UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSRS
Investment Company Act file number 811-5689
SCUDDER MULTI-MARKET INCOME TRUST
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(Exact Name of Registrant as Specified in Charter)
222 South Riverside Plaza, Chicago, IL 60606
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 454-7190
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Paul Schubert
345 Park Avenue
New York, NY 10154
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(Name and Address of Agent for Service)
Date of fiscal year end: 11/30
Date of reporting period: 05/31/2005
ITEM 1. REPORT TO STOCKHOLDERS
Scudder Multi-Market
Income Trust
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| Semiannual Report to Shareholders |
| May 31, 2005 |
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Investments in 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 May 31, 2005 |
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Performance is historical, assumes reinvestment of all dividends and capital gains distributions, and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when sold, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Please visit scudder.com for the Fund's most recent month-end performance.
Average Annual Total Returns as of 5/31/05 |
Scudder Multi-Market Income Trust | 6-Month* | 1-Year | 3-Year | 5-Year | 10-Year |
Based on Net Asset Value(a) | 4.78% | 22.04% | 15.83% | 12.29% | 9.01% |
Based on Market Price | 19.38% | 41.05% | 18.22% | 16.32% | 10.77% |
CS First Boston High Yield Index(b) | .60% | 9.97% | 12.14% | 8.64% | 7.49% |
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%)(b) | 2.45% | 9.99% | 10.14% | 8.51% | 8.20% |
Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.
* Total returns shown for periods less than one year are not annualized.
Net Asset Value and Market Price |
| As of 5/31/05 | As of 11/30/04 |
Net Asset Value | $ 9.59 | $ 9.53 |
Market Price | $ 10.41 | $ 9.08 |
Distribution Information |
Six Months: Income Dividends as of 5/31/05 | $ 0.39 |
May Income Dividend | $ .0650 |
Current Annualized Distribution Rate (based on Net Asset Value) as of 5/31/05+ | 8.13% |
Current Annualized Distribution Rate (based on Market Price) as of 5/31/05+ | 7.49% |
a Total investment returns reflect changes in net asset value per share during each period and assume that dividends and capital gain 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.
b CS First Boston High Yield Index is an unmanaged, unleveraged, trader-priced portfolio constructed to mirror the global high-yield debt market. Lehman Brothers Treasury Index is an unmanaged, unleveraged, 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, unleveraged, foreign securities index representing major government bond markets other than the US. J.P. Morgan Emerging Markets Bond Index Plus is an unmanaged, unleveraged, 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 May 31, 2005. 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 |
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In the following interview, Portfolio Manager Jan C. Faller discusses market conditions and investment strategy during Scudder Multi-Market Income Trust's most recent semiannual period ended May 31, 2005.
Q: How did the fund perform over the six-month period ended May 31, 2005?
A: For the six-month period, the fund returned 4.78% based on net asset value. The fund's total return based on its market price was 19.38%. This compares with the 0.60% return of its benchmark, the CS First Boston High Yield Index for the six-month period.1 (Past performance is no guarantee of future results. Please see page 3 for more complete performance information.)
1 CS First Boston High Yield Index is an unmanaged, unleveraged, trader-priced portfolio constructed to mirror the global high-yield debt market. 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.
Q: Will you comment on the fund's price movement from a discount to a premium?
A: Early in the reporting period, as the Federal Reserve (the Fed) made it clear it was in the midst of an extended cycle of interest rate increases, there was concern in the marketplace that use of leverage in closed end funds would become less appealing. This led to selling of shares in a number of funds which employ leverage, and we believe contributed to the discount of the fund's exchange-traded shares. More recently, however, it has become evident that the tightening has had little impact on credit markets. The improving outlook for the credit markets and the fund's increased yield evidently made the fund more attractive to buyers, shifting its price from a discount to a premium over the period.
Q: Will you discuss the general market environment for the sectors in which the fund was invested during the period?
A: Over the past six months, bond markets — particularly credit markets — began to show more volatility than they have for some time. Prior to this year, yields in both the emerging markets and high yield sectors had fallen steadily, benefiting holders of lower quality credits. The trend carried through the end of 2004, as investors remained comfortable with improving credit fundamentals and attractive technical factors in the credit markets. Then, in March and April of 2005, high yield began to suffer due to a combination of rich valuations, continued increases in short-term interest rates, and uncertainty about the possibility of GM and Ford falling into the high-yield indices due to downgrades. As the auto picture gained clarity in May, and the economic backdrop in the United States continued to evidence moderate, stable growth, the high-yield sector did recover somewhat, but did not regain the previous highs it had reached early in 2005. Emerging-markets debt, while trading off in sympathy with high yield, did not experience nearly the same degree of stress, and by the end of May showed much better returns than the high-yield sector. The US Treasury yield curve flattened dramatically over the past six months, with two-year yields rising more than 100 basis points, while 30-year yields fell by nearly 50 basis points; 10-year yields completely defied market expectations by ending up below 4% at the end of May.
Q: How did the fund's allocations affect performance?
