UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSR
Investment Company Act file number 811-5689
SCUDDER MULTI-MARKET INCOME TRUST
--------------------------------
(Exact Name of Registrant as Specified in Charter)
222 SOUTH RIVERSIDE PLAZA
CHICAGO, IL 60606
--------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 295-2663
--------------
Salvatore Schiavone
Two International Place
Boston, Massachusetts 02110
---------------------------------------
(Name and Address of Agent for Service)
Date of fiscal year end: 11/30
Date of reporting period: 11/30/03
ITEM 1. REPORT TO STOCKHOLDERS
[Scudder Investments logo]
Scudder Multi-Market
Income Trust
|
| |
| Annual Report to Shareholders |
| November 30, 2003 |
|
Investments in mutual funds involve risk. Yields and market value will fluctuate. Investing in emerging markets presents certain unique risks not associated with domestic investments, such as currency fluctuation, political and economic changes and market risks. Additionally, the fund invests in lower-quality and non-rated securities which present greater risk of loss of principal and interest than higher-quality securities. All of these factors may result in greater share price volatility. Shares of closed-end funds frequently trade at a discount to net asset value. The price of the fund's shares is determined by a number of factors, several of which are beyond the control of the fund. Therefore, the fund cannot predict whether its shares will trade at, below or above net asset value.
Scudder Investments is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Investment Management Americas Inc., Deutsche Asset Management Inc., Deutsche Asset Management Investment Services Ltd., Deutsche Bank Trust Company Americas and Scudder Trust Company.
Fund shares are not FDIC-insured and are not deposits or other obligations of, or guaranteed by, any bank. Fund shares involve investment risk, including possible loss of principal.
Performance Summary November 30, 2003 |
|
Average Annual Total Returns |
Scudder Multi-Market Income Trust | 1-Year | 3-Year | 5-Year | 10-Year |
Based on Net Asset Value(a)
| 28.12% | 13.73% | 7.70% | 7.79% |
Based on Market Price
| 28.44% | 13.82% | 9.79% | 7.82% |
CS First Boston High Yield Index+
| 26.57%
| 11.64%
| 5.91%
| 7.19%
|
CS First Boston High Yield Index (50%), Lehman Brothers Treasury Index (25%), Citigroup Non-US World Government Bond Currency Hedged Index (15%), J.P. Morgan Emerging Markets Bond Index Plus (10%)+
| 17.06%
| 9.92%
| 6.86%
| 6.38%
|
Net Asset Value and Market Price |
| As of 11/30/03 | As of 11/30/02 |
Net Asset Value
| $ 8.77 | $ 7.52 |
Market Price
| $ 8.57 | $ 7.33 |
Distribution Information |
Twelve Months:
Income Dividends
| $ .76 |
November Income Dividend
| $ .0615 |
Current Annualized Distribution Rate (based on Net Asset Value)++
| 8.42% |
Current Annualized Distribution Rate (based on Market Price)++
| 8.61% |
Performance is historical, assumes reinvestment of all dividends and capital gains and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when redeemed, shares may be worth more or less then their original cost. Current performance may be lower or higher than the performance data quoted. Please visit scudder.com for the product's most recent month-end performance.
Notes to Performance Summary |
a Total investment returns reflect changes in net asset value per share during each period and assume that dividends and capital gains distributions, if any, were reinvested. These percentages are not an indication of the performance of a shareholder's investment in the Fund based on market price.+ CS First Boston High Yield Index is an unmanaged trader-priced portfolio constructed to mirror the global high-yield debt market. Lehman Brothers Treasury Index is an unmanaged index reflecting the performance of all public obligations and does not focus on one particular segment of the Treasury market. Citigroup Non-USD World Government Bond Currency Hedged Index is an unmanaged foreign securities index representing major government bond markets other than the US. J.P. Morgan Emerging Markets Bond Index Plus is an unmanaged index tracking total returns for traded external currency-denominated debt instruments in the emerging markets: Brady bonds, loans, Eurobonds and US dollar-denominated local market instruments. Index returns assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.++ Current annualized distribution rate is the latest monthly dividend shown as an annualized percentage of net asset value/market price on November 30, 2003. Distribution rate simply measures the level of dividends and is not a complete measure of performance. Distribution rates are historical and will fluctuate.Portfolio Management Review |
|
Scudder Multi-Market Income Trust: A Team Approach to Investing
Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor"), which is part of Deutsche Asset Management, is the investment advisor for Scudder Multi-Market Income Trust. DeIM and its predecessors have more than 80 years of experience managing mutual funds and DeIM provides a full range of investment advisory services to institutional and retail clients. DeIM is also responsible for selecting brokers and dealers and for negotiating brokerage commissions and dealer charges.
Deutsche Asset Management is a global asset management organization that offers a wide range of investing expertise and resources. This well-resourced global investment platform brings together a wide variety of experience and investment insight across industries, regions, asset classes and investing styles.
DeIM is an indirect, wholly owned subsidiary of Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is engaged in a wide range of financial services, including investment management, mutual funds, retail, private and commercial banking, investment banking and insurance.
Deutsche Asset Management Investment Services Limited ("DeAMIS"), an affiliate of DeIM, serves as sub-advisor to the fund, effective September 9, 2002. DeAMIS renders investment advisory and management services including services related to foreign securities, foreign currency transactions and related investments with regard to the portion of the fund's portfolio that is allocated to it by DeIM from time-to-time for management.
Portfolio Management Team
Jan C. Faller, CFA
Managing Director of Deutsche Asset Management and Lead Manager of the fund.
• Joined Deutsche Asset Management in 1999 and the fund team in 2000.
• Over 12 years of investment industry experience.
• PanAgora Asset Management, bond and currency investment manager from 1995 to 1999.
• MBA, Amos Tuck School, Dartmouth College.
Andrew P. Cestone
Managing Director of Deutsche Asset Management and Portfolio Manager of the fund.
• Joined Deutsche Asset Management in March 1998 and the fund team in 2002.
• Prior to that, Investment Analyst, Phoenix Investment Partners, from 1997 to 1998.
Sean P. McCaffrey, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the fund.
• Joined Deutsche Asset Management in 1996 and the fund team in 2002.
• Prior to that, Fixed Income Analyst, Fidelity Investments, from 1991-1996.
• Head of Fixed Income Enhanced Strategies & Mutual Funds Group, portfolio manager for structured and quantitatively based active investment grade and enhanced fixed income strategies underlying retail mutual fund and institutional mandates: New York.
• MBA, Yale University.
In the following interview, Jan C. Faller, lead portfolio manager of Scudder Multi-Market Income Trust, discusses market conditions and the fund's investment strategy during the 12-month period ended November 30, 2003.
Q: How did the fund perform over the 12 months ended November 30, 2003?
A: Over the 12-month period ended November 30, 2003, the fund's total return was 28.12% based on net asset value. The fund's return based on its market price was 28.44%. This compares with the 17.73% average return (for the one-year period ended November 30, 2003) of the fund's peers in the Lipper General Bond Funds category for closed-end funds.1
1 The Lipper General Bond Funds category includes closed-end funds that do not have quality or maturity restrictions and intend to keep the bulk of assets in corporate and government debt issues. It is not possible to invest directly in the Lipper category. Source: Lipper Inc. Rankings are historical and do not guarantee future results. Lipper rankings are based on the fund's total return unadjusted for sales charges with distributions reinvested. If sales charges had been included, rankings might have been less favorable.Q: Will you discuss the general market environment for the sectors in which the fund was invested during the period?
A: During the past 12 months, both high-yield debt and emerging-market debt provided strong performance. Prior to the current fiscal year, high yield endured a tough environment amid corporate accounting scandals, global political turmoil and a volatile stock market. We always felt that high-yield bonds - though they often perform in tandem with stocks - were not in a "bubble" the way equities were. More recently, high-yield bonds have benefited from strong demand from risk-tolerant investors as yields of investment-grade and Treasury bonds declined dramatically. Now, we believe that high yield seems to have returned to "fair value" after investors snapped up many of these bonds at depressed prices. On the other hand, the fair-value price for some high-yield bonds has continued to rise as government economic statistics have improved and, in our view, we see the recovery beginning to gain traction.
Within emerging markets, Brazil and Russia were the biggest stories. At the beginning of the period, Brazil elected a new president, Luiz Inacio Lula da Silva. A politician from a populist background, Lula began to "shift gears" a third of the way through the election. From the reforms that he has begun to push through, we feel it's clear that Lula is conscious of investor concerns. At the same time, he's managed to be popular among the Brazilian people. Lula has kept two important constituents happy, and the market has rewarded him handsomely for that. In Russia, despite the controversy over the arrest of Yukos Oil Company president Mikhail Khodorkovsky, sovereign debt has continued to perform well, as the market has kept its confidence in the ability of President Putin and the Russian administration to maintain order and meet the country's debt obligations. The growth of Russia's oil business has continued to put the country on a more sound financial footing, and early December 2003 elections have solidified Putin's political standing.
Q: What impact has exposure to these two areas had on the fund's performance?
A: The fund strongly benefited from its high-yield allocation during the period. Lower-quality high-yield bonds were the strongest performers, and we gradually shifted the Trust's exposure in the direction of lower-quality high-yield bonds during the fiscal year. In the emerging markets, the good news I mentioned from Brazil and Russia was the main driver of positive performance. Brazilian "C" Brady bonds, which had been distressed, have soared in value as President Lula has shown himself to be investor friendly. Russian bonds also posted strong gains as the country's leaders made progress in shoring up Russia's fiscal picture.
Q: What detracted from performance during the period?
A: In high yield we began the year with a credit quality concentration tilted toward the higher end of the spectrum. This held the performance of the Trust's high-yield exposure back as lower-quality credits provided the best returns during the year. As the year progressed, we shifted our exposure down the credit spectrum. Thus we did benefit from lower-quality returns later in the year. Within emerging markets, as Brazil recovered, we turned our attention from global debt to local bonds, as our analysis indicated that local debt offered better value. While local debt did rally with the country overall, global debt continued to lead in terms of performance. Thus, this shift held back returns somewhat in emerging markets.
Q: What changes in fund strategy did you make during the period?
A: Over the period, we increased the fund's use of leverage. Through the use of a secured loan from Barton Capital Corporation, where we raise money in the short-term commercial paper market, the fund borrows money at short-term interest rates and then invests the proceeds in longer-term securities, which typically pay higher interest rates.
The fund's turnover rate also increased during the period, as we sought to achieve greater diversification in our high-yield holdings and as we sought to take advantage of country allocation opportunities in emerging markets. While that increase in turnover exposed the fund to greater transaction costs, we feel that the better returns that were generated more than made up for costs associated with increased trading.
Q: How do you assess the market environment for the fund's sectors at present?
A: I mentioned that high-yield bonds seem to have reached fair value for the moment. We think that emerging markets are fully valued and somewhat vulnerable to external shocks that might come along, though we believe any such events would be short-term in nature. Following increases in short-term interest rates by the Bank of England and the Australian central bank late in the period - the first such moves in the current global business cycle - we are carefully monitoring US Federal Reserve statements for any signs of a near-term shift in policy. We believe that Scudder Multi-Market Income fund remains an attractive vehicle for investors seeking relatively high current return.
The views expressed in this report reflect those of the portfolio managers only through the end of the period of the report as stated on the cover. The managers' views are subject to change at any time based on market and other conditions and should not be construed as a recommendation.
Portfolio Summary November 30, 2003 |
|
Asset Allocation | 11/30/03 | 11/30/02 |
|
Emerging Market Bonds
| 44%
| 46%
|
High-Yield Corporate Bonds
| 52%
| 49%
|
Other
| 3%
| 4%
|
US Government Agency Pass-Thrus
| -
| 1%
|
US Treasury Obligations
| 1%
| -
|
| 100%
| 100%
|
Quality | 11/30/03 | 11/30/02 |
|
Government and Agency
| 1%
| 5%
|
A
| 3%
| -
|
BBB
| 13%
| 13%
|
BB
| 24%
| 28%
|
B
| 46%
| 44%
|
Below B
| 11%
| 9%
|
Not rated
| 2%
| 1%
|
| 100%
| 100%
|
Interest Rate Sensitivity | 11/30/03 | 11/30/02 |
|
Average Maturity
| 11.2 years
| 11.8 years
|
Duration
| 6.7 years
| 5.5 years
|
Asset allocation, quality and interest rate sensitivity are subject to change.
For more complete details about the fund's investment portfolio, see page 12. A monthly Fact Sheet and quarterly Portfolio Holdings are available upon request.
