Sherratt 75,448,258.982 1,491,030.388
------------------------------------------------------------------------------
Ward Smith 75,365,597.457 1,573,691.913
------------------------------------------------------------------------------
ITEM 2. To ratify the selection of independent public accountants for the
current fiscal year.
NUMBER OF SHARES
For 75,596,591.897
----------------------------------------------------------
Against 692,449.509
----------------------------------------------------------
Abstain 650,247.964
----------------------------------------------------------
------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - 10/31/03
------------------------------------------------------------------------------------------------------
The Portfolio of Investments is a complete list of all securities owned by your fund. It is
categorized by broad-based asset classes.
Bonds - 96.8%
-----------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 Omitted) $ VALUE
-----------------------------------------------------------------------------------------------------
U.S. Bonds - 63.0%
-----------------------------------------------------------------------------------------------------
Advertising & Broadcasting - 2.3%
-----------------------------------------------------------------------------------------------------
Allbritton Communications Co., 7.75s, 2012 $1,000 $1,020,000
-----------------------------------------------------------------------------------------------------
Clear Channel Communications, Inc., 6.5s, 2005 275 333,657
-----------------------------------------------------------------------------------------------------
Granite Broadcasting Corp., 10.375s, 2005 1,221 1,196,580
-----------------------------------------------------------------------------------------------------
Lamar Media Corp., 7.25s, 2013 1,370 1,441,925
-----------------------------------------------------------------------------------------------------
Muzak LLC, 10s, 2009 435 457,837
-----------------------------------------------------------------------------------------------------
Paxson Communications Corp., 0s to 2006,
12.25s to 2009 2,275 1,911,000
-----------------------------------------------------------------------------------------------------
Radio One, Inc., 8.875s, 2011 1,425 1,567,500
-----------------------------------------------------------------------------------------------------
XM Satellite Radio, Inc., 14s, 2009 380 325,850
-----------------------------------------------------------------------------------------------------
XM Satellite Radio, Inc., 12s, 2010 1,450 1,613,125
-----------------------------------------------------------------------------------------------------
Young Broadcasting, Inc., 8.5s, 2008 2,750 2,963,125
-----------------------------------------------------------------------------------------------------
$12,830,599
-----------------------------------------------------------------------------------------------------
Aerospace - 0.9%
-----------------------------------------------------------------------------------------------------
Boeing Capital Corp., 5.75s, 2007 $1,153 $1,235,356
-----------------------------------------------------------------------------------------------------
Hexcel Corp., 9.875s, 2008 1,215 1,348,650
-----------------------------------------------------------------------------------------------------
Hexcel Corp., 9.75s, 2009 800 834,000
-----------------------------------------------------------------------------------------------------
K & F Industries, Inc., 9.25s, 2007 157 162,495
-----------------------------------------------------------------------------------------------------
K & F Industries, Inc., 9.625s, 2010 1,500 1,680,000
-----------------------------------------------------------------------------------------------------
$5,260,501
-----------------------------------------------------------------------------------------------------
Airlines - 0.4%
-----------------------------------------------------------------------------------------------------
Continental Airlines, Inc., 6.545s, 2019 $2,387 $2,373,966
-----------------------------------------------------------------------------------------------------
Airlines Pass-Through
-----------------------------------------------------------------------------------------------------
Airplane Pass-Through Trust, 10.875s, 2019 $247 $4,939
-----------------------------------------------------------------------------------------------------
Apparel Manufacturers - 0.1%
-----------------------------------------------------------------------------------------------------
Westpoint Stevens, Inc., 7.875s, 2005 (In Default) $2,150 $247,250
-----------------------------------------------------------------------------------------------------
Westpoint Stevens, Inc., 7.875s, 2008 (In Default) 1,225 140,875
-----------------------------------------------------------------------------------------------------
$388,125
-----------------------------------------------------------------------------------------------------
Automotive - 3.8%
-----------------------------------------------------------------------------------------------------
Collins & Aikman Products Co., 10.75s, 2011 $1,173 $985,320
-----------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 5.625s, 2004 255 297,770
-----------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 7s, 2013 1,000 983,043
-----------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 7.875s, 2010 3,058 3,199,151
-----------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 6s, 2006 375 452,708
-----------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 7s, 2012 2,610 2,697,553
-----------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 8s, 2031 1,367 1,405,824
-----------------------------------------------------------------------------------------------------
Lear Corp., 8.11s, 2009 5,765 6,644,162
-----------------------------------------------------------------------------------------------------
Metaldyne Corp., 11s, 2012 2,025 1,701,000
-----------------------------------------------------------------------------------------------------
Tenneco Automotive, Inc., 10.25s, 2013 1,705 1,884,025
-----------------------------------------------------------------------------------------------------
TRW, Inc., 9.375s, 2013# 635 720,725
-----------------------------------------------------------------------------------------------------
TRW, Inc., 11s, 2013# 200 236,000
-----------------------------------------------------------------------------------------------------
$21,207,281
-----------------------------------------------------------------------------------------------------
Banks & Credit Companies - 0.8%
-----------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corp., 6.5s, 2012 $3,033 $3,349,400
-----------------------------------------------------------------------------------------------------
Popular, Inc., 4.25s, 2008 1,525 1,544,627
-----------------------------------------------------------------------------------------------------
$4,894,027
-----------------------------------------------------------------------------------------------------
Basic Industry - 0.2%
-----------------------------------------------------------------------------------------------------
Trimas Corp., 9.875s, 2012 $985 $989,925
-----------------------------------------------------------------------------------------------------
Broadcast & Cable TV - 4.9%
-----------------------------------------------------------------------------------------------------
Charter Communications Holdings LLC, 8.625s, 2009 $3,300 $2,648,250
-----------------------------------------------------------------------------------------------------
Continental Cablevision, Inc., 9.5s, 2013 7,341 8,434,104
-----------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 8.125s, 2009 3,469 3,607,760
-----------------------------------------------------------------------------------------------------
DirecTV Holdings LLC, 8.375s, 2013 600 675,000
-----------------------------------------------------------------------------------------------------
Jones Intercable, Inc., 8.875s, 2007 1,500 1,580,654
-----------------------------------------------------------------------------------------------------
Lenfest Communications, Inc., 10.5s, 2006 500 590,000
-----------------------------------------------------------------------------------------------------
Mediacom Communications Corp., 11s, 2013 2,600 2,717,000
-----------------------------------------------------------------------------------------------------
TCI Communications Financing III, 9.65s, 2027 5,000 6,081,250
-----------------------------------------------------------------------------------------------------
Tele Communications, Inc., 9.8s, 2012 1,135 1,474,431
-----------------------------------------------------------------------------------------------------
$27,808,449
-----------------------------------------------------------------------------------------------------
Building - 0.8%
-----------------------------------------------------------------------------------------------------
American Standard, Inc., 7.375s, 2008 $1,015 $1,119,038
-----------------------------------------------------------------------------------------------------
Jacuzzi Brands, Inc., 9.625s, 2010# 500 530,000
-----------------------------------------------------------------------------------------------------
Nortek, Inc., 9.25s, 2007 125 129,219
-----------------------------------------------------------------------------------------------------
Nortek, Inc., 8.875s, 2008 1,215 1,266,637
-----------------------------------------------------------------------------------------------------
Williams Scotsman, Inc., 9.875s, 2007 1,455 1,476,825
-----------------------------------------------------------------------------------------------------
Williams Scotsman, Inc., 10s, 2008# 205 225,500
-----------------------------------------------------------------------------------------------------
$4,747,219
-----------------------------------------------------------------------------------------------------
Business Services - 1.1%
-----------------------------------------------------------------------------------------------------
Iron Mountain, Inc., 8.625s, 2013 $985 $1,076,112
-----------------------------------------------------------------------------------------------------
Iron Mountain, Inc., 7.75s, 2015 1,630 1,740,025
-----------------------------------------------------------------------------------------------------
Lucent Technologies, Inc., 5.5s, 2008 2,050 1,906,500
-----------------------------------------------------------------------------------------------------
Xerox Corp., 7.625s, 2013 1,415 1,443,300
-----------------------------------------------------------------------------------------------------
$6,165,937
-----------------------------------------------------------------------------------------------------
Chemicals - 0.9%
-----------------------------------------------------------------------------------------------------
Huntsman ICI Holdings LLC, 10.125s, 2009 $1,900 $1,809,750
-----------------------------------------------------------------------------------------------------
JohnsonDiversey, Inc., 10.67s, 2013# 1,465 1,091,425
-----------------------------------------------------------------------------------------------------
Koppers, Inc., 9.875s, 2013# 400 422,000
-----------------------------------------------------------------------------------------------------
Lyondell Chemical Co., 9.875s, 2007 1,060 1,075,900
-----------------------------------------------------------------------------------------------------
Nalco Co., 7.75s, 2011# 695 722,800
-----------------------------------------------------------------------------------------------------
$5,121,875
-----------------------------------------------------------------------------------------------------
Consumer Goods & Services - 0.8%
-----------------------------------------------------------------------------------------------------
KinderCare Learning Centers, Inc., 9.5s, 2009 $1,450 $1,479,000
-----------------------------------------------------------------------------------------------------
Remington Arms, Inc., 10.5s, 2011 500 523,125
-----------------------------------------------------------------------------------------------------
Samsonite Corp., 10.75s, 2008 740 777,000
-----------------------------------------------------------------------------------------------------
Sealy Mattress Co., 9.875s, 2007 1,700 1,755,250
-----------------------------------------------------------------------------------------------------
$4,534,375
-----------------------------------------------------------------------------------------------------
Containers - 0.9%
-----------------------------------------------------------------------------------------------------
Owens-Brockway Glass Container, Inc., 8.875s, 2009 $515 $558,775
-----------------------------------------------------------------------------------------------------
Owens-Brockway Glass Container, Inc., 8.25s, 2013 2,090 2,204,950
-----------------------------------------------------------------------------------------------------
Pliant Corp., 13s, 2010 1,000 955,000
-----------------------------------------------------------------------------------------------------
Silgan Holdings, Inc., 9s, 2009 1,425 1,473,094
-----------------------------------------------------------------------------------------------------
$5,191,819
-----------------------------------------------------------------------------------------------------
Corporate Asset-Backed - 8.5%
-----------------------------------------------------------------------------------------------------
Amresco Commercial Mortgage Funding Corp., 7s, 2029 $3,570 $3,545,735
-----------------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp., 5.44s, 2030 8,000 6,996,082
-----------------------------------------------------------------------------------------------------
CPS Auto Receivables Trust, 2.89s, 2009 1,286 1,300,441
-----------------------------------------------------------------------------------------------------
Deutsche Mortgage Acceptance Corp., 7.5s, 2031 1,847 1,362,473
-----------------------------------------------------------------------------------------------------
DLJ Mortgage Acceptance Corp., 8s, 2003+ 60 59,669
-----------------------------------------------------------------------------------------------------
Falcon Auto Dealership LLC, 3.875s, 2023 (Interest Only) 9,452 1,798,320
-----------------------------------------------------------------------------------------------------
First Union-Lehman Brothers Bank, 0.757s, 2028
(Interest Only) 84,041 2,217,784
-----------------------------------------------------------------------------------------------------
First Union-Lehman Brothers Bank, 7s, 2014 1,847 1,727,597
-----------------------------------------------------------------------------------------------------
First Union-Lehman Brothers Bank, 7.5s, 2029 1,847 1,708,017
-----------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Security, Inc., 6.02s, 2033 5,800 5,154,831
-----------------------------------------------------------------------------------------------------
LB Commercial Mortgage Trust, 1.161s, 2028
(Interest Only) 24,085 855,971
-----------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., 6.86s, 2010 2,215 2,320,625
-----------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., 7.709s, 2039 5,560 5,305,681
-----------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., 7.214s, 2007 2,250 2,279,592
-----------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., 1.083s, 2031
(Interest Only) 25,109 822,869
-----------------------------------------------------------------------------------------------------
Multi Family Capital Access One, Inc., 6.65s, 2024 155 172,696
-----------------------------------------------------------------------------------------------------
Nationslink Funding Corp., 5s, 2031 4,560 4,128,368
-----------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., 7.75s, 2027 1,747 1,744,534
-----------------------------------------------------------------------------------------------------
TIAA Retail Commercial Mortgage Trust, 7.17s, 2032# 4,309 4,682,232
-----------------------------------------------------------------------------------------------------
$48,183,517
-----------------------------------------------------------------------------------------------------
Defense Electronics - 0.3%
-----------------------------------------------------------------------------------------------------
L-3 Communications Corp., 7.625s, 2012 $1,455 $1,585,950
-----------------------------------------------------------------------------------------------------
Energy - Independent - 0.2%
-----------------------------------------------------------------------------------------------------
Ocean Energy, Inc., 4.375s, 2007 $908 $934,173
-----------------------------------------------------------------------------------------------------
Energy - Integrated - 0.7%
-----------------------------------------------------------------------------------------------------
Triton Energy Ltd., 9.25s, 2005 $3,500 $3,801,269
-----------------------------------------------------------------------------------------------------
Entertainment - 2.3%
-----------------------------------------------------------------------------------------------------
AMC Entertainment, Inc., 9.5s, 2011 $1,700 $1,787,125
-----------------------------------------------------------------------------------------------------
Disney (Walt) Co., 6.75s, 2006 2,140 2,335,117
-----------------------------------------------------------------------------------------------------
News America Holdings, Inc., 7.7s, 2025 517 591,062
-----------------------------------------------------------------------------------------------------
News America, Inc., 6.55s, 2033 529 540,364
-----------------------------------------------------------------------------------------------------
Regal Cinemas Corp., 9.375s, 2012 2,425 2,740,250
-----------------------------------------------------------------------------------------------------
Six Flags, Inc., 9.75s, 2013 1,500 1,470,000
-----------------------------------------------------------------------------------------------------
Turner Broadcasting Systems, Inc., 8.375s, 2013 419 504,035
-----------------------------------------------------------------------------------------------------
Turner Broadcasting Systems, Inc., 8.4s, 2024 3,000 3,154,965
-----------------------------------------------------------------------------------------------------
$13,122,918
-----------------------------------------------------------------------------------------------------
Financial Institutions - 0.7%
-----------------------------------------------------------------------------------------------------
SLM Corp., 1.381s, 2007 $4,120 $4,120,012
-----------------------------------------------------------------------------------------------------
Food & Non Alcoholic Beverages - 0.1%