A: Throughout the period, the fund maintained an approximate 50/50 balance between its high-yield and emerging-markets portfolio allocations. As noted above, spreads widened more significantly in the high-yield sector; that allocation therefore held back the performance of the fund in comparison with the emerging-markets allocation. Both sectors did provide attractive income for the fund, although the price return for high yield was moderately negative over the past six months. Having credit exposure diversified between corporate credit and emerging-markets debt helped insulate the fund from the more aggressive sell-off in high yield, reducing the volatility of the fund's returns relative to a total high-yield allocation.
Q: Why did the fund's weighting in non-rated securities increase during the period?
A: Two countries in the emerging markets - Argentina and the Dominican Republic — were undergoing debt restructurings. As a result, the bonds were not rated at period end, which led to an increase in the percentage of the fund allocated to unrated holdings.
Q: Will you comment on developments in the emerging markets over the period?
A: In general, emerging markets were relatively stable over the period. The beginning of the period saw the peaceful resolution of an election crisis in the Ukraine, much to the satisfaction of the international community. Importantly, during the period of uncertainty this situation had created, the debt of other emerging markets did not respond negatively — a sign of the overall health and maturity of this sector. Turkey had benefited for some time from the perception that it has made substantial progress toward eventually joining the European Economic Union. However, the outlook in this regard wavered over the period and created substantial volatility for Turkish issues, with some carryover to other emerging markets. Russia and several other emerging-markets countries continue to benefit from crude oil prices that are hovering near historic highs. While Brazil's economy eased during the first several months of 2005, the Lula administration appears committed to pursuing the sound monetary and fiscal policies that have worked thus far to avoid crisis there.
Q: Will you comment on leverage employed by the fund over the period?
A: During the period, we maintained the fund's use of leverage at approximately 25% of portfolio assets. In employing leverage, the fund uses a secured loan to raise money in the commercial paper market at short-term interest rates, and then invests the proceeds in longer-term securities. The increase in short-term interest rates and flattening of the yield curve over the past year made this strategy somewhat less attractive. Further, the increase in credit spreads muted any price-appreciation benefit associated with leverage in March and April. However, with credit spreads on high yield and emerging markets both at about 400 basis points, the carry associated with leverage remains attractive, and certainly benefited the income of the fund over the period. The current Federal Reserve approach of incrementally raising short-term rates has been supportive of the economy and fixed-income spread sectors, but we will, of course, continue to closely evaluate the fund's use of leverage.
Q: Can you discuss the factors that contributed to the decrease in the fund's weighted average maturity and the fund's duration?
A: Due to concerns about the possibility of greater volatility in both emerging markets and high-yield sectors, the maturity and duration of the fund decreased. In an attempt to reduce risk and position the emerging markets holdings more defensively, the fund held a greater position in cash, which in part contributed to the lower numbers. Also, its high yield holdings were shortened on average as we sold longer-dated bonds in favor of securities with lower duration and maturity. (These holdings should perform better in the event that the investment environment turns negative.)
Q: What is your current assessment of the fixed-income environment?
A: There is more reason to be concerned about inflation than there was six months ago, mainly because of continued high oil prices and the increased pricing power for businesses that has flowed from the economic recovery. Still, the underlying economic environment is stable, the Fed appears to be moving steadily toward a neutral monetary policy and US wage inflation remains under control. We therefore do not expect any of the more extreme scenarios with respect to inflation and interest rates to unfold.
Going forward, we will continue to monitor the global economy and the statements of the world's central banks. We believe that Scudder Multi-Market Income Trust remains an attractive vehicle for investors seeking a 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 May 31, 2005 |
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Portfolio Composition
(Excludes Securities Lending Collateral) | 5/31/05 | 11/30/04 |
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Foreign Bonds — US$ Denominated | 44% | 45% |
Corporate Bonds | 37% | 38% |
Foreign Bonds — Non US$ Denominated | 9% | 11% |
Cash Equivalents | 7% | 3% |
Loan Participation | 1% | 1% |
US Government Backed | 1% | 1% |
Other | 1% | 1% |
| 100% | 100% |
Corporate and Foreign Bond Diversification
(As a Percentage of Corporate and Foreign Bonds) | 5/31/05 | 11/30/04 |
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Emerging Market Sovereign Bonds | 46% | 49% |
Consumer Discretionary | 12% | 14% |
Materials | 8% | 8% |
Industrials | 8% | 7% |
Energy | 7% | 5% |
Telecommunication Services | 6% | 7% |
Financials | 4% | 5% |
Utilities | 4% | 2% |
Consumer Staples | 2% | 1% |
Health Care | 2% | 1% |
Information Technology | 1% | 1% |
| 100% | 100% |
Quality
(Excludes Cash Equivalents and Securities Lending Collateral) | 5/31/05 | 11/30/04 |
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Government and Agency | 1% | 1% |
A | 1% | — |
BBB | 14% | 16% |
BB | 30% | 34% |
B | 32% | 33% |
Below B | 9% | 12% |
Not rated | 13% | 4% |
| 100% | 100% |
Interest Rate Sensitivity | 5/31/05 | 11/30/04 |
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Average Maturity | 9.9 years | 11.5 years |
Duration | 5.8 years | 6.8 years |
Portfolio composition, corporate and foreign bond diversification, quality and interest rate sensitivity are subject to change.
