<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
MFS(R) MULTIMARKET
INCOME TRUST
SEMIANNUAL REPORT o APRIL 30, 2000
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Performance Summary ....................................................... 10
Portfolio of Investments .................................................. 12
Financial Statements ...................................................... 22
Notes to Financial Statements ............................................. 26
Trustees and Officers ..................................................... 33
MFS ORIGINAL RESEARCH(R)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
This spring, the U.S. stock market experienced record point drops and
volatility that have given many investors cause for concern. While the recent
market correction has rattled a lot of nerves, it's important to put the
current market environment in perspective. Throughout the history of the
market, investors have experienced numerous corrections (declines of more than
20%) and periods of extreme volatility. Of course, past performance is no
guarantee of future results; however, over the long term, stock and bond
investors have enjoyed returns that have solidly outpaced inflation.
From our perspective, as we look at the global investment climate at the
beginning of the new millennium, we see many reasons for optimism, as well as
the need to voice some words of caution. Our reasons for being optimistic
about both stock and bond markets include
o STRONG CORPORATE EARNINGS GROWTH: We believe that, over time, the most
important driver of stock prices is corporate earnings. Our research
indicates that the average earnings growth for U.S. companies could approach
15% in 2000, which would bode very well for U.S. equities. We are also
seeing encouraging signs that companies worldwide, and particularly in
Europe, are beginning to focus more on earnings and shareholder value --
that is, delivering stock price performance that will reward investors. As
we research companies around the globe, we are finding that specific areas
of opportunity include technology companies, especially those involved in
wireless telecommunications and in supplying infrastructure and services for
the Internet.
o LOW INFLATION WORLDWIDE: We believe accelerating inflation is one of the
chief factors that could end the current economic boom. While the U.S.
economy continues to grow rapidly, we have not experienced significant signs
of inflation. In our opinion, perhaps the major force keeping inflation at
bay is worldwide productivity increases, fueled by advancing technology. A
technological revolution based on computerization and the Internet appears
to be making it possible for companies to produce more products with fewer
employees, thereby enabling companies to increase earnings without raising
prices. A related factor keeping inflation down is the heightened
competition of an increasingly global marketplace, where, for example,
businesses are beginning to use computer networks and the Internet to shop
worldwide for the lowest prices from suppliers.
o STRONG GLOBAL ECONOMIES: Our outlook is that a majority of national
economies will continue to experience healthy growth with low inflation. In
late January, the current economic boom in the United States became the
longest in the nation's history. It appears to us that the U.S. Federal
Reserve Board's (the Fed's) program of gradual interest-rate increases will
eventually be successful in cooling the somewhat overheated U.S. economy
while prolonging the boom. In Europe, we see strong evidence that most
countries will continue on a moderate growth path with low inflation. A
major reason for this is that European companies have begun to adopt the
practices of downsizing, outsourcing, and consolidation that have helped
revitalize U.S. industry over the past decade. We are witnessing a similar
situation in Japan, as more firms merge, restructure, and invest in
technology. In the Pacific Rim, most economies have recovered from the
economic turmoil of late summer 1998 and are surging ahead. We believe
progress toward restructuring Asia's banking systems and other ailing
industries bodes well for stronger investor confidence in the region. While
business conditions have been less favorable in Latin America due to
relatively high inflation, increased exports and industrial production
suggest to us that the region's recession has ended.
Amid this positive global outlook, however, we believe investors should also
heed some cautionary notes:
o IT IS HIGHLY UNLIKELY THAT U.S. EQUITY MARKETS WILL CONTINUE TO PERFORM AT
THE PACE OF THE LAST SEVERAL YEARS. Although our outlook for U.S. markets
this year is quite positive, we believe it is unrealistic for investors to
expect stock market returns, as measured by the Standard & Poor's 500
Composite Index,(1) to routinely exceed 20%, as they did for each of the
past four years.
o HIGH VALUATIONS, ESPECIALLY OF TECHNOLOGY STOCKS, HAVE MADE U.S. MARKETS
INCREASINGLY VOLATILE. Investor excitement over the past year has pushed
many technology-related stocks to very high relative prices, as expressed by
their price/earnings (P/E) ratios. In general, we believe these higher
valuations are largely supported by the strong earnings growth mentioned
earlier. However, as we've recently experienced, this backdrop has led to a
highly volatile environment, where the market is swift to punish companies
whose earnings are less than expected and where fear can rapidly overcome
the desire to invest for long-term goals.
o RISING INTEREST RATES MAY DAMPEN MARKETS IN THE SHORT TERM, PARTICULARLY IN
THE UNITED STATES AND EUROPE. The Fed's current program of raising interest
rates could potentially cool both stock and bond markets, and the European
Central Bank has tended to follow the lead of the Fed in adjusting its own
interest rates. It is our expectation, however, that in the long term
interest rates will trend down again, perhaps by the end of this year. We
believe that could be favorable for both equity and fixed-income
investments.
On balance, it appears to us that the current global investment climate is
well matched to MFS' research-oriented style of investing. In the equity
markets, where we believe earnings growth is the most reliable indicator of
long-term performance, we feel our research team is second to none in
determining the real value of a company and its long-term earnings potential.
To do that, our portfolio managers and our worldwide team of research analysts
spend extensive time visiting with companies, talking to their customers, and
investigating their competition. In fixed-income investing, we believe the
quality of our research gives us an advantage by helping us determine which
types of securities can add the most value to a fund and by helping us reduce
credit risk, which is the biggest danger to some higher-income bond funds. In
sum, MFS Original Research(R) is one of the most important factors in our
ongoing effort to deliver competitive performance to you, our investors.
We appreciate your confidence and welcome any questions or comments
you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
May 18, 2000
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(1)The Standard & Poor's 500 Composite Index (the S&P 500) is a popular,
unmanaged index of common stock total return performance. It is not
possible to invest directly in an index.
Investments in mutual funds will fluctuate and may be worth more or less upon
redemption.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of James T. Swanson]
James T. Swanson
Dear Shareholders,
For the six months ended April 30, 2000, the Trust provided a total return of
4.90% based on its beginning and ending stock market prices and assuming the
reinvestment of any distributions paid during the period. The Trust's total
return based on its net asset value (NAV) was 4.16%. During the same period,
the J.P. Morgan Non-Dollar Government Bond Index (the Morgan Index) returned
-7.08%, the Lehman Brothers Government Bond Index returned 2.25%, and the
Lehman Brothers High Yield Bond Index returned 0.08%. The Morgan Index is an
index of actively traded government bonds issued by 12 countries (excluding
the United States) with remaining maturities of at least one year. The Lehman
Brothers Government Bond Index is comprised of all publicly issued debt
obligations of the U.S. Treasury, U.S. government agencies, quasi-federal
corporations, and corporate debt guaranteed by the U.S. government. The Lehman
Brothers High Yield Bond Index is an index of noninvestment-grade corporate
debt.
In relation to our benchmarks, the Trust's holdings performed well across the
six sectors in which we invest: U.S. government and mortgage bonds, U.S. high-
grade corporates, U.S. high-yield corporates, international developed
countries, emerging markets, and convertible bonds and preferred stocks. We
believe our outperformance resulted from our strategy of employing both sector
diversification and flexibility in managing the Trust. We continually
reallocate assets among the various sectors in response to, or in anticipation
of, global events, taking advantage of what we perceive to be opportunities
throughout the world.
Our bottom-up MFS Original Research(R) process plays a key role in helping us
manage the Trust because our approach is to try to pick bonds issued by good
companies and good countries, period; none of our sectors is meant to
replicate an index. In the balance of this letter, we'll review how each
sector contributed to performance and give you our outlook for individual
sectors.