Investment Portfolio as of November 30, 2003 | |
|
| Principal Amount ($) (c) | Value ($) |
|
|
Corporate Bonds 56.0% |
Consumer Discretionary 15.3%
|
Adelphia Communications Corp., 10.25%, 6/15/2011*
| 140,000
| 120,050
|
Advantica Restaurant Co.:
|
|
|
11.25%, 1/15/2008 | 213,638
| 147,410
|
12.75%, 9/30/2007 | 195,000
| 200,850
|
American Achieve Corp., 11.625%, 1/1/2007
| 355,000
| 391,388
|
American Lawyer Media, Inc., Series B, 9.75%, 12/15/2007
| 450,000
| 428,625
|
Ameristar Casino, Inc., 10.75%, 2/15/2009
| 140,000
| 160,300
|
Boca Resorts, Inc., 9.875%, 4/15/2009
| 610,000
| 649,650
|
Broder Brothers Co., 144A, 11.25%, 10/15/2010
| 60,000
| 60,150
|
Buffets, Inc., 11.25%, 7/15/2010
| 415,000
| 445,606
|
Carrols Corp., 9.5%, 12/1/2008
| 105,000
| 104,475
|
Central Garden & Pet Co., 9.125%, 2/1/2013
| 155,000
| 170,888
|
Charter Communications Holdings LLC:
|
|
|
8.625%, 4/1/2009 | 195,000
| 156,000
|
9.625%, 11/15/2009 | 375,000
| 302,813
|
144A, 10.25%, 9/15/2010 | 550,000
| 559,625
|
Step-up Coupon, 0% to 1/15/2007, 12.125% to 1/15/2012 | 50,000
| 26,500
|
Step-up Coupon, 0% to 5/15/2006, 11.75% to 5/15/2011 | 385,000
| 224,263
|
Choctaw Resort Development Enterprises, 9.25%, 4/1/2009
| 365,000
| 397,850
|
Cinemark USA, Inc.:
|
|
|
8.5%, 8/1/2008 | 410,000
| 428,450
|
9.0%, 2/1/2013 | 160,000
| 177,600
|
Circus & Eldorado, 10.125%, 3/1/2012
| 415,000
| 422,263
|
CKE Restaurants, Inc., 9.125%, 5/1/2009
| 140,000
| 142,800
|
CSC Holdings, Inc.:
|
|
|
7.875%, 12/15/2007 | 330,000
| 338,250
|
Senior Notes, 7.25%, 7/15/2008 | 130,000
| 130,650
|
Dex Media East LLC, 12.125%, 11/15/2012
| 1,215,000
| 1,461,038
|
Dex Media West LLC, 144A, 9.875%, 8/15/2013
| 310,000
| 351,850
|
Dex Media, Inc.:
|
|
|
144A, 8.0%, 11/15/2013 | 110,000
| 111,650
|
144A, Step Coupon Bond, 0% until 11/15/2008, 9.0% to 11/15/2013 | 275,000
| 184,250
|
DIMON, Inc.:
|
|
|
144A, 7.75%, 6/1/2013 | 315,000
| 319,725
|
Series B, 9.625%, 10/15/2011 | 620,000
| 688,200
|
Dyersburg Corp., Series B, 9.75%, 9/1/2007*
| 1,085,000
| 109
|
EchoStar DBS Corp., 144A, 6.375%, 10/1/2011
| 60,000
| 60,225
|
Eldorado Resorts LLC, 10.5%, 8/15/2006
| 479,000
| 484,389
|
Finlay Fine Jewelry Corp., 8.375%, 5/1/2008
| 280,000
| 288,400
|
General Motors Corp., 8.25%, 7/15/2023
| 250,000
| 269,602
|
Group 1 Automotive, Inc., 144A, 8.25%, 8/15/2013
| 260,000
| 274,950
|
Herbst Gaming, Inc., 10.75%, 9/1/2008
| 795,000
| 890,400
|
Imperial Home Decor Group, Inc., Series B, 11.0%, 3/15/2008*
| 150,000
| 0
|
Inn of the Mountain Gods, 144A, 12.0%, 11/15/2010
| 260,000
| 275,600
|
Interep National Radio Sales, Inc., 10.0%, 7/1/2008
| 415,000
| 368,831
|
International Game Technology, 8.375%, 5/15/2009
| 370,000
| 437,973
|
Intrawest Corp., 10.5%, 2/1/2010
| 365,000
| 402,413
|
J.C. Penney Co., Inc., 6.875%, 10/15/2015
| 105,000
| 110,775
|
Jacobs Entertainment Co., 11.875%, 2/1/2009
| 245,000
| 268,888
|
Jefra Cosmetics International, Inc., 10.75%, 5/15/2011
| 430,000
| 460,100
|
Kellwood Co.:
|
|
|
7.625%, 10/15/2017 | 170,000
| 180,200
|
7.875%, 7/15/2009 | 50,000
| 54,563
|
Keystone Automotive Operation, 144A, 9.75%, 11/1/2013
| 155,000
| 163,719
|
Krystal, Inc., 10.25%, 10/1/2007
| 250,000
| 250,313
|
Laidlaw International, Inc., 144A, 10.75%, 6/15/2011
| 330,000
| 363,000
|
Levi Strauss & Co., 12.25%, 12/15/2012
| 140,000
| 101,150
|
Lin Television Corp., 144A, 6.5%, 5/15/2013
| 130,000
| 128,375
|
Mediacom Broadband LLC, 11.0%, 7/15/2013
| 185,000
| 198,413
|
Mediacom LLC, 7.875%, 2/15/2011
| 180,000
| 167,400
|
Meritage Corp., 9.75%, 6/1/2011
| 95,000
| 105,569
|
MGM Mirage, Inc., 6.0%, 10/1/2009
| 235,000
| 238,231
|
Mortons Restaurant Group, 144A, 7.5%, 7/1/2010
| 105,000
| 95,550
|
National Vision, Inc., 12.0%, 3/30/2009
| 665,781
| 306,259
|
Norcraft Co. LP, 144A, 9.0%, 11/1/2011
| 140,000
| 147,700
|
Old Evangeline Downs, 13.0%, 3/1/2010
| 155,000
| 163,525
|
PEI Holding, Inc., 11.0%, 3/15/2010
| 270,000
| 313,538
|
Penn National Gaming, Inc.:
|
|
|
144A, 6.875%, 12/1/2011 | 150,000
| 148,125
|
8.875%, 3/15/2010 | 95,000
| 102,600
|
Petro Stopping Centers, 10.5%, 2/1/2007
| 960,000
| 974,400
|
PRIMEDIA, Inc.:
|
|
|
7.625%, 4/1/2008 | 225,000
| 223,875
|
8.875%, 5/15/2011 | 175,000
| 181,125
|
Rayovac Corp., 144A, 8.5%, 10/1/2013
| 215,000
| 223,600
|
Remington Arms Co., Inc., 10.5%, 2/1/2011
| 440,000
| 457,600
|
Renaissance Media Group, 10.0%, 4/15/2008
| 490,000
| 502,863
|
Rent-Way, Inc., 144A, 11.875%, 6/15/2010
| 130,000
| 141,700
|
Restaurant Co., 11.25%, 5/15/2008
| 286,640
| 285,924
|
Rite Aid Corp.:
|
|
|
"C1", Series 97, 144A, 7.3%, 3/10/2019 | 368,176
| 329,517
|
6.125%, 12/15/2008 | 185,000
| 174,825
|
River Rock Entertainment, 144A, 9.75%, 11/1/2011
| 290,000
| 307,400
|
Samsonite Corp., 10.75%, 6/15/2008
| 740,000
| 767,750
|
Schuler Homes, Inc., 10.5%, 7/15/2011
| 485,000
| 554,719
|
Scientific Games Corp., 12.5%, 8/15/2010
| 167,000
| 197,060
|
Sealy Mattress Co., Series B, 9.875%, 12/15/2007
| 250,000
| 258,125
|
Sinclair Broadcast Group, Inc.:
|
|
|
8.0%, 3/15/2012 | 660,000
| 704,550
|
8.75%, 12/15/2011 | 315,000
| 346,500
|
Six Flags, Inc.:
|
|
|
8.875%, 2/1/2010 | 740,000
| 723,350
|
9.5%, 2/1/2009 | 75,000
| 75,750
|
Sonic Automotive, Inc., 144A, 8.625%, 8/15/2013
| 535,000
| 563,088
|
Transwestern Publishing, Series F, 9.625%, 11/15/2007
| 700,000
| 722,750
|
Trump Holdings & Funding, 11.625%, 3/15/2010
| 380,000
| 341,050
|
Venetian Casino Resort LLC, 144A, 11.0%, 6/15/2010
| 190,000
| 219,925
|
Wheeling Island Gaming, Inc., 10.125%, 12/15/2009
| 465,000
| 488,250
|
Worldspan LP/WS Finance Corp., 144A, 9.625%, 6/15/2011
| 300,000
| 297,750
|
XM Satellite Radio, Inc., Step-up Coupon, 0% to 12/31/2005, 14.0% to 12/31/2009
| 330,000
| 289,575
|
| 27,477,075 |
Consumer Staples 1.7%
|
Agrilink Foods, Inc., 11.875%, 11/1/2008
| 157,000
| 166,224
|
Elizabeth Arden, Inc., Series B, 11.75%, 2/1/2011
| 405,000
| 469,294
|
General Nutrition Center, 144A, 8.5%, 12/1/2010
| 160,000
| 163,200
|
Jostens Holding Corp., 144A, Step-up Coupon, 0% to 12/1/2008, 10.25% to 12/1/2013
| 220,000
| 138,600
|
Michael Foods, Inc., Series B, 144A, 8.0%, 11/15/2013
| 225,000
| 230,625
|
National Beef Pack, 144A, 10.5%, 8/1/2011
| 175,000
| 191,625
|
Pilgrim's Pride Corp., 9.625%, 9/15/2011
| 80,000
| 87,200
|
Pinnacle Foods Holding Corp., 8.25%, 12/1/2013
| 260,000
| 266,500
|
PPC Escrow Corp., 144A, 9.25%, 11/15/2013
| 135,000
| 138,375
|
Salton, Inc., 10.75%, 12/15/2005
| 160,000
| 164,000
|
Stater Brothers Holdings, Inc., 10.75%, 8/15/2006
| 655,000
| 689,388
|
Williams Scotsman, Inc., 9.875%, 6/1/2007
| 350,000
| 341,250
|
| 3,046,281 |
Energy 7.3%
|
Avista Corp., 9.75%, 6/1/2008
| 870,000
| 1,017,900
|
Citgo Petroleum Corp., 11.375%, 2/1/2011
| 1,455,000
| 1,680,525
|
Coastal Corp., 6.5%, 6/1/2008
| 245,000
| 209,475
|
Continental Resources, Inc., 10.25%, 8/1/2008
| 555,000
| 555,000
|
Dynegy Holdings, Inc., 144A, 9.875%, 7/15/2010
| 160,000
| 175,200
|
Edison Mission Energy, 7.73%, 6/15/2009
| 1,230,000
| 1,143,900
|
El Paso Corp., 7.375%, 12/15/2012
| 370,000
| 314,500
|
Gulfterra Energy Partner, 6.25%, 6/1/2010
| 75,000
| 75,375
|
Lone Star Technologies, Inc., Series B, 9.0%, 6/1/2011
| 410,000
| 397,700
|
Newpark Resources, Inc., 8.625%, 12/15/2007
| 290,000
| 298,700
|
North American Energy Partners, 144A, 8.75%, 12/1/2011
| 135,000
| 139,388
|
On Semiconductor Corp., 13.0%, 5/15/2008
| 395,000
| 458,200
|
Parker Drilling Co.:
|
|
|
144A, 9.625%, 10/1/2013 | 215,000
| 218,225
|
Series B, 10.125%, 11/15/2009 | 605,000
| 632,225
|
Pemex Project Funding Master Trust:
|
|
|
7.375%, 12/15/2014 | 2,200,000
| 2,310,000
|
8.625%, 2/1/2022 | 330,000
| 360,525
|
Pioneer Natural Resources Co., 9.625%, 4/1/2010
| 765,000
| 946,285
|
Southern Natural Gas Co., 8.875%, 3/15/2010
| 250,000
| 275,625
|
Stone Energy Corp., 8.25%, 12/15/2011
| 495,000
| 532,125
|
Trico Marine Services, Inc., 8.875%, 5/15/2012
| 350,000
| 215,250
|
Westport Resources Corp., 144A, 8.25%, 11/1/2011
| 350,000
| 381,500
|
Williams Co., Inc.:
|
|
|
8.75%, 3/15/2032 | 135,000
| 142,088
|
8.125%, 3/15/2012 | 100,000
| 108,000
|
Williams Holdings of Delaware, Inc., 6.5%, 12/1/2008
| 300,000
| 304,500
|
Wiser Oil Co., 9.5%, 5/15/2007
| 290,000
| 279,850
|
| 13,172,061 |
Financials 3.1%
|
Ahold Finance USA, Inc., 6.25%, 5/1/2009
| 445,000
| 447,225
|
Alamosa Delaware, Inc., 11.0%, 7/31/2009
| 33,000
| 27,885
|
AmeriCredit Corp.:
|
|
|
9.25%, 5/1/2009 | 470,000
| 486,450
|
9.875%, 4/15/2006 | 460,000
| 476,100
|
CBRE Escrow, Inc., 144A, 9.75%, 5/15/2010
| 305,000
| 339,313
|
Dollar Financial Group, 144A, 9.75%, 11/15/2011
| 330,000
| 339,900
|
Farmers Insurance Exchange, 144A, 8.625%, 5/1/2024
| 435,000
| 448,050
|
Ford Motor Credit Co.:
|
|
|
7.0%, 10/1/2013 | 80,000
| 81,120
|
7.375%, 10/28/2009 | 105,000
| 111,079
|
FRD Acquisition Co., Series B, 12.5%, 7/15/2004*
| 80,000
| 0
|
Global Exchange Services, Inc., LIBOR plus 9.0%, 12.0%, 7/15/2008**