-----------------------------------------------------------------------------------------------------
Seminis, Inc., 10.25s, 2013# $360 $385,200
-----------------------------------------------------------------------------------------------------
Forest & Paper Products - 1.2%
-----------------------------------------------------------------------------------------------------
Buckeye Cellulose Corp., 9.25s, 2008 $2,150 $2,182,250
-----------------------------------------------------------------------------------------------------
Buckeye Technologies, Inc., 8.5s, 2013# 525 549,281
-----------------------------------------------------------------------------------------------------
Georgia Pacific Corp., 9.375s, 2013 1,220 1,403,000
-----------------------------------------------------------------------------------------------------
International Paper Co., 5.375s, 2006 140 168,619
-----------------------------------------------------------------------------------------------------
MeadWestvaco Corp., 6.8s, 2032 2,678 2,729,281
-----------------------------------------------------------------------------------------------------
$7,032,431
-----------------------------------------------------------------------------------------------------
Gaming & Lodging - 2.8%
-----------------------------------------------------------------------------------------------------
Aztar Corp., 8.875s, 2007 $1,550 $1,619,750
-----------------------------------------------------------------------------------------------------
Forest City Enterprises, Inc., 7.625s, 2015 235 244,400
-----------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.625s, 2012 1,100 1,216,875
-----------------------------------------------------------------------------------------------------
Host Marriott LP, 8.45s, 2008 2,635 2,740,400
-----------------------------------------------------------------------------------------------------
MGM Mirage, Inc., 8.375s, 2011 1,550 1,728,250
-----------------------------------------------------------------------------------------------------
Park Place Entertainment Corp., 8.875s, 2008 1,540 1,711,325
-----------------------------------------------------------------------------------------------------
Pinnacle Entertainment, Inc., 8.75s, 2013 650 650,000
-----------------------------------------------------------------------------------------------------
Starwood Hotels & Resorts, Inc., 7.875s, 2012 2,600 2,873,000
-----------------------------------------------------------------------------------------------------
Venetian Casino Resort LLC, 11s, 2010 1,525 1,759,469
-----------------------------------------------------------------------------------------------------
Wackenhut Corrections Corp., 8.25s, 2013# 1,110 1,176,600
-----------------------------------------------------------------------------------------------------
$15,720,069
-----------------------------------------------------------------------------------------------------
Home Construction - 0.8%
-----------------------------------------------------------------------------------------------------
Horton (D.R.), Inc., 8s, 2009 $1,565 $1,744,975
-----------------------------------------------------------------------------------------------------
Pulte Homes, Inc., 6.375s, 2033 3,033 2,899,327
-----------------------------------------------------------------------------------------------------
$4,644,302
-----------------------------------------------------------------------------------------------------
Insurance - 0.2%
-----------------------------------------------------------------------------------------------------
Prudential Funding Corp., 6.6s, 2008# $1,230 $1,370,547
-----------------------------------------------------------------------------------------------------
Insurance - Property & Casualty - 0.8%
-----------------------------------------------------------------------------------------------------
Allstate Corp., 7.2s, 2009 $1,668 $1,938,883
-----------------------------------------------------------------------------------------------------
Willis Corroon Corp., 9s, 2009 2,325 2,458,688
-----------------------------------------------------------------------------------------------------
$4,397,571
-----------------------------------------------------------------------------------------------------
Machinery & Tools - 1.9%
-----------------------------------------------------------------------------------------------------
AGCO Corp., 9.5s, 2008 $2,000 $2,180,000
-----------------------------------------------------------------------------------------------------
Amsted Industries, Inc., 10.25s, 2011# 1,845 2,034,112
-----------------------------------------------------------------------------------------------------
Blount, Inc., 7s, 2005 700 689,500
-----------------------------------------------------------------------------------------------------
Manitowoc Co., Inc., 10.5s, 2012 1,180 1,339,300
-----------------------------------------------------------------------------------------------------
Terex Corp., 9.25s, 2011 1,380 1,521,450
-----------------------------------------------------------------------------------------------------
Terex Corp., 10.375s, 2011 1,140 1,285,350
-----------------------------------------------------------------------------------------------------
United Rentals, Inc., 10.75s, 2008 1,600 1,796,000
-----------------------------------------------------------------------------------------------------
$10,845,712
-----------------------------------------------------------------------------------------------------
Medical & Health Technology & Services - 0.6%
-----------------------------------------------------------------------------------------------------
Alliance Imaging, Inc., 10.375s, 2011 $1,600 $1,692,000
-----------------------------------------------------------------------------------------------------
Fisher Scientific International, Inc., 8.125s, 2012 1,133 1,217,975
-----------------------------------------------------------------------------------------------------
Genesis Healthcare Corp., 8s, 2013# 255 260,419
-----------------------------------------------------------------------------------------------------
$3,170,394
-----------------------------------------------------------------------------------------------------
Metals & Mining - 0.5%
-----------------------------------------------------------------------------------------------------
Arch Western Finance LLC, 6.75s, 2013# $735 $760,725
-----------------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 6.875s, 2013 340 357,850
-----------------------------------------------------------------------------------------------------
Phelps Dodge Corp., 8.75s, 2011 501 597,100
-----------------------------------------------------------------------------------------------------
U.S. Steel Corp., 9.75s, 2010 1,010 1,065,550
-----------------------------------------------------------------------------------------------------
$2,781,225
-----------------------------------------------------------------------------------------------------
Municipals - 2.6%
-----------------------------------------------------------------------------------------------------
Florida Board of Education Capital Outlay, 5s, 2030 $3,000 $3,023,190
-----------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority, NY, 5s, 2031 3,000 3,015,690
-----------------------------------------------------------------------------------------------------
New Jersey Economic Development Authority, 5.5s, 2012 1,500 1,705,095
-----------------------------------------------------------------------------------------------------
Philadelphia, PA Water & Wastewater Revenue, 5s, 2031 2,700 2,706,318
-----------------------------------------------------------------------------------------------------
State of Massachusetts, 5.5s, 2013 3,620 4,110,112
-----------------------------------------------------------------------------------------------------
$14,560,405
-----------------------------------------------------------------------------------------------------
Natural Gas - Distribution - 0.8%
-----------------------------------------------------------------------------------------------------
AmeriGas Partners LLP, 8.875s, 2011 $1,635 $1,773,975
-----------------------------------------------------------------------------------------------------
Kinder Morgan Energy Partners, 7.3s, 2033 2,578 2,892,093
-----------------------------------------------------------------------------------------------------
$4,666,068
-----------------------------------------------------------------------------------------------------
Natural Gas - Pipeline - 0.9%
-----------------------------------------------------------------------------------------------------
ANR Pipeline Co., 8.875s, 2010 $440 $479,600
-----------------------------------------------------------------------------------------------------
Southern Natural Gas Co., 8.875s, 2010 1,540 1,678,600
-----------------------------------------------------------------------------------------------------
Williams Cos., Inc., 6.25s, 2006 667 683,675
-----------------------------------------------------------------------------------------------------
Williams Cos., Inc., 7.125s, 2011 2,100 2,152,500
-----------------------------------------------------------------------------------------------------
$4,994,375
-----------------------------------------------------------------------------------------------------
Oils - 0.3%
-----------------------------------------------------------------------------------------------------
Valero Energy Corp., 6.875s, 2012 $1,331 $1,461,969
-----------------------------------------------------------------------------------------------------
Personal Computers & Peripherals - 0.7%
-----------------------------------------------------------------------------------------------------
Jabil Circuit, Inc., 5.875s, 2010 $1,033 $1,067,181
-----------------------------------------------------------------------------------------------------
Unisys Corp., 7.875s, 2008 2,655 2,764,519
-----------------------------------------------------------------------------------------------------
$3,831,700
-----------------------------------------------------------------------------------------------------
Photographic Products - 0.1%
-----------------------------------------------------------------------------------------------------
Eastman Kodak Co., 7.25s, 2013 $833 $849,451
-----------------------------------------------------------------------------------------------------
Pollution Control - 0.5%
-----------------------------------------------------------------------------------------------------
Allied Waste North America, Inc., 7.875s, 2013 $2,375 $2,547,187
-----------------------------------------------------------------------------------------------------
Printing & Publishing - 1.0%
-----------------------------------------------------------------------------------------------------
Dex Media East LLC, 9.875s, 2009 $1,500 $1,698,750
-----------------------------------------------------------------------------------------------------
Dex Media West LLC, 9.875s, 2013# 1,490 1,694,875
-----------------------------------------------------------------------------------------------------
Hollinger International Publishing, Inc., 9s, 2010 800 848,000
-----------------------------------------------------------------------------------------------------
Mail-Well Corp., 9.625s, 2012 1,050 1,178,625
-----------------------------------------------------------------------------------------------------
$5,420,250
-----------------------------------------------------------------------------------------------------
Real Estate - 0.8%
-----------------------------------------------------------------------------------------------------
Boston Properties, Inc., 5s, 2015 $2,949 $2,774,681
-----------------------------------------------------------------------------------------------------
Kimco Realty Corp., 6s, 2012 1,399 1,478,616
-----------------------------------------------------------------------------------------------------
$4,253,297
-----------------------------------------------------------------------------------------------------
Stores - 0.7%
-----------------------------------------------------------------------------------------------------
J. Crew Corp., 10.375s, 2007 $1,100 $1,133,000
-----------------------------------------------------------------------------------------------------
Rite Aid Corp., 9.5s, 2011 1,760 1,980,000
-----------------------------------------------------------------------------------------------------
Rite Aid Corp., 9.25s, 2013 815 876,125
-----------------------------------------------------------------------------------------------------
$3,989,125
-----------------------------------------------------------------------------------------------------
Supermarkets - 0.4%
-----------------------------------------------------------------------------------------------------
Fleming Cos., Inc., 9.25s, 2010 (In Default) $1,695 $262,725
-----------------------------------------------------------------------------------------------------
Roundy's, Inc., 8.875s, 2012 1,650 1,724,250
-----------------------------------------------------------------------------------------------------
$1,986,975
-----------------------------------------------------------------------------------------------------
Telecommunications - Wireline - 1.3%
-----------------------------------------------------------------------------------------------------
AT&T Corp., 8.5s, 2031 $1,113 $1,262,095
-----------------------------------------------------------------------------------------------------
Qwest Services Corp., 13.5s, 2010# 1,600 1,868,000
-----------------------------------------------------------------------------------------------------
Sprint Capital Corp., 6.875s, 2028 1,501 1,412,549
-----------------------------------------------------------------------------------------------------
Verizon New York, Inc., 6.875s, 2012 2,473 2,713,017
-----------------------------------------------------------------------------------------------------
$7,255,661
-----------------------------------------------------------------------------------------------------
Tobacco - 0.1%
-----------------------------------------------------------------------------------------------------
Philip Morris Cos., Inc., 6.8s, 2003 $593 $594,485
-----------------------------------------------------------------------------------------------------
U.S. Government Agencies - 3.4%
-----------------------------------------------------------------------------------------------------
FNMA, 6s, 2016 $792 $823,792
-----------------------------------------------------------------------------------------------------
FNMA, 6s, 2017 2,237 2,326,930
-----------------------------------------------------------------------------------------------------
FNMA, 6.5s, 2031 419 434,917
-----------------------------------------------------------------------------------------------------
FNMA, 6.5s, 2032 5,366 5,575,000
-----------------------------------------------------------------------------------------------------
FNMA, 5.5s, 2033 8,175 8,253,656
-----------------------------------------------------------------------------------------------------
Small Business Administration, 5.34s, 2021 1,841 1,900,454
-----------------------------------------------------------------------------------------------------
$19,314,749
-----------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 2.4%
-----------------------------------------------------------------------------------------------------
U.S. Treasury Notes, 3.375s, 2007 $12,598 $13,738,558
-----------------------------------------------------------------------------------------------------
Utilities - Electric Power - 5.7%
-----------------------------------------------------------------------------------------------------
AES Corp., 8.75s, 2013# $1,100 $1,174,250
-----------------------------------------------------------------------------------------------------
AES Corp., 9s, 2015# 1,100 1,177,000
-----------------------------------------------------------------------------------------------------
Beaver Valley II Funding, 9s, 2017 1,491 1,733,802
-----------------------------------------------------------------------------------------------------
BVPS II Funding Corp., 8.68s, 2017 870 1,000,578
-----------------------------------------------------------------------------------------------------
Calpine Corp., 8.5s, 2011 750 536,250
-----------------------------------------------------------------------------------------------------
Calpine Corp., 8.75s, 2013# 1,255 1,145,187
-----------------------------------------------------------------------------------------------------
CMS Energy Corp., 8.5s, 2011 $1,300 $1,358,500
-----------------------------------------------------------------------------------------------------
Dynegy, Inc., 6.875s, 2011 1,600 1,392,000
-----------------------------------------------------------------------------------------------------
Entergy Louisiana, Inc., 8.09s, 2017 2,132 2,426,374
-----------------------------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., 3.5s, 2008 2,437 2,369,346
-----------------------------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., 5.875s, 2012 3,552 3,675,173
-----------------------------------------------------------------------------------------------------
Niagara Mohawk Power Corp., 8.77s, 2018 2,309 2,407,329
-----------------------------------------------------------------------------------------------------
NiSource, Inc., 7.875s, 2010 2,409 2,850,425
-----------------------------------------------------------------------------------------------------
PG&E Corp., 6.875s, 2008# 400 424,000
-----------------------------------------------------------------------------------------------------
PSEG Power LLC, 7.75s, 2007 3,120 3,151,200
-----------------------------------------------------------------------------------------------------
Reliant Resources, Inc., 9.25s, 2010# 490 438,550
-----------------------------------------------------------------------------------------------------
Reliant Resources, Inc., 9.5s, 2013# 575 511,750
-----------------------------------------------------------------------------------------------------
TXU Corp., 6.375s, 2006 3,943 4,179,580
-----------------------------------------------------------------------------------------------------
$31,951,294
-----------------------------------------------------------------------------------------------------
Utilities - Telephone - 0.2%
-----------------------------------------------------------------------------------------------------
Cincinnati Bell, Inc., 7.25s, 2013# $1,205 $1,229,100
-----------------------------------------------------------------------------------------------------
Wireless Communications - 1.6%
-----------------------------------------------------------------------------------------------------
Alamosa Holdings, Inc., 12.5s, 2011 $1,925 $1,848,000
-----------------------------------------------------------------------------------------------------