In the U.S. government sector, which includes U.S. Treasury and mortgage-
backed securities, we have remained conservative by holding mainly cash and
long-term bonds. Lately we are seeing worsening inflation numbers and high oil
prices -- as well as some wage inflation, which appears to be Federal Reserve
Board (Fed) Chairman Alan Greenspan's biggest worry. Our expectation is that
the Fed may raise short-term interest rates still further and that, therefore,
this sector may not do well over the near term. Eventually, however, we
believe the Fed will succeed in bringing inflation back down and will be able
to lower interest rates again. But in the meantime we are remaining cautious;
our sector allocation was about a quarter of portfolio assets at the end of
the period, and we may lower that in the coming months.
The U.S. high-grade corporate bond sector was a weak performer for the markets
in general. Inflation concerns and more supply than demand caused prices of
high-grade corporate bonds to fall faster than prices of U.S. Treasuries, thus
decreasing the value (and increasing the effective yield) of existing high-grade
issues. This is also described as a spread widening, with the spread being the
difference in yield between high-grade issues and Treasuries.
For us, however, high-grade corporate bonds were a strong area during the
period. We feel this was because our research identified a number of utilities
as crossover opportunities. These are companies whose credit ratings could --
and in fact did -- improve, causing their bonds to cross over to a higher
rating and therefore appreciate in value. These utilities comprised most of
our high-grade corporate holdings, so we feel our research gave us an
advantage that helped us to outperform in a sector that performed poorly for
the markets in general.
Going forward, our near-term outlook for high-grade corporate bonds is not
particularly rosy. It appears to us that the economy may be slowing and
inflation may be on the rise, which could cause corporate earnings to get
squeezed. So it's likely we may reduce our holdings in this sector over the
next few months, from our current weighting of roughly 12% of assets.
In the U.S. high-yield corporate sector, which consists of bonds issued by
companies with lower credit ratings (junk bonds), one of the keys to success
is avoiding defaults. This is another sector where we feel our Original
Research(SM) has historically helped us add yield to the Trust and at the same
time steer clear of most potentially problematic companies. The numbers appear
to bear out that opinion; in 1999, we were invested in only one of the 88
domestic companies that defaulted on high-yield debt. We have also
been careful to diversify in the high-yield area, with no company representing
more than 1% of portfolio assets.
Since about November of 1999, it seemed to us that the market has been
expecting a recession because it was discounting bonds in this sector in
anticipation of a 10% default rate, one of the highest rates we have ever
seen. We disagree with that expectation of recession; thus, we feel this
sector represents a great opportunity for our research to identify securities
we believe are selling at bargain prices and offering attractive yields. We
have therefore been gradually adding holdings in this sector, finding some of
our best values in media and telecommunications companies.
The international developed-country sector, in which our main focus is Europe,
has played a minimal role in the portfolio recently. We have been at our
lowest allocation ever, about 10% of assets, because European interest rates
have been increasing and we don't envision the situation turning around in the
near future. One reason is that growth is accelerating in Europe, so there is
upward pressure on interest rates as competition for capital increases. In
terms of relative value, we feel there is currently more value in the United
States.
We believe a problem in Europe has been the disarray among the finance
communities of European monetary union (EMU) countries. They are supposed to
be speaking with one voice, but instead they appear to be speaking with many
different voices. As a result their central bank, which is supposed to be
protecting the value of the euro, has little credibility. This is the main
reason the Trust's position in the euro has done poorly. The good news, in our
view, is that we are optimistic that nondollar currencies, including the euro,
will eventually begin to appreciate as the U.S. economy slows.
In contrast to the developed countries, emerging market debt has been our
best-performing sector since the beginning of 1999. Again, we feel this is an
area where MFS research has yielded opportunities that the market in general
may have passed over. More than two years ago, for example, we identified
Mexican government bonds as undervalued issues in an improving country. During
the past quarter, major rating agencies raised these bonds to investment
grade. As with the utility bonds mentioned earlier, the Trust benefited from
having bought these bonds early and having seen them appreciate in price as
they crossed over to a higher rating.
Emerging markets worldwide appear to be benefiting from improving fundamentals
and rating-agency upgrades. The restoration of credibility in Brazil, South
Korea, and Mexico, as well as continuing democratization in many of these
countries, leads us to believe that ongoing recoveries in Asia and Latin
America may continue to contribute to performance. Our holdings in this sector
currently comprise about 16% of the portfolio; since investments in emerging
markets tend to be very volatile, we limit this sector to a maximum of 25% of
assets.
Finally, the convertible bonds and preferred stocks sector represents about 2%
of the portfolio. We look to these securities to sometimes give an extra kick
to performance. Convertibles are bond-like instruments that also have equity
characteristics; generally, they are corporate bonds that are exchangeable for
a certain number of shares of stock at a preset price.
We tend to add to the convertible bonds and preferred stock sector when the
stock market suffers a decline, often causing convertibles to cheapen and trade
more on their bond values, which are usually lower than their stock values. We
feel this may serve as a free option if the stock price should recover and cause
the value of the convertible to appreciate. Level 3 Communications, a wireless
telecommunications and information services company, represents one of our
recent successes in this sector.
In sum, our outlook for the fixed-income environment is that short-term rates
will keep rising over the near term and that we may experience continued
volatility and uncertainty as the Fed works to slow down the economy. In the
longer term, however, we feel the Fed's efforts will eventually succeed, which
could bring the competition for capital down and could bring rates down,
perhaps as early as late 2000.
Because they are currently so cheap, we feel that high-yield and emerging
market bonds issued by corporations with strong fundamentals may continue to
do well, even in the short term. The U.S. economy still appears to be strong,
and we are seeing improving fundamentals around the world. So we think the
opportunity exists for a flexible trust such as ours to benefit from investing
in selected areas.
Another reason we remain optimistic about bonds is that the recent volatility
has underscored the riskiness of the stock market. We think this may induce
many investors to move money into fixed-income securities, which could help
fixed-income prices.
Another positive factor we foresee is more demand for fixed-income products as
the population in the U.S. ages. At the same time, the government is issuing
less debt because of its huge budget surpluses. We believe this combination of
increased demand and lower supply could potentially drive up bond prices --
another reason we feel the long-term outlook for fixed-income investing is
very good.
Respectfully,
/s/ James T. Swanson
James T. Swanson
Portfolio Manager
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. The manager's views are subject to change at any time based on market
and other conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index.
The portfolio is actively managed, and current holdings may be different.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
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JAMES T. SWANSON IS SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R).
HE IS PORTFOLIO MANAGER OF MFS(R) STRATEGIC INCOME FUND, MFS(R) GLOBAL
GOVERNMENTS FUND, MFS(R) GLOBAL GOVERNMENTS SERIES (PART OF MFS(R)
VARIABLE INSURANCE TRUST(SM)), THE STRATEGIC INCOME SERIES OFFERED THROUGH
MFS(R)/SUN LIFE ANNUITY PRODUCTS, AND TWO CLOSED-END FUNDS, MFS(R) CHARTER
INCOME TRUST AND MFS(R) MULTIMARKET INCOME TRUST.
MR. SWANSON JOINED MFS IN 1985 AS VICE PRESIDENT AND WAS NAMED SENIOR VICE
PRESIDENT IN 1989. HE IS A GRADUATE OF COLGATE UNIVERSITY AND THE HARVARD
UNIVERSITY GRADUATE SCHOOL OF BUSINESS ADMINISTRATION. MR. SWANSON IS A
CHARTERED FINANCIAL ANALYST.
ALL PORTFOLIO MANAGERS AT MFS INVESTMENT MANAGEMENT(R) ARE SUPPORTED BY AN
INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS ORIGINAL
RESEARCH(R), A GLOBAL, SECURITY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING
SECURITIES.