| 325,000
| 308,750
|
IOS Capital LLC, 7.25%, 6/30/2008
| 335,000
| 336,675
|
LaBranche & Co., Inc., 12.0%, 3/2/2007
| 290,000
| 278,400
|
Poster Financial Group, 144A, 8.75%, 12/1/2011
| 105,000
| 107,494
|
Pxre Capital Trust I, 8.85%, 2/1/2027
| 225,000
| 205,031
|
Qwest Capital Funding, Inc., 7.75%, 8/15/2006
| 535,000
| 548,375
|
Qwest Corp., 7.25%, 10/25/2035
| 135,000
| 129,938
|
RH Donnelley Finance Corp., 144A, 10.875%, 12/15/2012
| 355,000
| 419,344
|
Thornburg Mortgage, Inc., 8.0%, 5/15/2013
| 155,000
| 163,525
|
Universal City Development, 11.75%, 4/1/2010
| 265,000
| 307,400
|
| 5,562,054 |
Health Care 1.7%
|
AmerisourceBergen Corp., 7.25%, 11/15/2012
| 405,000
| 430,313
|
Genesis Healthcare Corp., 144A, 8.0%, 10/15/2013
| 120,000
| 122,100
|
HEALTHSOUTH Corp., 7.625%, 6/1/2012
| 370,000
| 338,550
|
HMP Equity Holdings Corp., 144A, Zero Coupon, 5/15/2008
| 235,000
| 124,550
|
Neighbore, Inc., 144A, 6.875%, 11/15/2013
| 135,000
| 136,013
|
Norcross Safety Products, 144A, 9.875%, 8/15/2011
| 235,000
| 257,325
|
Quintiles Transnational Corp., 144A, 10.0%, 10/1/2013
| 200,000
| 214,000
|
Tenet Healthcare Corp.:
|
|
|
6.375%, 12/1/2011 | 895,000
| 827,875
|
7.375%, 2/1/2013 | 635,000
| 614,363
|
| 3,065,089 |
Industrials 8.3%
|
Aavid Thermal Technologies, Inc., 12.75%, 2/1/2007
| 150,000
| 149,971
|
Allied Waste North America, Inc.:
|
|
|
Series B, 8.5%, 12/1/2008 | 310,000
| 341,000
|
Series B, 8.875%, 4/1/2008 | 240,000
| 264,600
|
Series B, 10.0%, 8/1/2009 | 140,000
| 151,200
|
AMI Semiconductor, Inc., 10.75%, 2/1/2013
| 141,000
| 167,790
|
Amsted Industries, Inc., 144A, 10.25%, 10/15/2011
| 305,000
| 334,738
|
Argo-Tech Corp., 8.625%, 10/1/2007
| 335,000
| 329,975
|
Atrium Companies, Inc., Series B, 10.5%, 5/1/2009
| 50,000
| 53,063
|
AutoNation, Inc., 9.0%, 8/1/2008
| 255,000
| 290,063
|
Avondale Mills, Inc., 10.25%, 7/1/2013
| 470,000
| 314,900
|
Browning-Ferris Industries:
|
|
|
7.4%, 9/15/2035 | 205,000
| 190,650
|
9.25%, 5/1/2021 | 80,000
| 88,200
|
Case New Holland, Inc., 144A, 9.25%, 8/1/2011
| 145,000
| 162,400
|
Collins & Aikman Floor Cover, Series B, 9.75%, 2/15/2010
| 335,000
| 361,800
|
Collins & Aikman Products, 10.75%, 12/31/2011
| 565,000
| 508,500
|
Congoleum Corp., 8.625%, 8/1/2008*
| 240,000
| 145,200
|
Continental Airlines, Inc., 8.0%, 12/15/2005
| 180,000
| 174,600
|
Corrections Corp. of America:
|
|
|
144A, 7.5%, 5/1/2011 | 75,000
| 78,563
|
9.875%, 5/1/2009 | 330,000
| 368,363
|
CP Ships Ltd., 10.375%, 7/15/2012
| 440,000
| 510,400
|
Dana Corp.:
|
|
|
7.0%, 3/1/2029 | 315,000
| 288,225
|
9.0%, 8/15/2011 | 155,000
| 175,925
|
DeCrane Aircraft Holdings, Inc., Series B, 12.0%, 9/30/2008
| 350,000
| 182,000
|
Delta Air Lines, Inc.:
|
|
|
7.7%, 12/15/2005 | 220,000
| 202,400
|
7.9%, 12/15/2009 | 200,000
| 157,000
|
Eagle-Picher Industries, Inc., 144A, 9.75%, 9/1/2013
| 240,000
| 255,000
|
Equistar Chemical, 10.625%, 5/1/2011
| 85,000
| 90,100
|
Evergreen International Aviation, 144A, 12.0%, 5/15/2010
| 330,000
| 264,000
|
Flextronics International Ltd., 6.5%, 5/15/2013
| 225,000
| 225,000
|
Golden State Petroleum Transportation, 8.04%, 2/1/2019
| 215,000
| 208,185
|
Grove Holdings LLC, 11.625%, 5/1/2009*
| 100,000
| 0
|
Grove Investors, Inc., 14.5%, 5/1/2010*
| 229,720
| 0
|
GS Technologies, 12.0%, 9/1/2004*
| 68,786
| 3,267
|
Hercules, Inc., 11.125%, 11/15/2007
| 746,000
| 891,470
|
Hornbeck Offshore Services, Inc., 10.625%, 8/1/2008
| 255,000
| 279,863
|
ISP Chemco, Inc., Series B, 10.25%, 7/1/2011
| 275,000
| 308,000
|
ISP Holdings, Inc., Series B, 10.625%, 12/15/2009
| 155,000
| 170,500
|
Kansas City Southern:
|
|
|
7.5%, 6/15/2009 | 195,000
| 202,800
|
9.5%, 10/1/2008 | 300,000
| 336,375
|
Metaldyne Corp., 144A, 10.0%, 11/1/2013
| 240,000
| 230,400
|
Millennium America, Inc.:
|
|
|
7.625%, 11/15/2026 | 50,000
| 44,250
|
144A, 9.25%, 6/15/2008 | 1,570,000
| 1,683,826
|
Mobile Mini, Inc., 144A, 9.5%, 7/1/2013
| 315,000
| 342,169
|
Motors and Gears, Inc., 10.75%, 11/15/2006
| 280,000
| 235,200
|
Nortek Holdings, Inc., 144A, Step-up Coupon, 0% to 11/15/2007, 10.0% to 5/15/2011
| 55,000
| 39,050
|
Overseas Shipholding Group, 8.75%, 12/1/2013
| 140,000
| 152,775
|
Plainwell, Inc., Series B, 11.0%, 3/1/2008*
| 490,000
| 24,500
|
Republic Engineered Products LLC, 10.0%, 8/16/2009*
| 137,412
| 52,217
|
Resolution Performance Products LLC, 13.5%, 11/15/2010
| 580,000
| 458,200
|
Seabulk International, Inc., 144A, 9.5%, 8/15/2013
| 360,000
| 375,300
|
Tech Olympic USA, Inc., 10.375%, 7/1/2012
| 315,000
| 349,650
|
Tenneco Automotive, Inc.:
|
|
|
Series B, 10.25%, 7/15/2013 | 70,000
| 79,450
|
11.625%, 10/15/2009 | 245,000
| 258,475
|
The Brickman Group, Ltd., Series B, 11.75%, 12/15/2009
| 140,000
| 161,000
|
Westlake Chemical Corp., 144A, 8.75%, 7/15/2011
| 655,000
| 704,125
|
Xerox Corp., 7.125%, 6/15/2010
| 375,000
| 385,313
|
| 14,801,986 |
Information Technology 0.8%
|
Cooperative Computing, 144A, 10.5%, 6/15/2011
| 135,000
| 146,475
|
Digitalnet, Inc., 9.0%, 144A, 7/15/2010
| 161,000
| 176,698
|
Lucent Technologies, Inc.:
|
|
|
6.45%, 3/15/2029 | 440,000
| 335,500
|
7.25%, 7/15/2006 | 365,000
| 367,738
|
Stratus Technologies, Inc., 144A, 10.375%, 12/1/2008
| 155,000
| 158,875
|
Telex Communications, Inc., 144A, 11.5%, 10/15/2008
| 165,000
| 172,219
|
| 1,357,505 |
Materials 8.6%
|
Aqua Chemical, Inc., 11.25%, 7/1/2008
| 155,000
| 124,000
|
ARCO Chemical Co., 9.8%, 2/1/2020
| 1,175,000
| 1,104,500
|
Buckeye Technologies, Inc., 144A, 8.5%, 10/1/2013
| 215,000
| 228,975
|
Caraustar Industries, Inc., 9.875%, 4/1/2011
| 445,000
| 473,925
|
Cascades, Inc., 7.25%, 2/15/2013
| 545,000
| 569,525
|
Dan River, Inc., 144A, 12.75%, 4/15/2009
| 205,000
| 59,450
|
Dayton Superior Corp.:
|
|
|
144A, 10.75%, 9/15/2008 | 235,000
| 239,994
|
13.0%, 6/15/2009 | 200,000
| 165,000
|
DIMAC Corp., 144A, 12.5%, 10/1/2008*
| 1,030,000
| 10,300
|
Equistar Chemicals LP, 144A, 8.75%, 2/15/2009
| 1,495,000
| 1,502,475
|
Euramax International PLC, 144A, 8.5%, 8/15/2011
| 265,000
| 280,900
|
Fibermark, Inc., 10.75%, 4/15/2011
| 405,000
| 263,250
|
Foamex LP, 10.75%, 4/1/2009
| 420,000
| 376,950
|
Fonda Group, 9.5%, 3/1/2007
| 175,000
| 155,313
|
Georgia-Pacific Corp.:
|
|
|
7.375%, 12/1/2025 | 635,000
| 592,138
|
8.875%, 2/1/2010 | 370,000
| 419,025
|
8.875%, 5/15/2031 | 420,000
| 454,650
|
9.375%, 2/1/2013 | 315,000
| 361,463
|
Debenture, 7.7%, 6/15/2015 | 315,000
| 325,238
|
Hexcel Corp., 144A, 9.75%, 1/15/2009
| 165,000
| 172,013
|
Huntsman Advanced Materials LLC, 144A, 11.0%, 7/15/2010
| 280,000
| 305,200
|
Huntsman International LLC:
|
|
|
10.125%, 7/1/2009 | 305,000
| 338,296
|
11.625%, 10/15/2010 | 120,000
| 117,600
|
IMC Global, Inc., 10.875%, 8/1/2013
| 605,000
| 638,275
|
Koppers Industry, Inc., 144A, 9.875%, 10/15/2013
| 185,000
| 200,725
|
Nalco Co., 144A, 7.75%, 11/15/2011
| 390,000
| 406,575
|
Neenah Corp., 144A, 13.0%, 9/30/2013
| 284,879
| 288,433
|
Omnova Solutions, Inc., 144A, 11.25%, 6/1/2010
| 125,000
| 133,750
|
Owens-Brockway Glass Container, 8.25%, 5/15/2013
| 475,000
| 497,563
|
Pemex Project Funding Master Trust, 6.25%, 8/5/2013
| 2,000,000
| 2,398,919
|
Pliant Corp.:
|
|
|
11.125%, 9/1/2009 | 280,000
| 291,200
|
13.0%, 6/1/2010 | 50,000
| 46,000
|
13.0%, 6/1/2010 | 50,000
| 45,750
|
Rockwood Specialties Corp., 144A, 10.625%, 5/15/2011
| 205,000
| 223,450
|
Tekni-Plex, Inc., 8.75%, 11/15/2013
| 225,000
| 230,063
|
Texas Industries, Inc., 144A, 10.25%, 6/15/2011
| 230,000
| 258,750
|
Trimas Corp., 9.875%, 6/15/2012
| 340,000
| 350,200
|
United States Steel LLC, 9.75%, 5/15/2010
| 585,000
| 627,413
|
US Can Corp., Series B, 12.375%, 10/1/2010
| 215,000
| 184,900
|
| 15,462,146 |
Telecommunication Services 6.2%
|
ACC Escrow Corp., 144A, 10.0%, 8/1/2011
| 840,000
| 919,800
|
Alamosa Delaware, Inc., 11.0%, 7/31/2010
| 32,000
| 33,120
|
American Tower Corp.:
|
|
|
144A, 7.25%, 12/1/2011 | 85,000
| 85,213
|
9.375%, 2/1/2009 | 610,000
| 640,500
|
American Tower Escrow Corp., Zero Coupon, 8/1/2008
| 450,000
| 308,250
|
Century Communications Corp.:
|
|
|
8.75%, 10/1/2007* | 80,000
| 64,900
|
8.375%, 11/15/2017* | 60,000
| 48,375
|
Cincinnati Bell, Inc., 144A, 8.375%, 1/15/2014
| 720,000
| 754,200
|
Crown Castle International Corp.:
|
|
|
144A, 7.5%, 12/1/2013 | 160,000
| 158,400
|
9.375%, 8/1/2011 | 425,000
| 467,500
|
Dobson Communications Corp., 144A, 8.875%, 10/1/2013
| 480,000
| 483,000
|
General Cable Corp., 144A, 9.5%, 11/15/2010
| 75,000
| 78,938
|
Insight Midwest LP:
|
|
|
9.75%, 10/1/2009 | 275,000
| 290,125
|
10.5%, 11/1/2010 | 285,000
| 310,650
|
LCI International, Inc., 7.25%, 6/15/2007
| 315,000
| 296,100
|
Level 3 Communications, Inc.:
|
|
|
11.0%, 3/15/2008 | 230,000
| 223,100
|
Step-up Coupon, 0% to 12/1/2003, 10.50% to 12/1/2008 | 185,000
| 172,975
|
Level 3 Financing, Inc., 144A, 10.75%, 10/15/2011
| 275,000
| 287,375
|
Nextel Communications:
|
|
|
6.875%, 10/31/2013
| 105,000
| 107,494
