<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[Graphic Omitted]
MFS(R) MULTIMARKET
INCOME TRUST
ANNUAL REPORT o OCTOBER 31, 2000
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 5
Performance Summary ....................................................... 9
Results of Shareholder Meeting ............................................ 11
Portfolio of Investments .................................................. 12
Financial Statements ...................................................... 23
Notes to Financial Statements ............................................. 27
Independent Auditors' Report .............................................. 35
Trustees and Officers ..................................................... 37
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,
If you've been reading our fund reports for any length of time, you've probably
sensed the pride we have in our research process. More than anything else, we
think MFS Original Research(R) -- and the performance results it has yielded for
shareholders -- makes us unique among investment management companies. We think
that uniqueness stems from three factors: philosophy, process, and people.
PHILOSOPHY
In over 75 years in the investment management business, we've developed a
number of beliefs about the best ways to invest over a variety of market
conditions. First, we believe in bottom-up research, which means we use a
company-by-company, one-security-at-a-time approach to building a portfolio.
What we look for is the truth about the fundamentals of a company's business
-- things such as the ability of management to execute its business plan, the
ability of that plan to be scaled up as the company grows, actual demand for
the company's products and services, cash flow, profits, and earnings.
Second, we believe that, over the long term, stock prices follow earnings. In
our view, stock prices are basically a multiple of projected earnings, with
the multiple increasing as the market perceives that a company has something
customers want and will continue to want. One of the major elements of
Original Research(SM) is doing our best to project a company's future earnings
and determine how much the market will pay for those earnings.
Third, we believe there are at least three ways to potentially achieve
competitive long-term performance: be early, uncover second chances,
and avoid mistakes. All of these are based on bottom-up research. In both
domestic and international markets, early discovery has historically been a
hallmark of our investment style. Some of the stocks with which MFS has been
most successful are those in which we've taken large positions before the
market discovered or believed in them. Similarly, some of our best fixed-
income investments have been early positions in companies or governments that
our research revealed were potential candidates for credit upgrades.
(A credit upgrade causes the value of a bond to rise because it indicates the
market has increased confidence that principal and interest on the bond will
be repaid.)
"Second-chance" opportunities are companies whose stock prices have stumbled
but that we believe still have the potential to be market leaders. For
example, a quarterly earnings shortfall of a few cents may cause the market to
temporarily lose confidence in a company. If we believe the business remains
fundamentally strong, we may use the price decline as a buying opportunity.
Avoiding mistakes is another way we feel Original Research may help performance.
In fixed-income investing this means, among other things, trying to be better
than our peers at avoiding bond issuers that may default. In equity investing,
avoiding mistakes means we strive to know a company and its industry well enough
to distinguish truth from hype.
PROCESS
We acquire our information firsthand, by researching thousands of companies to
determine which firms may make good investments. Our analysis of an individual
company may include
o face-to-face contact with senior management as well as frontline
workers
o analysis of the company's financial statements and balance sheets
o contact with the company's current and potential customers
o contact with the company's competitors
o our own forecasts of the company's future market share, cash flow, and
earnings
Our analysts and portfolio managers disseminate this information in the form
of daily notes e-mailed worldwide to all members of our investment team. This
ensures that our best ideas are shared throughout the company, without
barriers between equity and fixed-income, international and domestic, or value
and growth investment areas. We believe this allows each of our portfolio
managers -- and thus each of our investors -- to potentially benefit from any
relevant item of Original Research.
John Ballen, our President and Chief Investment Officer, has often said that
the thought he hopes managers will have when they read the daily notes is, "I
could never perform as well at any other investment company, because nowhere
else could the quality of the research be this good."
PEOPLE
Our team of research analysts and portfolio managers traces its roots back to
1932, when we created one of the first in-house research departments in the
industry. Today, we believe we have an investment team distinguished for its
unique blend of talent, continuity, and cohesiveness.
MFS' team culture and commitment to quality research have proven to be of
tremendous value in attracting some of the best and brightest talent from
leading business schools and from other investment management companies. Our
company culture was a key factor in our recognition by Fortune magazine in its
January 10, 2000, issue as one of the "100 Best Companies to Work For" in
America. As befits a great team, our people have tended to stick around -- the
average MFS tenure of our portfolio managers is 11 years, with over 16 years in
the investment industry. Contributing to this continuity is our policy that all
equity portfolio managers are promoted from within, after distinguishing
themselves first as research analysts. And because many of us who are now
managing funds or managing the company itself have been working together for
well over a decade, we have a cohesiveness, a shared philosophy of investing,
and a unity of purpose that we believe bodes well for the future of the company.
We also have scale. Our research analyst team is over 55 members strong and
growing. Each analyst is our in-house expert on a specific industry or group
of industries in a specific region of the globe. In pursuing their research,
our analysts and portfolio managers each year will visit more than 2,000
companies throughout the world, meet with representatives from more than 3,000
companies at one of our four worldwide offices, attend roughly 5,000 company
presentations sponsored by major Wall Street firms, and consult with over
1,000 analysts from hundreds of U.S. and foreign brokerage houses.
All of this culminates in our analysts making buy and sell recommendations on
a wide range of potential investments for all of our portfolios. In the end,
the goal of Original Research is to try to give our portfolio managers an
advantage over their peers -- to enable our managers to deliver competitive
performance by finding opportunities before they are generally recognized by
the market, and by avoiding mistakes whenever possible. Original Research
does, we believe, make a difference.
As always, we appreciate your confidence in MFS and welcome any questions or
comments you may have.
Respectfully,
/s/ Jeffrey Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
November 16, 2000
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 12 months ended October 31, 2000, the trust provided a total return of
8.84% 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 4.65%. The trust's results
compare to returns over the same period for the following benchmarks: -9.94%
for the J.P. Morgan Non-Dollar Government Bond Index (the Morgan Index), 8.04%
for the Lehman Brothers Government Bond Index, and -1.61% for the Lehman
Brothers High Yield Bond Index. 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 composed 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.
The trust's holdings performed relatively 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. Interestingly, the top-
performing bond sectors in 2000 have been U.S. Treasuries, one of the safest
of all fixed-income sectors in terms of credit risk, and emerging markets, one
of the riskiest, (Principal value and interest on Treasury securities are
guaranteed by the U.S. government if held to maturity.)
We increased our exposure to long-term Treasuries because long-term interest
rates have been falling, causing long-term Treasury prices to rise. Although
the Federal Reserve Board (the Fed) raised short-term interest rates several
times since last fall in an effort to slow the economy, the effect of those
increases has been to lower long-term rates. We think long-term rates fell
because the market has had confidence that the Fed will succeed in slowing
economic growth, which could lead to lower rates in the future. The shrinking
federal deficit is another factor that has caused long-term bond prices to
rise because demand for these bonds has increased as the government has begun
reducing the size of outstanding issues.