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NUMBER OF SHAREHOLDERS
As of April 30, 2000, our records indicate that there are 12,703 registered
shareholders and approximately 44,300 shareholders owning Trust shares in
"street" name, such as through brokers, banks, and other financial
intermediaties.
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
P.O. Box 8200
Boston, MA 02266-8200
1-800-637-2304
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.
<PAGE>
OBJECTIVE: To provide a high level of current income through investments in
fixed-income securities.
NEW YORK STOCK EXCHANGE SYMBOL: MMT
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PERFORMANCE SUMMARY
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For the six months ended April 30, 2000)
NET ASSET VALUE PER SHARE
October 31, 1999 $7.03
April 30, 2000 $6.98
NEW YORK STOCK EXCHANGE PRICE
October 31, 1999 $6.0625
April 28, 2000 (high)* $6.0625
December 31, 1999 (low)* $5.5000
April 28, 2000 $6.0625
*For the six months ended November 1, 1999, through April 30, 2000.
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NOTES TO PERFORMANCE SUMMARY
U.S. Treasury bills and U.S. government bonds fluctuate in value, but they are
guaranteed as to the timely payment of interest and, if held to maturity,
provide a guaranteed return of principal.
Government guarantees apply to individual securities only and not to prices
and yields of shares in a managed portfolio. Nondiversified Trusts have more
risk than diversified Trusts.
An investment in shares of the Trust should not be considered to constitute a
complete investment program. The Trust may invest in high-yield, foreign,
emerging market, and derivative securities. Lower-rated securities may provide
greater returns, but they are also associated with greater-than-average risk.
Investing in foreign and emerging market securities also involves special
risks. The Trust has the flexibility to invest in derivative securities when
its manager believes such securities can provide better value relative to
direct investments in stocks or bonds.
<PAGE>
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 from $100 to
$500 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. A service fee of $0.75
is charged for each cash purchase as well as a pro rata share of the
brokerage 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.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- April 30, 2000
<CAPTION>
Bonds - 88.1%
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Principal Amount
Issuer (000 Omitted) Value
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Bonds - 60.4%
Advertising - 0.2%
Outdoor Systems, Inc., 8.875s, 2007 $ 1,525 $ 1,475,682
---------------------------------------------------------------------------------------------------------------
Aerospace - 0.6%
Argo Tech Corp., 8.625s, 2007 $ 300 $ 222,000
BE Aerospace, Inc., 8s, 2008 2,500 2,000,000
K & F Industries, Inc., 9.25s, 2007 200 185,000
United Defense Industries, Inc., 8.75s, 2007 1,550 1,441,500
------------
$ 3,848,500
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Automotive - 0.3%
Lear Corp., 9.5s, 2006 $ 1,725 $ 1,662,607
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Broadcasting - 0.5%
American Radio Systems Corp., 9s, 2006 $ 750 $ 758,348
Cumulus Media, Inc., 10.375s, 2008 1,000 905,000
Granite Broadcasting Corp., 10.375s, 2005 1,335 1,284,937
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$ 2,948,285
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Building Materials - 1.5%
AAF-McQuay, Inc., 8.875s, 2003 $ 1,925 $ 1,665,125
American Standard, Inc., 7.375s, 2008 1,050 960,750
Building Materials Corp., 8s, 2007 1,100 940,500
Grove Worldwide LLC/Capital, Inc., 9.25s, 2008 1,250 537,500
Nortek, Inc., 9.25s, 2007 125 116,562
Nortek, Inc., 9.875s, 2004 2,700 2,558,250
Synthetic Industries, Inc., 13s, 2000 2,600 2,561,000
UDC Homes, Inc., 14.5s, 2000 29 16,115
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$ 9,355,802
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Business Services - 0.6%
Iron Mountain, Inc., 8.75s, 2009 $ 1,600 $ 1,420,000
Iron Mountain, Inc., 10.125s, 2006 150 144,750
Pierce Leahy Corp., 11.125s, 2006 2,000 2,055,000
------------
$ 3,619,750
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Chemicals - 0.4%
Huntsman ICI Chemicals LLC, 10.125s, 2009 $ 1,025 $ 1,014,750
NL Industries, Inc., 11.75s, 2003 1,270 1,304,925
------------
$ 2,319,675
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Computer Hardware - Systems - 0.2%
Anacomp, Inc., 10.875s, 2004 $ 1,250 $ 1,125,000
---------------------------------------------------------------------------------------------------------------
Computer Software - Services - 0.5%
Unisystem Corp., 7.875s, 2008 $ 3,250 $ 3,111,875
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Consumer Goods and Services - 0.6%
Hayes Wheels International, Inc., 9.125s, 2007 $ 2,100 $ 1,911,000
Kindercare Learning Centers, Inc., 9.5s, 2009 350 319,375
Williams Scotsman, Inc., 9.875s, 2007 1,250 1,162,500
------------
$ 3,392,875
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Container, Forest and Paper Products - 0.9%
Ball Corporation, 7.75s, 2006 $ 500 $ 472,500
Gaylord Container Corp., 9.875s, 2008 1,200 936,000
Gaylord Container Corp., "B", 9.75s, 2007 1,200 1,107,000
Silgan Holdings, Inc., 9s, 2009 1,500 1,410,000
U.S. Timberlands, 9.625s, 2007 1,700 1,496,000
------------
$ 5,421,500
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Energy - 0.1%
AmeriGas Partners LP, "B", 10.125s, 2007 $ 600 $ 607,500
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Financial Institutions - 2.6%
Commercial Mortgage Asset Trust, 7.839s, 2020
(Interest Only) $ 94,088 $ 3,072,566
Constellation Finance LLC, 9.8s, 2001 4,250 3,910,000
DTI Holdings, Inc., 0s to 2003, 12.5s to 2008 3,825 1,721,250
Merrill Lynch Mortgage Investors, Inc., 8.439s, 2022+ 1,200 1,138,313
Morgan Stanley Capital Inc., 7.776s, 2010 3,560 2,603,946
Natexis AMBS Co. LLC, 8.44s, 2049## 1,000 915,603
Residential Accredit Loans Inc., 7.75s, 2027 2,542 2,347,828
------------
$ 15,709,506
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Food and Beverage Products - 0.5%
Borden, Inc., 9.25s, 2019 $ 750 $ 691,927
Borden, Inc., 9.2s, 2021 2,500 2,313,925
------------
$ 3,005,852
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Industrial - 0.8%
Allied Waste North America Inc., 10s, 2009 $ 1,500 $ 1,031,250
Day International Group, Inc., "B", 11.125s, 2005 1,000 992,500
IMO Industries, Inc., 11.75s, 2006 1,650 1,650,000
Numatics, Inc., 9.625s, 2008 1,600 1,264,000
------------
$ 4,937,750
---------------------------------------------------------------------------------------------------------------
Information, Paging and Technology - 0.4%
NEXTEL International, Inc., 0s to 2003, 12.125s to 2008 $ 2,750 $ 1,705,000
NEXTEL Communications, Inc., 0s to 2002, 9.75s to 2007 300 214,500