|
9.5%, 2/1/2011
| 580,000
| 662,650
|
Nextel Partners, Inc.:
|
|
|
144A, 8.125%, 7/1/2011 | 480,000
| 499,200
|
11.0%, 3/15/2010 | 180,000
| 198,000
|
12.5%, 11/15/2009 | 50,000
| 57,750
|
Nortel Networks Corp., 7.4%, 6/15/2006
| 130,000
| 133,738
|
Northern Telecom Capital, 7.875%, 6/15/2026
| 150,000
| 147,000
|
Qwest Services Corp.:
|
|
|
5.625%, 11/15/2008 | 820,000
| 803,600
|
7.25%, 9/15/2025 | 415,000
| 407,738
|
144A, 13.5%, 12/15/2010 | 265,000
| 311,706
|
144A, 14.0%, 12/15/2014 | 778,000
| 956,940
|
Rural Cellular Corp., 144A, 9.875%, 2/1/2010
| 275,000
| 284,625
|
Shaw Communications, Inc., 8.25%, 4/11/2010
| 420,000
| 470,400
|
Triton PCS, Inc., 8.5%, 6/1/2013
| 80,000
| 84,800
|
Western Wireless Corp., 9.25%, 7/15/2013
| 290,000
| 301,600
|
| 11,049,762 |
Utilities 3.0%
|
AES Corp., 144A, 9.0%, 5/15/2015
| 160,000
| 174,200
|
Calpine Corp.:
|
|
|
144A, 8.5%, 7/15/2010 | 1,300,000
| 1,205,750
|
8.5%, 2/15/2011 | 145,000
| 105,488
|
144A, 9.875%, 12/1/2011 | 50,000
| 49,125
|
CMS Energy Corp.:
|
|
|
7.5%, 1/15/2009 | 800,000
| 806,000
|
144A, 7.75%, 8/1/2010 | 235,000
| 238,525
|
8.5%, 4/15/2011 | 520,000
| 542,100
|
8.9%, 7/15/2008 | 125,000
| 132,188
|
El Paso Production Holding Corp., 144A, 7.75%, 6/1/2013
| 810,000
| 773,550
|
MSW Energy Holdings/Finance, 144A, 8.5%, 9/1/2010
| 105,000
| 113,138
|
PG&E Corp., 144A, 6.875%, 7/15/2008
| 150,000
| 159,750
|
Reliant Resources, Inc., 144A, 9.25%, 7/15/2010
| 85,000
| 85,850
|
Sonat, Inc., 7.625%, 7/15/2011
| 295,000
| 255,175
|
TNP Enterprises, Inc., Series B, 10.25%, 4/1/2010
| 440,000
| 477,400
|
Western Resources, Inc., 9.75%, 5/1/2007
| 165,000
| 189,130
|
| 5,307,369 |
Total Corporate Bonds (Cost $99,774,265)
| 100,301,328 |
|
Foreign Bonds - US$ Denominated 56.0% |
Alestra SA de RL de CV, 8.0%, 6/30/2010
| 140,000
| 120,750
|
Antenna TV SA, 9.0%, 8/1/2007
| 205,000
| 202,438
|
Avecia Group PLC, 11.0%, 7/1/2009
| 355,000
| 301,750
|
Banque Cent de Tunisie, 8.25%, 9/19/2027
| 200,000
| 219,000
|
Biovail Corp., 7.875%, 4/1/2010
| 295,000
| 286,150
|
Burns, Philp & Co., Ltd.:
|
|
|
144A, 9.5%, 11/15/2010 | 50,000
| 53,000
|
144A, 9.75%, 7/15/2012 | 390,000
| 404,625
|
Conproca SA de CV, 12.0%, 6/16/2010
| 235,000
| 298,450
|
Corp Durango SA, 144A, 13.75%, 7/15/2009*
| 210,000
| 122,850
|
Crown Euro Holdings SA, 10.875%, 3/1/2013
| 510,000
| 589,050
|
Dolphin Telecom PLC, Series B, Step-up Coupon, 0% to 5/15/2004, 14.0% to 5/15/2009*
| 499,091
| 50
|
Eircom Funding, 144A, 8.25%, 8/15/2013
| 290,000
| 314,650
|
Embratel Participacoes SA, 144A, 11.0%, 12/15/2008
| 75,000
| 75,750
|
Esprit Telecom Group PLC:
|
|
|
10.875%, 6/15/2008* | 200,000
| 20
|
11.50%, 12/15/2007* | 550,000
| 55
|
Fage Dairy Industry SA, 9.0%, 2/1/2007
| 550,000
| 550,000
|
Federal Republic of Brazil, 10.0%, 8/7/2011
| 620,000
| 655,340
|
Federative Republic of Brazil:
|
|
|
8.875%, 4/15/2024 | 5,800,000
| 5,191,000
|
11.0%, 1/11/2012 | 550,000
| 613,250
|
C Bond, 8.0%, 4/15/2014 | 1,065,170
| 1,025,226
|
Floating Rate Bond, LIBOR plus .875%, 2.188%**, 4/15/2009 | 2,200,072
| 2,054,317
|
Floating Rate Bond, LIBOR plus .875%, 2.188%**, 4/15/2012 | 2,900,000
| 2,552,000
|
Gerdau Ameristeel Corp., 144A, 10.375%, 7/15/2011
| 200,000
| 212,000
|
Grupo Elektra SA de CV, 12.0%, 4/1/2008
| 210,000
| 227,325
|
Grupo Iusacell SA de CV, Series B, 10.0%, 7/15/2004*
| 65,000
| 38,025
|
Innova S de R.L.:
|
|
|
144A, 9.375%, 9/19/2013 | 420,000
| 429,450
|
12.875%, 4/1/2007 | 136,107
| 139,509
|
Ivory Coast, Step-up Coupon, 2.0% to 3/31/2005, 2.5% to 3/31/2007, 3.0% to 3/29/2010*
| 990,000
| 173,250
|
LeGrand SA, 8.5%, 2/15/2025
| 205,000
| 214,738
|
Luscar Coal Ltd., 9.75%, 10/15/2011
| 245,000
| 278,075
|
Millar Western Forest Products Ltd., 7.75%, 11/15/2013
| 155,000
| 157,519
|
Millicom International Cellular SA:
|
|
|
144A, 10.0%, 12/1/2013 | 515,000
| 527,875
|
144A, 11.0%, 6/1/2006 | 168,000
| 172,200
|
Mobifon Holdings BV, 12.5%, 7/31/2010
| 455,000
| 520,975
|
Mobile Telesystems Financial, 144A, 8.375%, 10/14/2010
| 275,000
| 273,969
|
Nigeria Promissory Notes, Series RC, 5.092%, 1/5/2010
| 1,235,252
| 1,116,500
|
Nortel Networks Corp., 6.125%, 2/15/2006
| 460,000
| 462,875
|
OAO Gazprom, 144A, 9.625%, 3/1/2013
| 515,000
| 558,775
|
Petro Mexicanos, 8.625%, 12/1/2023
| 670,000
| 723,600
|
Petroliam Nasional Berhad, 7.75%, 8/15/2015
| 3,520,000
| 4,191,616
|
Petronas Capital Ltd., 7.0%, 5/22/2012
| 200,000
| 226,000
|
PTC International Finance II SA, 11.25%, 12/1/2009
| 145,000
| 158,775
|
Republic of Algeria, 2.063%, 3/4/2010
| 1,833,000
| 1,778,010
|
Republic of Argentina:
|
|
|
9.75%, 9/19/2027* | 2,200,000
| 539,000
|
Series BGL4, 11.0%, 10/9/2006* | 900,000
| 229,500
|
11.375%, 3/15/2010*
| 1,050,000
| 273,000
|
11.375%, 3/15/2010* | 1,200,000
| 312,000
|
11.375%, 3/15/2010* | 3,000,000
| 780,000
|
11.375%, 3/15/2010* | 270,000
| 70,200
|
Series 2018, 12.25%, 6/19/2018* | 2,334,750
| 560,340
|
Republic of Bulgaria, 8.25%, 1/15/2015
| 7,290,000
| 8,492,850
|
Republic of Ecuador, Step-up Coupon, 7.0% to 8/1/2004, 8.0% to 8/1/2005, 9.0% to 8/15/2030
| 3,300,000
| 2,310,000
|
Republic of El Salvador, 144A, 8.25%, 4/10/2032
| 3,300,000
| 3,135,000
|
Republic of Guatemala, 9.25%, 8/1/2013
| 930,000
| 1,013,700
|
Republic of Philippines:
|
|
|
8.375%, 3/12/2009 | 760,000
| 771,400
|
9.375%, 1/18/2017 | 500,000
| 511,875
|
9.875%, 3/16/2010 | 1,900,000
| 2,014,000
|
Republic of Turkey:
|
|
|
10.5%, 1/13/2008 | 1,800,000
| 2,090,250
|
11.0%, 1/14/2013 | 1,200,000
| 1,428,000
|
11.875%, 1/15/2030 | 1,000,000
| 1,270,000
|
12.375%, 6/15/2009 | 5,600,000
| 6,958,000
|
Republic of Ukraine:
|
|
|
144A, 7.65%, 6/11/2013 | 160,000
| 162,000
|
7.65%, 6/11/2013 | 4,860,000
| 4,932,900
|
11.0%, 3/15/2007 | 450,812
| 500,401
|
Republic of Venezuela:
|
|
|
5.375%, 8/7/2010 | 3,300,000
| 2,541,000
|
9.25%, 9/15/2027 | 200,000
| 166,000
|
10.75%, 9/19/2013 | 4,750,000
| 4,666,875
|
Series A, Collateralized Par Bond, 6.75%, 3/31/2020 | 2,500,000
| 2,218,750
|
Series DL, Floating Rate Debt Conversion Bond, LIBOR plus .875%, 2.312%**, 12/18/2007 | 1,178,699
| 1,096,190
|
Royal Caribbean Cruises Ltd., 7.5%, 10/15/2027
| 255,000
| 243,206
|
Russian Federation:
|
|
|
11.0%, 7/24/2018 | 500,000
| 661,250
|
12.75%, 6/24/2028 | 700,000
| 1,093,750
|
Step-up Coupon, 5.0% to 3/31/2007, 7.5% to 3/31/2030 | 5,000,000
| 4,684,500
|
Russian Ministry of Finance, 3.0%, 5/14/2011
| 3,600,000
| 2,736,000
|
Stena AB:
|
|
|
144A, 7.5%, 11/1/2013 | 200,000
| 202,250
|
9.625%, 12/1/2012 | 80,000
| 89,200
|
Telus Corp., 8.0%, 6/1/2011
| 235,000
| 269,879
|
Tembec Industries, Inc., 144A, 8.5%, 2/1/2011
| 845,000
| 825,988
|
TFM SA de CV:
|
|
|
10.25%, 6/15/2007 | 1,055,000
| 1,086,650
|
11.75%, 6/15/2009 | 215,000
| 218,225
|
12.5%, 6/15/2012 | 215,000
| 238,650
|
Tyco International Group SA:
|
|
|
6.375%, 10/15/2011 | 465,000
| 488,250
|
6.75%, 2/15/2011 | 275,000
| 295,625
|
United Mexican States:
|
|
|
8.0%, 9/24/2022 | 4,800,000
| 5,164,800
|
8.125%, 12/30/2019 | 2,900,000
| 3,197,250
|
Vicap SA, 11.375%, 5/15/2007
| 365,000
| 354,050
|
Vitro SA de CV, 144A, 11.75%, 11/1/2013
| 265,000
| 251,750
|
Vivendi Universal SA:
|
|
|
144A, 6.25%, 7/15/2008 | 265,000
| 278,250
|
144A, 9.25%, 4/15/2010 | 515,000
| 602,550
|
Yell Finance BV, Step-up Coupon, 0% to 8/1/2006, 13.5% to 8/1/2011
| 114,000
| 104,595
|
Total Foreign Bonds - US$ Denominated (Cost $98,674,435)
| 100,340,681 |
|
Foreign Bonds - Non US$ Denominated 7.9% |
Banque Cent de Tunisie, 6.25%, 2/20/2013 EUR
| 930,000
| 1,159,769
|
EMI Group PLC, 144A, 8.625%, 10/15/2013 EUR
| 165,000
| 205,766
|
Federal Republic of Brazil, 11.0%, 2/4/2010 EUR
| 1,000,000
| 1,301,023
|
Ispat Europe Group SA, 11.875%, 2/1/2011 EUR
| 580,000
| 674,614
|
Pemex Project Funding Master Trust, 6.625%, 4/4/2010 EUR
| 700,000
| 867,741
|
Poland Government, Series 1110, 6.0%, 11/24/2010 PLZ
| 9,400,000
| 2,200,899
|
Republic of Argentina:
|
|
|
7.50%, 5/23/2049* EUR | 1,669,606
| 455,460
|
7.875%, 7/29/2005* EUR | 127,823
| 33,720
|
8.0%, 2/26/2008* EUR | 2,410,000
| 635,763
|
9.0%, 5/24/2005* EUR | 470,000
| 119,760
|
9.25%, 7/20/2004* EUR | 440,000
| 113,435
|
10.25%, 2/6/2049* EUR | 766,938
| 183,927
|
10.50%, 11/29/2049* EUR | 1,022,584
| 245,236
|
11.25%, 11/13/2026* EUR | 577,760
| 152,414
|
Republic of Romania:
|
|
|
5.75%, 7/2/2010 EUR | 900,000
| 1,077,571
|
8.5%, 5/8/2012 EUR | 3,380,000
| 4,670,628
|
Total Foreign Bonds - Non US$ Denominated (Cost $13,520,097)
| 14,097,726 |
|
Convertible Bonds 0.8% |
Aether Systems, 6.0%, 3/22/2005
| 115,000
| 112,700
|
Aristocrat Leisure Ltd., 144A, 5.0%, 5/31/2006
| 290,000
| 266,800
|
Aspen Technology, Inc., 5.25%, 6/15/2005
| 115,000
| 111,550
|
Conexant Systems, Inc., 4.0%, 2/1/2007
| 140,000
| 131,600
|
DIMON, Inc., 6.25%, 3/31/2007
| 250,000
| 237,500
|
Parker Drilling Co., 5.5%, 8/1/2004
| 660,000
| 656,700
|
Total Convertible Bonds (Cost $1,489,085)
| 1,516,850 |
|