The quality ratings represent the lower of Moody's Investors Services, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") credit ratings. The ratings of Moody's Investors Service, Inc. and Standard and Poor's Corporation represent their opinions as to the quality of the securities they rate. Ratings are relative and subjective and are not absolute standards of quality. The Fund's credit quality does not remove market risk.
For more complete details about the Fund's investment portfolio, see page 12. A quarterly Fact Sheet is available upon request. Please see the Additional Information section for contact information.
Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at www.sec.gov, and it also may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330.
Investment Portfolio as of May 31, 2005 (Unaudited) |  |  |
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| Principal Amount ($)(c) | Value ($) |
| |
Corporate Bonds 48.4% |
Consumer Discretionary 12.2% |
155 East Tropicana LLC/Finance, 144A, 8.75%, 4/1/2012 (e) | 180,000 | 174,150 |
Adesa, Inc., 7.625%, 6/15/2012 | 115,000 | 114,425 |
AMC Entertainment, Inc., 8.0%, 3/1/2014 (e) | 420,000 | 380,100 |
AutoNation, Inc., 9.0%, 8/1/2008 | 190,000 | 206,625 |
Aztar Corp., 7.875%, 6/15/2014 (e) | 500,000 | 526,250 |
Bally Total Fitness Holdings Corp., 10.5%, 7/15/2011 (e) | 130,000 | 129,350 |
Cablevision Systems New York Group, 144A, 7.88%**, 4/1/2009 | 350,000 | 367,500 |
Caesars Entertainment, Inc.: | | |
8.875%, 9/15/2008 | 170,000 | 187,850 |
9.375%, 2/15/2007 | 120,000 | 128,400 |
Charter Communications Holdings LLC:
Step-up Coupon, 0% to 5/15/2006, 11.75% to 5/15/20 | 690,000 | 446,775 |
9.625%, 11/15/2009 (e) | 590,000 | 441,025 |
10.25%, 9/15/2010 | 1,105,000 | 1,121,575 |
Cooper-Standard Automotive, Inc., 144A, 8.375%, 12/15/2014 (e) | 410,000 | 340,300 |
CSC Holdings, Inc., 7.875%, 12/15/2007 | 555,000 | 579,281 |
Dex Media East LLC/Financial, 12.125%, 11/15/2012 | 1,461,000 | 1,749,547 |
Dura Operating Corp.: | | |
Series B, 8.625%, 4/15/2012 (e) | 205,000 | 184,500 |
Series B, 9.0%, 5/1/2009 EUR | 65,000 | 51,991 |
Dyersburg Corp., Series B, 9.75%, 9/1/2007* | 1,085,000 | 0 |
EchoStar DBS Corp., 144A, 6.625%, 10/1/2014 | 100,000 | 100,250 |
Friendly Ice Cream Corp., 8.375%, 6/15/2012 (e) | 45,000 | 42,300 |
General Motors Corp., 8.25%, 7/15/2023 (e) | 65,000 | 49,436 |
Imperial Home Decor Group, Inc., Series B, 11.0%, 3/15/2008* | 150,000 | 0 |
Interep National Radio Sales, Inc., Series B, 10.0%, 7/1/2008 (e) | 275,000 | 228,250 |
ITT Corp., 7.375%, 11/15/2015 | 410,000 | 450,488 |
Jacobs Entertainment, Inc.: | | |
11.875%, 2/1/2009 | 680,000 | 731,000 |
144A, 11.875%, 2/1/2009 | 270,000 | 290,250 |
Levi Strauss & Co., 144A, 7.73%**, 4/1/2012 (e) | 170,000 | 157,675 |
Mediacom LLC, 9.5%, 1/15/2013 (e) | 510,000 | 506,175 |
MGM MIRAGE: | | |
8.375%, 2/1/2011 (e) | 685,000 | 739,800 |
9.75%, 6/1/2007 | 230,000 | 248,688 |
MTR Gaming Group, Inc., Series B, 9.75%, 4/1/2010 | 145,000 | 157,325 |
NCL Corp., 144A, 10.625%, 7/15/2014 | 380,000 | 387,600 |
Norcraft Holdings/Capital, Step-up Coupon, 0% to 9/1/2008, 9.75% to 9/1/2012 | 470,000 | 305,500 |
Paxson Communications Corp.: | | |
Step-up Coupon, 0% to 1/15/2006, 12.25% to 1/15/2009 (e) | 135,000 | 124,875 |