NEXTEL Communications, Inc., 0s to 2003, 9.95s to 2008 450 315,000
------------
$ 2,234,500
---------------------------------------------------------------------------------------------------------------
Insurance - 0.4%
Americo Life, Inc., 9.25s, 2005 $ 2,650 $ 2,573,813
---------------------------------------------------------------------------------------------------------------
Media - 1.2%
Chancellor Media Corp., 8.125s, 2007 $ 3,625 $ 3,588,750
Chancellor Media Corp., "B", 8.75s, 2007 1,000 997,500
Fox/Liberty Networks LLC, Inc., 8.875s, 2007 2,450 2,450,000
Lenfest Communications, Inc., 10.5s, 2006 500 550,000
------------
$ 7,586,250
---------------------------------------------------------------------------------------------------------------
Medical and Health Products - 0.2%
Polymer Group, Inc., "B", 9s, 2007 $ 1,645 $ 1,480,500
---------------------------------------------------------------------------------------------------------------
Medical and Health Technology and Services
Quorum Health Group, Inc., 8.75s, 2005 $ 200 $ 188,000
---------------------------------------------------------------------------------------------------------------
Metals and Minerals - 1.6%
Commonwealth Aluminum Corp., 10.75s, 2006 $ 1,000 $ 992,500
Haynes International, Inc., 11.625s, 2004 2,200 1,210,000
Kaiser Aluminum & Chemical Corp., 9.875s, 2002 1,015 969,325
Kaiser Aluminum & Chemical Corp., 10.875s, 2006 1,625 1,535,625
Metal Management, Inc., 10s, 2008 2,000 1,460,000
P&L Coal Holdings Corp., 9.625s, 2008 1,750 1,570,625
Thermadyne Manufacturing/Capital Corp., 9.875s, 2008 1,500 1,215,000
Wheeling Pittsburgh Corp., 9.25s, 2007 1,000 897,500
------------
$ 9,850,575
---------------------------------------------------------------------------------------------------------------
Oil Services - 1.2%
Clark USA, Inc., 10.875s, 2005 $ 995 $ 584,562
Continental Resources, Inc., 10.25s, 2008 1,000 885,000
Ocean Energy, Inc., 8.875s, 2007 375 369,375
Triton Energy Limited, 9.25s, 2005 5,500 5,445,000
------------
$ 7,283,937
---------------------------------------------------------------------------------------------------------------
Printing and Publishing - 0.4%
Golden Books Publishing Inc., 10.75s, 2004 (In default) $ 409 $ 245,340
Hollinger International Publishing Inc., 9.25s, 2007 1,950 1,881,750
------------
$ 2,127,090
---------------------------------------------------------------------------------------------------------------
Real Estate - 0.3%
Dynex Capital, Inc., 7.875s, 2002 $ 3,600 $ 1,980,000
---------------------------------------------------------------------------------------------------------------
Retail - 0.6%
Cole National Group, Inc., 9.875s, 2006 $ 500 $ 391,250
J.Crew Operating Corp., 10.375s, 2007 1,680 1,482,600
Musicland Group, Inc., 9.875s, 2008 600 498,000
Revlon Consumer Products Corp., 8.125s, 2006 200 143,000
Samsonite Corp., 10.75s, 2008 1,400 1,183,000
------------
$ 3,697,850
---------------------------------------------------------------------------------------------------------------
Special Products and Services - 0.3%
Buckeye Cellulose Corp., 9.25s, 2008 $ 2,150 $ 2,107,000
---------------------------------------------------------------------------------------------------------------
Steel - 0.2%
Alaska Steel Holdings Corp., 9.125s, 2006 $ 500 $ 490,000
WCI Steel, Inc., 10s, 2004 825 808,500
------------
$ 1,298,500
---------------------------------------------------------------------------------------------------------------
Telecommunications - 9.0%
Adelphia Communications Corp., 9.875s, 2007 $ 1,725 $ 1,668,937
Allbritton Communications Co., 9.75s, 2007 1,005 942,188
Allegiance Telecommunications, Inc., 12.875s, 2008 2,000 2,150,000
Centennial Cellular Operating Co., 10.75s, 2008 500 497,500
Century Communications Corp., 9.5s, 2005 450 428,625
Charter Communications Holdings, 0s to 2004, 9.92s to 2011 1,000 550,000
Comcast Corp., 9.375s, 2005 1,940 2,032,519
Continental Cablevision, Inc., 9.5s, 2013 5,000 5,380,100
Focal Communications Corp., 0s to 2003, 12.125s to 2008 450 290,250
FrontierVision Holdings LP, 11s, 2006 2,000 2,040,000
FrontierVision Holdings LP, 11.875s, 2007 500 435,000
ICG Holdings, Inc., 0s to 2001, 12.5s to 2006 3,340 2,672,000
Intermedia Communications, Inc., "B", 0s to 2002,
11.25s to 2007 2,875 2,192,187
ITC Deltacom, Inc., 11s, 2007 2,945 3,003,900
ITC Deltacom, Inc., 9.75s, 2008 750 727,500
Jones Intercable, Inc., 8.875s, 2007 1,500 1,530,240
Level 3 Communications, Inc., 9.125s, 2008 2,050 1,778,375
NTL Communications Corp., 0s to 2003, 12.375s to 2006 1,025 671,375
NTL, Inc., 0s to 2003, 9.75s to 2008 1,860 1,178,775
PSINet, Inc., 11s, 2009 1,510 1,328,800
Qwest Communications International, Inc.,
0s to 2003, 8.29 to 2008 2,325 1,725,778
Qwest Communications International, Inc., 10.875s, 2007 487 523,077
Spectrasite Holdings, Inc., 12s, 2008 2,550 1,581,000
Sprint Spectrum LP, 0s to 2001, 12.5s to 2006 2,000 1,884,860
TCI Communications Financing III, 9.65s, 2027 5,000 5,741,000
Time Warner Telecommunications LLC, 9.75s, 2008 2,500 2,468,750
Triton PCS, Inc., 0s to 2003, 11s to 2008 2,450 1,745,625
Turner Broadcasting Systems, Inc., 8.4s, 2024 3,000 2,863,440
United International Holdings, 10.75s, 2008 3,200 2,112,000
Western Wireless Corp., 10.5s, 2007 1,500 1,537,500
WorldCom, Inc., 8.875s, 2006 900 935,766
------------
$ 54,617,067
---------------------------------------------------------------------------------------------------------------
U.S. Federal Agencies - 15.2%
Federal Home Loan Bank, 5.125s, 2001 $ 3,750 $ 3,686,700
Federal Home Loan Bank, 5.7s, 2009 14,325 12,892,500
Federal Home Loan Bank, 7.5s, 2028 12,533 12,278,333
Financing Corp., 9.4s, 2018 12,000 14,482,440
FNMA, 6.625s, 2009 12,190 11,628,163
FNMA, 7s, 2029 2,587 2,475,131
FNMA, 7.5s, 2099 8,000 7,830,080
GNMA, 6.5s, 2028 13,369 12,526,393
GNMA, 7.5s, 2025 4,410 4,340,288
GNMA, 8s, 2030 10,000 10,026,301
GNMA TBA, 7.5s, 2027 525 516,309
------------
$ 92,682,638
---------------------------------------------------------------------------------------------------------------
U.S. Government Guaranteed - 12.4%
U.S. Treasury Bonds, 6.125s, 2029 $ 4,001 $ 4,010,362
U.S. Treasury Bonds, 12s, 2005 14,000 17,158,680
U.S. Treasury Bonds, 9.875s, 2015 14,825 19,941,997
U.S. Treasury Notes, 4.25s, 2010 4,022 4,107,386
U.S. Treasury Notes, 5.5s, 2000 6,750 6,747,907
U.S. Treasury Notes, 6.125s, 2001 8,000 7,926,240
U.S. Treasury Notes, 8s, 2001 15,250 15,471,583
------------
$ 75,364,155
---------------------------------------------------------------------------------------------------------------
Utilities - Electric - 6.7%
Beaver Valley Funding Corp., 9s, 2017 $ 2,124 $ 2,135,809
BVPS II Funding Corp., 8.68s, 2017 1,000 1,030,690
Cheasapeake Energy Corp., 9.625s, 2005 1,600 1,544,000
CMS Energy Corp., 6.75s, 2004 2,350 2,220,750
El Paso Electric Co., "D", 8.9s, 2006 3,425 3,499,117
Midland Funding Cogeneration Venture Corp., 10.33s, 2002 4,750 4,856,404