US Treasury Obligations 1.5% |
US Treasury Bond:
|
|
|
5.375%, 2/15/2031 | 685,000
| 709,725
|
10.375%, 11/15/2009 | 500,000
| 541,582
|
12.0%, 8/15/2013 | 1,000,000
| 1,379,609
|
Total US Treasury Obligations (Cost $2,674,823)
| 2,630,916 |
|
Units
| Value ($) |
|
|
Other 0.0% |
SpinCycle, Inc.*
| 13,881
| 78,011
|
SpinCycle, Inc. "F"*
| 97
| 545
|
Total Other (Cost $33,925)
| 78,556 |
|
Shares
| Value ($) |
|
|
Common Stocks 0.1% |
ACP Holding Co., 144A*
| 33,014
| 16,507
|
Catalina Restaurant Group, Inc.*
| 1,474
| 2,358
|
ICG Communications, Inc.*
| 1,056
| 11
|
IMPSAT Fiber Networks, Inc.*
| 7,638
| 63,663
|
MEDIQ, Inc., 144A*
| 184
| 18
|
XO Communications, Inc.*
| 711
| 3,534
|
Total Common Stocks (Cost $1,458,786)
| 86,091 |
|
Warrants 0.0% |
ACP Holding Co., 144A*
| 29,968
| 11,747
|
DeCrane Aircraft Holdings, Inc.*
| 350
| 4
|
Destia Communications, Inc.*
| 370
| 0
|
Empire Gas Corp.*
| 552
| 0
|
ICG Communications, Inc.*
| 757
| 89
|
Mariner Health Care, Inc.*
| 1,634
| 490
|
Republic Technologies International LLC*
| 730
| 0
|
Waxman Industries, Inc.*
| 12,154
| 0
|
XO Communications, Inc.*
| 1,424
| 2,314
|
XO Communications, Inc. "B"*
| 1,068
| 1,394
|
XO Communications, Inc. "C"*
| 1,068
| 961
|
Total Warrants (Cost $1,455,490)
| 16,999 |
|
Preferred Stocks 0.5% |
CSC Holdings, Inc.
| 1,605
| 170,531
|
Paxson Communications Corp.
| 61
| 552,050
|
TNP Enterprises, Inc.
| 1,439
| 142,424
|
Total Preferred Stocks (Cost $863,181)
| 865,005 |
Convertible Preferred Stocks 0.3% |
Alamosa Holdings, Inc., Series B
| 92
| 25,760
|
Hercules Trust II
| 695
| 496,925
|
World Access, Inc. "D"*
| 215
| 0
|
Total Convertible Preferred Stocks (Cost $779,828)
| 522,685 |
|
Cash Equivalents 2.4% |
Scudder Cash Management QP Trust, 1.09% (b)
(Cost $4,271,173)
| 4,271,173
| 4,271,173 |
| % of Net Assets | Value ($) |
|
|
Total Investment Portfolio (Cost $224,995,088) (a)
| 125.5 | 224,728,010 |
Other Assets and Liabilities, Net
| 2.7 | 4,961,926 |
Notes payable
| (28.2) | (50,500,000) |
Net Assets
| 100.0 | 179,189,936 |
* Non-income producing security. In the case of a bond, generally denotes that the issuer has defaulted on the payment of principal or interest or has filed for bankruptcy.** These securities are shown at the current rate as of November 30, 2003.(a) The cost for federal income tax purposes was $225,441,889. At November 30, 2003, net unrealized depreciation for all securities based on tax cost was $713,879. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $10,046,174 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $10,760,053.(b) Scudder Cash Management QP Trust is also managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.(c) Principal amount stated in US dollars unless otherwise noted.Currency Abbreviations
|
EUR
| Euro
|
PLZ
| Polish Zlotys
|
144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of November 30, 2003 |
Assets
|
Investments:
Investments in securities, at value (cost $220,723,915)
| $ 220,456,837 |
Investment in Scudder Cash Management QP Trust (cost $4,271,173)
| 4,271,173 |
Total investments in securities, at value (cost $224,995,088)
| 224,728,010 |
Cash
| 33,419 |
Foreign currency, at value (cost $221,432)
| 222,151 |
Receivable for investments sold
| 3,263,086 |
Interest receivable
| 5,230,108 |
Foreign taxes recoverable
| 1,667 |
Unrealized appreciation on forward currency exchange contracts
| 253,295 |
Other assets
| 91,202 |
Total assets
| 233,822,938 |
Liabilities
|
Dividends payable to shareholders
| 1,256,583 |
Payable for investments purchased
| 1,859,903 |
Notes payable
| 50,500,000 |
Interest payable on notes
| 200,536 |
Unrealized depreciation on forward currency exchange contracts
| 566,638 |
Accrued management fee
| 131,586 |
Other accrued expenses and payables
| 117,756 |
Total liabilities
| 54,633,002 |
Net assets, at value
| $ 179,189,936 |
Net Assets
|
Net assets consist of:
Accumulated distributions in excess of net investment income
| (967,023) |
Net unrealized appreciation (depreciation) on:
Investments
| (267,078) |
Foreign currency related transactions
| (294,861) |
Accumulated net realized gain (loss)
| (34,336,079) |
Paid-in capital
| 215,054,977 |
Net assets, at value
| $ 179,189,936 |
Net Asset Value
|
Net Asset Value per share ($179,189,936 / 20,432,247 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)
| $ 8.77 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the year ended November 30, 2003 |
Investment Income
|
Income:
Interest
| $ 17,341,333 |
Interest - Scudder Cash Management QP Trust
| 96,878 |
Dividends
| 79,115 |
Total Income
| 17,517,326 |
Expenses:
Management fee
| 1,425,134 |
Services to shareholders
| 36,149 |
Custodian fees
| 101,758 |
Auditing
| 50,696 |
Legal
| 2,045 |
Trustees' fees and expenses
| 27,508 |
Reports to shareholders
| 52,399 |
Interest expense
| 811,456 |
Stock exchange listing fees
| 33,626 |
Other
| 1,891 |
Total expenses, before expense reductions
| 2,542,662 |
Expense reductions
| (1,094) |
Total expenses, after expense reductions
| 2,541,568 |
Net investment income
| 14,975,758 |
Realized and Unrealized Gain (Loss) on Investment Transactions
|
Net realized gain (loss) from:
Investments
| 8,375,268 |
Foreign currency related transactions
| (1,631,926) |
| 6,743,342 |
Net unrealized appreciation (depreciation) during the period on:
Investments
| 19,767,390 |
Foreign currency related transactions
| (391,534) |
| 19,375,856 |
Net gain (loss) on investment transactions
| 26,119,198 |
Net increase (decrease) in net assets resulting from operations
| $ 41,094,956 |
The accompanying notes are an integral part of the financial statements.
Statement of Cash Flows for the year ended November 30, 2003 |
Cash Flows from Operating Activities:
| |
Investment income received
| $ 15,806,011 |
Payment of operating expenses
| (1,779,048) |
Payment of interest expense
| (805,507) |
Proceeds from sales and maturities of investments
| 450,041,499 |
Purchases of investments
| (459,094,900) |
Net purchases, sales and maturities of short-term investments
| (3,116,966) |
Cash generated by operating activities
| $ 1,051,089 |
Cash Flows from Financing Activities:
|
Net increase (decrease) in notes payable
| $ 12,500,000 |
Distributions paid (net of reinvestment of distributions)
| (13,762,300) |
Cash provided by financing activities
| (1,262,300) |
Increase (decrease) in cash
| (211,211) |
Cash at beginning of period*
| 466,781 |
Cash at end of period*
| $ 255,570 |
Reconciliation of Net Increase (Decrease) in Net Assets Resulting from Operations to Cash Used by Operating Activities:
|
Net increase (decrease) in net assets resulting from operations
| $ 41,094,956 |
Net (increase) decrease in cost of investments
| (20,913,267) |
Net increase (decrease) in unrealized appreciation (depreciation) on investments
| (19,767,390) |
(Increase) decrease in dividends and interest receivable
| (1,016,010) |
(Increase) decrease in other assets
| 61,027 |
(Increase) decrease in receivable for investments sold
| 2,753,140 |
Increase (decrease) in payable for investments purchased
| (1,566,345) |
Increase (decrease) in unrealized appreciation (depreciation) on forward foreign currency exchange contracts
| 390,763 |
Increase (decrease) in interest payable on notes
| 5,949 |
Increase (decrease) in other accrued expenses and payables
| 8,266 |
Cash generated by operating activities
| $ 1,051,089 |
Non-Cash Financing Activities:
|
Reinvestment of distributions
| $ 531,253 |
* Includes foreign currencyThe accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets |
Increase (Decrease) in Net Assets
| Years Ended November 30, |
2003 | 2002 |
Operations:
Net investment income
| $ 14,975,758 | $ 16,423,179 |
Net realized gain (loss) on investment transactions
| 6,743,342 | (17,050,584) |
Net unrealized appreciation (depreciation) during the period on investment transactions
| 19,375,856 | 7,144,799 |
Net increase (decrease) in net assets resulting from operations
| 41,094,956 | 6,517,394 |
Distributions to shareholders from:
Net investment income
| (15,550,136) | (16,127,007) |
Return of capital
| - | (937,595) |
Fund share transactions:
Reinvestment of distributions
| 531,253 | 850,147 |
Net Increase (decrease) in net assets from fund share transactions
| 531,253 | 850,147 |
Increase (decrease) in net assets
| 26,076,073 | (9,697,061) |
Net assets at beginning of period
| 153,113,863 | 162,810,924 |
Net assets at end of period (including accumulated distributions in excess of net investment income of $967,023 and $102,734, respectively)
| $ 179,189,936 | $ 153,113,863 |
Other Information
|
Shares outstanding at beginning of period
| 20,365,909 | 20,258,342 |
Shares issued to shareholders in reinvestment of distributions
| 66,338 | 107,567 |
Shares outstanding at end of period
| 20,432,247 | 20,365,909 |
The accompanying notes are an integral part of the financial statements.