10.75%, 7/15/2008 (e) | 140,000 | 137,200 |
Petro Stopping Centers, 9.0%, 2/15/2012 | 590,000 | 592,950 |
Pinnacle Entertainment, Inc., 8.75%, 10/1/2013 (e) | 300,000 | 312,000 |
Premier Entertainment Biloxi LLC/Finance, 10.75%, 2/1/2012 | 355,000 | 351,450 |
PRIMEDIA, Inc.: | | |
8.638%**, 5/15/2010 | 575,000 | 603,750 |
8.875%, 5/15/2011 | 515,000 | 540,750 |
Remington Arms Co., Inc., 10.5%, 2/1/2011 (e) | 200,000 | 191,000 |
Renaissance Media Group LLC, 10.0%, 4/15/2008 | 325,000 | 325,406 |
Resorts International Hotel & Casino, Inc., 11.5%, 3/15/2009 | 435,000 | 493,725 |
Restaurant Co., 11.25%, 5/15/2008 | 414,036 | 414,036 |
Schuler Homes, Inc., 10.5%, 7/15/2011 (e) | 765,000 | 855,729 |
Simmons Bedding Co.: | | |
144A, Step-up Coupon, 0% to 12/15/2009, 10.0% to 12/15/2014 | 800,000 | 352,000 |
7.875%, 1/15/2014 | 155,000 | 136,400 |
Sinclair Broadcast Group, Inc.: | | |
8.0%, 3/15/2012 (e) | 605,000 | 627,687 |
8.75%, 12/15/2011 | 785,000 | 832,100 |
Sonic Automotive, Inc., Series B, 8.625%, 8/15/2013 (e) | 305,000 | 299,281 |
Toys "R" Us, Inc., 7.375%, 10/15/2018 | 580,000 | 464,000 |
Trump Entertainment Resort, Inc., 8.5%, 6/1/2015 | 600,000 | 583,500 |
TRW Automotive, Inc.: | | |
11.0%, 2/15/2013 (e) | 555,000 | 607,725 |
11.75%, 2/15/2013 EUR | 120,000 | 166,863 |
United Auto Group, Inc., 9.625%, 3/15/2012 | 495,000 | 519,750 |
Visteon Corp., 7.0%, 3/10/2014 (e) | 290,000 | 242,150 |
Wheeling Island Gaming, Inc., 10.125%, 12/15/2009 | 155,000 | 164,300 |
Williams Scotsman, Inc., 9.875%, 6/1/2007 (e) | 750,000 | 738,750 |
Wynn Las Vegas LLC, 144A, 6.625%, 12/1/2014 | 480,000 | 460,800 |
XM Satellite Radio, Inc.: Step-up Coupon, 0% to 12/31/2005, 14.0% to 12/31/2009 | 490,003 | 501,028 |
12.0%, 6/15/2010 | 25,000 | 27,938 |
Young Broadcasting, Inc.: 8.75%, 1/15/2014 (e) | 550,000 | 497,750 |
10.0%, 3/1/2011 | 125,000 | 123,437 |
| 23,812,711 |
Consumer Staples 1.8% |
Agrilink Foods, Inc., 11.875%, 11/1/2008 | 167,000 | 172,845 |
Alliance One International, Inc.: | | |
144A, 11.0%, 5/15/2012 | 495,000 | 503,662 |
144A, 12.75%, 11/15/2012 | 140,000 | 130,200 |
Del Laboratories, Inc., 144A, 8.0%, 2/1/2012 | 200,000 | 170,000 |
Duane Reade, Inc., 9.75%, 8/1/2011 (e) | 215,000 | 165,550 |
GNC Corp.: 8.5%, 12/1/2010 | 150,000 | 114,375 |
144A, 8.625%, 1/15/2011 | 25,000 | 22,500 |
National Beef Packing Co., 10.5%, 8/1/2011 (e) | 130,000 | 124,800 |
North Atlantic Trading Co., 9.25%, 3/1/2012 (e) | 810,000 | 583,200 |
Pinnacle Foods Holding Corp., 8.25%, 12/1/2013 (e) | 327,000 | 279,585 |
Rite Aid Corp., 11.25%, 7/1/2008 | 495,000 | 520,988 |
Swift & Co.: | | |
10.125%, 10/1/2009 | 365,000 | 396,938 |
12.5%, 1/1/2010 | 90,000 | 100,800 |
Viskase Co., Inc., 11.5%, 6/15/2011 | 185,000 | 196,100 |
| 3,481,543 |
Energy 3.3% |
Belden & Blake Corp., 8.75%, 7/15/2012 | 455,000 | 411,775 |
Chesapeake Energy Corp.: | | |
6.875%, 1/15/2016 | 105,000 | 109,725 |
9.0%, 8/15/2012 | 230,000 | 255,875 |
CITGO Petroleum Corp., 6.0%, 10/15/2011 | 485,000 | 475,300 |
Dynegy Holdings, Inc.: | | |
6.875%, 4/1/2011 (e) | 135,000 | 128,250 |
7.125%, 5/15/2018 | 455,000 | 409,500 |
7.625%, 10/15/2026 (e) | 225,000 | 200,250 |
8.75%, 2/15/2012 | 60,000 | 62,175 |
144A, 9.875%, 7/15/2010 | 490,000 | 532,875 |