We believe our emerging market debt holdings have been strong performers
because it appears that many Third World countries have started to get their
political and economic houses in order, and their economic systems are coming
more into line with the rest of the world. As the market has recognized this
situation, bonds issued by these nations have tended to improve, and even in
some cases be upgraded, crossing over from below-investment grade to
investment grade. (When a bond's rating is upgraded, the bond is considered
less risky and therefore its price rises.) For example, our research was early
in identifying Mexico as a country with credit upgrade potential, and the
portfolio benefited when the Mexican bonds we held crossed over to investment
grade this past spring.
The one area that slightly detracted from relative performance was our
currency holdings in the euro, which experienced an ongoing slide in value
versus the dollar. In our view, the U.S. dollar has now become relatively
overvalued, and we expect that the euro will come back. Until we observe signs
of that beginning to happen, however, in the near term we plan to keep our
euro exposure to a minimum.
Looking ahead, we believe U.S. Treasuries may do better than any other fixed-
income sector over the next few months. As the U.S. economy slows, we feel the
Fed could potentially begin lowering interest rates to provide more liquidity,
thus driving up bond prices. To take advantage of this situation, we have
increased our weighting in U.S. government and mortgage bonds to our highest
allocation in a couple of years.
We also view the high-yield sector as an area of potential opportunity. We
believe high-yield bond prices were beaten down in 2000 because the market was
pricing in a 10% default rate in anticipation of a recession. Looking toward
the first half of 2001, however, we think the Fed will be successful in
slowing the economy without prompting a recession. We believe that in the
first or second quarter, the market will recognize that the economy has
achieved a successful "soft landing," and we feel prices of credit-sensitive
issues including high-yield bonds will begin to rise. At this point, we
anticipate increasing our allocation to that sector, once we begin to see
signs of an imminent turnaround.
Our overall investment approach is to try to provide investors with "one-stop
shopping" in the bond world by offering a combination of the six sectors of
the bond market we mentioned previously. We vary the weights of these sectors
within certain limits, depending on where we believe the best values are at
any given time. For example, if one sector gets beaten down in price, but we
believe the situation will improve -- as with the high-yield sector described
earlier -- we may reallocate assets from pricier asset sectors to that cheaper
one to try to take advantage of the opportunity. We feel markets have not
always behaved rationally, and a portfolio such as ours may take advantage of
those situations.
To help us uncover market opportunities, we have a unique process in place
that assists us in making portfolio management decisions based on forward-
looking research and ideas across our entire fixed-income department. This
procedure, called the Horizon Process, enables us to gather our analysts' best
ideas across all fixed-income sectors and channel them into the portfolio.
Every three weeks, MFS experts in each investment area give us a three-month
horizon outlook for their segments of the market. We then compile these
outlooks into a report and then decide, based on this information, where we
think the best risk-adjusted fixed-income opportunities appear to be at any
given time. At that point, we can adjust sector weightings accordingly.
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, CFA, IS SENIOR VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R). HE IS PORTFOLIO MANAGER OF THE STRATEGIC INCOME
PORTFOLIOS OF OUR MUTUAL FUNDS AND VARIABLE ANNUITY PRODUCTS AND OF THE
GLOBAL GOVERNMENTS PORTFOLIO OF OUR VARIABLE ANNUITY PRODUCTS. HE ALSO
MANAGES TWO CLOSED-END FUNDS, MFS(R) CHARTER INCOME TRUST AND MFS(R)
MULTIMARKET INCOME TRUST.
JAMES 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 (CFA).
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 October 31, 2000, our records indicate that there are 11,997 registered
shareholders and approximately 46,500 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
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 year ended October 31, 2000)
NET ASSET VALUE PER SHARE
October 31, 1999 $7.03
October 31, 2000 $6.69
NEW YORK STOCK EXCHANGE PRICE
October 31, 1999 $6.0625
August 22, 2000 (high)* $6.3750
December 31, 1999 (low)* $5.5000
October 31, 2000 $6.0000
*For the period November 1, 1999, through October 31, 2000.
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NOTES TO PERFORMANCE SUMMARY
Government guarantees apply to individual securities only and not to prices
and yields of shares in a managed portfolio.
This trust is nondiversified and has more risk than one that is diversified.
The trust invests in a limited number of companies and may have more risk
because a change in one security's value may have a more significant effect on
the trust's net asset value. An investment in the trust is not 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
and 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.
RESULTS OF SHAREHOLDER MEETING (Unaudited)
At the annual meeting of shareholders of MFS Multimarket Income Trust, which
was held on September 14, 2000, the following actions were taken:
ITEM 1. The election of Jeffrey L. Shames, William J. Poorvu, Arnold D. Scott,
and David B. Stone as Trustees of the trust.
ELECTION OF TRUSTEES FOR AGAINST
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Jeffrey L. Shames 74,389,473.5401 1,281,939.5726
William J. Poorvu 74,498,150.6249 1,173,262.4878
Arnold D. Scott 74,474,106.5272 1,197,306.5855
David B. Stone 74,340,850.6274 1,330,562.4853
ITEM 2. The ratification of the selection of Ernst & Young LLP as the
independent public accountants to be employed by the Trust for the
fiscal year ending October 31, 2001.