Years Ended November 30, | 2003 | 2002a | 2001 | 2000 | 1999 |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 7.52 | $ 8.04 | $ 8.27 | $ 9.72 | $ 10.42 |
Income (loss) from investment operations:
|
Net investment incomeb
| .73 | .81 | .89 | 1.01 | 1.02 |
Net realized and unrealized gain (loss) on investment transactions
| 1.28 | (.49) | (.05) | (1.43) | (.86) |
Total from investment operations | 2.01 | .32 | .84 | (.42) | .16 |
Less distributions from:
Net investment income
| (.76) | (.80) | (1.07) | (1.03) | (.86) |
Return of capital
| - | (.04) | - | - | - |
Total distributions | (.76) | (.84) | (1.07) | (1.03) | (.86) |
Net asset value, end of period
| $ 8.77 | $ 7.52 | $ 8.04 | $ 8.27 | $ 9.72 |
Market value, end of period
| $ 8.57 | $ 7.33 | $ 8.52 | $ 8.06 | $ 8.31 |
Total Return
|
Based on net asset value (%)c
| 28.12 | 4.17 | 10.21 | (3.86) | 2.48 |
Based on market value (%)c
| 28.44 | (4.18) | 19.80 | 9.60 | (1.27) |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 179 | 153 | 163 | 166 | 195 |
Ratio of expenses (%)
| 1.52 | 1.66 | 2.08 | 2.20 | 1.65 |
Ratio of expenses excluding interest expense (%)
| 1.03 | 1.09 | 1.04 | 1.03 | 1.09 |
Ratio of net investment income (%)
| 8.93 | 10.45 | 10.80 | 10.90 | 10.16 |
Portfolio turnover rate (%)
| 224 | 117 | 31 | 26 | 51 |
Total debt outstanding end of period ($ thousands)
| 50,500 | 38,000 | 30,000 | 30,000 | 30,000 |
Asset coverage per $1,000 of debt*
| 4,548 | 5,029 | 6,427 | 6,541 | 7,510 |
a As required, effective December 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. The effect of this change for the year ended November 30, 2002 was to decrease net investment income per share by $.01, increase net realized and unrealized gain (loss) per share by $.01, and decrease the ratio of net investment income to average net assets from 10.66% to 10.45%. Per share data and ratios for periods prior to December 1, 2001 have not been restated to reflect this change in presentation.
b Based on average shares outstanding during the period.
c Total return based on net asset value reflects changes in the Fund's net asset value during the period. Total return based on market value reflects changes in market value. Each figure includes reinvestments of dividends. These figures will differ depending upon the level of any discount or premium to net asset value at which the Fund's shares trade during the period.
* Asset coverage equals the total net assets plus borrowings of the Fund divided by the borrowings outstanding at period end.
|
Notes to Financial Statements |
|
A. Significant Accounting Policies
Scudder Multi-Market Income Trust (the ``Fund'') is registered under the Investment Company Act of 1940, as amended (the ``1940 Act''), as a closed-end, diversified management investment company organized as a Massachusetts business trust.
The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates. Actual results could differ from those estimates. The policies described below are followed consistently by the Fund in the preparation of its financial statements.
Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading. Debt securities are valued by independent pricing services approved by the Trustees of the Fund. If the pricing services are unable to provide valuations, the securities are valued at the most recent bid quotation or evaluated price, as applicable, obtained from one or more broker-dealers. Such services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes. Equity securities are valued at the most recent sale price reported on the exchange (US or foreign) or over-the-counter market on which the security it traded most extensively. Securities for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation.
Money market instruments purchased with an original or remaining maturity of sixty days or less, maturing at par, are valued at amortized cost. Investments in open-end investment companies and Scudder Cash Management QP Trust are valued at their net asset value each business day.
Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Trustees.
Foreign Currency Translations. The books and records of the Fund are maintained in US dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into US dollars at the prevailing exchange rates at period end. Purchases and sales of investment securities, income and expenses are translated into US dollars at the prevailing exchange rates on the respective dates of the transactions.
Net realized and unrealized gains and losses on foreign currency transactions represent net gains and losses between trade and settlement dates on securities transactions, the disposition of forward foreign currency exchange contracts and foreign currencies, and the difference between the amount of net investment income accrued and the US dollar amount actually received. 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 but is included with net realized and unrealized gains and losses on investment securities.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange contract ("forward currency contract") is a commitment to purchase or sell a foreign currency at the settlement date at a negotiated rate. The Fund may enter into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign currency denominated portfolio holdings and to facilitate transactions in foreign currency denominated securities.
Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies and unrealized gain (loss) is recorded daily. Sales and purchases of forward currency contracts having the same settlement date and broker are offset and any gain (loss) is realized on the date of offset; otherwise, gain (loss) is realized on settlement date. Realized and unrealized gains and losses which represent the difference between the value of a forward currency contract to buy and a forward currency contract to sell are included in net realized and unrealized gain (loss) from foreign currency related transactions.
Certain risks may arise upon entering into forward currency contracts from the potential inability of counterparties to meet the terms of their contracts. Additionally, when utilizing forward currency contracts to hedge, the Fund gives up the opportunity to profit from favorable exchange rate movements during the term of the contract.
Federal Income Taxes. The Fund's policy is to comply with the requirements of the Internal Revenue Code, as amended, which are applicable to regulated investment companies, and to distribute all of its taxable income to its shareholders. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required.
At November 30, 2003 the Fund had a net tax basis capital loss carryforward of approximately $33,889,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until November 30, 2008 ($3,659,000), November 30, 2009 ($13,990,000) and November 30, 2010 ($16,240,000), the respective expiration dates, whichever occurs first.
Distribution of Income and Gains. All of the net investment income of the Fund is declared and distributed to shareholders monthly. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Fund if not distributed, and, therefore, will be distributed to shareholders at least annually.
The timing and characterization of certain income and capital gains distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to certain securities sold at a loss and premium amortization on debt securities. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund.
At November 30, 2003, the Fund's components of distributable earnings (accumulated losses) on a tax-basis were as follows:
Undistributed ordinary income*
| $ - |
Undistributed net long-term capital gains
| $ - |
Capital loss carryforwards
| $ (33,889,000) |
Net unrealized appreciation (depreciation) on investments
| $ (713,819) |
In addition, the tax character of distributions paid to shareholders by the Fund are summarized as follows:
| Years Ended November 30, |
| 2003 | 2002 |
Distributions from ordinary income*
| $ 15,550,136 | $ 16,127,007 |
Distributions from return of capital
| $ - | $ 937,595 |
* Included in the Fund's distributions from ordinary income for the year ended November 30, 2003, is $4,858,249 in excess of investment company taxable income, which in accordance with applicable US tax law, is taxable to shareholders as ordinary income distributions. For tax purposes short-term capital gains distributions are considered ordinary income distributions.Statement of Cash Flows. Information of financial transactions which have been settled through the receipt and disbursement of cash is presented in the Statement of Cash Flows. The cash amount shown in the Statement of Cash Flows represents the cash position in its custodian bank at November 30, 2003. Significant non-cash activity from market discount accretion and premium amortization has been excluded from the Statement of Cash Flows.
Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Realized gains and losses from investment transactions are recorded on an identified cost basis. All premiums and discounts are amortized/accreted for financial reporting purposes, with the exception of securities bought in default.
B. Purchases and Sales of Securities
During the year ended November 30, 2003, purchases and sales of investment securities (excluding short-term investments and US Treasury securities) aggregated $449,899,111 and $444,267,496, respectively. Purchase and sales of US Treasury securities aggregated $7,629,660 and $4,835,359, respectively.
C. Related Parties
Management Agreement. Under the Management Agreement with Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor"), the Advisor directs the investments of the Fund in accordance with its investment objectives, policies and restrictions. The Advisor determines the securities, instruments and other contracts relating to investments to be purchased, sold or entered into by the Fund. In addition to portfolio management services, the Advisor provides certain administrative services in accordance with the Management Agreement. The Fund pays a monthly investment management fee of 1/12 of the annual rate of 0.85% of average weekly net assets. Deutsche Asset Management Investment Services Limited ("DeAMIS"), an affiliate of the Advisor, serves as sub-advisor to the Fund with respect to a portion of the Fund's portfolio that is allocated to it by the Advisor for management. The Advisor compensates DeAMIS out of the management fee it receives from the Fund.
Service Provider Fees. Scudder Investments Service Company (``SISC''), an affiliate of the Advisor, is the transfer, dividend-paying and shareholder service agent for the Fund. Effective January 15, 2003, pursuant to a sub-transfer agency agreement between SISC and DST Systems, Inc. ("DST"), SISC has delegated certain transfer agent and dividend paying agent functions to DST. SISC compensates DST out of the shareholder servicing fee it receives from the Fund. The amount charged to the Fund by SISC aggregated $24,000, of which $12,000 is unpaid at November 30, 2003.
Trustees' Fees and Expenses. The Fund pays each Trustee not affiliated with the Advisor retainer fees plus specified amounts for attended board and committee meetings.
Scudder Cash Management QP Trust. Pursuant to an Exemptive Order issued by the SEC, the Fund may invest in the Scudder Cash Management QP Trust (the ``QP Trust''), and other affiliated funds managed by the Advisor. The QP Trust seeks to provide as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity. The QP Trust does not pay the Advisor a management fee for the affiliated funds' investments in the QP Trust.
D. Expense Off-Set Arrangement
The Fund has entered into an arrangement with its custodian and transfer agent whereby credits realized as a result of uninvested cash balances were used to reduce a portion of the Fund's expenses. During the year ended November 30, 2003, the Fund's custodian and transfer agent fees were reduced by $1,094 and $0, respectively, under these arrangements.
E. Forward Foreign Currency Commitments
As of November 30, 2003, the Fund had the following open forward foreign currency exchange contracts:
Contracts to Deliver | | In Exchange For | | Settlement Date | | Net Unrealized Appreciation |
USD
| 100,359 | | EUR
| 85,850 | | 12/10/2003
| | $ 2,560 |
USD
| 411,746 | | EUR
| 360,000 | | 1/29/2004
| | 19,200 |
USD
| 2,067,882 | | EUR
| 1,808,000 | | 1/29/2004
| | 96,428 |
USD
| 589,694 | | EUR
| 513,000 | | 1/29/2004
| | 24,405 |
USD
| 731,808 | | EUR
| 630,000 | | 1/29/2004
| | 22,349 |
MXP
| 12,750,000 | | USD
| 1,151,553 | | 1/29/2004
| | 40,770 |
MXP
| 24,301,000 | | USD
| 2,157,787 | | 2/20/2004
| | 47,583 |
Total unrealized appreciation
| | $ 253,295 |
Contracts to Deliver | | In Exchange For | | Settlement Date | | Net Unrealized (Depreciation) |
EUR
| 51,999 | | USD
| 59,799 | | 12/10/2003
| | $ (2,538) |
EUR
| 46,363 | | USD
| 54,338 | | 12/10/2003
| | (1,243) |
EUR
| 61,428 | | USD
| 67,202 | | 12/10/2003
| | (6,439) |
EUR
| 66,628 | | USD
| 71,965 | | 12/10/2003
| | (7,910) |
EUR
| 641,832 | | USD
| 715,938 | | 12/10/2003
| | (53,500) |
EUR
| 51,479 | | USD
| 58,487 | | 12/10/2003
| | (3,227) |
EUR
| 256,507 | | USD
| 296,958 | | 12/10/2003
| | (10,546) |
USD
| 1,685,167 | | MXP
| 19,280,000 | | 1/29/2004
| | (5,489) |
USD
| 1,689,574 | | MXP
| 19,300,000 | | 1/29/2004
| | (8,152) |
EUR
| 209,000 | | USD
| 243,123 | | 1/29/2004
| | (7,065) |
EUR
| 12,220,000 | | USD
| 14,242,166 | | 1/29/2004
| | (386,079) |
EUR
| 280,000 | | USD
| 326,369 | | 1/29/2004
| | (8,811) |
EUR
| 1,150,000 | | USD
| 1,317,061 | | 1/29/2004
| | (59,575) |
EUR
| 225,000 | | USD
| 263,828 | | 1/29/2004
| | (5,513) |
EUR
| 51,425 | | USD
| 60,913 | | 3/26/2004
| | (551) |
Total unrealized depreciation
| | $ (566,638) |
Currency Abbreviations
|
|
EUR
| Euro
| USD
| United States Dollar
|
MXP
| Mexican Pesos
|
|
|
F. Investing in High Yield Securities
Investing in high yield securities may involve greater risks and considerations not typically associated with investing in US Government bonds and other high quality fixed-income securities. These securities are non-investment grade securities, often referred to as "junk bonds." Economic downturns may disrupt the high yield market and impaired the ability of issuers to repay principal and interest. Also, an increase in interest rates would likely have an adverse impact on the value such obligations. Moreover, high yield securities may be less liquid due to extent that there is no established retail secondary market and because of a decline in the value of such securities.