Centennial Cellular Operating Co., 10.75s, 2008 500 500,000
-----------------------------------------------------------------------------------------------------
Centennial Cellular Operating Co., 10.125s, 2013# 1,270 1,320,800
-----------------------------------------------------------------------------------------------------
Crown Castle International Corp., 10.375s, 2011 1,500 1,537,500
-----------------------------------------------------------------------------------------------------
Dobson Communications Corp., 8.875s, 2013# 495 502,425
-----------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.75s, 2010 475 425,125
-----------------------------------------------------------------------------------------------------
Triton PCS, Inc., 8.5s, 2013 1,055 1,110,387
-----------------------------------------------------------------------------------------------------
Western Wireless Corp., 9.25s, 2013# 1,715 1,792,175
-----------------------------------------------------------------------------------------------------
$9,036,412
-----------------------------------------------------------------------------------------------------
Total U.S. Bonds $355,295,388
-----------------------------------------------------------------------------------------------------
Foreign Bonds - 33.8%
-----------------------------------------------------------------------------------------------------
Algeria - 0.1%
-----------------------------------------------------------------------------------------------------
Republic of Algeria, 2.063s, 2010 $630 $606,845
-----------------------------------------------------------------------------------------------------
Argentina
-----------------------------------------------------------------------------------------------------
Republic of Argentina, 2s, 2008 ARS93 $25,216
-----------------------------------------------------------------------------------------------------
Republic of Argentina, 1.162s, 2012 $249 142,677
-----------------------------------------------------------------------------------------------------
$167,893
-----------------------------------------------------------------------------------------------------
Australia - 0.6%
-----------------------------------------------------------------------------------------------------
Burns Philp Capital Property Ltd., 9.75s, 2012 (Food &
Non Alcoholic Beverages)# $3,480 $3,549,600
-----------------------------------------------------------------------------------------------------
Austria - 1.0%
-----------------------------------------------------------------------------------------------------
Republic of Austria, 5.5s, 2007 EUR 3,064 $3,826,879
-----------------------------------------------------------------------------------------------------
Republic of Austria, 5s, 2012 953 1,166,511
-----------------------------------------------------------------------------------------------------
Republic of Austria, 4.65s, 2018 574 666,015
-----------------------------------------------------------------------------------------------------
$5,659,405
-----------------------------------------------------------------------------------------------------
Belgium - 0.2%
-----------------------------------------------------------------------------------------------------
Kingdom of Belgium, 3.75s, 2009 EUR 685 $795,671
-----------------------------------------------------------------------------------------------------
Kingdom of Belgium, 5s, 2012 435 533,205
-----------------------------------------------------------------------------------------------------
$1,328,876
-----------------------------------------------------------------------------------------------------
Brazil - 2.0%
-----------------------------------------------------------------------------------------------------
Banco Nacional de Desenvolvi, 8.754s, 2008 (Banks &
Credit Companies) $497 $484,575
-----------------------------------------------------------------------------------------------------
Federal Republic of Brazil, 2.063s, 2009 756 687,768
-----------------------------------------------------------------------------------------------------
Federal Republic of Brazil, 9.25s, 2010 1,330 1,326,010
-----------------------------------------------------------------------------------------------------
Federal Republic of Brazil, 10s, 2011 1,801 1,837,020
-----------------------------------------------------------------------------------------------------
Federal Republic of Brazil, 2.063s, 2012 975 819,000
-----------------------------------------------------------------------------------------------------
Federal Republic of Brazil, 10.25s, 2013 399 410,970
-----------------------------------------------------------------------------------------------------
Federal Republic of Brazil, 8s, 2014 4,110 3,825,182
-----------------------------------------------------------------------------------------------------
Federal Republic of Brazil, 2s, 2024 537 425,841
-----------------------------------------------------------------------------------------------------
Federal Republic of Brazil, 8.875s, 2024 1,764 1,459,710
-----------------------------------------------------------------------------------------------------
Federal Republic of Brazil, 11s, 2040 117 114,192
-----------------------------------------------------------------------------------------------------
$11,390,268
-----------------------------------------------------------------------------------------------------
Bulgaria - 0.3%
-----------------------------------------------------------------------------------------------------
Republic of Bulgaria, 8.25s, 2015# $1,312 $1,492,400
-----------------------------------------------------------------------------------------------------
Canada - 1.8%
-----------------------------------------------------------------------------------------------------
Abitibi Consolidated, Inc., 6.95s, 2006 (Forest & Paper
Products) $2,500 $2,577,267
-----------------------------------------------------------------------------------------------------
Abitibi Consolidated, Inc., 8.55s, 2010 (Forest & Paper
Products) 1,384 1,505,103
-----------------------------------------------------------------------------------------------------
Government of Canada, 5.5s, 2009 CAD 2,837 2,278,870
-----------------------------------------------------------------------------------------------------
Government of Canada, 5.25s, 2012 1,606 1,258,099
-----------------------------------------------------------------------------------------------------
Government of Canada, 8s, 2023 690 690,905
-----------------------------------------------------------------------------------------------------
Rogers Cable, Inc., 6.25s, 2013 (Broadcast & Cable TV) $1,765 1,765,000
-----------------------------------------------------------------------------------------------------
$10,075,244
-----------------------------------------------------------------------------------------------------
Chile - 0.4%
-----------------------------------------------------------------------------------------------------
Empresa Nacional de Electricidad S.A., 8.35s, 2013
(Utilities - Electric Power) $1,231 $1,325,089
-----------------------------------------------------------------------------------------------------
HQI Transelec Chile S.A., 7.875s, 2011 (Utilities -
Electric Power) 700 796,287
-----------------------------------------------------------------------------------------------------
$2,121,376
-----------------------------------------------------------------------------------------------------
Colombia - 0.3%
-----------------------------------------------------------------------------------------------------
Republic of Colombia, 9.75s, 2009 $833 $905,887
-----------------------------------------------------------------------------------------------------
Republic of Colombia, 10.75s, 2013 455 497,088
-----------------------------------------------------------------------------------------------------
Republic of Colombia, 10.375s, 2033 72 72,360
-----------------------------------------------------------------------------------------------------
$1,475,335
-----------------------------------------------------------------------------------------------------
Denmark - 0.5%
-----------------------------------------------------------------------------------------------------
Kingdom of Denmark, 7s, 2007 DKK 4,819 $850,114
-----------------------------------------------------------------------------------------------------
Kingdom of Denmark, 6s, 2009 8,242 1,423,093
-----------------------------------------------------------------------------------------------------
Kingdom of Denmark, 6s, 2011 2,000 348,594
-----------------------------------------------------------------------------------------------------
Kingdom of Denmark, 5s, 2013 2,999 487,314
-----------------------------------------------------------------------------------------------------
$3,109,115
-----------------------------------------------------------------------------------------------------
Dominican Republic - 0.1%
-----------------------------------------------------------------------------------------------------
Dominican Republic, 9.5s, 2006# $485 $421,950
-----------------------------------------------------------------------------------------------------
Dominican Republic, 9.04s, 2013# 386 297,220
-----------------------------------------------------------------------------------------------------
$719,170
-----------------------------------------------------------------------------------------------------
Ecuador
-----------------------------------------------------------------------------------------------------
Republic of Ecuador, 7s, 2030 $79 $52,416
-----------------------------------------------------------------------------------------------------
Finland - 1.1%
-----------------------------------------------------------------------------------------------------
Republic of Finland, 2.75s, 2006 EUR 147 $169,742
-----------------------------------------------------------------------------------------------------
Republic of Finland, 3s, 2008 3,368 3,808,904
-----------------------------------------------------------------------------------------------------
Republic of Finland, 5.375s, 2013 1,621 2,037,664
-----------------------------------------------------------------------------------------------------
$6,016,310
-----------------------------------------------------------------------------------------------------
France - 2.7%
-----------------------------------------------------------------------------------------------------
Vivendi Universal S.A., 6.25s, 2008 (Advertising &
Broadcasting)# $905 $945,725
-----------------------------------------------------------------------------------------------------
France Telecom S.A., 8.45s, 2006 (Telecommunications -
Wireline) 105 117,591
-----------------------------------------------------------------------------------------------------
Crown Cork & Seal Co., Inc., 9.5s, 2011 (Containers) 1,580 1,753,800
-----------------------------------------------------------------------------------------------------
France Telecom S.A. (Telecom - Wireline), 9.75s, 2031
(Telecommunications - Wireline) 2,141 2,825,737
-----------------------------------------------------------------------------------------------------
Republic of France, 4.75s, 2007 EUR 1,370 1,668,892
-----------------------------------------------------------------------------------------------------
Republic of France, 4s, 2009 2,767 3,238,414
-----------------------------------------------------------------------------------------------------
Republic of France, 4.75s, 2012 458 551,284
-----------------------------------------------------------------------------------------------------
Republic of France, 5s, 2012 400 491,045
-----------------------------------------------------------------------------------------------------
Republic of France, 5s, 2016 207 251,011
-----------------------------------------------------------------------------------------------------
Rhodia S.A., 8.875s, 2011 (Chemicals)# $2,090 1,860,100
-----------------------------------------------------------------------------------------------------
SNCF, 7.5s, 2008 (Railroad & Shipping) EUR 750 1,004,356
-----------------------------------------------------------------------------------------------------
Societe Generale Capital Trust I, 7.875s, 2049 (Banks &
Credit Companies) 300 405,307
-----------------------------------------------------------------------------------------------------
Vivendi Environnement, 5.875s, 2008 (Pollution Control) 250 309,297
-----------------------------------------------------------------------------------------------------
$15,422,559
-----------------------------------------------------------------------------------------------------
Germany - 6.4%
-----------------------------------------------------------------------------------------------------
Coca Cola Erfrischungsgetranke, 5.875s, 2005 (Food & Non
Alcoholic Beverages) EUR 600 $724,078
-----------------------------------------------------------------------------------------------------
DaimlerChrysler AG, 8.5s, 2031 (Automotive) 1,251 1,402,974
-----------------------------------------------------------------------------------------------------
DePfa Deutsche Pfandbriefbk, 5.5s, 2010 (Corporate Asset-
Backed) 960 1,204,719
-----------------------------------------------------------------------------------------------------
Deutsche Telekom International Finance B.V., 8.75s, 2030
(Telecommunications - Wireline) $1,414 1,778,890
-----------------------------------------------------------------------------------------------------
Federal Republic of Germany, 4s, 2009 EUR 716 841,387
-----------------------------------------------------------------------------------------------------
Federal Republic of Germany, 4.5s, 2009 21,107 25,404,791
-----------------------------------------------------------------------------------------------------
Federal Republic of Germany, 5.25s, 2010 1,209 1,506,946
-----------------------------------------------------------------------------------------------------
Kreditanstalt fur Wiederaufbau, 3.25s, 2008 (Banks &
Credit Compaines) 1,705 1,955,404
-----------------------------------------------------------------------------------------------------
Kreditanstalt fur Wiederaufbau, 4.75s, 2006 (Banks &
Credit Companies) 750 907,523
-----------------------------------------------------------------------------------------------------
Kronos International, Inc., 8.875s, 2009 (Chemicals) 95 114,160
-----------------------------------------------------------------------------------------------------
$35,840,872
-----------------------------------------------------------------------------------------------------
Greece - 0.2%
-----------------------------------------------------------------------------------------------------
Republic of Greece, 3.5s, 2008 EUR 592 $684,223
-----------------------------------------------------------------------------------------------------
Republic of Greece, 4.6s, 2013 370 435,734
-----------------------------------------------------------------------------------------------------
$1,119,957
-----------------------------------------------------------------------------------------------------
Ireland - 1.4%
-----------------------------------------------------------------------------------------------------
MDP Acquisitions PLC, 9.625s, 2012 (Forest & Paper
Products) $940 $1,043,400
-----------------------------------------------------------------------------------------------------
Bank of Ireland UK Holdings, 7.4s, 2049 (Banks & Credit
Companies) EUR 500 666,327
-----------------------------------------------------------------------------------------------------
Chalet Finance 1 PLC, 2.33s, 2013 (Home Loans) 300 350,501
-----------------------------------------------------------------------------------------------------
Republic of Ireland, 4.25s, 2007 2,322 2,781,413
-----------------------------------------------------------------------------------------------------
Republic of Ireland, 3.25s, 2009 1,662 1,884,603
-----------------------------------------------------------------------------------------------------
Republic of Ireland, 5s, 2013 868 1,060,098
-----------------------------------------------------------------------------------------------------
$7,786,342
-----------------------------------------------------------------------------------------------------
Italy - 1.6%
-----------------------------------------------------------------------------------------------------
Republic of Italy, 4.5s, 2007 EUR 1,271 $1,532,344
-----------------------------------------------------------------------------------------------------
Republic of Italy, 4.5s, 2005 4,745 5,669,177
-----------------------------------------------------------------------------------------------------
Republic of Italy, 4.75s, 2013 34 40,700
-----------------------------------------------------------------------------------------------------
Republic of Italy, 5.25s, 2017 370 453,605
-----------------------------------------------------------------------------------------------------
Telecom Italia S.p.A., 5.25s, 2013 (Telecommunications -
Wireline)# $1,425 1,413,916
-----------------------------------------------------------------------------------------------------
$9,109,742
-----------------------------------------------------------------------------------------------------
Japan - 0.9%
-----------------------------------------------------------------------------------------------------
UFJ Holdings, Inc., 6.75s, 2013 (Banks & Credit
Companies) $4,612 $4,828,524
-----------------------------------------------------------------------------------------------------
Kazakhstan - 0.5%
-----------------------------------------------------------------------------------------------------
Hurricane Finance B.V., 9.625s, 2010 (Oils)# $36 $39,420
-----------------------------------------------------------------------------------------------------
Kazkommerts International B.V., 10.125s, 2007 (Banks &
Credit Companies)# 250 275,000
-----------------------------------------------------------------------------------------------------
Kazkommerts International B.V., 8.5s, 2013 (Banks &
Credit Companies)# 1,361 1,354,195
-----------------------------------------------------------------------------------------------------
KazTransOil Co., 8.5s, 2006 (Oil Services)# 1,137 1,199,535
-----------------------------------------------------------------------------------------------------
Turanalem Finance B.V., 7.875s, 2010 (Banks & Credit
Companies)# 39 38,025
-----------------------------------------------------------------------------------------------------
Turanelem Finance B.V., 7.875s, 2010 (Banks & Credit
Companies)# 10 9,750
-----------------------------------------------------------------------------------------------------
$2,915,925
-----------------------------------------------------------------------------------------------------
Luxembourg - 0.1%
-----------------------------------------------------------------------------------------------------