El Paso Production Holding Corp., 7.75%, 6/1/2013 | 505,000 | 523,937 |
Key Energy Services, Inc., 6.375%, 5/1/2013 | 155,000 | 151,900 |
Newpark Resources, Inc., Series B, 8.625%, 12/15/2007 | 530,000 | 527,350 |
NGC Corp. Capital Trust I, Series B, 8.316%, 6/1/2027 | 250,000 | 207,500 |
Southern Natural Gas, 8.875%, 3/15/2010 | 405,000 | 441,130 |
Stone Energy Corp.: | | |
6.75%, 12/15/2014 | 250,000 | 237,500 |
8.25%, 12/15/2011 | 615,000 | 633,450 |
Whiting Petroleum Corp.: | | |
7.25%, 5/1/2012 | 25,000 | 25,063 |
7.25%, 5/1/2013 (e) | 40,000 | 39,800 |
Williams Companies, Inc.: | | |
8.125%, 3/15/2012 (e) | 745,000 | 838,125 |
8.75%, 3/15/2032 | 230,000 | 269,675 |
| 6,481,155 |
Financials 4.4% |
AAC Group Holding Corp., 144A, Step-up Coupon, 0% to 10/1/2008, 10.25% to 10/1/2012 | 85,000 | 54,400 |
Affinia Group, Inc., 144A, 9.0%, 11/30/2014 | 535,000 | 438,700 |
Alamosa Delaware, Inc., Step-up Coupon, 0% to 7/31/2005, 12.0% to 7/31/2009 | 227,000 | 247,998 |
AmeriCredit Corp., 9.25%, 5/1/2009 (e) | 880,000 | 941,600 |
Atlantic Mutual Insurance Co., 144A, 8.15%, 2/15/2028 | 170,000 | 110,356 |
BF Saul Real Estate Investment Trust, 7.5%, 3/1/2014 | 175,000 | 181,125 |
E*TRADE Financial Corp., 8.0%, 6/15/2011 | 400,000 | 418,000 |
FINOVA Group, Inc., 7.5%, 11/15/2009 | 1,177,300 | 500,352 |
FRD Acquisition Co., Series B, 12.5%, 7/15/2004* | 80,000 | 0 |
General Motors Acceptance Corp.: | | |
4.13%**, 3/20/2007 | 425,000 | 406,385 |
6.125%, 8/28/2007 (e) | 135,000 | 132,033 |
6.75%, 12/1/2014 (e) | 205,000 | 173,877 |
6.875%, 9/15/2011 | 70,000 | 61,046 |
8.0%, 11/1/2031 | 1,550,000 | 1,296,609 |
H&E Equipment/Finance, 11.125%, 6/15/2012 | 345,000 | 376,912 |
Poster Financial Group, Inc., 8.75%, 12/1/2011 (e) | 390,000 | 392,925 |
PXRE Capital Trust I, 8.85%, 2/1/2027 | 345,000 | 357,075 |
Qwest Capital Funding, Inc., 6.5%, 11/15/2018 | 145,000 | 110,925 |
R.H. Donnelly Finance Corp., 10.875%, 12/15/2012 | 295,000 | 341,463 |
RC Royalty Subordinated LLC, 7.0%, 1/1/2018 | 240,000 | 220,800 |
TIG Capital Holdings Trust, 144A, 8.597%, 1/15/2027 | 480,000 | 376,800 |
Triad Acquisition, 144A, 11.125%, 5/1/2013 | 250,000 | 248,750 |
UGS Corp., 144A, 10.0%, 6/1/2012 | 485,000 | 533,500 |
Universal City Development, 11.75%, 4/1/2010 | 615,000 | 694,950 |
| 8,616,581 |
Health Care 1.5% |
Cinacalcet Royalty Subordinated LLC, 8.0%, 3/30/2017 | 275,000 | 283,250 |
Encore Medical Corp., 9.75%, 10/1/2012 | 250,000 | 230,000 |
Hanger Orthopedic Group, Inc., 10.375%, 2/15/2009 (e) | 175,000 | 163,625 |
HEALTHSOUTH Corp., 10.75%, 10/1/2008 (e) | 520,000 | 536,900 |
InSight Health Services Corp., Series B, 9.875%, 11/1/2011 | 330,000 | 282,150 |
Tenet Healthcare Corp.: | | |
6.375%, 12/1/2011 | 485,000 | 465,600 |
144A, 9.25%, 2/1/2015 | 950,000 | 978,500 |
| 2,940,025 |
Industrials 7.4% |
Aavid Thermal Technologies, Inc., 12.75%, 2/1/2007 | 580,000 | 612,625 |
Allied Security Escrow Corp., 11.375%, 7/15/2011 | 370,000 | 351,500 |
Allied Waste North America, Inc.: | | |
Series B, 5.75%, 2/15/2011 (e) | 905,000 | 843,912 |
Series B, 9.25%, 9/1/2012 | 403,000 | 433,225 |
Avondale Mills, Inc., 144A, 10.093%**, 7/1/2012 | 370,000 | 347,800 |
Bear Creek Corp., 144A, 7.873%**, 3/1/2012 | 195,000 | 189,150 |
Beazer Homes USA, Inc.: | | |