% OF SHARES TO TOTAL % OF SHARES TO TOTAL
SHARES OUTSTANDING SHARES SHARES VOTED
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For 74,485,867.6913 86.0246% 98.4333%
Against 438,915.0199 0.5069 0.5800
Abstain 746,630.4015 0.8623 0.9867
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS -- October 31, 2000
Bonds - 87.3%
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PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER (000 OMITTED) VALUE
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<S> <C> <C>
S. Bonds - 64.8%
Aerospace - 0.5%
Airplane Pass-Through Trust, 10.875s, 2019 $ 247 $ 186,288
Argo Tech Corp., 8.625s, 2007 300 243,000
BE Aerospace, Inc., 8s, 2008 2,500 2,275,000
K & F Industries, Inc., 9.25s, 2007 200 191,750
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$ 2,896,038
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Automotive - 0.6%
Hayes Wheels International, Inc., 9.125s, 2007 $ 2,100 $ 1,659,000
Lear Corp., 9.5s, 2006 1,725 1,717,272
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$ 3,376,272
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Broadcasting - 1.1%
Clear Channel Communications Inc., 8.125s, 2007 $ 3,625 $ 3,652,187
Clear Channel Communications Inc., 8.75s, 2007 1,000 1,025,000
Cumulus Media, Inc., 10.375s, 2008 750 592,500
Granite Broadcasting Corp., 10.375s, 2005 1,221 1,040,903
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$ 6,310,590
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Building Materials - 0.7%
AAF-McQuay, Inc., 8.875s, 2003 $ 1,925 $ 1,732,500
American Standard, Inc., 7.375s, 2008 1,050 960,750
Building Materials Corp., 8s, 2007 1,100 352,000
Nortek, Inc., 8.875s, 2008 1,215 1,057,050
Nortek, Inc., 9.25s, 2007 125 111,250
UDC Homes, Inc., 14.5s, 2000* 29 13,917
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$ 4,227,467
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Business Services - 0.7%
Iron Mountain, Inc., 8.75s, 2009 $ 1,600 $ 1,536,000
Iron Mountain, Inc., 10.125s, 2006 150 154,500
Pierce Leahy Corp., 11.125s, 2006 2,000 2,072,500
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$ 3,763,000
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Chemicals - 0.7%
Huntsman ICI Holdings LLC, 10.125s, 2009 $ 1,025 $ 984,000
Lyondell Chemical Co., 10.875s, 2009 1,750 1,697,500
NL Industries, Inc., 11.75s, 2003 1,270 1,285,875
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$ 3,967,375
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Computer Hardware - Systems
Anacomp, Inc., 10.875s, 2004 $ 1,250 $ 181,250
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Computer Software - Systems - 0.5%
Unisystem Corp., 7.875s, 2008 $ 3,250 $ 2,981,875
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Consumer Goods and Services - 0.3%
Kindercare Learning Centers, Inc., 9.5s, 2009 $ 350 $ 319,375
Williams Scotsman, Inc., 9.875s, 2007 1,250 1,081,250
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$ 1,400,625
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Containers - 0.5%
Synthetic Industries, Inc., 14.9s, 2000 $ 2,600 $ 2,561,000
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Container, Forest and Paper Products - 1.2%
Ball Corporation, 7.75s, 2006 $ 500 $ 470,000
Buckeye Cellulose Corp., 9.25s, 2008 2,150 2,128,500
Gaylord Container Corp., 9.75s, 2007 1,200 792,000
Gaylord Container Corp., 9.875s, 2008 1,200 360,000
Silgan Holdings, Inc., 9s, 2009 1,500 1,273,125
U.S. Timberlands, 9.625s, 2007 1,700 1,525,750
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$ 6,549,375
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Energy - 0.1%
AmeriGas Partners LP, "B", 10.125s, 2007 $ 600 $ 601,500
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Financial Institutions - 3.4%
Commercial Mortgage Asset Trust, 7.839s, 2020
(Interest Only) $ 93,641 $ 3,152,901
Constellation Finance LLC, 9.8s, 2001 4,250 4,080,000
DTI Holdings, Inc., 0s to 2003, 12.5s, 2008 1,655 562,700
Merrill Lynch Mortgage Investors, Inc., 8.49s, 2022+ 1,200 1,143,938
Morgan Stanley Capital, Inc., 7.771s, 2039 5,560 4,296,200
Nationslink Funding Corp., 5s, 2009 5,460 3,773,372
Residential Accredit Loans Inc., 7.75s, 2027 2,525 2,345,045
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$ 19,354,156
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Food and Beverage Products - 0.5%
Borden, Inc., 9.25s, 2019 $ 750 $ 623,100
Borden, Inc., 9.2s, 2021 2,500 1,914,950
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$ 2,538,050
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Industrial - 0.9%
Allied Waste North America, Inc., 10s, 2009 $ 1,500 $ 1,267,500
Day International Group, Inc., 11.125s, 2005 1,000 985,000
IMO Industries, Inc., 11.75s, 2006 1,650 1,664,437
Numatics, Inc., 9.625s, 2008 1,600 1,224,000
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$ 5,140,937
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Information, Paging and Technology - 0.5%
Nextel Communications, Inc., 0s to 2002, 9.75s, 2007 $ 300 $ 231,000
Nextel Communications, Inc., 0s to 2003, 9.95s, 2008 1,450 1,083,875
Nextel International, Inc., 0s to 2003, 12.125s, 2008 2,750 1,677,500
------------
$ 2,992,375
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Insurance - 0.4%
Americo Life, Inc., 9.25s, 2005 $ 2,650 $ 2,484,375
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Media - 2.1%
Echostar DBS Corp., 9.375s, 2009 $ 2,000 $ 1,967,500
Fox/Liberty Networks LLC, Inc., 8.875s, 2007 2,450 2,462,250
Golden Books Publishing, Inc., 10.75s, 2004 438 109,508
Lenfest Communications, Inc., 10.5s, 2006 500 540,000
LIN Holdings Corp., 0s to 2003, 10s, 2008 1,500 1,080,000
NTL Communications Corp., 0s to 2003, 12.375s, 2008 1,025 574,000
Paxson Communications Corp., 11.625s, 2002 2,500 2,553,125
United Pan Europe, 10.875s, 2009 2,200 1,661,000
Viacom Inc., 9s, 2006 750 765,000
------------
$ 11,712,383
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Medical and Health Technology and Services
Quorum Health Group, Inc., 8.75s, 2005 $ 200 $ 202,000
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Metals and Minerals - 1.1%
Commonwealth Aluminum Corp., 10.75s, 2006 $ 1,000 $ 915,000
Haynes International, Inc., 11.625s, 2004 1,585 1,109,500
Kaiser Aluminum & Chemical Corp., 9.875s, 2002 1,015 862,750
Kaiser Aluminum & Chemical Corp., 10.875s, 2006 175 148,750
Metal Management, Inc., 10s, 2008 2,000 280,000
P&L Coal Holdings Corp., 9.625s, 2008 1,750 1,701,875
Thermadyne Manufacturing Corp., 9.875s, 2008 1,500 1,080,000
Wheeling Pittsburgh Corp., 9.25s, 2007 1,000 280,000
------------
$ 6,377,875
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Oil Services - 1.4%
Clark USA, Inc., 10.875s, 2005 $ 60 $ 40,200
Continental Resources, Inc., 10.25s, 2008 1,000 895,000
Forest Oil Corp., 10.5s, 2006 1,250 1,268,750
Ocean Energy, Inc., 8.875s, 2007 265 268,313
Pemex Project, 9.125s, 2010## 140 136,182
Triton Energy Ltd., 9.25s, 2005 5,500 5,582,500
------------