Credit Suisse Group, 7.974s, 2010 (Banks & Credit
Companies) EUR 265 $356,784
-----------------------------------------------------------------------------------------------------
Malaysia - 0.4%
-----------------------------------------------------------------------------------------------------
Petronas Capital Ltd., 7.875s, 2022 (Oil Services)# $987 $1,119,291
-----------------------------------------------------------------------------------------------------
Petroliam Nasional, 7.75s, 2015 (Oils) 999 1,165,833
-----------------------------------------------------------------------------------------------------
$2,285,124
-----------------------------------------------------------------------------------------------------
Mexico - 2.5%
-----------------------------------------------------------------------------------------------------
Grupo Televisa S.A. de C.V., 8.5s, 2032 (Broadcast &
Cable TV) $1,866 $1,959,300
-----------------------------------------------------------------------------------------------------
Grupo Elektra S.A. de C.V., 12s, 2008 (Electronics) 42 44,835
-----------------------------------------------------------------------------------------------------
Petroleos Mexicanos, 9.5s, 2027 (Oils) 302 351,075
-----------------------------------------------------------------------------------------------------
BBVA Bancomer, 10.5s, 2011 (Banks & Credit Companies)# 1,240 1,391,900
-----------------------------------------------------------------------------------------------------
Innova S de R. L. De C.V., 9.375s, 2013 (Wireless
Communications)# 711 716,332
-----------------------------------------------------------------------------------------------------
Pemex Finance Ltd., 9.69s, 2009 (Energy - Integrated) 905 1,054,325
-----------------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 9.125s, 2010 (Quasi-
Government) 980 1,146,600
-----------------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 8.625s, 2022 (Quasi-
Governement) 2,834 3,089,060
-----------------------------------------------------------------------------------------------------
TFM S.A. de C.V., 10.25s, 2007 (Transportation -
Services) 15 15,300
-----------------------------------------------------------------------------------------------------
TFM S.A. de C.V., 11.75s, 2009 (Transportation -
Services) 16 16,120
-----------------------------------------------------------------------------------------------------
TFM S.A. de C.V., 12.5s, 2012 (Transportation - Services) 344 378,400
-----------------------------------------------------------------------------------------------------
United Mexican States, 8.125s, 2019 107 118,235
-----------------------------------------------------------------------------------------------------
United Mexican States, 8s, 2022 24 26,100
-----------------------------------------------------------------------------------------------------
United Mexican States, 11.5s, 2026 2,673 3,822,390
-----------------------------------------------------------------------------------------------------
United Mexican States, 8.3s, 2031 12 13,332
-----------------------------------------------------------------------------------------------------
$14,143,304
-----------------------------------------------------------------------------------------------------
Netherlands - 1.1%
-----------------------------------------------------------------------------------------------------
Deutsche Telekom International Finance B.V., 8.125s, 2012
(Telecomnunications - Wireline) EUR 130 $183,312
-----------------------------------------------------------------------------------------------------
Kingdom of Netherlands, 3.75s, 2009 3,364 3,901,040
-----------------------------------------------------------------------------------------------------
Kingdom of Netherlands, 5s, 2012 1,722 2,111,192
-----------------------------------------------------------------------------------------------------
$6,195,544
-----------------------------------------------------------------------------------------------------
New Zealand - 0.5%
-----------------------------------------------------------------------------------------------------
Government of New Zealand, 8s, 2006 NZD 315 $204,206
-----------------------------------------------------------------------------------------------------
Government of New Zealand, 7s, 2009 2,682 1,715,141
-----------------------------------------------------------------------------------------------------
Government of New Zealand, 6.5s, 2013 1,504 940,969
-----------------------------------------------------------------------------------------------------
$2,860,316
-----------------------------------------------------------------------------------------------------
Panama - 0.3%
-----------------------------------------------------------------------------------------------------
Republic of Panama, 1.938s, 2016 $174 $150,601
-----------------------------------------------------------------------------------------------------
Republic of Panama, 9.375s, 2023 99 107,415
-----------------------------------------------------------------------------------------------------
Republic of Panama, 9.375s, 2029 1,030 1,169,050
-----------------------------------------------------------------------------------------------------
$1,427,066
-----------------------------------------------------------------------------------------------------
Philippines
-----------------------------------------------------------------------------------------------------
Philippines Republic, 9.375s, 2017 $77 $81,716
-----------------------------------------------------------------------------------------------------
Poland - 0.3%
-----------------------------------------------------------------------------------------------------
PTC International Finance II S.A., 11.25s, 2009 (Wireless
Communications) $1,314 $1,435,545
-----------------------------------------------------------------------------------------------------
Portugal - 0.2%
-----------------------------------------------------------------------------------------------------
Republic of Portugal, 5.45s, 2013 EUR 1,067 $1,339,129
-----------------------------------------------------------------------------------------------------
Qatar - 0.2%
-----------------------------------------------------------------------------------------------------
State of Qatar, 9.75s, 2030# $20 $27,800
-----------------------------------------------------------------------------------------------------
State of Qatar, 9.75s, 2030 735 1,014,300
-----------------------------------------------------------------------------------------------------
$1,042,100
-----------------------------------------------------------------------------------------------------
Russia - 1.3%
-----------------------------------------------------------------------------------------------------
Gazprom, 9.625s, 2013 (Utilities - Gas)# $200 $217,000
-----------------------------------------------------------------------------------------------------
Mobile TeleSystems Finance S.A., 9.75s, 2008 (Wireless
Communications)# 19 20,187
-----------------------------------------------------------------------------------------------------
Mobile TeleSystems Finance S.A., 8.375s, 2010 (Wireless
Communications)# 1,344 1,323,840
-----------------------------------------------------------------------------------------------------
Russian Federation, 3s, 2011 380 286,900
-----------------------------------------------------------------------------------------------------
Russian Federation, 11s, 2018# 113 150,968
-----------------------------------------------------------------------------------------------------
Russian Federation, 5s, 2030# 1,433 1,336,904
-----------------------------------------------------------------------------------------------------
Siberian Oil Co., 10.75s, 2009 (Energy - Integrated) 780 832,650
-----------------------------------------------------------------------------------------------------
Tyumen Oil Co., 11s, 2007 (Oil Services) 1,560 1,770,600
-----------------------------------------------------------------------------------------------------
Vimplecom B.V., 10.45s, 2005 (Wireless Communications)# 1,551 1,638,244
-----------------------------------------------------------------------------------------------------
$7,577,293
-----------------------------------------------------------------------------------------------------
Singapore - 0.2%
-----------------------------------------------------------------------------------------------------
Flextronics International Ltd., 6.5s, 2013 (Electronics)# $1,130 $1,115,875
-----------------------------------------------------------------------------------------------------
Spain - 1.3%
-----------------------------------------------------------------------------------------------------
Kingdom of Spain, 6s, 2008 EUR 2,034 $2,594,331
-----------------------------------------------------------------------------------------------------
Kingdom of Spain, 5.35s, 2011 2,797 3,505,511
-----------------------------------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc., 9.625s, 2009
(Advertising & Broadcasting) 1,400 1,452,500
-----------------------------------------------------------------------------------------------------
$7,552,342
-----------------------------------------------------------------------------------------------------
Supra-National - 0.2%
-----------------------------------------------------------------------------------------------------
European Investment Bank, 5.375s, 2012 (Banks & Credit
Companies) EUR 750 $937,994
-----------------------------------------------------------------------------------------------------
Sweden - 0.3%
-----------------------------------------------------------------------------------------------------
Assa Abloy AB, 5.125s, 2006 (Consumer Goods & Services) EUR 130 $157,200
-----------------------------------------------------------------------------------------------------
Spintab AB, 5s, 2008 (Banks & Credit Companies) SEK 10,000 1,298,513
-----------------------------------------------------------------------------------------------------
$1,455,713
-----------------------------------------------------------------------------------------------------
Turkey
-----------------------------------------------------------------------------------------------------
Republic of Turkey, 9.5s, 2014 $25 $26,750
-----------------------------------------------------------------------------------------------------
Republic of Turkey, 11.875s, 2030 161 201,451
-----------------------------------------------------------------------------------------------------
$228,201
-----------------------------------------------------------------------------------------------------
Ukraine - 0.2%
-----------------------------------------------------------------------------------------------------
Republic of Ukraine, 7.65s, 2013# $973 $975,432
-----------------------------------------------------------------------------------------------------
United Kingdom - 2.4%
-----------------------------------------------------------------------------------------------------
Abbey National Capital, 8.963s, 2049 (Banks & Credit
Companies) $2,109 $2,797,392
-----------------------------------------------------------------------------------------------------
BAE Systems Holdings, Inc., 6.4s, 2011 (Aerospace)# 1,922 2,059,788
-----------------------------------------------------------------------------------------------------
Barclays Bank PLC, 8.55s, 2049 (Banks & Credit
Companies)# 2,141 2,626,230
-----------------------------------------------------------------------------------------------------
Telewest Communications PLC, 9.625s, 2006 (Broadcast &
Cable TV) (In Default) 350 185,500
-----------------------------------------------------------------------------------------------------
Global TeleSystems, Inc., 10.875s, 2008
(Telecommunications - Wireline) (In Default) 165 17
-----------------------------------------------------------------------------------------------------
Europa Two Ltd., 2.472s, 2027 (Corporate Asset-Backed) EUR 392 454,827
-----------------------------------------------------------------------------------------------------
Granite Mortgages PLC, 1s, 2042 (Residential Mortgage-
Backed) 350 426,408
-----------------------------------------------------------------------------------------------------
National Westminster Bank PLC, 6.625s, 2049 (Banks &
Credit Companies) 330 421,741
-----------------------------------------------------------------------------------------------------
NGG Finance PLC, 5.25s, 2006 (Utilities - Electric Power) 200 241,700
-----------------------------------------------------------------------------------------------------
OTE Telecommunications PLC, 6.125s, 2007
(Telecommunications - Wireline) 195 241,258
-----------------------------------------------------------------------------------------------------
Pearson PLC, 6.125s, 2007 (Printing & Publishing) 135 167,324
-----------------------------------------------------------------------------------------------------
Reed Elsevier Capital, Inc., 6.125s, 2006 (Advertising &
Broadcasting) 230 250,807
-----------------------------------------------------------------------------------------------------
Rolls Royce PLC, 6.375s, 2007 (Aerospace) 300 376,111
-----------------------------------------------------------------------------------------------------
United Kingdom Treasury, 7.25s, 2007 GBP 1,562 2,876,629
-----------------------------------------------------------------------------------------------------
Vodafone Airtouch PLC, 5.75s, 2006 (Wireless
Communications) EUR 140 173,135
-----------------------------------------------------------------------------------------------------
$13,298,867
-----------------------------------------------------------------------------------------------------
Venezuela - 0.2%
-----------------------------------------------------------------------------------------------------
Republic of Venezuela, 1.875s, 2007 $107 $98,837
-----------------------------------------------------------------------------------------------------
Republic of Venezuela, 10.75s, 2013# 942 890,190
-----------------------------------------------------------------------------------------------------
$989,027
-----------------------------------------------------------------------------------------------------
Vietnam
-----------------------------------------------------------------------------------------------------
Republic of Vietnam, 3.5s, 2028 $166 $115,333
-----------------------------------------------------------------------------------------------------
Total Foreign Bonds $190,200,879
-----------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $514,261,266) $545,496,267
-----------------------------------------------------------------------------------------------------
Convertible Bonds - 0.2%
-----------------------------------------------------------------------------------------------------
U.S. Bonds - 0.2%
-----------------------------------------------------------------------------------------------------
Wireless Communications - 0.2%
-----------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 5.25s, 2010 $1,300 $1,248,000
-----------------------------------------------------------------------------------------------------
Foreign Bonds
-----------------------------------------------------------------------------------------------------
United Kingdom
-----------------------------------------------------------------------------------------------------
Fortis Capital Co., 6.25s, 2049 (Banks & Credit
Companies) EUR 155 $190,761
-----------------------------------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $1,364,348) $1,438,761
-----------------------------------------------------------------------------------------------------
Stocks - 0.2%
-----------------------------------------------------------------------------------------------------
ISSUER SHARES $ VALUE
-----------------------------------------------------------------------------------------------------
U.S. Stocks - 0.2%
-----------------------------------------------------------------------------------------------------
Apparel Manufacturers - 0.1%
-----------------------------------------------------------------------------------------------------
Sind Holdings, Inc.* 5,720 $371,800
-----------------------------------------------------------------------------------------------------
Basic Industry
-----------------------------------------------------------------------------------------------------
Thermadyne Holdings Corp.* 812 $10,621
-----------------------------------------------------------------------------------------------------
Tobacco
-----------------------------------------------------------------------------------------------------
Reynolds (RJ) Tobacco Holdings, Inc. 2,302 $110,565
-----------------------------------------------------------------------------------------------------
Utilities - Telephone - 0.1%
-----------------------------------------------------------------------------------------------------
ITC Deltacom, Inc.* 112,647 $591,397
-----------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $2,666,653) $1,084,383
-----------------------------------------------------------------------------------------------------
Warrants
-----------------------------------------------------------------------------------------------------
U.S. Warrants
-----------------------------------------------------------------------------------------------------
Loral Orion Network Systems, Inc., Expire 1/15/07
(Business Services)* 1,625 $40
-----------------------------------------------------------------------------------------------------
Loral Orion Network Systems, Inc., Expire 1/15/07
(Business Services)* 700 20
-----------------------------------------------------------------------------------------------------
Thermadyne Holdings Corp., Expire 5/23/04 (Basic
Industry)* 1,285 1,157
-----------------------------------------------------------------------------------------------------
Thermadyne Holdings Corp., Expire 5/23/06 (Basic
Industry)* 777 777
-----------------------------------------------------------------------------------------------------
Total U.S. Warrants $1,994
-----------------------------------------------------------------------------------------------------
Foreign Warrants
-----------------------------------------------------------------------------------------------------
Ono Finance PLC, Expire 2/15/20 (Broadcast & Cable TV) 1,000 $10
-----------------------------------------------------------------------------------------------------
Total Warrants (Identified Cost, $185,913) $2,004
-----------------------------------------------------------------------------------------------------
Repurchase Agreement - 1.4%
-----------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 Omitted) $ VALUE
-----------------------------------------------------------------------------------------------------
Goldman Sachs Group, LP dated 10/31/03 due 11/03/03,
total to be received $7,909,692 (secured by various U.S.