G. Investing in Emerging Markets
Investing in emerging markets may involve special risks and considerations not typically associated with investing in the United States of America. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and future adverse political, social and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls and delayed settlements and may have prices more volatile than those of comparable securities in the United States of America.
H. Borrowings
The notes payable represents a secured loan of $50,500,000 from Barton Capital Corporation at November 30, 2003. The note bears interest at the commercial paper rate plus dealer fees (1.085% at November 30, 2003) which is payable at maturity. A commitment fee is charged to the Fund and is included with interest expense on the Statement of Operations. An arrangement fee incurred by the Fund in connection with its loan was deferred and is being amortized on a straight-line basis over a three year period. The loan amounts and rates are reset periodically under a credit facility obtained by the Fund in an amount not to exceed $60,000,000 at any one time and which is renewable annually until May 28, 2005.
The weighted average outstanding daily balance of all loans (based on the number of days the loans were outstanding) during the year ended November 30, 2003 was approximately $44,272,603 with a weighted average interest rate of 1.32%.
Report of Ernst & Young LLP, Independent Auditors |
|
To the Trustees and Shareholders of
Scudder Multi-Market Income Trust:
We have audited the accompanying statement of assets and liabilities, including the investment portfolio, of the Scudder Multi-Market Income Trust (the "Fund") as of November 30, 2003, and the related statements of operations and cash flows 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 November 30, 2003, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Scudder Multi-Market Income Trust at November 30, 2003, the results of its operations and cash flows 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.
Boston, Massachusetts
January 21, 2004 | /s/ Ernst & Young LLP
|
Tax Information (Unaudited) |
|
Please consult a tax advisor if you have questions about federal or state income tax laws, or on how to prepare your tax returns. If you have specific questions about your account, please call 1-800-621-1048.
Dividend Reinvestment Plan |
|
A. Participation
We invite you to review the description of the Dividend Reinvestment Plan (the ``Plan'') which is available to you as a shareholder of Scudder Multi-Market Income Trust (the ``Fund''). If you wish to participate and your shares are held in your own name, simply contact Scudder Investments Service Company, whose address and phone number are provided in Paragraph E for the appropriate form. If your shares are held in the name of a brokerage firm, bank, or other nominee, you must instruct that nominee to re-register your shares in your name so that you may participate in the Plan, unless your nominee has made the Plan available on shares held by them. Shareholders who so elect will be deemed to have appointed UMB Bank, N.A. ("United Missouri Bank" or "UMB") as their agent and as agent for the Fund under the Plan.
B. Dividend Investment Account
The Fund's transfer agent and dividend disbursing agent or its delegate (the ``Transfer Agent'') will establish a Dividend Investment Account (the ``Account'') for each shareholder participating in the Plan. The Transfer Agent will credit to the Account of each participant funds it receives from the following sources: (a) cash dividends and capital gains distributions paid on shares of beneficial interest (the ``Shares'') of the Fund registered in the participant's name on the books of the Fund; and (b) cash dividends and capital gains distributions paid on Shares registered in the name of the Transfer Agent but credited to the participant's Account. Sources described in clauses (a) and (b) of the preceding sentence are hereinafter called ``Distributions.''
C. Investment of Distribution Funds held in each account
If on the record date for a Distribution (the ``Record Date''), Shares are trading at a discount from net asset value per Share (according to the evaluation most recently made on Shares of the Fund), funds credited to a participant's Account will be used to purchase Shares (the ``Purchase''). UMB will attempt, commencing five days prior to the Payment Date and ending at the close of business on the Payment Date (``Payment Date'' as used herein shall mean the last business day of the month in which such Record Date occurs), to acquire Shares in the open market. If and to the extent that UMB is unable to acquire sufficient Shares to satisfy the Distribution by the close of business on the Payment Date, the Fund will issue to UMB Shares valued at net asset value per Share (according to the evaluation most recently made on Shares of the Fund) in the aggregate amount of the remaining value of the Distribution. If, on the Record Date, Shares are trading at a premium over net asset value per Share, the Fund will issue on the Payment Date, Shares valued at net asset value per Share on the Record Date to the Transfer Agent in the aggregate amount of the funds credited to the participants' accounts.
D. Voluntary Cash Contributions
A participant may from time to time make voluntary cash contributions to his Account by sending to Transfer Agent a check or money order, payable to Transfer Agent, in a minimum amount of $100 with appropriate accompanying instructions. (No more than $500 may be contributed per month.) Transfer Agent will inform UMB of the total funds available for the purchase of Shares and UMB will use the funds to purchase additional Shares for the participant's Account the earlier of: (a) when it next purchases Shares as a result of a Distribution or (b) on or shortly after the first day of each month and in no event more than 30 days after such date except when temporary curtailment or suspension of purchases is necessary to comply with applicable provisions of federal securities laws. Cash contributions received more than fifteen calendar days or less than five calendar days prior to a Payment Date will be returned uninvested. Interest will not be paid on any uninvested cash contributions. Participants making voluntary cash investments will be charged a $.75 service fee for each such investment and will be responsible for their pro rata share of brokerage commissions.
E. Additional Information
Address all notices, correspondence, questions, or other communication regarding the Plan, or if you would like a copy of the Plan, to:
Scudder Investments Service Company
P.O. Box 219066
Kansas City, Missouri 64121-9066
1-800-294-4366
F. Adjustment of Purchase Price
The Fund will increase the price at which Shares may be issued under the Plan to 95% of the fair market value of the shares on the Record Date if the net asset value per Share of the Shares on the Record Date is less than 95% of the fair market value of the Shares on the Record Date.
G. Determination of Purchase Price
The cost of Shares and fractional Shares acquired for each participant's Account in connection with a Purchase shall be determined by the average cost per Share, including brokerage commissions as described in Paragraph G hereof, of the Shares acquired by UMB in connection with that Purchase. Shareholders will receive a confirmation showing the average cost and number of Shares acquired as soon as practicable after the Transfer Agent has received or UMB has purchased Shares. The Transfer Agent may mingle the cash in a participant's account with similar funds of other participants of the Fund for whom UMB acts as agent under the Plan.
H. Brokerage Charges
There will be no brokerage charges with respect to Shares issued directly by the Fund as a result of Distributions. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to UMB's open market purchases in connection with the reinvestment of Distributions. Brokerage charges for purchasing small amounts of Shares for individual Accounts through the Plan can be expected to be less than the usual brokerage charges for such transactions, as UMB will be purchasing Shares for all participants in blocks and prorating the lower commission thus attainable.
I. Service Charges
There is no service charge by the Transfer Agent or UMB to shareholders who participate in the Plan other than service charges specified in Paragraphs D and M hereof. However, the Fund reserves the right to amend the Plan in the future to include a service charge.
J. Transfer of Shares Held by Agent
The Transfer Agent will maintain the participant's Account, hold the additional Shares acquired through the Plan in safekeeping and furnish the participant with written confirmation of all transactions in the Account. Shares in the Account are transferable upon proper written instructions to the Transfer Agent. Upon request to the Transfer Agent, a certificate for any or all full Shares in a participant's Account will be sent to the participant.
K. Shares Not Held in Shareholder's Name
Beneficial owners of Shares which are held in the name of a broker or nominee will not be automatically included in the Plan and will receive all distributions in cash. Such shareholders should contact the broker or nominee in whose name their Shares are held to determine whether and how they may participate in the Plan.
L. Amendments
Experience under the Plan may indicate that changes are desirable. Accordingly, the Fund reserves the right to amend or terminate the Plan, including provisions with respect to any Distribution paid, subsequent to notice thereof sent to participants in the Plan at least ninety days before the record date for such Distribution, except when such amendment is necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority, in which case such amendment shall be effective as soon as practicable. The amendment shall be deemed to be accepted by each participant unless, prior to the effective date thereof, the Transfer Agent receives notice of the termination of such participant's account under the Plan in accordance with the terms hereof. The Plan may be terminated by the Fund.
M. Withdrawal from Plan
Shareholders may withdraw from the Plan at any time by giving the Transfer Agent a written notice. If the proceeds are $100,000 or less and the proceeds are to be payable to the shareholder of record and mailed to the address of record, a signature guarantee normally will not be required for notices by individual account owners (including joint account owners), otherwise a signature guarantee will be required. In addition, if the certificate is to be sent to anyone other than the registered owner(s) at the address of record, a signature guarantee will be required on the notice. A notice of withdrawal will be effective for the next Distribution following receipt of the notice by the Transfer Agent provided the notice is received by the Transfer Agent at least ten days prior to the Record Date for the Distribution. When a participant withdraws from the Plan, or when the Plan is terminated in accordance with Paragraph L hereof, the participant will receive a certificate for full Shares in the Account, plus a check for any fractional Shares based on market price; or if a Participant so desires, the Transfer Agent will notify UMB to sell his Shares in the Plan and send the proceeds to the participant, less brokerage commissions and a $2.50 service fee.
N. Tax Implications
Shareholders will receive tax information annually for personal records and to assist in preparation of their Federal income tax returns. If Shares are purchased at a discount, the amount of the discount is considered taxable income and is added to the cost basis of the purchased shares.
The following table presents certain information regarding the Trustees and Officers of the fund as of November 30, 2003. Each individual's age is set forth in parentheses after his or her name. Unless otherwise noted, (i) each individual has engaged in the principal occupation(s) noted in the table for at least the most recent five years, although not necessarily in the same capacity, and (ii) the address of each individual is c/o Deutsche Asset Management, 222 South Riverside Plaza, Chicago, Illinois, 60606. Each Trustee's term of office extends until the next shareholder's meeting called for the purpose of electing Trustees and until the election and qualification of a successor, or until such Trustee sooner dies, resigns or is removed as provided in the governing documents of the fund.
Independent Trustees |
Name, Age, Position(s) Held with the Fund and Length of Time Served1
| Principal Occupation(s) During Past 5 Years and
Other Directorships Held
| Number of Funds in Fund Complex Overseen
|
John W. Ballantine (57)
Trustee, 1999-present
| Retired; formerly, Executive Vice President and Chief Risk Management Officer, First Chicago NBD Corporation/The First National Bank of Chicago (1996-1998); Executive Vice President and Head of International Banking (1995-1996). Directorships: Enron Corporation (energy trading firm) (effective May 30, 2002); First Oak Brook Bancshares, Inc.; Oak Brook Bank; American Healthways, Inc. (provider of disease and care management services); F.N.B. Corporation (bank holding company); Prisma Energy International (owner and operator of Enron's international energy infrastructure business).
| 82 |
Lewis A. Burnham (70)
Trustee, 1977-present
| Retired; formerly, Director of Management Consulting, McNulty & Company (1990-1998); prior thereto, Executive Vice President, Anchor Glass Container Corporation.
| 82 |
Donald L. Dunaway (66)
Trustee, 1980-present
| Retired; formerly, Executive Vice President, A.O. Smith Corporation (diversified manufacturer) (1963-1994).
| 82 |
James R. Edgar (57)
Trustee, 1999-present
| Distinguished Fellow, University of Illinois, Institute of Government and Public Affairs (1999-present); formerly, Governor, State of Illinois (1991-1999). Directorships: Kemper Insurance Companies; John B. Sanfilippo & Son, Inc. (processor/packager/marketer of nuts, snacks and candy products); Horizon Group Properties, Inc.; Youbet.com (online wagering platform); Alberto-Culver Company (manufactures, distributes and markets health and beauty-care products).
| 82 |
Paul K. Freeman (53)
Trustee, 2002-present
| President, Cook Street Holdings (consulting); Adjunct Professor, University of Denver; Consultant, World Bank/Inter-American Development Bank; formerly, Project Leader, International Institute for Applied Systems Analysis (1998-2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986-1998).
| 82 |
Robert B. Hoffman (66)
Trustee, 1981-present
| Retired; formerly, Chairman, Harnischfeger Industries, Inc. (machinery for the mining and paper industries) (1999-2000); prior thereto, Vice Chairman and Chief Financial Officer, Monsanto Company (agricultural, pharmaceutical and nutritional/food products) (1994-1999).
| 82 |
Shirley D. Peterson (62)
Trustee, 1995-present
| Retired; formerly, President, Hood College (1995-2000); prior thereto, Partner, Steptoe & Johnson (law firm); Commissioner, Internal Revenue Service; Assistant Attorney General (Tax), US Department of Justice. Directorships: Federal Mogul Corp. (supplier of automotive components and subsystems); AK Steel (steel production); Trustee, Bryn Mawr College.
| 82 |
Fred B. Renwick (73)
Trustee, 1988-present
| Retired; Professor Emeritus of Finance, New York University, Stern School of Business (2001-present); formerly, Professor, New York University Stern School of Business (1965-2001). Directorships: The Wartburg Foundation; Chairman, Finance Committee of Morehouse College Board of Trustees; formerly, Director of Board of Pensions, Evangelical Lutheran Church in America; member of the Investment Committee of Atlanta University Board of Trustees; Chair of the Investment Committee, American Bible Society Board of Trustees.