$ 8,190,945
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Printing and Publishing - 0.3%
Hollinger International Publishing, 9.25s, 2007 $ 1,950 $ 1,930,500
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Retail - 0.5%
J.Crew Operating Corp., 10.375s, 2007 $ 1,680 $ 1,478,400
Musicland Group, Inc., 9.875s, 2008 600 495,000
Samsonite Corp., 10.75s, 2008 1,400 1,074,500
------------
$ 3,047,900
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Steel - 0.2%
AK Steel Holdings Corp., 9.125s, 2006 $ 275 $ 270,875
WCI Steel, Inc., 10s, 2004 825 664,125
------------
$ 935,000
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Telecommunications - 9.1%
Adelphia Communications Corp., 9.875s, 2007 $ 1,725 $ 1,561,125
Allbritton Communications Co., 9.75s, 2007 1,005 977,363
Allegiance Telecommunications, Inc., 12.875s, 2008## 2,000 2,010,000
Centennial Cellular Operating Co., 10.75s, 2008 500 475,000
Century Communications Corp., 9.5s, 2005 450 409,500
Charter Communications Holdings, 0s to 2004, 9.92s, 2011 4,000 2,300,000
Continental Cablevision, Inc., 9.5s, 2013 5,000 5,335,050
Crown Castle International Corp., 10.75s, 2011 2,000 2,040,000
Focal Communications Corp., 0s to 2003, 12.125s, 2008 450 216,000
Frontier Vision Holdings LP, 11s, 2006 2,000 1,920,000
Frontier Vision Holdings LP, 0s to 2001, 11.875s, 2007 500 417,500
ICG Holdings, Inc., 0s to 2001, 12.5s, 2006 3,340 501,000
Intermedia Communications, Inc., 0s to 2002,
11.25s, 2000 2,875 2,371,875
ITC Deltacom, Inc., 11s, 2007 2,945 2,503,250
ITC Deltacom, Inc., 9.75s, 2008 750 605,625
Jones Intercable, Inc., 8.875s, 2007 1,500 1,563,810
Level 3 Communications, Inc., 9.125s, 2008 2,050 1,660,500
NTL, Inc., 0s to 2003, 9.75s, 2008 1,860 1,041,600
PSINet, Inc., 11s, 2009 1,510 732,350
Qwest Communications International, Inc., 0s to 2003,
8.29s, 2008 2,325 1,946,467
Qwest Communications International, Inc., 10.875s, 2007 487 532,529
Spectrasite Holdings, Inc., 0s to 2003, 12s, 2008 2,550 1,663,875
Sprint Spectrum LP, 0s to 2001, 12.5s, 2006 2,000 1,994,730
TCI Communications Financing III, 9.65s, 2027 5,000 5,317,900
Time Warner Telecommunications LLC, 9.75s, 2008 2,500 2,212,500
Triton PCS, Inc., 0s to 2003, 11s, 2008 2,450 1,849,750
Turner Broadcasting Systems, Inc., 8.4s, 2024 3,000 2,934,720
United International Holdings, 0s to 2003, 10.75s, 2008 3,200 1,920,000
Western Wireless Corp., 10.5s, 2007 1,500 1,556,250
WorldCom, Inc., 8.875s, 2006 900 928,710
------------
$ 51,498,979
------------------------------------------------------------------------------------
U.S. Federal Agencies - 18.4%
Federal Home Loan Bank, 5.125s, 2001 $ 3,750 $ 3,726,563
Federal Home Loan Bank, 7.5s, 2030 9,743 9,740,515
Federal Home Loan Mortgage Corp., 7.5s, 2028 2,382 2,381,598
Financing Corp., 9.4s, 2018 12,000 15,318,720
FNMA, 7.5s, 2030 10,000 9,987,800
FNMA, 6.625s, 2009 25,990 25,835,619
FNMA, 7s, 2029 7,477 7,327,324
FNMA, 7s, 2030 12,913 12,653,803
FNMA, 7.5s, 2030 7,863 7,853,504
GNMA, 8s, 2030 9,629 9,795,144
------------
$104,620,590
------------------------------------------------------------------------------------
U.S. Government Guaranteed - 15.9%
U.S. Treasury Bonds, 12s, 2005 $ 14,000 $ 17,357,760
U.S. Treasury Bonds, 9.875s, 2015 14,825 20,456,128
U.S. Treasury Bonds, 6.125s, 2029 4,001 4,143,516
U.S. Treasury Bonds, 6.25s, 2030 3,750 3,993,750
U.S. Treasury Notes, 6.125s, 2001 8,000 7,987,520
U.S. Treasury Notes, 6.75s, 2005 3,057 3,169,253
U.S. Treasury Notes, 4.25s, 2010 10,265 10,575,720
U.S. Treasury Notes, 5.75s, 2010 15,000 14,985,900
U.S. Treasury Notes, 6.5s, 2010 6,897 7,219,228
------------
$ 89,888,775
------------------------------------------------------------------------------------
Utilities - Electric - 3.2%
Beaver Valley Funding Corp., 9s, 2017 $ 2,124 $ 2,193,731
BVPS II Funding Corp., 8.68s, 2017 1,000 1,030,120
Cheasapeake Energy Corp., 9.625s, 2005 1,600 1,606,000
Midland Cogeneration Venture Corp., 10.33s, 2002 3,933 4,007,669
Niagara Mohawk Power Corp., 7.25s, 2002 1,437 1,429,058
Niagara Mohawk Power Corp., 8.77s, 2018 2,433 2,524,335
Toledo Edison Co., 8.7s, 2002 2,192 2,215,542
Waterford 3 Funding Entergy Corp., 8.09s, 2017 2,979 2,911,833
------------
$ 17,918,288
------------------------------------------------------------------------------------
Total U.S. Bonds $367,649,495
------------------------------------------------------------------------------------
Foreign Bonds - 22.5%
Argentina - 2.7%
Autopistas Del Sol S.A., 10.25s, 2009 (Industrial)## $ 4,500 $ 3,532,500
Citibank NA Buenos Aires, 0s, 2001 (Banks and Credit
Cos.) 398 400,428
Industrias Metalurgicas Pescarm, 9.5s, 2002 (Metals
and Minerals)## 750 453,750
Mastellone Hermanos S.A., 11.75s, 2008 (Food and
Beverage Products) 450 288,000
Republic of Argentina, 11.75s, 2015 2,344 1,998,260
Republic of Argentina, 12s, 2020 100 86,750
Republic of Argentina, 10.25s, 2030 280 212,800
Supercanal Holdings S.A., 11.5s, 2005
(Telecommunications) (In default)## 1,000 330,000
Telecom de Argentina, 12s, 2002 (Telecommunications) 5,000 5,237,500
Telefonica de Argentina, 9.125s, 2008
(Telecommunications) 3,400 3,012,107
------------
$ 15,552,095
------------------------------------------------------------------------------------
Australia - 0.3%
Commonwealth of Australia, 7.5s, 2005 AUD 2,976 $ 1,627,412
------------------------------------------------------------------------------------
Bermuda - 0.6%
Flag Ltd., 8.25s, 2008 (Telecommunications) $ 1,600 $ 1,344,000
Global Crossing Holdings Ltd., 9.625s, 2008
(Telecommunications) 2,325 2,220,375
------------
$ 3,564,375
------------------------------------------------------------------------------------
Brazil - 3.1%
Banco Nacional de Desenvolvi, 12.693s, 2008 (Banks
and Credit Cos.)## $ 290 $ 268,975
Federal Republic of Brazil, 11.625s, 2004 1,000 1,010,000
Federal Republic of Brazil, 7.688s, 2009 100 85,786
Federal Republic of Brazil, 14.5s, 2009 35 37,363
Federal Republic of Brazil, 8s, 2014 3,115 2,326,509
Federal Republic of Brazil, 12.75s, 2020 5,000 4,637,500
Federal Republic of Brazil, 6s, 2024 85 55,598
Federal Republic of Brazil, 7.375s, 2024 100 76,203
Federal Republic of Brazil, 12.25s, 2030 2,145 1,866,150
Federal Republic of Brazil, 11s, 2040 9,800 7,466,400
------------
$ 17,830,484
------------------------------------------------------------------------------------
Bulgaria - 0.1%
National Republic of Bulgaria, 7.75s, 2011 $ 100 $ 74,625
National Republic of Bulgaria, 3s, 2012 130 93,113
National Republic of Bulgaria, 7.75s, 2024 250 187,500
------------
$ 355,238
------------------------------------------------------------------------------------
Canada - 1.1%
AT&T Canada, Inc., 0s to 2003, 9.95s, 2008
(Telecommunications) $ 4,150 $ 3,320,705
Gulf Canada Resources Ltd., 9.25s, 2004 (Oil
Services) 400 406,500
PCI Chemicals Canada, Inc., 9.25s, 2007 (Chemicals) 1,500 600,000
Rogers Cantel, Inc., 9.375s, 2008
(Telecommunications) 1,800 1,818,000