Midland Funding Corp. II, "A", 11.75s, 2005 1,265 1,360,242
Midland Funding Corp., "B", 13.25s, 2006 1,000 1,167,060
Niagara Mohawk Power Corp., 7.25s, 2002 1,437 1,410,138
Niagara Mohawk Power Corp., 8.77s, 2018 2,468 2,560,797
Texas & New Mexico Power Co., 10.75s, 2003 13,690 13,802,258
Toledo Edison Co., 8.7s, 2002 2,192 2,186,257
Waterford 3 Funding Entergy Corp., 8.09s, 2017 2,979 2,762,649
------------
$ 40,536,171
---------------------------------------------------------------------------------------------------------------
Total U.S. Bonds $368,150,205
---------------------------------------------------------------------------------------------------------------
Foreign Bonds - 27.7%
Argentina - 4.5%
Autopistas Del Sol S.A., "B", 10.25s, 2009 (Industrial)## $ 4,500 $ 3,735,000
Cia Latino Americana, 11.625s, 2004 (Sovereign)## 2,750 1,828,750
Industrias Metalurgicas Pescarm, 9.5s, 2002 (Metals and Minerals)## 750 502,500
Multicanal S.A., 0s, 2000 (Cable Television) 500 477,850
Republic of Argentina, 6s, 2023 13,000 9,090,302
Republic of Argentina, 11.874s, 2004## 2,500 2,631,250
Supercanal Holdings S.A., 11.5s, 2005 (Telecommunications)
(In default)## 1,000 430,000
Telecom de Argentina, 12s, 2002 (Telecommunications) 5,000 5,275,000
Telefonica de Argentina, 9.125s, 2008 (Telecommunications) 3,400 3,321,321
------------
$ 27,291,973
---------------------------------------------------------------------------------------------------------------
Bermuda - 0.6%
Flag Ltd., 8.25s, 2008 (Telecommunications) $ 1,600 $ 1,424,000
Global Crossing Holdings Ltd., 9.625s, 2008 (Telecommunications) 2,325 2,278,500
------------
$ 3,702,500
---------------------------------------------------------------------------------------------------------------
Brazil - 3.0%
Federal Republic of Brazil, 12.25s, 2030 $ 2,300 $ 2,104,500
Federal Republic of Brazil, 11.625s, 2004 4,000 3,960,000
Federal Republic of Brazil, 7.438s, 2009 2,000 1,637,500
Federal Republic of Brazil, 14.5s, 2009 69 72,623
Federal Republic of Brazil, 5s, 2014 1,752 1,254,558
Federal Republic of Brazil, 12.75s, 2020 5,000 4,792,500
Federal Republic of Brazil, 6s, 2024 2,250 1,434,375
Federal Republic of Brazil, 10.125s, 2027 3,850 3,003,000
------------
$ 18,259,056
---------------------------------------------------------------------------------------------------------------
Canada - 1.1%
AT&T Canada, Inc., 0s to 2003, 9.95s to 2008
(Telecommunications) $ 4,150 $ 3,311,617
Gulf Canada Resources Ltd., 9.25s, 2004 (Oil
Services) 400 398,708
PCI Chemicals Canada, Inc., 9.25s, 2007 (Chemicals) 1,500 1,226,250
Rogers Cantel, Inc., 9.375s, 2008
(Telecommunications) 1,800 1,791,000
------------
$ 6,727,575
---------------------------------------------------------------------------------------------------------------
Denmark - 0.4%
Kingdom of Denmark, 7s, 2007 DKK 16,432 $ 2,171,660
---------------------------------------------------------------------------------------------------------------
France - 0.5%
Republic of France, 4s, 2009 EUR 4,066 $ 3,318,870
---------------------------------------------------------------------------------------------------------------
Germany - 0.6%
Federal Republic of Germany, 4.5s, 2009 EUR 1,231 $ 1,053,288
Federal Republic of Germany, 5.375s, 2010 3,130 2,859,804
------------
$ 3,913,092
---------------------------------------------------------------------------------------------------------------
Grand Cayman Islands - 1.7%
APP Finance IX Ltd., 10.526s, 2001
(Container, Forest and Paper Products) $ 6,900 $ 6,037,500
Daiwa PB Ltd., 7.241s, 2049 (Banks and Credit Cos.) 5,350 4,601,000
------------
$ 10,638,500
---------------------------------------------------------------------------------------------------------------
Greece - 2.8%
Fage Dairy Industries S.A., 9s, 2007 (Food and Beverage Products) $ 5,000 $ 4,150,000
Hellenic Republic, 5.75s, 2008 EUR 1,089 988,802
Hellenic Republic, 8.7s, 2005 GRD 898,000 2,702,879
Hellenic Republic, 8.9s, 2003 3,128,000 9,109,213
------------
$ 16,950,894
---------------------------------------------------------------------------------------------------------------
Hong Kong - 0.3%
Daewoo Hong Kong Ltd., 5.675s, 2001
(Distribution/Wholesale) (In default) $ 5,000 $ 1,600,000
---------------------------------------------------------------------------------------------------------------
Indonesia - 0.2%
Indah Kiat Finance Mauritius Ltd., 10s, 2007 (Textiles) $ 1,500 $ 978,750
---------------------------------------------------------------------------------------------------------------
Luxembourg - 0.1%
Millicom International Cellular Communications Corp.,
0s to 2001, 13.50s to 2006 (Telecommunications) $ 600 $ 507,000
---------------------------------------------------------------------------------------------------------------
Malaysia - 0.4%
Tenaga Nasional Berhad, 7.5s, 2096 (Utilities)+ $ 3,350 $ 2,518,430
---------------------------------------------------------------------------------------------------------------
Mexico - 3.4%
Alestra S.A. de R L de CV, 12.625s, 2009 (Telecommunications) $ 5,000 $ 4,850,000
Bepensa S.A., 9.75s, 2004 (Sovereign) 2,475 2,289,375
Empresas ICA Sociedad Controladora S.A. de CV, 5s,
2004 (Construction) 2,500 1,275,000
Empresas ICA Sociedad Controladora S.A. de CV,
11.875s, 2001 (Construction) 3,000 2,872,500
Grupo Minero Mexico S.A. de CV, 8.25s, 2008
(Metals and Minerals) 2,600 2,145,000
Nuevo Grupo Iusacell S.A. de CV, 14.25s, 2006
(Telecommunications)## 3,450 3,605,250
Satelites Mexicanos S.A. de CV, 10.125s, 2004
(Telecommunications) 1,250 937,500
United Mexican States, 6.25s, 2019 1,000 821,250
United Mexican States, 6.903s, 2019 917 896,367
United Mexican States, 6.943s, 2019 1,334 1,303,985
------------
$ 20,996,227
---------------------------------------------------------------------------------------------------------------
Netherlands - 1.2%
Cellco Finance N.V. Turkcell, 12.75s, 2005
(Telecommunications)## $ 2,800 $ 2,849,000
PT Alatief Freeport Finance, 9.75s, 2001 (Finance) 1,392 1,238,880
Tenet Healthcare Corp., 0s, 2002 (Medical and Health
Technology and Services) 2,468 1,977,485
United Pan Europe Communication N.V., 10.875s, 2009
(Cable Television) 1,200 1,098,000
------------
$ 7,163,365
---------------------------------------------------------------------------------------------------------------
New Zealand - 0.2%
Government of New Zealand, 8s, 2006 NZD 2,270 $ 1,156,337
---------------------------------------------------------------------------------------------------------------
Panama - 0.2%
Republic of Panama, 8.25s, 2008 $ 1,000 $ 887,500
---------------------------------------------------------------------------------------------------------------
Russia - 0.9%
Russia Principal Loans, 6.906s, 2020 (In default) $ 19,500 $ 5,313,750
---------------------------------------------------------------------------------------------------------------
South Korea - 0.3%