| 82 |
William P. Sommers (70)
Trustee, 1979- January 1, 2004
| Retired; formerly, President and Chief Executive Officer, SRI International (research and development) (1994-1998); prior thereto, Executive Vice President, lameter (medical information and educational service provider); Senior Vice President and Director, Booz, Allen & Hamilton Inc. (management consulting firm). Directorships: PSI Inc. (satellite engineering and components); Evergreen Solar, Inc. (develop/manufacture solar electric system engines); H2 Gen (manufacture hydrogen generators); Zassi Medical Evolutions, Inc. (specialists in intellectual property opportunities in medical device arena); Guckenheimer Enterprises (executive food services).
| 82 |
John G. Weithers (70)
Trustee, 1993-present
| Retired; formerly, Chairman of the Board and Chief Executive Officer, Chicago Stock Exchange. Directorships: Federal Life Insurance Company; Chairman of the Members of the Corporation and Trustee, DePaul University; formerly, International Federation of Stock Exchanges; Records Management Systems.
| 82 |
Interested Trustees and Officers2 |
Name, Age, Position(s) Held with the Fund and Length of Time Served1
| Principal Occupation(s) During Past 5 Years and
Other Directorships Held
| Number of Funds in Fund Complex Overseen
|
Richard T. Hale3 (58)
Chairman and Trustee, 2002-present
Chief Executive Officer, 2003-present
| Managing Director, Deutsche Investment Management Americas Inc. (2003-present); Managing Director, Deutsche Bank Securities Inc. (formerly Deutsche Banc Alex. Brown Inc.) and Deutsche Asset Management (1999 to present); Director and President, Investment Company Capital Corp. (registered investment advisor) (1996 to present); Director, Deutsche Global Funds, Ltd. (2000 to present), CABEI Fund (2000 to present), North American Income Fund (2000 to present) (registered investment companies); Director, Scudder Global Opportunities Fund (since 2003); Director/Officer Deutsche/Scudder Mutual Funds (various dates); President, Montgomery Street Income Securities, Inc. (2002 to present) (registered investment companies); Vice President, Deutsche Asset Management, Inc. (2000 to present); formerly, Director, ISI Family of Funds (registered investment companies; 4 funds overseen) (1992-1999)
| 201 |
Brenda Lyons4,6 (40)
President, 2003-present
| Managing Director, Deutsche Asset Management
| n/a |
Philip J. Collora (58)
Vice President and Assistant Secretary, 1986-present
| Director, Deutsche Asset Management
| n/a |
Jan C. Faller5 (37)
Vice President, 2001-present
| Managing Director, Deutsche Asset Management (1999-present); prior thereto, investment manager, PanAgora Asset Management, and banking officer, Wainwright Bank & Trust Co.
| n/a |
Daniel O. Hirsch3 (49)
Vice President and Assistant Secretary, 2002-present
| Managing Director, Deutsche Asset Management (2002-present) and Director, Deutsche Global Funds Ltd. (2002-present); formerly, Director, Deutsche Asset Management (1999-2002); Principal, BT Alex. Brown Incorporated (now Deutsche Bank Securities Inc.) (1998-1999); Assistant General Counsel, United States Securities and Exchange Commission (1993-1998)
| n/a |
Kenneth Murphy4 (40)
Vice President, 2002-present
| Vice President, Deutsche Asset Management (2000-present); Vice President, Scudder Distributors, Inc. (December 2002-present); formerly, Director, John Hancock Signature Services (1992-2000)
| n/a |
Charles A. Rizzo4 (46)
Treasurer and Chief Financial Officer, 2002-present
| Director, Deutsche Asset Management (April 2000-present). Formerly, Vice President and Department Head, BT Alex. Brown Incorporated (now Deutsche Bank Securities Inc.) (1998-1999); Senior Manager, Coopers & Lybrand L.L.P. (now PricewaterhouseCoopers LLP) (1993-1998)
| n/a |
Salvatore Schiavone4 (38)
Assistant Treasurer, 2003-present
| Director, Deutsche Asset Management
| n/a |
Lucinda H. Stebbins4 (58)
Assistant Treasurer, 2003-present
| Director, Deutsche Asset Management
| n/a |
Kathleen Sullivan D'Eramo4 (46)
Assistant Treasurer, 2003-present
| Director, Deutsche Asset Management
| n/a |
John Millette4 (41)
Secretary, 2001-present
| Director, Deutsche Asset Management
| n/a |
Lisa Hertz5 (33)
Assistant Secretary, 2003-present
| Assistant Vice President, Deutsche Asset Management
| n/a |
Caroline Pearson4 (41)
Assistant Secretary, 1998-present
| Managing Director, Deutsche Asset Management
| n/a |
1 Length of time served represents the date that each Trustee was first elected to the common board of trustees which oversees a number of investment companies, including the fund, managed by the Advisor. For the Officers of the fund, length of time served represents the date that each Officer was first elected to serve as an officer of any fund overseen by the aforementioned common board of trustees.2 As a result of their respective positions held with the Advisor, these individuals are considered "interested persons" of the Advisor within the meaning of the 1940 Act. Interested persons receive no compensation from the fund.3 Address: One South Street, Baltimore, Maryland4 Address: Two International Place, Boston, Massachusetts5 Address: 345 Park Avenue, New York, New York6 Ms. Lyons was elected by the Trustees as President on November 19, 2003.Automated Information Lines | Scudder Closed-End Fund Info Line (800) 349-4281
|
Web Site | www.scudder.com or visit our Direct Link:
CEF.Scudder.com (Do not use www.) Obtain monthly fact sheets, financial reports, press releases and webcasts when available.
|
Written Correspondence | Deutsche Investment Management Americas Inc. 222 South Riverside
Chicago, IL 60606
|
Proxy Voting | A description of the fund's policies and procedures for voting proxies for portfolio securities can be found on our Web site - scudder.com (type "proxy voting" in the search field) - or on the SEC's Web site - www.sec.gov. To obtain a written copy without charge, call us toll free at (800) 621-1048.
|
Legal Counsel | Vedder, Price, Kaufman & Kammholz 222 North LaSalle Street
Chicago, IL 60601
|
Dividend Reinvestment Plan Agent | UMB Bank P.O. Box 410064
Kansas City, MO 64141-0064
|
Shareholder Service Agent | Scudder Investments Service Company P.O. Box 219066
Kansas City, MO 64121-9066
(800) 294-4366
|
Custodian and Transfer Agent | State Street Bank and Trust Company 225 Franklin Street
Boston, MA 02110
|
Independent Auditors | Ernst & Young LLP 200 Clarendon Street
Boston, MA 02116
|
NYSE Symbol | KMM
|
CUSIP Number | 81118Q101
|
ITEM 2. CODE OF ETHICS.
As of the end of the period, November 30, 2003, the Scudder Multi-Market Income
Trust has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that
applies to its President and Treasurer and its Chief Financial Officer. A copy
of the code of ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Fund's Board of Directors/Trustees has determined that the Fund has at least
one "audit committee financial expert" serving on its audit committee: Mr.
Donald L. Dunaway. This audit committee member is "independent," meaning that he
is not an "interested person" of the Fund (as that term is defined in Section
2(a)(19) of the Investment Company Act of 1940) and he does not accept any
consulting, advisory, or other compensatory fee from the Fund (except in the
capacity as a Board or committee member).
An "audit committee financial expert" is not an "expert" for any purpose,
including for purposes of Section 11 of the Securities Act of 1933, as a result
of being designated as an "audit committee financial expert." Further, the
designation of a person as an "audit committee financial expert" does not mean
that the person has any greater duties, obligations, or liability than those
imposed on the person without the "audit committee financial expert"
designation. Similarly, the designation of a person as an "audit committee
financial expert" does not affect the duties, obligations, or liability of any
other member of the audit committee or board of directors.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not currently applicable.
ITEM 5. [RESERVED]
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Proxy Voting Guidelines. The Fund has delegated proxy voting responsibilities to
its investment advisor, subject to the Board's general oversight. The Fund has
delegated proxy voting to the advisor with the direction that proxies should be
voted consistent with the Fund's best economic interests. The advisor has
adopted its own Proxy Voting Policies and Procedures ("Policies"), a Proxy
Voting Desktop Manual ("Manual"), and Proxy Voting Guidelines ("Guidelines") for
this purpose. The Policies address, among other things, conflicts of interest
that may arise between the interests of the Fund, and the interests of the
advisor and its affiliates, including the Fund's principal underwriter. The
Manual sets forth the procedures that the advisor has implemented to vote
proxies, including monitoring for corporate events, communicating with the
fund's custodian regarding proxies, considering the merits of each proposal, and
executing and recording the proxy vote. The Guidelines set forth the advisor's
general position on various proposals, such as:
o Shareholder Rights -- The advisor generally votes against proposals that
restrict shareholder rights.
o Corporate Governance -- The advisor generally votes for confidential and
cumulative voting and against supermajority voting requirements for charter
and bylaw amendments.
o Anti-Takeover Matters -- The advisor generally votes for proposals that
require shareholder ratification of poison pills or that request boards to
redeem poison pills, and votes "against" the adoption of poison pills if
they are submitted for shareholder ratification. The advisor generally
votes for fair price proposals.
o Routine Matters -- The advisor generally votes for the ratification of
auditors, procedural matters related to the annual meeting, and changes in
company name, and against bundled proposals and adjournment.
The general provisions described above do not apply to investment companies. The
advisor generally votes proxies solicited by investment companies in accordance
with the recommendations of an independent third-party, except for proxies
solicited by or with respect to investment companies for which the advisor or an
affiliate serves as investment advisor or principal underwriter ("affiliated
investment companies"). The advisor votes affiliated investment company proxies
in the same proportion as the vote of the investment company's other
shareholders (sometimes called "mirror" or "echo" voting). Master fund proxies
solicited from feeder funds are voted in accordance with applicable requirements
of the Investment Company Act of 1940.
Although the Guidelines set forth the advisor's general voting positions on
various proposals, the advisor may, consistent with the Fund's best interests,
determine under some circumstances to vote contrary to those positions.
The Guidelines on a particular issue may or may not reflect the view of
individual members of the board, or of a majority of the board. In addition, the
Guidelines may reflect a voting position that differs from the actual practices
of the public companies within the Deutsche Bank organization or of the
investment companies for which the advisor or an affiliate serves as investment
advisor or sponsor.
The advisor may consider the views of a portfolio company's management in
deciding how to vote a proxy or in establishing general voting positions for the
Guidelines, but management's views are not determinative.
As mentioned above, the Policies describe the way in which the advisor resolves
conflicts of interest. To resolve conflicts, the advisor, under normal
circumstances, votes proxies in accordance with its Guidelines. If the advisor
departs from the Guidelines with respect to a particular proxy or if the
Guidelines do not specifically address a certain proxy proposal, a committee
established by the advisor will vote the proxy. Before voting any such proxy,
however, the committee will exclude from the voting discussions and
determinations any member who is involved in or aware of a material conflict of
interest. If, after excluding any and all such members, there are fewer than
three voting members remaining, the advisor will engage an independent third
party to vote the proxy or follow the proxy voting recommendations of an
independent third party.
Under certain circumstances, the advisor may not be able to vote proxies or the
advisor may find that the expected economic costs from voting outweigh the
benefits associated with voting. For example, the advisor may not vote proxies
on certain foreign securities due to local restrictions or customs. The advisor
generally does not vote proxies on securities subject to share blocking
restrictions.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The Chief Executive and Financial Officers concluded that the Registrant's
Disclosure Controls and Procedures are effective based on the evaluation of the
Disclosure Controls and Procedures as of a date within 90 days of the filing
date of this report.
(b) During the filing period of the report, management identified issues
relating to the overall fund expense payment and accrual process. Management
discussed these matters with the Registrant's Audit Committee and auditors,
instituted additional procedures to enhance its internal controls and will
continue to develop additional controls and redesign work flow to strengthen the
overall control environment associated with the processing and recording of fund
expenses.
ITEM 10. EXHIBITS.
(a)(1) Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached
hereto as EX-99.CODE ETH.
(a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as
Exhibit 99.CERT.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as
Exhibit 99.906CERT.
Form N-CSR Item F
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: Scudder Multi-Market Income Trust
By: /s/Richard T. Hale
--------------------------------------------
Richard T. Hale
Chief Executive Officer
Date: January 16, 2004
--------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Registrant: Scudder Multi-Market Income Trust
By: /s/Richard T. Hale
--------------------------------------------
Richard T. Hale
Chief Executive Officer
Date: January 16, 2004
--------------------------------------------
By: /s/Charles A. Rizzo
--------------------------------------------
Charles A. Rizzo
Chief Financial Officer
Date: January 16, 2004
--------------------------------------------