------------
$ 6,145,205
------------------------------------------------------------------------------------
Colombia
Republic of Colombia, 11.75s, 2020 $ 110 $ 88,110
------------------------------------------------------------------------------------
Ecuador
Republic of Equador, 12s, 2012## $ 120 $ 81,300
------------------------------------------------------------------------------------
Grand Cayman Islands - 1.6%
APP Finance IX Ltd., 10.75s, 2001 (Forest and
Paper Products) $ 6,900 $ 4,623,000
Daiwa PB Ltd., 7.71s, 2049 (Banks and Credit Cos.) 5,350 4,440,500
------------
$ 9,063,500
------------------------------------------------------------------------------------
Greece - 2.3%
Fage Dairy Industries S.A., 9s, 2007 (Food and
Beverage Products) $ 5,000 $ 3,750,000
Hellenic Republic, 8.9s, 2003 GRD 3,128,00 8,369,333
Hellenic Republic, 8.7s, 2005 328,500 913,050
------------
$ 13,032,383
------------------------------------------------------------------------------------
Indonesia - 0.3%
Indah Kiat Finance Mauritius Ltd., 10s, 2007
(Textiles) $ 4,000 $ 1,520,000
------------------------------------------------------------------------------------
Luxembourg - 0.1%
Millicom International Cellular Communications Corp.,
0s to 2001, 13.5s, 2006 (Telecommunications) $ 600 $ 507,000
------------------------------------------------------------------------------------
Mexico - 2.1%
Bepensa S.A., 9.75s, 2004 (Sovereign)## $ 2,590 $ 2,369,850
Cydsa S.A., 9.375s, 2002 (Chemicals) 1,320 567,600
Grupo Iusacell S.A. de CV, 14.25s, 2006
(Telecommunications) 3,495 3,521,212
Grupo Minero Mexico S.A. de CV, 8.25s, 2008 (Metals
and Minerals) 2,630 2,261,800
Maxcom Telecomunicacione, 13.75s, 2007
(Telecommunications) 82 36,900
Petroleos Mexicanos, 9.5s, 2027 (Oils) 60 57,832
Satelites Mexicanos S.A. de CV, 10.125s, 2004
(Telecommunications) 1,250 787,500
TFM S.A. de CV, 0s to 2002, 11.75s, 2009
(Transportation) 1,856 1,354,880
United Mexican States, 9.875s, 2010 150 155,625
United Mexican States, 6.25s, 2019 1,000 880,000
United Mexican States, 11.5s, 2026 80 93,800
------------
$ 12,086,999
------------------------------------------------------------------------------------
Morocco
Kingdom of Morocco, 7.75s, 2009 $ 114 $ 98,610
------------------------------------------------------------------------------------
Netherlands - 1.2%
APP International Finance BV, 11.75s, 2005
(Container, Forest, and Paper Products) $ 85 $ 34,850
Netia Holdings BV, 10.25s, 2007 (Telecommunications) 120 90,000
PT Alatief Freeport Finance, 9.75s, 2001 (Finance) 2,042 1,827,590
PTC International Finance BV, 0s to 2002, 10.75s,
2007 (Telecommunications) 60 40,200
Tenet Healthcare Corp., 0s, 2002 (Medical and Health
Technology Services) 2,468 1,974,400
Tjiwi Kimia International Finance BV, 13.25s, 2001
(Forest and Paper Products) 3,350 2,814,000
------------
$ 6,781,040
------------------------------------------------------------------------------------
New Zealand - 0.2%
Government of New Zealand, 8s, 2006 NZD 2,270 $ 959,811
------------------------------------------------------------------------------------
Panama - 0.4%
Republic of Panama, 4.5s, 2014 $ 255 $ 202,087
Republic of Panama, 10.75s, 2020 1,910 1,858,430
------------
$ 2,060,517
------------------------------------------------------------------------------------
Peru
Republic of Peru, 3.75s, 2017 $ 50 $ 26,188
------------------------------------------------------------------------------------
Philippines
Philippines Republic, 10.625s, 2025 $ 70 $ 53,200
------------------------------------------------------------------------------------
Qatar
State of Qatar, 9.75s, 2030## $ 45 $ 43,819
------------------------------------------------------------------------------------
Russia - 2.1%
Russian Federation, 8.75s, 2005## $ 80 $ 62,800
Russian Federation, 8.25s, 2010## 727 466,943
Russian Federation, 12.75s, 2028## 80 67,500
Russian Federation, 2.5s, 2030## 29,972 11,164,402
------------
$ 11,761,645
------------------------------------------------------------------------------------
South Africa
Republic of South Africa, 12.5s, 2002 ZAR 1,000 $ 133,719
------------------------------------------------------------------------------------
South Korea - 0.1%
Chohung Bank, 11.5s, 2010 (Banks and Credit Cos.)## $ 75 $ 71,719
Hanvit Bank, 12.75s, 2010 (Banks and Credit Cos.)## 85 82,450
Korea Electric Power Corp., 8s, 2002 (Utilities -
Electric) 750 748,039
------------
$ 902,208
------------------------------------------------------------------------------------
Spain - 1.1%
Kingdom of Spain, 7s, 2005 $ 6,102 $ 6,169,903
------------------------------------------------------------------------------------
Sweden
Slovak Wireless Finance Co., 11.25s, 2007
(Telecommunications) EUR 75 $ 59,183
------------------------------------------------------------------------------------
Turkey
Republic of Turkey, 12.375s, 2009 $ 43 43,215
Republic of Turkey, 11.75s, 2010 40 38,820
Republic of Turkey, 11.875s, 2030 64 62,480
------------
$ 144,515
------------------------------------------------------------------------------------
United Kingdom - 2.6%
Colt Telecom Group PLC, 8.875s, 2007
(Telecommunications) DEM 1,000 $ 417,563
Colt Telecom Group PLC, 0s to 2001, 12s, 2006
(Telecommunications) $ 500 455,625
Diamond Cable Communications Corp. PLC, 0s to 2000,
11.75s, 2005 (Cable Television) 2,000 1,900,000
Dolphin Telecom PLC, 0s to 2003, 11.5s, 2008
(Telecommunications) 2,515 477,850
Energis PLC, 9.75s, 2009 (Telecommunications) 1,000 960,000
Global Tele-Systems Ltd., 10.875s, 2008
(Telecommunications) 700 196,000
Telewest Communications PLC, 9.625s, 2006 (Cable
Television) 2,200 1,826,000
United Kingdom Treasury, 6.75s, 2004 GBP 5,533 8,363,770
------------
$ 14,596,808
------------------------------------------------------------------------------------
Venezuela - 0.1%
Republic of Venezuela, 9.25s, 2027 $ 560 $ 369,600
------------------------------------------------------------------------------------
Uruguay - 0.4%
Banco Central de Uruguay, "A", 6.75s, 2021 (Banks and
Credit Cos.) $ 1,250 $ 1,100,000
Republic Orient of Uruguay, 7.875s, 2027 1,102 1,067,851
------------
$ 2,167,851
------------------------------------------------------------------------------------
Total Foreign Bonds $127,782,718
------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $533,457,994) $495,432,213
------------------------------------------------------------------------------------
Preferred Stock - 1.8%
------------------------------------------------------------------------------------
SHARES
------------------------------------------------------------------------------------
CSC Holdings, Inc., 11.125% (Telecommunications) 76,667 $ 8,165,035
Primedia, Inc., 10% (Printing and Publishing) 1,360 127,160
Primedia, Inc., 8.625% (Printing and Publishing) 20,000 1,680,000
------------
Total Preferred Stock (Identified Cost, $6,752,910) $ 9,972,195