Treasury and Federal Agency obligations in a jointly
traded account), at Cost $7,909 $7,909,000
-----------------------------------------------------------------------------------------------------
Put Options Purchased
-----------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER/EXPIRATION MONTH/STRIKE PRICE (000 Omitted) $ VALUE
-----------------------------------------------------------------------------------------------------
Brazil Federal Republic Bonds/December/91.825 $271 $1,951
-----------------------------------------------------------------------------------------------------
Venezuela/December/85 105 745
-----------------------------------------------------------------------------------------------------
Total Put Options Purchased (Premiums Paid, $9,937) $2,696
-----------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $526,397,117) $555,933,111
-----------------------------------------------------------------------------------------------------
Put Options Written - (0.0)%
-----------------------------------------------------------------------------------------------------
Brazilian Government Bonds/December/91.75 BRL 135 $(948)
-----------------------------------------------------------------------------------------------------
South African Rand/December/9.32 ZAR 4,660 $--
-----------------------------------------------------------------------------------------------------
Total Put Options Written (Premiums Received, $17,020) $(948)
-----------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.4% 7,828,182
-----------------------------------------------------------------------------------------------------
Net Assets - 100.0% $563,760,345
-----------------------------------------------------------------------------------------------------
* Non-income producing security.
# SEC Rule 144A restriction.
+ Restricted security.
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 below.
ARS = Argentine Peso MXN = Mexican Peso
AUD = Australian Dollar NZD = New Zealand Dollar
BRL = Brazilian Real PLN = Polish Zloty
CAD = Canadian Dollar RUB = Russian Ruble
CLP = Chilean Peso SEK = Swedish Krona
CNY = Chinese Yuan SGD = Singapore Dollar
COP = Colombian Peso THB = Thai Baht
DKK = Danish Krone TRL = Turkish Lira
EUR = Euro TWD = Taiwan New Dollar
GBP = British Pound UYU = Uraguayan Peso
IDR = Indonesian Rupiah ZAR = South African Rand
See notes to financial statements.
-----------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
-----------------------------------------------------------------------------------------------------
This statement represents your fund's balance sheet, which details the assets and liabilities
composing the total value of your fund.
AT 10/31/03
ASSETS
Investments, at value (identified cost, $526,397,117) $555,933,111
-----------------------------------------------------------------------------------------------------
Cash 216,282
-----------------------------------------------------------------------------------------------------
Foreign currency, at value (identified cost, $1,217) 1,242
-----------------------------------------------------------------------------------------------------
Receivable for forward foreign currency exchange contracts 1,503,676
-----------------------------------------------------------------------------------------------------
Receivable for investments sold 387,155
-----------------------------------------------------------------------------------------------------
Interest and dividends receivable 9,960,343
-----------------------------------------------------------------------------------------------------
Other assets 154,555
-----------------------------------------------------------------------------------------------------
Total assets $568,156,364
-----------------------------------------------------------------------------------------------------
LIABILITIES
Payable to dividend disbursing agent $233,006
-----------------------------------------------------------------------------------------------------
Payable for forward foreign currency exchange contracts 1,143,357
-----------------------------------------------------------------------------------------------------
Payable for investments purchased 2,323,381
-----------------------------------------------------------------------------------------------------
Payable for trust shares reacquired 83,870
-----------------------------------------------------------------------------------------------------
Written options outstanding, at value (premiums received,
$17,020) 948
-----------------------------------------------------------------------------------------------------
Payable for daily variation margin on open future contracts 59,641
-----------------------------------------------------------------------------------------------------
Payable to affiliates
-----------------------------------------------------------------------------------------------------
Management fee 11,385
-----------------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fee 13,642
-----------------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 526,789
-----------------------------------------------------------------------------------------------------
Total liabilities $4,396,019
-----------------------------------------------------------------------------------------------------
Net assets $563,760,345
-----------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
NET ASSETS CONSIST OF
Paid-in capital $632,782,515
-----------------------------------------------------------------------------------------------------
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 29,954,893
-----------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (90,560,905)
-----------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income (8,416,158)
-----------------------------------------------------------------------------------------------------
Total $563,760,345
-----------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding (89,758,854
issued, less 6,388,302 treasury shares) 83,370,552
-----------------------------------------------------------------------------------------------------
Net asset value per share (net assets of $563,760,345 /
83,370,552 shares of beneficial interest outstanding) $6.76
-----------------------------------------------------------------------------------------------------
See notes to financial statements.
--------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------------------------------------------
This statement describes how much your fund received in investment income and paid in expenses. It also describes any
gains and/or losses generated by fund operations.
FOR YEAR ENDED 10/31/03
NET INVESTMENT INCOME
Interest income $36,989,555
-----------------------------------------------------------------------------------------------------
Dividends 15,910
-----------------------------------------------------------------------------------------------------
Total investment income $37,005,465
-----------------------------------------------------------------------------------------------------
Expenses
-----------------------------------------------------------------------------------------------------
Management fee $3,956,816
-----------------------------------------------------------------------------------------------------
Trustees" compensation 94,137
-----------------------------------------------------------------------------------------------------
Custodian fee 346,212
-----------------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fee 182,836
-----------------------------------------------------------------------------------------------------
Administrative fee 54,381
-----------------------------------------------------------------------------------------------------
Auditing fees 49,820
-----------------------------------------------------------------------------------------------------
Legal fees 3,576
-----------------------------------------------------------------------------------------------------
Postage 43,985
-----------------------------------------------------------------------------------------------------
Printing 72,607
-----------------------------------------------------------------------------------------------------
Miscellaneous 396,066
-----------------------------------------------------------------------------------------------------
Total expenses $5,200,436
-----------------------------------------------------------------------------------------------------
Fees paid indirectly (16,612)
-----------------------------------------------------------------------------------------------------
Net expenses $5,183,824
-----------------------------------------------------------------------------------------------------
Net investment income $31,821,641
-----------------------------------------------------------------------------------------------------
Statement of Operations - continued
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) (identified cost basis)
-----------------------------------------------------------------------------------------------------
Investment transactions $25,146,731
-----------------------------------------------------------------------------------------------------
Written option transactions 2,258
-----------------------------------------------------------------------------------------------------
Futures transactions $(1,172,652)
-----------------------------------------------------------------------------------------------------
Foreign currency transactions $(15,887,764)
-----------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign currency
transactions $8,088,573
-----------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
-----------------------------------------------------------------------------------------------------
Investments $28,647,462
-----------------------------------------------------------------------------------------------------
Written options 16,072
-----------------------------------------------------------------------------------------------------
Futures contracts 2,371
-----------------------------------------------------------------------------------------------------
Translation of assets and liabilities in foreign
currencies 1,755,289
-----------------------------------------------------------------------------------------------------
Net unrealized gain on investments and foreign currency
translation $30,421,194
-----------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and foreign
currency $38,509,767
-----------------------------------------------------------------------------------------------------
Increase in net assets from operations $70,331,408
-----------------------------------------------------------------------------------------------------
See notes to financial statements.
-----------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT 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.
FOR YEARS ENDED 10/31 2003 2002
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income $31,821,641 $34,676,335
-----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions 8,088,573 (34,318,848)
-----------------------------------------------------------------------------------------------------
Net unrealized gain on investments and foreign currency
translation 30,421,194 11,488,644
----------------------------------------------------------- ------------ -------------
Increase in net assets from operations $70,331,408 $11,846,131
----------------------------------------------------------- ------------ -------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(33,246,025) $(35,951,308)
-----------------------------------------------------------------------------------------------------
TRUST SHARE (PRINCIPAL) TRANSACTIONS
Cost of shares reacquired $(2,269,553) $(1,717,045)
-----------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets $34,815,830 $(25,822,222)
----------------------------------------------------------- ------------ -------------
NET ASSETS
At beginning of period $528,944,515 $554,766,737
-----------------------------------------------------------------------------------------------------
At end of period (including accumulated distributions in
excess of net investment income of $8,416,158 and
$534,911, respectively) $563,760,345 $528,944,515
-----------------------------------------------------------------------------------------------------
See notes to financial statements.
------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years.
Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by
which an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all distributions). This
information has been audited by the fund's independent auditors, whose report, together with the fund's financial statements,
are included in this report.
FOR YEARS ENDED 10/31
2003 2002 2001 2000 1999
Net asset value, beginning of period $6.32 $6.60 $6.69 $7.03 $7.17
------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#(S)
Net investment income $0.38 $0.41 $0.51 $0.58 $0.56
------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments and foreign currency 0.46 (0.26) (0.06) (0.40) (0.14)
---------------------------------------------- ------- ------ ------ ------ ------
Total from investment operations $0.84 $0.15 $0.45 $0.18 $0.42
---------------------------------------------- ------- ------ ------ ------ ------
LESS DISTRIBUTIONS
From net investment income $(0.40) $(0.43) $(0.49) $(0.41) $(0.57)
------------------------------------------------------------------------------------------------------------------------------
From paid-in capital -- -- (0.05) (0.17) --
------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.40) $(0.43) $(0.54) $(0.58) $(0.57)
---------------------------------------------- ------- ------ ------ ------ ------
Net increase from repurchase of capital
shares $0.00+ $0.00+ $0.00+ $0.06 $0.01
---------------------------------------------- ------- ------ ------ ------ ------
Net asset value, end of period $6.76 $6.32 $6.60 $6.69 $7.03
---------------------------------------------- ------- ------ ------ ------ ------
Per share market value, end of period $6.41 $5.69 $6.06 $6.00 $6.06
---------------------------------------------- ------- ------ ------ ------ ------
Total return at market value (%) 20.11 0.72* 9.83 8.84 2.81
------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA:
Expenses## 0.94 0.96 1.06 1.06 1.05
------------------------------------------------------------------------------------------------------------------------------
Net investment income(S) 5.76 6.49 7.65 8.23 7.80
------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 126 152 103 82 98
------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $563,760 $528,945 $554,767 $567,191 $641,213
------------------------------------------------------------------------------------------------------------------------------
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from fees paid indirectly.
+ Per share data is less than $0.01.
(S) As required, effective November 1, 2001, the trust 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.
* As revised, to reflect post closing activity on the NYSE at October 31, 2002. Such amount was previously reported as 0.90%.
See notes to financial statements.
-------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
(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
accounting principles generally accepted in the United States of America
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 on the basis of quotes from brokers and dealers or on the basis of
valuations furnished by a pricing service. 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 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. If no sales are reported, as is the case for
most securities traded over the counter, securities are valued on the basis of
quotations obtained from brokers and dealers or on the basis of valuations
furnished by a pricing service. Forward contracts and currency options will be
valued using a pricing model taking into consideration market data from an
external pricing source. Use of the pricing services has been approved by the
Board of Trustees. All other securities (other than short-term obligations),
futures contracts and options in the trust's portfolio for which the principal
market is one or more securities or commodities exchanges (whether domestic or
foreign) will be valued at the last reported sale price or at the settlement
price prior to the determination (or if there has been no current sale, at the
closing bid price) on the primary exchange on which such securities, futures
contracts or options are traded; but if a securities exchange is not the
principal market for securities, such securities will, if market quotations
are readily available, be valued at current bid prices. Short-term obligations
in the trust's portfolio are valued at amortized cost, which constitutes fair
value as determined by the Board of Trustees. Short-term obligations with a
remaining maturity in excess of 60 days will be valued upon dealer-supplied
valuations. Portfolio investments for which market quotations are not readily
available, or whose values have been materially affected by events occurring
after the close of their primary markets, are valued at fair value as
determined in good faith by or at the direction of the Board of Trustees.
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 - 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. 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 trust 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 $76,213 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. Interest income is recorded on the accrual basis. All premium
and discount is amortized or accreted for financial statement purposes in
accordance with accounting principles generally accepted in the United States
of America. 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. 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.
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 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 currency transactions, mortgage-backed securities, derivatives,
defaulted bonds, capital losses, and amortization and accretion on debt
securities.
The tax character of distributions declared for the years ended
October 31, 2003 and October 31, 2002 was as follows:
10/31/03 10/31/02
Distributions declared from:
-------------------------------------------------------------------------------
Ordinary income $33,246,025 $35,951,308
-------------------------------------------------------------------------------
Long-term capital gain 0 0
-------------------------------------------------------------------------------
$33,246,025 $35,951,308
-------------------------------------------------------------------------------
Tax return of capital 0 0
-------------------------------------------------------------------------------
Total distributions declared $33,246,025 $35,951,308
-------------------------------------------------------------------------------
During the year ended October 31, 2003 accumulated distributions in excess of
net investment income increased by $6,456,863, accumulated net realized loss
on investments and foreign currency transactions decreased by $6,455,775, and
paid-in capital increased by $1,088 due to differences between book and tax
accounting for mortgage-backed securities, currency transactions, the offset
of net investment loss against short-term capital gains, amortization and
accretion on debt securities, market discount, capital losses, etc. This
change had no effect on the net assets or net asset value per share.