8.375%, 4/15/2012 | 115,000 | 122,475 |
8.625%, 5/15/2011 | 95,000 | 100,463 |
Browning-Ferris Industries: | | |
7.4%, 9/15/2035 | 490,000 | 414,050 |
9.25%, 5/1/2021 | 135,000 | 134,663 |
Cenveo Corp., 7.875%, 12/1/2013 (e) | 375,000 | 355,313 |
Collins & Aikman Floor Cover, Series B, 9.75%, 2/15/2010 | 720,000 | 756,000 |
Columbus McKinnon Corp., 10.0%, 8/1/2010 | 265,000 | 283,550 |
Congoleum Corp., 8.625%, 8/1/2008* | 280,000 | 270,200 |
Cornell Companies, Inc., 10.75%, 7/1/2012 | 360,000 | 363,600 |
Dana Corp., 7.0%, 3/1/2029 | 400,000 | 334,642 |
Erico International Corp., 8.875%, 3/1/2012 | 160,000 | 163,561 |
Evergreen International Aviation, Inc., 12.0%, 5/15/2010 (e) | 120,000 | 83,400 |
Goodman Global Holding Co., Inc., 144A, 7.875%, 12/15/2012 (e) | 540,000 | 486,000 |
HydroChem Industrial Services, Inc., 144A, 9.25%, 2/15/2013 | 70,000 | 64,400 |
ISP Chemco, Inc., Series B, 10.25%, 7/1/2011 | 680,000 | 732,700 |
Joy Global, Inc., Series B, 8.75%, 3/15/2012 | 130,000 | 145,600 |
K. Hovnanian Enterprises, Inc., 8.875%, 4/1/2012 | 265,000 | 282,225 |
Kansas City Southern: | | |
7.5%, 6/15/2009 | 135,000 | 139,387 |
9.5%, 10/1/2008 | 840,000 | 916,650 |
Kinetek, Inc., Series D, 10.75%, 11/15/2006 | 665,000 | 605,150 |
Laidlaw International, Inc., 10.75%, 6/15/2011 | 425,000 | 480,781 |
Metaldyne Corp., 144A, 10.0%, 11/1/2013 (e) | 410,000 | 344,400 |
Millennium America, Inc., 9.25%, 6/15/2008 | 765,000 | 824,288 |
NTK Holdings, Inc., 144A, Step-up Coupon, 0% to 9/1/2009, 10.75% to 3/1/2014 (e) | 345,000 | 155,250 |
Rainbow National Services LLC, 144A, 10.375%, 9/1/2014 | 275,000 | 313,500 |
Securus Technologies, Inc., 144A, 11.0%, 9/1/2011 | 290,000 | 261,000 |
Ship Finance International Ltd., 8.5%, 12/15/2013 | 480,000 | 460,800 |
Technical Olympic USA, Inc.: | | |
7.5%, 3/15/2011 | 195,000 | 183,300 |
10.375%, 7/1/2012 | 580,000 | 614,800 |
The Brickman Group Ltd., Series B, 11.75%, 12/15/2009 | 235,000 | 265,550 |
United Rentals North America, Inc., 7.0%, 2/15/2014 (e) | 820,000 | 781,050 |
Westlake Chemical Corp., 8.75%, 7/15/2011 | 219,000 | 237,615 |
Xerox Capital Trust I, 8.0%, 2/1/2027 | 125,000 | 129,375 |
| 14,583,950 |
Information Technology 1.5% |
Activant Solutions, Inc.: | | |
144A, 9.09%**, 4/1/2010 | 130,000 | 131,950 |
10.5%, 6/15/2011 (e) | 350,000 | 367,500 |
Eschelon Operating Co.: | | |
8.375%, 3/15/2010 | 75,000 | 65,625 |
8.376%, 3/15/2010 | 105,000 | 91,875 |
Lucent Technologies, Inc.: | | |
6.45%, 3/15/2029 | 765,000 | 661,725 |
7.25%, 7/15/2006 (e) | 130,000 | 132,600 |
Sanmina-SCI Corp.: | | |
144A, 6.75%, 3/1/2013 | 1,040,000 | 982,800 |
10.375%, 1/15/2010 | 335,000 | 370,175 |
Viasystems, Inc., 10.5%, 1/15/2011 | 95,000 | 84,550 |
| 2,888,800 |
Materials 7.2% |
Aqua Chemical, Inc., 11.25%, 7/1/2008 | 170,000 | 145,350 |
ARCO Chemical Co., 9.8%, 2/1/2020 | 1,340,000 | 1,500,800 |
Associated Materials, Inc., Step-up Coupon, 0% to 3/1/2009, 11.25% to 3/1/2014 | 915,000 | 539,850 |
Caraustar Industries, Inc., 9.875%, 4/1/2011 (e) | 825,000 | 785,812 |
Constar International, Inc., 144A, 6.643%**, 2/15/2012 | 175,000 | 165,375 |
Dayton Superior Corp.: | | |
10.75%, 9/15/2008 | 305,000 | 309,575 |
13.0%, 6/15/2009 (e) | 660,000 | 554,400 |