------------------------------------------------------------------------------------
Convertible Bond - 0.8%
------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
------------------------------------------------------------------------------------
Colt Telecom Group PLC, 2s, 2006
(Telecommunications) $ 1,250 $ 945,282
Rite Aid Corp., 5.25s, 2002 (Retail) 250 63,125
Tenet Healthcare Corp., 6s, 2005 (Medical and Health
Technology Services) 4,250 3,527,500
------------
Total Convertible Bond (Identified Cost, $4,912,857) $ 4,535,907
------------------------------------------------------------------------------------
Stocks - 0.1%-
------------------------------------------------------------------------------------
SHARES
------------------------------------------------------------------------------------
Colt Telecom Group PLC, ADR (United Kingdom -
Telecommunications)* 1,565 $ 204,428
Golden Books Family Entertainment, Inc. (Printing
and Publishing)* 19,975 9,988
RJR Nabisco Holding Corp. (Consumer Goods and
Services) 6,908 199,468
RJR Nabisco Inc. (Consumer Goods and Services) 2,302 82,297
------------
Total Stocks (Identified Cost, $89,580) $ 496,181
------------------------------------------------------------------------------------
Warrants
------------------------------------------------------------------------------------
Maxcom Telecomunicacione, Expire 4/1/07
(Telecommunications)##* 82 $ 10
DTI Holdings, Inc., Expire 3/1/08
(Telecommunications)* 15,925 159
Loral Orion Network Systems, Inc., Expire 1/15/07
(Telecommunications)* 1,625 4,875
Loral Orion Network Systems, Inc., Expire 1/15/07
(Telecommunications)* 700 3,500
------------
Total Warrants (Identified Cost, $51,558) $ 8,544
------------------------------------------------------------------------------------
Rights
------------------------------------------------------------------------------------
United Mexican States* 501,000 $ --
Banco Central de Uruguay (Banks and Credit Cos.) 1,250,000 --
------------
Total Rights (Identified Cost, $-) $ --
------------------------------------------------------------------------------------
Call Options Purchased - 0.1%
------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER/EXPIRATION MONTH/STRIKE PRICE (000 OMITTED)
------------------------------------------------------------------------------------
Canadian Dollars/November/1.51 CAD 37,966 $ 56,151
Japanese Yen/April/104.35 JPY 2,634,328 503,157
Swiss Francs/December/1.67 CHF 42,332 39,792
------------
Total Call Options Purchased (Premiums Paid, $1,107,150) $ 599,100
------------------------------------------------------------------------------------
Put Options Purchased - 0.2%
Australian Dollars/November/0.57 AUD 15,568 $ --
Australian Dollars/November/0.605 11,946 --
Euro/November/0.9 EUR 35,481 --
Hong Kong Dollars/October/7.7828 HKD 98,547 69,870
Japanese Yen/December/96.8 JPY 2,445,745 136,962
Japanese Yen/December/109.5 2,761,172 193,282
Japanese Yen/April/104.35 2,634,328 906,209
------------
Total Put Options Purchased (Premiums Paid, $1,620,851) $ 1,306,323
------------------------------------------------------------------------------------
Repurchase Agreement - 6.4%
------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED)
------------------------------------------------------------------------------------
Goldman Sachs Group, LP dated 10/31/00 due 11/1/00,
total to be received $36,284,631 (secured by
various U.S. Government Securities in a jointly
traded account),
at Cost $ 36,278 $ 36,278,000
------------
Total Investments (Identified Cost, $584,270,900) $548,628,463
Put Options Written
------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
DESCRIPTION/EXPIRATION MONTH/STRIKE PRICE (000 OMITTED)
------------------------------------------------------------------------------------
Japanese Yen/December/103 JPY (2,602,394) $ (13,012)
Japanese Yen/December/112 (2,824,213) (59,308)
------------
Total Put Options Written (Premiums Received, $158,185) $ (72,320)
------------------------------------------------------------------------------------
Call Options Written - (0.3)%
Australian Dollars/May/.555 AUD (9,063) $ (673,223)
Australian Dollars/October/.500 (19,073) (407,716)
Australian Dollars/November/.5304 (14,487) (349,855)
Euro/November/.86 EUR (17,129) (300,825)
Japanese Yen/December/88 JPY (2,223,405) (157,862)
-------------
Total Call Options Written (Premiums Received, $ 1,005,341) $ (1,889,481)
------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 3.6% 20,524,512
------------------------------------------------------------------------------------
Net Assets - 100.0% $ 567,191,174
------------------------------------------------------------------------------------
</TABLE>
* 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 GRD = Greek Drachma
BRL = Brazilian Real HKD = Hong Kong Dollars
CAD = Canadian Dollars JPY = Japanese Yen
CHF = Swiss Francs MXN = Mexican Peso
CLP = Chilean Peso NOK = Norwegian Krone
DEM = Deutsche Marks NZD = New Zealand Dollar
DKK = Danish Kronor PLN = Polish Zloty
EUR = Euro SEK = Swedish Krona
GBP = British Pounds ZAR = South African Rand
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
--------------------------------------------------------------------------
OCTOBER 31, 2000
--------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $584,270,900) $ 548,628,463
Cash 1,454,724
Net receivable for forward foreign currency exchange
contracts to sell 2,634,438
Receivable for investments sold 15,514,574
Interest and dividends receivable 10,642,888
Other assets 3,434
-------------
Total assets $ 578,878,521
-------------
Liabilities:
Payable to custodian, at value (identified cost, $982) $ 973
Distributions payable 351,324
Net payable for forward foreign currency exchange
contracts to purchase 2,164,982
Net payable for forward currency exchange contracts
subject to master netting agreements 2,733,453
Payable for investments purchased 3,484,193
Payable for fund shares reacquired 482,400
Written options outstanding, at value (premiums received,
$1,163,526) 1,961,801
Payable to affiliates -
Management fee 5,308
Transfer and dividend disbursing agent fee 20,413
Administrative fee 273
Accrued expenses and other liabilities 482,227
-------------
Total liabilities $ 11,687,347
-------------
Net assets $ 567,191,174
=============
Net assets consist of:
Paid-in capital $ 645,706,101
Unrealized depreciation on investments and translation of
assets and liabilities in foreign currencies (38,752,866)
Accumulated net realized loss on investments and foreign
currency transactions (40,999,447)
Accumulated undistributed net investment income 1,237,386
-------------
Total $ 567,191,174
=============
Shares of beneficial interest outstanding (124,846,052
authorized, less 40,028,600 treasury shares) 84,817,452
==========
Net asset value per share (net assets / shares of
beneficial interest outstanding) $6.69
=====
See notes to financial statements.