As of October 31, 2003, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
Undistributed ordinary income $249,409
------------------------------------------------------------------
Capital loss carryforward (86,321,808)
------------------------------------------------------------------
Unrealized appreciation 25,352,988
------------------------------------------------------------------
Other temporary differences (8,302,759)
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.
EXPIRATION DATE
October 31, 2007 $(6,254,941)
------------------------------------------------------------------
October 31, 2008 (19,415,923)
------------------------------------------------------------------
October 31, 2009 (22,359,865)
------------------------------------------------------------------
October 31, 2010 (38,291,079)
------------------------------------------------------------------
Total $(86,321,808)
------------------------------------------------------------------
(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 investment income.
Management fees incurred for the year ended October 31, 2003 were 0.72% of
average daily net assets on an annualized basis.
The trust pays compensation to the Independent Trustees ("Trustees") in the
form of both a retainer and attendance fees, 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 inactive Trustees and an unfunded retirement benefit deferral
plan for active Trustees. Included in Trustees" compensation is a net increase
of $14,569 as a result of the change in the trust's pension liability for
active Trustees and a pension expense of $16,170 for inactive trustees for the
year ended October 31, 2003.
ADMINISTRATOR - The trust has an administrative services agreement with MFS to
provide the trust with certain financial, legal, shareholder communications,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the trust pays MFS an administrative fee
not to exceed the following annual percentage rates of the trust's average
daily net assets:
First $2 billion 0.0175%
------------------------------------------------------------------
Next $2.5 billion 0.0130%
------------------------------------------------------------------
Next $2.5 billion 0.0005%
------------------------------------------------------------------
In excess of $7 billion 0.0000%
------------------------------------------------------------------
TRANSFER AGENT - MFSC acts 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 and will reimburse MFSC for reasonable
out-of-pocket expenses.
(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 $119,156,033 $210,737,601
--------------------------------------------------------------------------------
Investments (non-U.S. government securities) $564,052,665 $496,088,626
--------------------------------------------------------------------------------
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 $530,635,497
------------------------------------------------------------------
Gross unrealized appreciation $33,169,265
------------------------------------------------------------------
Gross unrealized depreciation (7,871,651)
------------------------------------------------------------------
Net unrealized appreciation $25,297,614
------------------------------------------------------------------
(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 89,758,854 full and fractional shares of beneficial interest and
have authorized the repurchase by the trust of up to 10% annually of its own
shares of beneficial interest. The trust repurchased 381,600 shares of
beneficial interest during the year ended October 31, 2003 at an average price
per share of $5.95 and a weighted average discount of 8.90% per share. The
trust repurchased 294,300 shares of beneficial interest during the year ended
October 31, 2002, at an average price per shares of $5.83 and a weighted
average discount of 9.43% per share. Transactions in trust shares were
as follows:
Year ended 10/31/03 Year ended 10/31/02
SHARES AMOUNT SHARES AMOUNT
Treasury shares reacquired (381,600) $(2,269,553) (294,300) $(1,717,045)
-----------------------------------------------------------------------------------------------------------
Net decrease (381,600) $(2,269,553) (294,300) $(1,717,045)
-----------------------------------------------------------------------------------------------------------
(6) LINE OF CREDIT
The trust, and other affiliated funds participate in an $800 million 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 bank's
base rate. 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 quarter. The commitment fee allocated to the trust for the
year ended October 31, 2003 was $4,317. The trust had no borrowings during
the year.
(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 4 21,679
--------------------------------------------------------------------------
Options exercised (1) (2,401)
--------------------------------------------------------------------------
Options expired (1) (2,258)
--------------------------------------------------------------------------
Outstanding, end of period 2 $17,020
--------------------------------------------------------------------------
At October 31, 2003 the trust had sufficient cash and/or securities at least
equal to the value of the written options.
Forward Foreign Currency Exchange Contracts
-----
SALES
-----
CONTRACTS TO NET UNREALIZED
DELIVER/ IN EXCHANGE CONTRACTS APPRECIATION
SETTLEMENT DATE RECEIVE FOR AT VALUE (DEPRECIATION)
-----------------------------------------------------------------------------------------------------------
11/03/03 AUD 3,308,810 $2,331,387 $2,342,394 $(11,007)
11/03/03-01/13/04 CAD 9,067,639 6,717,472 6,864,779 (147,307)
12/17/03 DKK 20,189,606 3,173,618 3,149,283 24,335
11/03/03-01/13/04 EUR 142,382,236 166,350,636 165,132,863 1,217,773
11/03/03-01/13/04 GBP 3,242,680 5,414,797 5,494,136 (79,339)
11/24/03 MXN 2,896,708 260,000 261,289 (1,289)
11/03/03-12/17/03 NZD 9,633,240 5,735,653 5,883,207 (147,554)
11/03/03-01/13/04 SEK 12,584,044 1,605,373 1,609,309 (3,936)
11/03/03 SGD 544,256 313,268 312,823 445
11/10/03 TRL 305,591,003,470 211,094 204,737 6,357
------------ ------------ --------
$192,113,298 $191,254,820 $858,478
============ ============ ========
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
---------
PURCHASES
---------
11/21/03 ARS 145,890 $51,263 $50,619 $(644)
11/03/03-01/13/04 AUD 6,617,620 4,524,356 4,666,945 142,589
11/24/03 BRL 290,000 100,000 100,443 443
11/03/03-12/17/03 CAD 6,628,532 4,996,182 5,022,876 26,694
11/24/03 CLP 95,925,000 150,000 153,037 3,037
07/12/04 CNY 1,830,988 224,763 225,848 1,085
11/14/03 COP 274,333,000 94,497 95,026 529
12/17/03 DKK 4,262,782 674,822 664,932 (9,890)
11/03/03-01/13/04 EUR 73,799,946 86,378,115 85,670,376 (707,739)
11/03/03-01/13/04 GBP 3,536,351 5,914,976 5,989,411 74,435
11/28/03 IDR 866,500,000 102,049 101,448 (601)
11/24/03 MXN 8,814,849 790,683 795,116 4,433
11/03/03 NZD 4,816,620 2,950,180 2,948,952 (1,228)
11/24/03 PLN 1,184,531 299,766 292,992 (6,774)
11/21/03 RUB 6,230,000 207,046 207,152 106
11/03/03 SEK 5,390,135 696,304 690,483 (5,821)
11/03/03-11/28/03 SGD 1,440,492 832,308 828,007 (4,301)
11/21/03 THB 12,015,000 300,000 300,011 11
11/10/03-11/24/03 TRL 877,468,253,470 595,966 584,285 (11,681)
11/07/03 TWD 8,587,000 256,405 253,099 (3,306)
11/14/03 UYU 2,616,000 92,458 91,518 (940)
11/14/03 ZAR 562,033 80,010 81,414 1,404
------------ ------------ --------
$110,312,149 $109,813,990 $(498,159)
============ ============ ========
-----------------------------------------------------------------------------------------------------------
At October 31, 2003, the trust had sufficient cash and/or securities to cover
any commitments under these contracts.
Futures Contracts
UNREALIZED
APPRECIATION
DESCRIPTION EXPIRATION CONTRACTS POSITION (DEPRECIATION)
U.S. Treasury Notes December 2003 173 Short $3,361
--------------------------------------------------------------------------------
U.S. Treasury Notes December 2003 1 Short $(990)
--------------------------------------------------------------------------------
$2,371
--------------------------------------------------------------------------------
At October 31, 2003, the trust had sufficient cash and/or securities to cover
any commitments under these contracts.
(8) RESTRICTED SECURITIES
The trust may invest not more than 10% of its total assets in securities which
are subject to legal or contractual restrictions on resale. At October 31,
2003, the trust owned the following restricted security, excluding securities
issued under Rule 144A, constituting 0.01% of net assets which may not be
publicly sold without registration under the Securities Act of 1933. The trust
does not have the right to demand that such security be registered. The value
of this security 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.
SHARE/
DATE OF PRINCIPAL
DESCRIPTION ACQUISITION AMOUNT COST VALUE
DLJ Mortgage Acceptance Corp. 4/9/01 59,905 $54,963 $59,669
------------------------------------------------------------------------------
(9) CHANGE IN ACCOUNTING PRINCIPLE
As required, effective November 1, 2001, the trust adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium and accreting market discount on debt securities. Prior to
November 1, 2001 the trust did not amortize premium nor accrete market
discount on debt securities. The cumulative effect of this accounting change
had no impact on total net assets of the trust, but resulted in a $3,979,555
reduction in cost of securities and a corresponding $3,979,555 decrease in net
unrealized depreciation, based on securities held by the fund on November 1,
2001.
The effect of this change for the year ended October 31, 2002 was to increase
net investment income by $42,664, increase net unrealized depreciation by
$522,757, and decrease net realized losses by $565,421. The Statement of
Changes in Net Assets and Financial Highlights for prior periods has not been
restated to reflect this change in presentation.
(10) LEGAL PROCEEDINGS
Massachusetts Financial Services Company ("MFS"), the Trust's investment
adviser, has been contacted by the Office of the New York State Attorney
General ("NYAG") and the United States Securities and Exchange Commission
("SEC") in connection with their investigations of practices in the mutual
fund industry identified as "market timing" mutual fund shares. MFS is
cooperating with respect to these investigations. MFS has been informed that
the SEC is considering whether to institute an enforcement action against MFS
alleging false and misleading disclosure in certain MFS fund prospectuses and
breach of fiduciary duty concerning market timing. The NYAG has also indicated
that it is considering whether to commence an enforcement proceeding against
MFS relating to these practices. MFS continues to discuss these matters with
the SEC and the NYAG. Certain other regulatory authorities are also conducting
investigations into these practices within the industry and have requested
that MFS provide information to them.
In December 2003, MFS and Sun Life Financial Inc., along with certain MFS
funds and Trustees who serve on the Board of Trustees of these MFS funds, were
named as defendants in class action lawsuits filed in the United States
District Court, District of Massachusetts seeking damages of unspecified
amounts. The lawsuits were purportedly filed on behalf of people who
purchased, owned and/or redeemed shares of certain MFS funds during specified
periods. The suits allege that certain defendants permitted market timing and
late trading in the MFS funds which allegedly caused financial injury to the
funds" shareholders. The defendants are reviewing the allegations and will
respond appropriately. Additional lawsuits based upon similar allegations may
be filed in the future.
Any potential resolution of these matters may include, but not be limited to,
sanctions, penalties, damages or injunctions regarding MFS, restitution to
mutual fund shareholders and/or other financial penalties and structural
changes in the governance of MFS" mutual fund business.
These regulatory developments do not relate to closed-end investment companies
such as the Trust, and the Trust has not been named as a defendant in any of
the aforementioned lawsuits. Although MFS does not believe that these lawsuits
will have a material adverse effect on the Trust, there can be no assurance
that the ongoing adverse publicity and/or other developments resulting from
related regulatory investigations or developments will not result in an
increase in the market discount of the Trust's shares or other adverse
consequences to the Trust.
-------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
-------------------------------------------------------------------------------
To the Trustees and Shareholders of MFS Multimarket Income Trust:
We have audited the accompanying statement of assets and liabilities of MFS
Multimarket Income Trust (the Fund), including the portfolio of investments, as
of October 31, 2003, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of October 31, 2003, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
MFS Multimarket Income Trust at October 31, 2003, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and its financial highlights for each
of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
December 12, 2003
------------------------------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
------------------------------------------------------------------------------------------------------
The following tables present certain information regarding the Trustees and officers of the Trust, including
their principal occupations, which, unless specific dates are shown, are of more than five years" duration,
although the titles may not have been the same throughout.
Name, age, position with the Trust, principal occupation, and other directorships(1)
INTERESTED TRUSTEES
JEFFREY L. SHAMES(2) (born 06/02/55) ABBY M. O'NEILL (born 04/27/28)
Chairman Trustee
Massachusetts Financial Services Company, Chairman Private investor; Rockefeller Financial Services,
Inc. (investment advisers), Chairman and Chief
JOHN W. BALLEN(2) (born 09/12/59) Executive Officer
Trustee and President
Massachusetts Financial Services Company, Chief LAWRENCE T. PERERA (born 06/23/35)
Executive Officer and Director Trustee
Hemenway & Barnes (attorneys), Partner
KEVIN R. PARKE(2) (born 12/14/59)
Trustee WILLIAM J. POORVU (born 04/10/35)
Massachusetts Financial Services Company, Trustee
President, Chief Investment Officer, and Director Private investor; Harvard University Graduate
School of Business Administration, Class of 1961
INDEPENDENT TRUSTEES Adjunct Professor in Entrepreneurship Emeritus;
CBL & Associates Properties, Inc. (real estate
LAWRENCE H. COHN, M.D. (born 03/11/37) investment trust), Director
Trustee
Brigham and Women's Hospital, Chief of Cardiac J. DALE SHERRATT (born 09/23/38)
Surgery; Harvard Medical School, Professor of Trustee
Surgery Insight Resources, Inc. (acquisition planning
specialists), President; Wellfleet Investments
WILLIAM R. GUTOW (born 09/27/41) (investor in health care companies), Managing
Trustee General Partner (since 1993); Cambridge
Private investor and real estate consultant; Nutraceuticals (professional nutritional
Capitol Entertainment Management Company (video products), Chief Executive Officer (until May
franchise), Vice Chairman 2001)
J. ATWOOD IVES (born 05/01/36) ELAINE R. SMITH (born 04/25/46)
Trustee Trustee
Private investor; KeySpan Corporation (energy Independent health care industry consultant
related services), Director; Eastern Enterprises
(diversified services company), Chairman, Trustee WARD SMITH (born 09/13/30)
and Chief Executive Officer (until November 2000) Trustee
Private investor
(1) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission
(i.e., "public companies").
(2) "Interested person" of MFS within the meaning of the Investment Company Act of 1940 (referred to as the
1940 Act) which is the principal federal law governing investment companies like the Trust. The address of MFS
is 500 Boylston Street, Boston, Massachusetts 02116.