Hanvit Bank, 12.75s, 2010 (Banks and Credit Cos.)## $ 1,000 $ 1,010,000
Korea Electric Power Corp., 8s, 2002 (Utilities -
Electric) 750 739,688
------------
$ 1,749,688
---------------------------------------------------------------------------------------------------------------
Sweden - 0.5%
Kingdom of Sweden, 9s, 2009 SEK 23,700 $ 3,296,524
---------------------------------------------------------------------------------------------------------------
Turkey - 0.4%
Republic of Turkey, 11.875s, 2030 $ 2,500 $ 2,703,125
---------------------------------------------------------------------------------------------------------------
United Kingdom - 4.0%
Cable & Wireless Communications, 6.75s, 2008 (Telecommunications) $ 7,527 $ 7,511,762
Colt Telecom Group PLC, 0s to 2001,12s to 2006
(Telecommunications) 1,500 1,290,000
Colt Telecom Group PLC, 8.875s, 2007 (Telecommunications) DEM 1,000 469,356
Diamond Cable Communications Corp. PLC, 0s to 2000,
11.75s to 2005 (Cable Television) 2,000 1,860,000
Dolphin Telecommunications PLC, 0s to 2003, 11.5s to
2008 (Telecommunications) 2,515 804,800
Energis PLC, 9.75s, 2009 (Telecommunications) 1,000 1,000,000
Global Tele-Systems Ltd., 10.875s, 2008 (Telecommunications) 700 595,000
GPA PLC, 10.875s, 2019 (Airlines)+ 247 207,259
Telewest PLC, 9.625s, 2006 (Media) 2,000 1,935,000
United Kingdom Treasury, 6.75s, 2004 GBP 5,533 8,952,865
------------
$ 24,626,042
---------------------------------------------------------------------------------------------------------------
Uruguay - 0.4%
Banco Central de Uruguay, "A", 6.75s, 2021
(Banks and Credit Cos.) $ 1,250 $ 1,100,000
Republica Orient Uruguay, 7.875s, 2027 1,102 1,049,266
------------
$ 2,149,266
---------------------------------------------------------------------------------------------------------------
Total Foreign Bonds $168,620,124
---------------------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $568,343,089) $536,770,329
---------------------------------------------------------------------------------------------------------------
Preferred Stock - 1.7%
---------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 11.125% (Telecommunications) 72,575 $ 7,801,813
Equitable Iowa Cos Capital Trust, 8.70% (Banks and
Credit Cos.) 20,000 490,000
Primedia, Inc., 10% (Printing and Publishing) 1,360 131,240
Primedia, Inc., 8.625% (Printing and Publishing) 20,000 1,840,000
Supermarkets General Holdings Corp., 14.125%
(Supermarkets)* 22,827 55,641
---------------------------------------------------------------------------------------------------------------
Total Preferred Stock (Identified Cost, $7,663,327) $ 10,318,694
---------------------------------------------------------------------------------------------------------------
Convertible Bond - 0.7%
---------------------------------------------------------------------------------------------------------------
Rite Aid Corp., 5.25s, 2002 (Retail) $ 3,100 $ 1,205,125
Tenet Healthcare Corp., 6s, 2005 (Medical and Health
Technology Services) 4,250 3,421,250
---------------------------------------------------------------------------------------------------------------
Total Convertible Bond (Identified Cost, $6,463,498) $ 4,626,375
---------------------------------------------------------------------------------------------------------------
Stocks - 0.1%
---------------------------------------------------------------------------------------------------------------
Shares
---------------------------------------------------------------------------------------------------------------
Colt Telecom Group PLC, ADR
(United Kingdom - Telecommunications)* 1,565 $ 267,224
Golden Books Family Entertainment Inc.
(Printing and Publishing)* 19,975 29,963
RJR Nabisco Holding Corp. (Consumer Goods and Services) 6,908 88,940
RJR Nabisco Inc. (Consumer Goods and Services) 2,302 47,766
---------------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $89,580) $ 433,893
---------------------------------------------------------------------------------------------------------------
Warrants*
---------------------------------------------------------------------------------------------------------------
DTI Holdings, Inc., Expire 3/1/08 (Financial Institutions) 19,125 $ 191
Loral Orion Network Systems, Inc., Expire 1/15/07
(Telecommunications) 1,625 11,375
Loral Orion Network Systems, Inc., Expire 1/15/07
(Telecommunications) 700 11,900
---------------------------------------------------------------------------------------------------------------
Total Warrants (Identified Cost, $56,143) $ 23,466
---------------------------------------------------------------------------------------------------------------
Rights
---------------------------------------------------------------------------------------------------------------
United Mexican States* (Identified Cost, $0) 4,475,000 $ --
---------------------------------------------------------------------------------------------------------------
Repurchase Agreement - 10.2%
---------------------------------------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
---------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, LP dated 4/28/00, due 05/01/00,
total to be received $62,029,605 (secured by
various U.S. Government Securities in a jointly
traded account),
at Cost $ 62,000 $ 62,000,000
---------------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $644,615,637) $614,172,757
---------------------------------------------------------------------------------------------------------------
Put Options Written
---------------------------------------------------------------------------------------------------------------
Principal Amount
of Contracts
Description/Expiration Month/Strike Price (000 Omitted)
---------------------------------------------------------------------------------------------------------------
Canadian Dollars/June/1.49 CAD (30,236) $ (103,861)
---------------------------------------------------------------------------------------------------------------
Total Put Options Written (Premiums Received, $144,079) $ (103,861)
---------------------------------------------------------------------------------------------------------------
Call Options Written - (0.2)%
---------------------------------------------------------------------------------------------------------------
Japanese Yen/June/103 JPY (2,079,236) $ (54,060)
Australian Dollars/June/.60 AUD (27,721) $ (885,351)
---------------------------------------------------------------------------------------------------------------
Total Call Options Written (Premiums Received, $643,912) $ (939,411)
---------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (0.6)% (3,617,750)
---------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $609,511,735
---------------------------------------------------------------------------------------------------------------
* 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.