<PAGE>
Statement of Operations
--------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000
--------------------------------------------------------------------------
Net investment income:
Income -
Interest $ 56,656,990
Dividends 224,550
------------
Total investment income $ 56,881,540
------------
Expenses -
Management fee $ 5,141,826
Trustees' compensation 139,400
Custodian fee 272,227
Transfer and dividend disbursing agent fee 243,173
Administrative fee 86,796
Auditing fees 39,329
Legal fees 6,023
Postage 53,672
Printing 52,959
Investor communication expense 328,764
Stock exchange fee 105,262
Miscellaneous 26,280
------------
Total expenses $ 6,495,711
Fees paid indirectly (115,826)
------------
Net expenses $ 6,379,885
------------
Net investment income $ 50,501,655
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions (23,567,907)
Written option transactions 2,770,970
Foreign currency transactions (6,420,580)
Swap transactions 66,869
------------
Net realized loss on investments and foreign
currency transactions $(27,150,648)
------------
Change in unrealized appreciation (depreciation) -
Investments $ (4,226,111)
Written options (936,312)
Translation of assets and liabilities in
foreign currencies (3,115,095)
Swap transactions 200,875
------------
Net unrealized loss on investments and foreign
currency translation $ (8,076,643)
------------
Net realized and unrealized loss on investments
and foreign currency $(35,227,291)
------------
Increase in net assets from operations $ 15,274,364
============
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000 1999
------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
<S> <C> <C>
Net investment income $ 50,501,655 $ 52,069,392
Net realized loss on investments and foreign currency
transactions (27,150,648) (22,875,200)
Net unrealized gain (loss) on investments and foreign
currency translation (8,076,643) 9,454,301
------------- -------------
Increase in net assets from operations $ 15,274,364 $ 38,648,493
------------- -------------
Distributions declared to shareholders -
From net investment income $ (35,553,670) $ (52,765,596)
From paid-in capital (15,231,841) --
------------- -------------
Total distributions declared to shareholders $ (50,785,511) $ (52,765,596)
------------- -------------
Trust share (principal) transactions -
Cost of shares reacquired $ (38,510,906) $ (10,550,275)
------------- -------------
Total decrease in net assets $ (74,022,053) $ (24,667,378)
Net assets:
At beginning of year 641,213,227 665,880,605
------------- -------------
At end of year (undistributed net investment income and
distributions in excess of net investment income of
$1,237,386 and $3,351,786, respectively) $ 567,191,174 $ 641,213,227
============= =============
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31, 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each year):
Net asset value - beginning of year $ 7.03 $ 7.17 $ 7.79 $ 7.71 $ 7.57
-------- -------- -------- -------- --------
Income from investment operations# -
Net investment income $ 0.58 $ 0.56 $ 0.59 $ 0.59 $ 0.57
Net realized and unrealized gain (loss)
on investments and foreign currency (0.40) (0.14) (0.63) 0.09 0.12
-------- -------- -------- -------- --------
Total from investment operations $ 0.18 $ 0.42 $ (0.04) $ 0.68 $ 0.69
-------- -------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.41) $ (0.57) $ (0.58) $ (0.62) $ (0.59)
From paid in capital (0.17) -- -- -- --
-------- -------- -------- -------- --------
Total distributions declared to shareholders $ (0.58) $ (0.57) $ (0.58) $ (0.62) $ (0.59)
-------- -------- -------- -------- --------
Net increase from repurchase of capital shares $ 0.06 $ 0.01 $ -- $ 0.02 $ 0.04
-------- -------- -------- -------- --------
Net asset value - end of year $ 6.69 $ 7.03 $ 7.17 $ 7.79 $ 7.71
-------- -------- -------- -------- --------
Per share market value - end of year $ 6.000 $ 6.063 $ 6.438 $ 7.125 $ 7.125
======== ======== ======== ======== ========
Total return 8.84% 2.81% (1.89)% 8.93% 19.32%
Ratios (to average net assets)/Supplemental data:
Interest expense -- % -- % -- % 0.18% -- %
Other expenses## 1.06% 1.05% 1.05% 0.93% 1.11%
Total expense 1.06% 1.05% 1.05% 1.11% 1.11%
Net investment income 8.23% 7.80% 7.70% 7.64% 7.49%
Portfolio turnover 82% 98% 155% 172% 214%
Net assets at end of year (000 Omitted) $567,191 $641,213 $665,881 $723,649 $739,882
Leverage analysis:
Debt outstanding at end of year (000 Omitted) $ -- $ -- $ -- $ -- $ --
Average daily balance of debt outstanding
(000 Omitted) $ -- $ -- $ -- $ 18,854 $ --
Average daily number of shares
outstanding (000 Omitted) 87,811 92,464 92,880 93,951 100,810
Average debt per share $ -- $ -- $ -- $ 0.20 $ --
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(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 (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 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. All discount
is accreted for financial statement and tax reporting purposes as required by
federal income tax regulations. Dividends received in cash are recorded on the
ex-dividend date. Dividend and interest payments received in additional
securities are recorded on the ex-dividend or ex-interest date in an amount
equal to the value of the security on such date. The trust 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 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. During
the year ended October 31, 2000, $10,358,813 was reclassified to accumulated
net realized loss in investments and foreign currency transactions, from
accumulated undistributed net investment income. In addition, $15,231,841 was
redesignated as a tax return of capital distribution due to differences
between book and tax accounting. This change had no effect on the net assets
or net asset value per share. At October 31, 2000, accumulated undistributed
net investment income (realized gain on investments and foreign currency
transactions) under book accounting were different from tax accounting due to
temporary differences in accounting.