Edgen Acquisition Corp., 144A, 9.875%, 2/1/2011 | 210,000 | 201,600 |
GEO Specialty Chemicals, Inc., 11.06%, 12/31/2009 | 309,000 | 327,540 |
Georgia-Pacific Corp.: | | |
8.0%, 1/15/2024 (e) | 715,000 | 820,462 |
9.375%, 2/1/2013 | 335,000 | 379,388 |
Hercules, Inc., 6.75%, 10/15/2029* | 325,000 | 316,875 |
Huntsman Advanced Materials LLC, 144A, 11.0%, 7/15/2010 | 435,000 | 495,900 |
Huntsman LLC, 11.625%, 10/15/2010 | 513,000 | 589,950 |
IMC Global, Inc.: | | |
7.375%, 8/1/2018 | 125,000 | 125,312 |
10.875%, 8/1/2013 | 373,000 | 434,545 |
Intermet Corp., 9.75%, 6/15/2009* (e) | 100,000 | 47,000 |
MMI Products, Inc., Series B, 11.25%, 4/15/2007 | 375,000 | 371,250 |
Neenah Corp.: | | |
144A, 11.0%, 9/30/2010 | 624,000 | 677,040 |
144A, 13.0%, 9/30/2013 | 325,879 | 329,138 |
NewPage Corp., 144A, 9.46%**, 5/1/2012 (e) | 365,000 | 357,700 |
Omnova Solutions, Inc., 11.25%, 6/1/2010 | 665,000 | 691,600 |
Oregon Steel Mills, Inc., 10.0%, 7/15/2009 (e) | 145,000 | 156,600 |
Oxford Automotive, Inc., 144A, 12.0%, 10/15/2010* (e) | 618,158 | 309,079 |
Pliant Corp.: | | |
144A, 11.625%, 6/15/2009 (PIK) | 30 | 32 |
11.125%, 9/1/2009 | 275,000 | 265,375 |
Portola Packaging, Inc., 8.25%, 2/1/2012 (e) | 465,000 | 296,438 |
Radnor Holdings Corp., 11.0%, 3/15/2010 (e) | 610,000 | 446,825 |
Rockwood Specialties Group, Inc., 144A, 7.625%,
11/15/2014 EUR | 305,000 | 369,688 |
Sheffield Steel Corp., 11.375%, 8/15/2011 (e) | 190,000 | 186,675 |
Texas Industries, Inc., 10.25%, 6/15/2011 | 345,000 | 391,575 |
TriMas Corp., 9.875%, 6/15/2012 | 900,000 | 729,000 |
UAP Holding Corp., Step-up Coupon, 0.0% to 1/15/2008, 10.75% to 7/15/2012 | 335,000 | 268,000 |
United States Steel Corp., 9.75%, 5/15/2010 | 430,000 | 469,775 |
United States Steel LLC, 10.75%, 8/1/2008 | 50,000 | 56,500 |
| 14,112,024 |
Telecommunication Services 4.9% |
AirGate PCS, Inc., 6.891%**, 10/15/2011 | 175,000 | 178,500 |
American Cellular Corp., Series B, 10.0%, 8/1/2011 (e) | 505,000 | 492,375 |
AT&T Corp.: | | |
7.3%, 11/15/2011 | 392,000 | 450,310 |
8.0%, 11/15/2031 | 485,000 | 615,950 |
Cincinnati Bell, Inc.: | | |
7.25%, 7/15/2013 (e) | 135,000 | 135,000 |
8.375%, 1/15/2014 (e) | 1,170,000 | 1,158,300 |
144A, 8.375%, 1/15/2014 | 115,000 | 113,850 |
Crown Castle International Corp., 9.375%, 8/1/2011 | 285,000 | 314,569 |
Dobson Communications Corp., 8.875%, 10/1/2013 | 305,000 | 250,100 |
Insight Midwest LP, 9.75%, 10/1/2009 (e) | 185,000 | 192,862 |
LCI International, Inc., 7.25%, 6/15/2007 | 480,000 | 451,200 |
Level 3 Financing, Inc., 144A, 10.75%, 10/15/2011 (e) | 95,000 | 79,562 |
MCI, Inc., 7.735%, 5/1/2014 | 630,000 | 705,600 |
Nextel Communications, Inc.: | | |
5.95%, 3/15/2014 (e) | 410,000 | 419,225 |
7.375%, 8/1/2015 | 1,160,000 | 1,254,250 |
Nextel Partners, Inc., 8.125%, 7/1/2011 | 300,000 | 326,250 |
Northern Telecom Capital, 7.875%, 6/15/2026 | 100,000 | 97,500 |
Qwest Corp., 7.25%, 9/15/2025 | 480,000 | 432,000 |
Qwest Services Corp.: | | |
144A, 13.5%, 12/15/2010 | 975,000 | 1,111,500 |
144A, 14.5%, 12/15/2014 | 160,000 | 189,200 |
Rural Cellular Corp., 9.875%, 2/1/2010 (e) | 65,000 | 64,188 |
SBA Telecom, Inc., Step-up Coupon, 0% to 12/15/2007, 9.75% to 12/15/2011 | 120,000 | 105,000 |
Triton PCS, Inc., 8.5%, 6/1/2013 (e) | 110,000 | 98,450 |