Trustees and Officers - continued
OFFICERS
JEFFREY L. SHAMES (born 06/02/55) ROBERT R. FLAHERTY (born 09/18/63)
Chairman Assistant Treasurer
Massachusetts Financial Services Company, Chairman Massachusetts Financial Services Company, Vice
President (since August 2000); UAM Fund Services,
JOHN W. BALLEN (born 09/12/59) Senior Vice President (prior to August 2000)
Trustee and President
Massachusetts Financial Services Company, Chief RICHARD M. HISEY (born 08/29/58)
Executive Officer and Director Treasurer
Massachusetts Financial Services Company, Senior
JAMES R. BORDEWICK, JR. (born 03/06/59) Vice President (since July 2002); The Bank of New
Assistant Secretary and Assistant Clerk York, Senior Vice President (September 2000 to
Massachusetts Financial Services Company, Senior July 2002); Lexington Global Asset Managers, Inc.,
Vice President and Associate General Counsel Executive Vice President and Chief Financial
Officer, (prior to September 2000); Lexington
STEPHEN E. CAVAN (born 11/06/53) Funds, Treasurer (prior to September 2000)
Secretary and Clerk
Massachusetts Financial Services Company, Senior ELLEN MOYNIHAN (born 11/13/57)
Vice President, General Counsel and Secretary Assistant Treasurer
Massachusetts Financial Services Company, Vice
STEPHANIE A. DESISTO (born 10/01/53) President
Assistant Treasurer
Massachusetts Financial Services Company, Vice JAMES O. YOST (born 06/12/60)
President (since April 2003); Brown Brothers Assistant Treasurer
Harriman & Co., Senior Vice President (November Massachusetts Financial Services Company, Senior
2002 to April 2003); ING Groep N.V./Aeltus Vice President
Investment Management, Senior Vice President
(prior to November 2002)
The Trust does not hold annual shareholder meetings for the purpose of electing Trustees, and Trustees are not
elected for fixed terms. This means that each Trustee will be elected to hold office until his or her
successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Each
officer will hold office until his or her successor is chosen and qualified, or until he or she retires,
resigns or is removed from office.
Messrs. Shames, Ives, Perera and Poorvu, and Ms. Smith, have served in their capacity as Trustee of the Trust
continuously since originally elected or appointed. Messrs. Ballen and Gutow have each served as a Trustee of
the Trust since August 1, 2001. Messrs. Cohn, Sherratt and Smith, and Ms. O'Neill, were elected by
shareholders and have served as Trustees of the Trust since January 1, 2002. Mr. Parke has served as Trustee
of the Trust since January 1, 2002.
Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or
a subsidiary is the investment adviser or distributor and, in the case of the officers, with certain
affiliates of MFS. Each Trustee serves as a board member of 110 funds within the MFS Family of Funds.
The Statement of Additional Information contains further information about the Trustees and is available
without charge upon request, by calling 1-800-225-2606.
------------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIANS
Massachusetts Financial Services Company State Street Bank and Trust Company
500 Boylston Street, Boston, MA 225 Franklin Street, Boston, MA
02116-3741 02110
PORTFOLIO MANAGERS JP Morgan Chase Bank
Peter C. Vaream(1) One Chase Manhattan Plaza
New York, NY 10081
AUDITORS
Ernst & Young LLP
(1) MFS Investment Management
------------------------------------------------------------------------------
FEDERAL TAX INFORMATION (UNAUDITED)
In January 2004, shareholders will be mailed a Form 1099-DIV reporting the
federal tax status of all distributions paid during the calendar year 2003.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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
A general description of the MFS Funds proxy voting policies is available
without charge, upon request, by calling 1-800-225-2606, by visiting the About
MFS section of mfs.com or by visiting the SEC's website at http://www.sec.gov.
NUMBER OF SHAREHOLDERS
As of October 31, 2003, our records indicate that there are 672 registered
shareholders and approximately 5,400 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
[logo] M F S(R)
500 Boylston Street
Boston, MA 02116-3741
(C) 2003 MFS Investment Management(R)
500 Boylston Street, Boston, MA 02116
MMT-ANN-12/03 75M
ITEM 2. CODE OF ETHICS.
The Registrant has adopted a Code of Ethics pursuant to Section 406 of the
Sarbanes-Oxley Act and as defined in the instructions to Form N-CSR that
applies to the Registrant's principal executive officer and principal financial
and accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Messrs. J. Atwood Ives and Ward Smith, members of the Audit Committee, have
been determined by the Board of Trustees in their reasonable business judgment
to meet the definition of "audit committee financial expert" as such term is
defined in the instructions to Form N-CSR. In addition, Messrs. Ives and Smith
are both "independent" members of the Audit Committee as defined in the
instructions to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time. [Applicable for annual reports filed for the first
fiscal year ending after December 15, 2003 (beginning with annual N-CSR filings
at the end of February, 2004 for December 31, 2003 reporting period.)]
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time. [Applicable for closed-end fund annual reports
covering periods ending on or after the compliance date for the listing
standards applicable to the closed-end fund. Listed issuers must be in
compliance with the new listing rules by the earlier of the registrant's first
annual shareholders meeting after January 15, 2004 or October 31, 2004.]
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Board of Trustees and the Board of Managers of the investment companies
(the "MFS Funds") advised by Massachusetts Financial Services Company ("MFS")
have delegated to MFS the right and obligation to vote proxies for shares that
are owned by the MFS Funds, in accordance with MFS' proxy voting policies and
procedures (the "MFS Proxy Policies"). The MFS Proxy Policies are set forth
below:
MASSACHUSETTS FINANCIAL SERVICES COMPANY
PROXY VOTING POLICIES AND PROCEDURES
SEPTEMBER 17, 2003
Massachusetts Financial Services Company, MFS Institutional Advisors,
Inc. and MFS' other investment adviser subsidiaries (collectively, "MFS") have
adopted proxy voting policies and procedures, as set forth below, with respect
to securities owned by the clients for which MFS serves as investment adviser
and has the power to vote proxies, including the registered investment
companies included within the MFS Family of Funds (the "MFS Funds").
These policies and procedures include:
A. Voting Guidelines;
B. Administrative Procedures;
C. Monitoring System;
D. Records Retention; and
E. Reports.
A. VOTING GUIDELINES
1. GENERAL POLICY; POTENTIAL CONFLICTS OF INTEREST
MFS' policy is that proxy voting decisions are made in what
MFS believes to be the best long-term economic interests of MFS'
clients, and not in the interests of any other party or in MFS'
corporate interests, including interests such as the distribution of
MFS Fund shares, administration of 401(k) plans, and institutional
relationships.
MFS has carefully reviewed matters that in recent years have
been presented for shareholder vote by either management or
shareholders of public companies. Based on the guiding principle that
all votes made by MFS on behalf of its clients must be in what MFS
believes to be the best long-term economic interests of such clients,
MFS has adopted proxy voting guidelines, which are set forth below,
that govern how MFS generally plans to vote on specific matters
presented for shareholder vote. In all cases, MFS will exercise its
discretion to vote these items in accordance with this guiding
principle. These underlying guidelines are simply that - guidelines.
Each proxy item is considered on a case-by-case basis, in light of all
relevant facts and circumstances, and there may be instances in which
MFS may vote proxies in a manner different from these guidelines.
As a general matter, MFS maintains a consistent voting
position with respect to similar proxy proposals made by various
issuers. In addition, MFS generally votes consistently on the same
matter when securities of an issuer are held by multiple client
accounts. However, MFS recognizes that there are gradations in certain
types of proposals that might result in different voting positions
being taken with respect to the different proxy statements. There also
may be situations involving matters presented for shareholder vote
that are not clearly governed by the guidelines, such as proposed
mergers and acquisitions. Some items that otherwise would be
acceptable will be voted against the proponent when it is seeking
extremely broad flexibility without offering a valid explanation. MFS
reserves the right to override the guidelines with respect to a
particular shareholder vote when such an override is, in MFS' best
judgment, consistent with the guiding principle of voting proxies in
the best long-term economic interests of MFS' clients.
From time to time, MFS receives comments on these guidelines
and regarding particular voting issues from its clients. Those
comments are reviewed and considered periodically, and these
guidelines are reviewed each year with MFS Equity Research Department
management, the MFS Proxy Review Group and the MFS Proxy Consultant
and are revised as appropriate.
These policies and procedures are intended to address any
potential material conflicts of interest on the part of MFS or its
affiliates that could arise in connection with the voting of proxies
on behalf of MFS' clients. MFS shall be mindful of any and all
potential material conflicts of interest that could arise in the
voting of these proxies, shall identify, analyze, document and report
on any such potential conflicts, and shall ultimately vote these
proxies in what MFS believes to be the best long-term economic
interests of its clients. The MFS Proxy Review Group is responsible
for monitoring and reporting on all potential conflicts of interest.
2. MFS' POLICY ON SPECIFIC ISSUES
NON-SALARY COMPENSATION PROGRAMS
Managements have become increasingly creative and generous
with compensation programs involving common stock. The original stock
option plans, which called for the optionee to pay the money to
exercise the option, are now embellished with no risk benefits such as
stock appreciation rights, the use of unexercised options to "buy"
stock, and restricted stock at bargain prices.
Stock option plans are supposed to reward results rather than
tenure, so the use of restricted stock at bargain prices is not
favored. In some cases, restricted stock is granted to the recipient
at deep discounts to fair market value, sometimes at par value. The
holder cannot sell for a period of years, but in the meantime is able
to vote and receive dividends. Eventually the restrictions lapse and
the stock can be sold.
MFS votes against option programs for officers, employees or
non-employee directors that do not require an investment by the
optionee, that give "free rides" on the stock price, or that permit
grants of restricted stock at deep discounts to fair market value. MFS
generally votes against stock option plans that involve stock
appreciation rights or the use of unexercised options to "buy" stock.
MFS opposes plans that provide unduly generous compensation
for officers, directors or employees, or could result in excessive
dilution to other shareholders. As a general guideline, MFS votes
against stock option plans if all such plans for a particular company
involve potential dilution, in the aggregate, of more than 15%.
MFS votes in favor of stock option plans for non-employee
directors as long as they satisfy the requirements set forth above
with respect to stock option plans for employees. Stock option plans
that include options for consultants and other third parties not
involved in the management of the company generally are opposed by
MFS.
"GOLDEN PARACHUTES"
From time to time, shareholders of companies have submitted
proxy proposals that would require shareholder approval of any
severance packages for executive officers that exceed certain
predetermined thresholds. MFS votes in favor of such shareholder
proposals when they would require shareholder approval of any
severance package for an executive officer that exceeds a certain
percentage of such officer's annual compensation. When put to a vote,
MFS votes against very large golden parachutes.
ANTI-TAKEOVER MEASURES
In general, MFS votes against any measure that inhibits
capital appreciation in a stock, including a possible takeover and any
proposal that protects management from action by shareholders. These
types of proposals take many forms, ranging from "poison pills" and
"shark repellents" to board classification and super-majority
requirements.
REINCORPORATION AND REORGANIZATION PROPOSALS
When presented with a proposal to reincorporate a company
under the laws of a different state, or to effect some other type of
corporate reorganization, MFS considers the underlying purpose and
ultimate effect of such a proposal in determining whether or not to
support such a measure. While MFS generally votes in favor of
management proposals that it believes are in the best long-term
economic interests of its clients, MFS may oppose such a measure if,
for example, the intent or effect would be to create additional
inappropriate impediments to possible acquisitions or takeovers.
DILUTION
There are many reasons for issuance of stock and most are
legitimate. As noted above under "Non-Salary Compensation Programs",
when a stock option plan (either individually or when aggregated with
other plans of the same company) would substantially dilute the
existing equity (e.g., by approximately 15% or more), MFS generally
votes against the plan. In addition, MFS votes against proposals where
management is asking for authorization to issue common or preferred
stock with no reason stated (a "blank check") because the unexplained
authorization could work as a potential anti-takeover device.
CONFIDENTIAL VOTING
MFS votes in favor of proposals to ensure that shareholder
voting results are kept confidential. For example, MFS supports
proposals that would prevent management from having access to
shareholder voting information that is compiled by an independent
proxy tabulation firm.
INDEPENDENCE OF BOARDS OF DIRECTORS AND COMMITTEES THEREOF
While MFS acknowledges the potential benefits of a company's
inclusion of directors who are "independent" from management, MFS
generally opposes shareholder proposals that would require that a
majority (or a "super-majority") of a company's board be comprised of
"independent" directors. Such proposals could inappropriately reduce a
company's ability to engage in certain types of transactions, could
result in the exclusion of talented directors who are not deemed
"independent", or could result in the unnecessary addition of
additional "independent" directors to a company's board. However, in
view of the special role and responsibilities of various the audit
committees of a board of directors, MFS supports proposals that would
require that the Audit, Nominating and Compensation Committees be
comprised entirely of directors who are deemed "independent" of the
company.
INDEPENDENT AUDITORS
Recently, some shareholder groups have submitted proposals to
limit the non-audit activities of a company's audit firm. Some
proposals would prohibit the provision of any non-audit services
(unless approved in advance by the full board) whereas other proposals
would cap non-audit fees so that such fees do not exceed a certain
percentage of the audit fees. MFS supports such shareholder proposals
that would cap non-audit fees at an amount deemed to be not excessive.
BEST PRACTICES STANDARDS
Best practices standards are rapidly evolving in the
corporate governance areas as a result of recent corporate failures,
the Sarbanes-Oxley Act of 2002 and revised listing standards on major
stock exchanges. MFS generally support these changes. However, many
issuers are not publicly registered, are not subject to these enhanced
listing standards or are not operating in an environment that is
comparable to that in the United States. In reviewing proxy proposals
under these circumstances, MFS votes for proposals that enhance
standards of corporate governance so long as we believe that -- within
the circumstances of the environment within which the issuers operate
- the proposal is consistent with the best long-term economic
interests of our clients.
FOREIGN ISSUERS - SHARE BLOCKING
In accordance with local law or business practices, many
foreign companies prevent the sales of shares that have been voted for
a certain period beginning prior to the shareholder meeting and ending
on the day following the meeting ("share blocking"). Depending on the
country in which a company is domiciled, the blocking period may begin
a stated number of days prior to the meeting (e.g., one, three or five
days) or on a date established by the company. While practices vary,
in many countries the block period can be continued for a longer
period if the shareholder meeting is adjourned and postponed to a
later date. Similarly, practices vary widely as to the ability of a
shareholder to have the "block" restriction lifted early (e.g., in
some countries shares generally can be "unblocked" up to two days
prior to the meeting whereas in other countries the removal of the
block appears to be discretionary with the issuer's transfer agent).