AUD = Australian Dollars GBP = British Pounds
CAD = Canadian Dollars GRD = Greek Drachma
DEM = Deutsche Marks JPY = Japanese Yen
DKK = Danish Kronor NZD = New Zealand Dollars
EUR = Euro SEK = Swedish Kroner
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
-------------------------------------------------------------------------------
APRIL 30, 2000
-------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $582,615,637) $552,172,757
Repurchase agreements, at cost and value 62,000,000
------------
Total investments, at value (identified cost,
$644,615,637) $614,172,757
Cash 58,937
Net receivable for forward foreign currency exchange
contracts to sell 2,785,658
Interest and dividends receivable 11,741,184
Other assets 12,598
------------
Total assets $628,771,134
------------
Liabilities:
Distributions payable $ 366,450
Net payable for forward foreign currency exchange
contracts to purchase 2,197,119
Net payable for forward foreign currency exchange
contracts subject to master netting agreements 1,737,399
Payable for investments purchased 11,861,958
Payable for Fund shares reacquired 1,523,125
Payable for swap agreements 25,948
Written options outstanding, at value (premiums received,
$787,991) 1,043,272
Payable to affiliates -
Management fee 20,106
Administrative fee 878
Accrued expenses and other liabilities 483,144
------------
Total liabilities $ 19,259,399
------------
Net assets $609,511,735
============
Net assets consist of:
Paid-in capital $676,684,703
Unrealized depreciation on investments and translation of
assets and liabilities in foreign currencies (31,912,028)
Accumulated net realized loss on investments and foreign
currency transactions (31,697,563)
Accumulated distributions in excess of net investment
income (3,563,377)
------------
Total $609,511,735
============
Shares of beneficial interest outstanding (124,846,052
authorized, less 37,495,100 treasury shares) 87,350,952
==========
Net asset value per share (net assets/shares of beneficial
interest outstanding) $6.98
=====
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
-------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2000
-------------------------------------------------------------------------------
Net investment income:
Income -
Interest $ 28,317,165
Dividends 120,050
------------
Total investment income $ 28,437,215
------------
Expenses -
Management fee $ 2,587,626
Trustees' compensation 85,922
Custodian fee 137,432
Transfer and dividend disbursing agent fee 103,706
Administrative fee 34,631
Auditing fees 19,729
Legal fees 2,722
Postage 29,569
Printing 20,505
Investor communication expense 131,158
Stock exchange fee 105,262
Miscellaneous 13,267
------------
Total expenses $ 3,271,529
Fees paid indirectly (47,869)
------------
Net expenses $ 3,223,660
------------
Net investment income $ 25,213,555
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ (6,481,365)
Written option transactions 329,066
Foreign currency transactions (1,337,652)
------------
Net realized loss on investments and foreign currency
transactions $ (7,489,951)
------------
Change in unrealized appreciation (depreciation) -
Investments $ 973,446
Written options (393,309)
Translation of assets and liabilities in foreign currencies (1,990,869)
Swap transactions 174,927
------------
Net unrealized loss on investments and foreign currency
translation $ (1,235,805)
------------
Net realized and unrealized loss on investments and
foreign currency $ (8,725,756)
------------
Increase in net assets from operations $ 16,487,799
============
See notes to financial statements.
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
<CAPTION>
Statement of Changes in Net Assets
--------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, 1999
(UNAUDITED)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 25,213,555 $ 52,069,392
Net realized loss on investments and foreign currency
transactions (7,489,951) (22,875,200)
Net unrealized gain (loss) on investments and foreign
currency translation (1,235,805) 9,454,301
------------ ------------
Increase in net assets from operations $ 16,487,799 $ 38,648,493
------------ ------------
Distributions declared to shareholders -
From net investment income $(25,425,146) $(52,765,596)
------------ ------------
Trust share (principal) transactions -
Cost of shares reacquired $(22,764,145) $(10,550,275)
------------ ------------
Total decrease in net assets $(31,701,492) $(24,667,378)
Net assets:
At beginning of period 641,213,227 665,880,605
------------ ------------
At end of period (including accumulated distributions in
excess of net investment income of $3,563,377 and
$3,351,786, respectively) $609,511,735 $641,213,227
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
<CAPTION>
Financial Highlights
-------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED ---------------------------------------------------------------------------
APRIL 30, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of
period $ 7.03 $ 7.17 $ 7.79 $ 7.71 $ 7.57 $ 7.06
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.28 $ 0.56 $ 0.59 $ 0.59 $ 0.57 $ 0.59
Net realized and unrealized
gain (loss) on investments
and foreign currency (0.05) (0.13) (0.63) 0.11 0.16 0.49
------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.23 $ 0.43 $(0.04) $ 0.70 $ 0.73 $ 1.08
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.28) $(0.57) $(0.58) $(0.62) $(0.59) $(0.53)
From paid-in capital -- -- -- -- -- (0.04)
------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $(0.28) $(0.57) $(0.58) $(0.62) $(0.59) $(0.57)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 6.98 $ 7.03 $ 7.17 $ 7.79 $ 7.71 $ 7.57
====== ====== ====== ====== ====== ======
Per share market value - end of
period $6.063 $6.063 $6.438 $7.125 $7.125 $6.500
Total return 4.90%++ 2.81% (1.89)% 8.93% 19.32% 15.69%
Ratios (to average net assets)/
Supplemental data(S):
Interest expense -- -- -- 0.18% -- 0.09%
Other expenses## 1.04%+ 1.05% 1.05% 0.93% 1.11% 1.10%
Expenses## 1.04%+ 1.05% 1.05% 1.11% 1.11% 1.19%
Net investment income 8.01%+ 7.80% 7.70% 7.64% 7.49% 8.13%
Portfolio turnover 37% 98% 155% 172% 214% 189%
Net assets at end of period (000
omitted) $609,512 $641,213 $665,881 $723,649 $739,882 $780,915
Leverage analysis:
Debt outstanding at end of
period (000 omitted) $ -- $ -- $ -- $ -- $ -- $ --
Average daily balance of debt
outstanding (000 omitted)
$ -- $ -- $ -- $ 18,854 $ -- $ 10,750
Average daily number of shares
outstanding (000 omitted) 89,400 92,464 92,880 93,951 100,810 108,970
Average debt per share $ -- $ -- $ -- $ 0.20 $ -- $ 0.10
(S) The investment adviser voluntarily waived a portion of its fee for certain of the periods indicated. If this fee had been
incurred by the Trust, the net investment income per share and the ratios would have been:
Ratios (to average net assets):
Expenses## 1.11%
Net investment income 8.11%
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Multimarket Income Trust (the Trust) is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a non-diversified, closed-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Investment Valuations - Debt securities (other than short-term obligations
which mature in 60 days or less), including listed issues, forward contracts,
and swap agreements, are valued on the basis of valuations furnished by
dealers or by a pricing service with consideration to 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 exchange or over-the-counter
prices. 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. Equity securities listed
on securities exchanges or reported through the NASDAQ system are reported at
market value using last sale prices. Unlisted equity securities or listed
equity securities for which last sale prices are not available are reported at
market value using last quoted bid prices. Short-term obligations, which
mature in 60 days or less, are valued at amortized cost, which approximates
market value. Non-U.S. dollar denominated short-term obligations are valued at
amortized cost as calculated in the foreign currency and translated into U.S.
dollars at the closing daily exchange rate. Futures contracts, options, and
options on futures contracts listed on commodities exchanges are reported at
market value using closing settlement prices. Over-the-counter options on
securities are valued by brokers. Over-the-counter currency options are valued
through the use of a pricing model which takes into account foreign currency
exchange spot and forward rates, implied volatility, and short-term repurchase
rates. Securities for which there are no such quotations or valuations are
valued in good faith, at fair value, by the 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 - Effective July 24, 1999, under a Deferred
Compensation 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
Trusts selected by the Trustee. Deferred amounts represent an unsecured
obligation of the Trust until distributed in accordance with the Plan.
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.
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 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.
Swap Agreements - The Trust may enter into swap agreements. A swap is an
exchange of cash payments between the Trust and another party which is based
on a specific financial index. Cash payments are exchanged at specified
intervals and the expected income or expense is recorded on the accrual basis.
The value of the swap is adjusted daily and the change in value is recorded as
unrealized appreciation or depreciation. Risks may arise upon entering into
these agreements from the potential inability of counterparties to meet the
terms of their contract and from unanticipated changes in the value of the
financial index on which the swap agreement is based. The Trust uses swaps for
both hedging and non-hedging purposes. For hedging purposes, the Trust may use
swaps to reduce its exposure to interest and foreign exchange rate
fluctuations. For non-hedging purposes, the Trust may use swaps to take a
position on anticipated changes in the underlying financial index.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. Dividends
received in cash are recorded on the ex-dividend date. Dividend and interest
payments received in additional securities are recorded on the ex-dividend or
ex-interest date in an amount equal to the value of the security on such date.
The Trust uses the effective interest method for reporting interest income on
payment-in-kind (PIK) bonds. 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
date.