At October 31, 2000, the trust, for federal income tax purposes, had a capital
loss carryforward of $40,819,384 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, 2008, ($19,415,923), October 31, 2007, ($18,400,020)
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. Included in Trustees' compensation is a net periodic
pension expense of $47,412 for the year ended October 31, 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 $230,833,519 $190,743,988
------------ ------------
Investments (non-U.S. government securities) $237,826,233 $346,758,977
------------ ------------
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 $584,450,961
------------
Gross unrealized appreciation $ 10,709,099
Gross unrealized depreciation (46,531,597)
------------
Net unrealized depreciation $(35,822,498)
============
(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>
YEAR ENDED OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 1999
---------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Treasury shares acquired (6,390,600) $(38,510,906) (1,672,300) $(10,550,275)
---------- ------------ ---------- ------------
Net decrease (6,390,600) $(38,510,906) (1,672,300) $(10,550,275)
========== ============ ========== ============
</TABLE>
In accordance with the provisions of the trust's prospectus, 6,390,600 shares
of beneficial interest were purchased by the trust during the year ended
October 31, 2000, at an average price per share of $6.026 and a weighted
average discount of 13.87% 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 the
year ended October 31, 2000, was $2,691. 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, 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 year 2 $ 450,646
Options written 27 4,559,379
Options terminated in closing transactions (6) (986,503)
Options exercised (12) (1,750,790)
Options expired (4) (1,109,206)
--- ----------
Outstanding, end of year 7 $ 1,163,526
=== ===========
At October 31, 2000, the trust had sufficient cash and/or securities at least
equal to the value of the written options.
Forward Foreign Currency Exchange Contracts
<TABLE>
<CAPTION>
NET
UNREALIZED
CONTRACTS TO CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN EXCHANGE FOR AT VALUE (DEPRECIATION)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales
12/15/00 AUD 27,920,162 $ 15,455,283 $ 14,471,463 $ 983,820
06/05/00 - 08/27/01 BRL 39,328,793 19,924,154 19,677,575 246,579
12/15/00 CAD 6,665,275 4,518,831 4,369,650 149,181
12/15/00 CHF 62,648,118 35,563,550 35,001,608 561,942
11/13/00 CLP 2,207,373,116 3,889,645 3,865,866 23,779
12/15/00 DKK 954,663 111,722 109,057 2,665
11/08/00 - 12/15/00 EUR 28,261,351 24,391,657 24,025,202 366,455
12/15/00 GRD 3,770,985,404 9,702,780 9,423,174 279,606
10/31/01 HKD 98,559,931 12,662,187 12,669,988 (7,801)
12/15/00 - 09/07/01 JPY 448,982,206 4,215,478 4,148,359 67,119
12/15/00 NOK 127,446,735 13,691,730 13,732,423 (40,693)
12/15/00 SEK 364,506 38,409 36,623 1,786
------------ ------------ -----------
$144,165,426 $141,530,988 $ 2,634,438
============ ============ ===========
Purchases
12/15/00 AUD 30,697,439 $ 16,926,613 $ 15,910,970 $(1,015,643)
06/05/01 - 11/01/01 BRL 39,841,293 19,832,550 19,926,051 93,501
12/15/00 CHF 40,079,963 22,746,858 22,392,743 (354,115)
11/13/00 CLP 2,207,373,116 3,990,911 3,865,865 (125,046)
12/15/00 EUR 41,989,035 36,506,201 35,695,602 (810,599)
12/15/00 GBP 9,871,077 13,998,569 14,331,734 333,165
12/15/00 JPY 3,121,404,290 29,110,268 28,827,274 (282,994)
11/10/00 - 12/18/00 MXN 6,600,000 686,815 685,079 (1,736)
11/24/00 PLN 1,250,000 268,702 267,187 (1,515)
------------ ------------ -----------
$144,067,487 $141,902,505 $(2,164,982)
============ ============ ===========
</TABLE>
At October 31, 2000, forward foreign currency purchases and sales under master
netting agreements excluded above amounted to a net payable of $171,309 with
Chase Bank, $347,012 with Deutsche Bank, $689,898 with CS First Boston, and
$1,525,234 with Merrill Lynch.
At October 31, 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 October 31,
2000, the trust owned the following restricted securities, excluding
securities issued under Rule 144A, constituting 0.20% 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>
DATE OF
DESCRIPTION ACQUISITION PAR AMOUNT COST VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Merrill Lynch Mortgage Investors, Inc.,
8.49s, 2022 6/22/94 1,200,000 831,750 $1,143,938
</TABLE>
<PAGE>
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 schedule of portfolio
investments, as of October 31, 2000, 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, 2000,
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, 2000, 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 the financial highlights for each
of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States.
Ernst & Young LLP
Boston, Massachusetts
December 8, 2000
<PAGE>
--------------------------------------------------------------------------------
FEDERAL TAX INFORMATION
--------------------------------------------------------------------------------
IN JANUARY 2001, SHAREHOLDERS WILL BE MAILED A FORM 1099-DIV REPORTING
THE FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE CALENDAR
YEAR 2000.
FOR THE YEAR ENDED OCTOBER 31, 2000, THE AMOUNT OF DISTRIBUTIONS FROM
INCOME ELIGIBLE FOR THE 70% DIVIDENDS RECEIVED DEDUCTION FOR
CORPORATIONS IS 0.64%.
--------------------------------------------------------------------------------
<TABLE>
<PAGE>
MFS(R) MULTIMARKET INCOME TRUST
<S> <C>
TRUSTEES PORTFOLIO MANAGER
J. Atwood Ives+(2) - Chairman and Chief James T. Swanson*
Executive Officer, Eastern Enterprises
(diversified services company) TREASURER
James O. Yost*
Lawrence T. Perera+(1) - Partner, Hemenway
& Barnes (attorneys) ASSISTANT TREASURERS
Mark E. Bradley*
William J. Poorvu+(1) - Adjunct Professor, Robert R. Flaherty*
Harvard University Graduate School of Business Laura F. Healy*
Administration Ellen Moynihan*
Charles W. Schmidt+(2) - Private Investor SECRETARY
Stephen E. Cavan*
Arnold D. Scott* - Senior Executive Vice
President, Director, and Secretary, MFS ASSISTANT SECRETARY
Investment Management James R. Bordewick, Jr.*
Jeffrey L. Shames* - Chairman and Chief TRANSFER AGENT, REGISTRAR, AND
Executive Officer, MFS Investment Management DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
Elaine R. Smith+(1) - Independent Consultant c/o MFS Service Center, Inc.
P.O. Box 9024
David B. Stone+(1)(2) - Chairman, North Boston, MA 02205-9824
American Management Corp. (investment advisers) 1-800-637-2304
INVESTMENT ADVISER CUSTODIAN
Massachusetts Financial Services Company State Street Bank and Trust Company
500 Boylston Street
Boston, MA 02116-3741 AUDITORS
Ernst & Young LLP
+ Independent Trustee
* MFS Investment Management
(1) Member of Audit Committee
(2) Member of Portfolio Trading Committee
</TABLE>
<PAGE>
MFS(R) MULTIMARKET INCOME TRUST ------------
BULK RATE
U.S. POSTAGE
[Logo] M F S(R) PAID
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) ------------
500 Boylston Street
Boston, MA 02116-3741
(c)2000 MFS Investment Management(R).
500 Boylston Street, Boston, MA 02116.
MMTCE-2 12/00 65M