Due to these restrictions, MFS must balance the benefits to its
clients of voting proxies against the potentially serious portfolio
management consequences of a reduced flexibility to sell the
underlying shares at the most advantageous time. For companies in
countries with potentially long block periods, the disadvantage of
being unable to sell the stock regardless of changing conditions
generally outweighs the advantages of voting at the shareholder
meeting for routine items. Accordingly, MFS generally will not vote
those proxies in the absence of an unusual, significant vote.
Conversely, for companies domiciled in countries with very short block
periods, MFS generally will continue to cast votes in accordance with
these policies and procedures.
SOCIAL ISSUES
There are many groups advocating social change, and many have
chosen the publicly-held corporation as a vehicle for their agenda.
Common among these are resolutions requiring the corporation to
refrain from investing or conducting business in certain countries, to
adhere to some list of goals or principles (e.g., environmental
standards) or to report on various activities. MFS votes against such
proposals unless their shareholder-oriented benefits will outweigh any
costs or disruptions to the business, including those that use
corporate resources to further a particular social objective outside
the business of the company or when no discernible shareholder
economic advantage is evident.
The laws of various states may regulate how the interests of
certain clients subject to those laws are voted. For example, the
General Laws of The Commonwealth of Massachusetts prohibit the
investment of state funds, including retirement system assets, in the
following types of investments: (i) financial institutions which
directly or through any subsidiary have outstanding loans to any
individual or corporation engaged in manufacturing, distribution or
sale of firearms, munitions, rubber or plastic bullets, tear gas,
armored vehicles or military aircraft for use or deployment in any
activity in Northern Ireland; or (ii) any stocks, securities or
obligations of any company so engaged.
Because of these statutory restrictions, it is necessary when
voting proxies for securities held in Massachusetts public pension
accounts to support the purpose of this legislation. Thus, on issues
relating to these or similar state law questions, it may be necessary
to cast ballots differently for these portfolios than MFS might
normally do for other accounts.
B. ADMINISTRATIVE PROCEDURES
1. MFS PROXY REVIEW GROUP
The administration of these policies and procedures is
overseen by the MFS Proxy Review Group, which includes senior MFS
Legal Department officers and MFS' Proxy Consultant. The MFS Proxy
Review Group:
a. Reviews these policies and procedures at least annually
and recommends any amendments considered to be necessary
or advisable;
b. Determines whether any material conflicts of interest
exist with respect to instances in which (i) MFS seeks to
override these guidelines and (ii) votes not clearly
governed by these guidelines; and
c. Considers special proxy issues as they may arise from time
to time.
The current MFS Proxy Consultant is an independent proxy
consultant who performs these services exclusively for MFS.
2. POTENTIAL CONFLICTS OF INTEREST
The MFS Proxy Review Group is responsible for monitoring
potential material conflicts of interest on the part of MFS or its
affiliates that could arise in connection with the voting of proxies
on behalf of MFS' clients. Any attempt to influence MFS' voting on a
particular proxy matter should be reported to the MFS Proxy Review
Group. The MFS Proxy Consultant will assist the MFS Proxy Review Group
in carrying out these responsibilities.
In cases where proxies are voted in accordance with these
policies and guidelines, no conflict of interest will be deemed to
exist. In cases where (i) MFS is considering overriding these policies
and guidelines, or (ii) matters presented for vote are not clearly
governed by these policies and guidelines, the MFS Proxy Review Group
and the MFS Proxy Consultant will follow these procedures:
a. Compare the name of the issuer of such proxy against a
list of significant current and potential (i) distributors
of MFS Fund shares, (ii) retirement plans administered by
MFS, and (iii) MFS institutional clients (the "MFS
Significant Client List");
b. If the name of the issuer does not appear on the MFS
Significant Client List, then no material conflict of
interest will be deemed to exist, and the proxy will be
voted as otherwise determined by the MFS Proxy Review
Group;
c. If the name of the issuer appears on the MFS Significant
Client List, then the MFS Proxy Review Group will
carefully evaluate the proposed votes in order to ensure
that the proxy ultimately is voted in what MFS believes to
be the best long-term economic interests of MFS' clients,
and not in MFS' corporate interests; and
d. For all potential material conflicts of interest
identified under clause (c) above, the MFS Proxy Review
Group will document: the name of the issuer, the issuer's
relationship to MFS, the analysis of the matters submitted
for proxy vote, and the basis for the determination that
the votes ultimately were cast in what MFS believes to be
the best long-term economic interests of MFS' clients, and
not in MFS' corporate interests.
The MFS Proxy Review Group is responsible for creating and
maintaining the MFS Significant Client List, in consultation with MFS'
distribution, retirement plan administration and institutional
business units. The MFS Significant Client List will be reviewed and
updated as necessary, but no less frequently than quarterly.
3. GATHERING PROXIES
Nearly all proxies received by MFS originate at Automatic
Data Processing Corp. ("ADP"). ADP and issuers send proxies and
related material directly to the record holders of the shares
beneficially owned by MFS' clients, usually to the client's custodian
or, less commonly, to the client itself. Each client's custodian is
responsible for forwarding all proxy solicitation materials to MFS
(except in the case of certain institutional clients for which MFS
does not vote proxies). This material will include proxy cards,
reflecting the proper shareholdings of Funds and of clients on the
record dates for such shareholder meetings, and proxy statements, the
issuer's explanation of the items to be voted upon.
MFS, on behalf of itself and the Funds, has entered into an
agreement with an independent proxy administration firm, Institutional
Shareholder Services, Inc. (the "Proxy Administrator"), pursuant to
which the Proxy Administrator performs various proxy vote processing
and recordkeeping functions for MFS' Fund and institutional client
accounts. The Proxy Administrator does not make recommendations to MFS
as to how to vote any particular item. The Proxy Administrator
receives proxy statements and proxy cards directly from various
custodians, logs these materials into its database and matches
upcoming meetings with MFS Fund and client portfolio holdings, which
are input into the Proxy Administrator's system by an MFS holdings
datafeed. Through the use of the Proxy Administrator system, ballots
and proxy material summaries for the upcoming shareholders' meetings
of over 10,000 corporations are available on-line to certain MFS
employees, the MFS Proxy Consultant and the MFS Proxy Review Group and
most proxies can be voted electronically. In addition to receiving the
hard copies of materials relating to meetings of shareholders of
issuers whose securities are held by the Funds and/or clients, the
ballots and proxy statements can be printed from the Proxy
Administrator's system and forwarded for review.
4. ANALYZING PROXIES
After input into the Proxy Administrator system, proxies
which are deemed to be completely routine (e.g., those involving only
uncontested elections of directors, appointments of auditors, and/or
employee stock purchase plans)(1) are automatically voted in favor by
the Proxy Administrator without being sent to either the MFS Proxy
Consultant or the MFS Proxy Review Group for further review. Proxies
that pertain only to merger and acquisition proposals are forwarded
initially to an appropriate MFS portfolio manager or research analyst
for his or her recommendation. All proxies that are reviewed by either
the MFS Proxy Consultant or a portfolio manager or analyst are then
forwarded with the corresponding recommendation to the MFS Proxy
Review Group.(2)
--------
(1) Proxies for foreign companies often contain significantly more voting items
than those of U.S. companies. Many of these items on foreign proxies
involve repetitive, non-controversial matters that are mandated by local
law. Accordingly, there is an expanded list of items that are deemed
routine (and therefore automatically voted in favor) for foreign issuers,
including the following: (i) receiving financial statements or other
reports from the board; (ii) approval of declarations of dividends; (iii)
appointment of shareholders to sign board meeting minutes; (iv) the
discharge of management and supervisory boards; and (v) approval of share
repurchase programs.
(2) From time to time, due to travel schedules and other commitments, an
appropriate portfolio manager or research analyst is not available to
provide a recommendation on a merger or acquisition proposal. If such a
recommendation cannot be obtained within a few business days prior to the
shareholder meeting, the MFS Proxy Review Group will determine the vote in
what MFS believes to be the best long-term economic interests of its
clients.
Recommendations with respect to voting on non-routine issues
are generally made by the MFS Proxy Consultant in accordance with the
policies summarized under "Voting Guidelines," and all other relevant
materials. His or her recommendation as to how each proxy proposal
should be voted is indicated on copies of proxy cards, including his
or her rationale on significant items. These cards are then forwarded
to the MFS Proxy Review Group.
As a general matter, portfolio managers and investment
analysts are consulted and involved in developing MFS' substantive
proxy voting guidelines, but have little or no involvement in or
knowledge of proxy proposals or voting positions taken by MFS. This is
designed to promote consistency in the application of MFS' voting
guidelines, to promote consistency in voting on the same or similar
issues (for the same or for multiple issuers) across all client
accounts, and to minimize or remove the potential that proxy
solicitors, issuers, and third parties might attempt to exert
influence on the vote or might create a conflict of interest that is
not in what MFS believes to be the best long-term economic interests
of our clients. In limited, specific instances (e.g., mergers), the
MFS Proxy Consultant or the MFS Proxy Review Group may consult with or
seek recommendations from portfolio managers or analysts. The MFS
Proxy Review Group would ultimately determine the manner in which all
proxies are voted.
As noted above, MFS reserves the right to override the
guidelines when such an override is, in MFS' best judgment, consistent
with the guiding principle of voting proxies in the best long-term
economic interests of MFS' clients. Any such override of the
guidelines shall be examined, explained and reported in accordance
with the procedures set forth in these policies.
5. VOTING PROXIES
After the proxy card copies are reviewed, they are voted
electronically through the Proxy Administrator's system. In accordance
with its contract with MFS, the Proxy Administrator also generates a
variety of reports for the MFS Proxy Consultant and the MFS Proxy
Review Group, and makes available on-line various other types of
information so that the MFS Proxy Review Group and the MFS Proxy
Consultant may monitor the votes cast by the Proxy Administrator on
behalf of MFS' clients.
C. MONITORING SYSTEM
It is the responsibility of the Proxy Administrator and MFS'
Proxy Consultant to monitor the proxy voting process. As noted above,
when proxy materials for clients are received, they are forwarded to
the Proxy Administrator and are input into the Proxy Administrator's
system. Additionally, through an interface with the portfolio holdings
database of MFS, the Proxy Administrator matches a list of all MFS
Funds and clients who hold shares of a company's stock and the number
of shares held on the record date with the Proxy Administrator's
listing of any upcoming shareholder's meeting of that company.
When the Proxy Administrator's system "tickler" shows that
the date of a shareholders' meeting is approaching, a Proxy
Administrator representative checks that the vote for MFS Funds and
clients holding that security has been recorded in the computer
system. If a proxy card has not been received from the client's
custodian, the Proxy Administrator calls the custodian requesting that
the materials be forward immediately. If it is not possible to receive
the proxy card from the custodian in time to be voted at the meeting,
MFS may instruct the custodian to cast the vote in the manner
specified and to mail the proxy directly to the issuer.
D. RECORDS RETENTION
MFS will retain copies of these policies and procedures in
effect from time to time and will retain all proxy voting reports
submitted to the Board of Trustees and Board of Managers of the MFS
Funds for a period of six years. Proxy solicitation materials,
including electronic versions of the proxy cards completed by the MFS
Proxy Consultant and the MFS Proxy Review Group, together with their
respective notes and comments, are maintained in an electronic format
by the Proxy Administrator and are accessible on-line by the MFS Proxy
Consultant and the MFS Proxy Review Group. All proxy voting materials
and supporting documentation, including records generated by the Proxy
Administrator's system as to proxies processed, the dates when proxies
were received and returned, and the votes on each company's proxy
issues, are retained for six years.
E. REPORTS
MFS FUNDS
Periodically, MFS will report the results of its voting to
the Board of Trustees and Board of Managers of the MFS Funds. These
reports will include: (i) a listing of how votes were cast; (ii) a
review of situations where MFS did not vote in accordance with the
guidelines and the rationale therefor; (iii) a review of the
procedures used by MFS to identify material conflicts of interest; and
(iv) a review of these policies and the guidelines and, as necessary
or appropriate, any proposed modifications thereto to reflect new
developments in corporate governance and other issues. Based on these
reviews, the Trustees and Managers of the MFS Funds will consider
possible modifications to these policies to the extent necessary or
advisable.
ALL MFS ADVISORY CLIENTS
At any time, a report can be printed by MFS for each client
who has requested that MFS furnish a record of votes cast. The report
specifies the proxy issues which have been voted for the client during
the year and the position taken with respect to each issue.
Generally, MFS will not divulge actual voting practices to any party other than
the client or its representatives (unless required by applicable law) because
we consider that information to be confidential and proprietary to the client.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable at this time. [Required for closed-end funds for periods ending
on or after June 15, 2004 (beginning with N-CSR's filed at the end of August,
2004 for June 30, 2004 reporting period.)]
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not required at this time. [Required for reporting periods ending after January
1, 2004 (beginning with N-CSR's filed at the end of March 2004, for January 31,
2004 reporting period).]
ITEM 10. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures 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 registrant's last fiscal half-year (the registrant's second fiscal
half-year in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 11. 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 23c-1 under the
Act (17 C.F.R. 270.23c-1) sent or given during the period covered by
the report by or on behalf of the registrant to 10 or more persons.
Not applicable at this time. [For closed-end funds for periods ending
on or after June 15, 2004 (beginning with N-CSR's filed at the end of
August 2004 for June 30, 2004 reporting period.)]
(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
By (Signature and Title)* JOHN W. BALLEN
----------------------------------------------------
John W. Ballen, President
Date: January 5, 2004
---------------------------
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)* JOHN W. BALLEN
----------------------------------------------------
John W. Ballen, President
(Principal Executive Officer)
Date: January 5, 2004
---------------------------
By (Signature and Title)* RICHARD M. HISEY
----------------------------------------------------
Richard M. Hisey, Treasurer
(Principal Financial Officer and Accounting Officer)
Date: January 5, 2004
---------------------------
* Print name and title of each signing officer under his or her signature.