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 requires that only distributions in excess of tax basis earnings and
profits be 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.
At April 30, 2000, the Trust, for federal income tax purposes, had a capital
loss carryforward of $21,403,462 which may be applied against any net taxable
realized gains of each succeeding year until the earlier of its utilization or
expiration on October 31, 2007, ($18,400,021) and October 31, 2003,
($3,003,441).
(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.
The Trust 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 all of
its independent Trustees and Mr. Bailey. Included in Trustees' compensation is
a net periodic pension expense of $25,934 for the six months ended April 30,
2000.
Administrator - The Trust has an administrative services agreement with MFS to
provide the Trust with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Trust incurs an administrative fee
at the following annual percentages 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 $ 94,194,603 $ 74,728,498
------------- -------------
Investments (non-U.S. government securities) $ 123,931,643 $ 182,611,093
------------- -------------
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 $ 647,120,315
--------------
Gross unrealized appreciation $ 12,663,557
Gross unrealized depreciation (45,611,115)
--------------
Net unrealized depreciation $ (32,947,558)
==============
(5) Shares of Beneficial Interest
The Trustees have authorized 124,846,052 full and fractional shares of
beneficial interest. Transactions in Trust shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED OCTOBER 31, 1999
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Treasury shares acquired (3,857,100) $(22,764,145) (1,672,300) $(10,550,275)
---------- ------------ ---------- ------------
Net decrease (3,857,100) $(22,764,145) (1,672,300) $(10,550,275)
========== ============ ========== ============
</TABLE>
In accordance with the provisions of the Trust's prospectus, 3,857,100 shares of
beneficial interest were repurchased by the Trust during the six months ended
April 30, 2000, at an average price per share of $5.90 and a weighted average
discount of 11.55% per share. The Trust repurchased 1,672,300 shares of
beneficial interest during the year ended October 31, 1999, at an average price
of $6.308 and a weighted average discount of 7.719% per share.
(6) Line of Credit
The Trust and other affiliated funds participate in a $1.1 billion unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made for temporary financing needs. Interest is
charged to each fund, based on its borrowings, at a rate equal to the 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 six months
ended April 30, 2000, was $5,000. The Trust had no borrowings during the period.
(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, swap agreements, 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
CONTRACTS PREMIUMS
-------------------------------------------------------------------------------
Outstanding, beginning of period 2 $ 450,646
Options written 5 831,705
Options terminated in closing transactions (2) (333,047)
Options exercised (1) (139,456)
Options expired (1) (21,857)
-- ---------
Outstanding, end of period 3 $ 787,991
== =========
At April 30, 2000, the Trust had sufficient cash and/or securities at least
equal to the value of the written options.
<TABLE>
Forward Foreign Currency Exchange Contracts
<CAPTION>
NET
UNREALIZED
CONTRACTS TO CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN EXCHANGE FOR AT VALUE (DEPRECIATION)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales 6/16/00 AUD 30,809,566 $18,758,493 $17,983,275 $ 775,218
6/16/00 CAD 31,305,337 21,441,235 21,170,801 270,434
6/16/00 DKK 19,376,669 2,530,470 2,371,452 159,018
6/16/00 EUR 20,928,691 20,179,272 19,079,783 1,099,489
6/16/00 JPY 832,146,492 8,150,308 7,766,393 383,915
6/16/00 SEK 30,966,420 3,563,454 3,465,870 97,584
----------- ----------- ----------
$74,623,232 $71,837,574 $2,785,658
=========== =========== ==========
Purchases 6/16/00 EUR 15,959,814 $15,543,262 $14,549,872 $ (993,390)
6/16/00 JPY 4,881,880,936 46,756,963 45,562,420 (1,194,543)
6/16/00 NZD 1,027,117 507,396 498,210 (9,186)
----------- ----------- ----------
$62,807,621 $60,610,502 $(2,197,119)
=========== =========== ===========
</TABLE>
At April, 30 2000, forward foreign currency purchases and sales under master
netting agreements excluded above amounted to a net payable of $1,114,547 with
Deutsche Bank and $763,356 with Merrill Lynch and a net receivable of $140,504
with CS First Boston.
At April 30, 2000, the Trust had sufficient cash and/or securities to cover
any commitments under these contracts.
<TABLE>
Swap Agreements
Interest Rate Swaps
<CAPTION>
UNREALIZED
NOTIONAL PRINCIPAL CASH FLOWS PAID CASH FLOWS RECEIVED APPRECIATION
EXPIRATION AMOUNT OF CONTRACT BY THE TRUST BY THE TRUST (DEPRECIATION)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3/22/03 106,700,000 Fixed - 4.38% Floating - 3M STIBOR $(370,039)
3/22/03 11,560,000 Floating - 6M STIBOR Fixed - 3.76% 344,091
--------
$(25,948)
========
</TABLE>
<PAGE>
At April 30, 2000, 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 net assets in securities which
are subject to legal or contractual restrictions on resale. At April 30, 2000,
the Trust owned the following restricted securities, excluding securities
issued under Rule 144A, constituting 0.63% 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 securities be registered. The
value of these securities is determined by valuations furnished by dealers or
by a pricing service, or if not available, in good faith, at fair value, by
the Trustees.
<TABLE>
<CAPTION>
SHARE/PAR
DESCRIPTION DATE OF ACQUISITION AMOUNT COST VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GPA PLC, 10.875s, 2019 3/13/96 247,000 $ 246,925 $ 207,259
Merrill Lynch Mortgage Investors, Inc.,
8.439s, 2022 6/22/94 1,200,000 831,750 1,138,313
Tenega Nasional Berhad, 7.5s, 2096 4/14/99 3,350,000 2,633,130 2,518,430
----------
$3,864,002
==========
</TABLE>
<PAGE>
MFS(R) MULTIMARKET INCOME TRUST
TRUSTEES PORTFOLIO MANAGER
J. Atwood Ives+(2) - Chairman and James T. Swanson*
Chief
Executive Officer, Eastern TREASURER
Enterprises W. Thomas London*
(diversified services company)
ASSISTANT TREASURERS
Lawrence T. Perera+(1) - Partner, Mark E. Bradley*
Hemenway Ellen Moynihan*
& Barnes (attorneys) James O. Yost*
William J. Poorvu+(1) - Adjunct SECRETARY
Professor, Harvard University Stephen E. Cavan*
Graduate School of Business
Administration ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Charles W. Schmidt+(2) - Private
Investor TRANSFER AGENT, REGISTRAR, AND
DIVIDEND DISBURSING AGENT
Arnold D. Scott* - Senior Executive State Street Bank and Trust
Vice President, Director, and Company
Secretary, c/o MFS Service Center, Inc.
MFS Investment Management P.O. Box 9024
Boston, MA 02205-9824
Jeffrey L. Shames* - Chairman and 1-800-637-2304
Chief Executive Officer, MFS
Investment Management CUSTODIAN
State Street Bank and Trust
Elaine R. Smith+(1) - Independent Company
Consultant
David B. Stone+(1)(2) - Chairman,
North American Management Corp.
(investment advisers)
INVESTMENT ADVISER
Massachusetts Financial Services
Company
500 Boylston Street
Boston, MA 02116-3741
+ Independent Trustee
* MFS Investment Management
(1) Member of Audit Committee
(2) Member of Portfolio Trading Committee
<PAGE>
MFS(R) MULTIMARKET INCOME TRUST ------------
BULK RATE
U.S. POSTAGE
PAID
[Logo] M F S(R) MFS
INVESTMENT MANAGEMENT ------------
We invented the mutual fund(R)
500 Boylston Street
Boston, MA 02116-3741
(c)2000 MFS Investment Management(R).
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116
MMTCE-3 06/00 75M