Ubiquitel Operating Co., 9.875%, 3/1/2011 | 120,000 | 129,600 |
US Unwired, Inc., Series B, 10.0%, 6/15/2012 | 245,000 | 268,275 |
Western Wireless Corp., 9.25%, 7/15/2013 | 60,000 | 68,400 |
| 9,702,016 |
Utilities 4.2% |
AES Corp., 144A, 8.75%, 5/15/2013 | 685,000 | 760,350 |
Allegheny Energy Supply Co. LLC: | | |
144A, 8.25%, 4/15/2012 (e) | 1,010,000 | 1,099,638 |
144A, 10.25%, 11/15/2007 | 60,000 | 66,900 |
Calpine Corp.: | | |
8.25%, 8/15/2005 (e) | 205,000 | 196,800 |
144A, 8.5%, 7/15/2010 (e) | 580,000 | 420,500 |
CMS Energy Corp.: | | |
7.5%, 1/15/2009 (e) | 85,000 | 88,188 |
8.5%, 4/15/2011 | 475,000 | 516,562 |
9.875%, 10/15/2007 | 680,000 | 737,800 |
DPL, Inc., 6.875%, 9/1/2011 | 395,000 | 422,650 |
Mission Energy Holding Co., 13.5%, 7/15/2008 | 1,240,000 | 1,463,200 |
NorthWestern Corp., 144A, 5.875%, 11/1/2014 | 115,000 | 116,150 |
NRG Energy, Inc., 144A, 8.0%, 12/15/2013 | 1,060,000 | 1,118,300 |
PSE&G Energy Holdings LLC: | | |
8.5%, 6/15/2011 | 420,000 | 449,400 |
10.0%, 10/1/2009 | 725,000 | 804,750 |
| 8,261,188 |
Total Corporate Bonds (Cost $99,400,306) | 94,879,993 |
Foreign Bonds — US$ Denominated 56.5% |
Consumer Discretionary 1.6% |
Advertising Directory Solutions, Inc., 144A, 9.25%, 11/15/2012 | 310,000 | 324,725 |
Jafra Cosmetics International, Inc., 10.75%, 5/15/2011 | 586,000 | 653,390 |
Kabel Deutschland GmbH, 144A, 10.625%, 7/1/2014 | 450,000 | 480,375 |
Shaw Communications, Inc., 8.25%, 4/11/2010 | 735,000 | 808,500 |
Telenet Group Holding NV, 144A, Step-up Coupon, 0% to 12/15/2008, 11.5% to 6/15/2014 | 675,000 | 502,875 |
Vitro Envases Norteamerica SA, 144A, 10.75%, 7/23/2011 | 55,000 | 53,487 |
Vitro SA de CV, Series A, 144A, 11.75%, 11/1/2013 (e) | 440,000 | 375,100 |
| 3,198,452 |
Consumer Staples 0.3% |
Burns Philp Capital Property Ltd., 10.75%, 2/15/2011 | 390,000 | 430,950 |
Grupo Cosan SA, 144A, 9.0%, 11/1/2009 | 115,000 | 117,587 |
| 548,537 |
Energy 5.2% |
Luscar Coal Ltd., 9.75%, 10/15/2011 | 470,000 | 512,300 |
OAO Gazprom, 144A, 9.625%, 3/1/2013 | 680,000 | 816,000 |
Pemex Project Funding Master Trust: | | |
7.375%, 12/15/2014 | 800,000 | 896,400 |
8.0%, 11/15/2011 | 1,800,000 | 2,047,500 |
144A, 9.5%, 9/15/2027 | 330,000 | 424,875 |
9.5%, 9/15/2027 | 2,800,000 | 3,612,000 |
Petroleum Geo-Services ASA, 10.0%, 11/5/2010 | 1,405,020 | 1,559,572 |
Secunda International Ltd., 11.141%**, 9/1/2012 | 305,000 | 288,225 |
| 10,156,872 |
Financials 0.5% |
Conproca SA de CV, 12.0%, 6/16/2010 | 235,000 | 289,050 |
Eircom Funding, 8.25%, 8/15/2013 | 305,000 | 320,250 |
New ASAT (Finance) Ltd., 9.25%, 2/1/2011 | 338,000 | 288,990 |
| 898,290 |
Health Care 0.2% |
Biovail Corp., 7.875%, 4/1/2010 (e) | 495,000 | 498,713 |
Industrials 1.5% |
CP Ships Ltd., 10.375%, 7/15/2012 | 380,000 | 425,600 |
Grupo Transportacion Ferroviaria Mexicana SA de CV: | | |
144A, 9.375%, 5/1/2012 | 420,000 | 434,700 |
10.25%, 6/15/2007 | 845,000 | 904,150 |
12.5%, 6/15/2012 (e) | 322,000 | 376,740 |
J. Ray McDermott, SA, 144A, 11.5%, 12/15/2013 | 275,000 | 299,750 |
LeGrand SA, 8.5%, 2/15/2025 | 255,000 | 303,450 |
Stena AB: | | |
7.0%, 12/1/2016 | 95,000 | 86,925 |
9.625%, 12/1/2012 | 180,000 | 196,650 |
| 3,027,965 |
Materials 2.2% |
Alrosa Finance SA, 144A, 8.875%, 11/17/2014 (e) | 235,000 | 254,975 |
Cascades, Inc.: | | |
7.25%, 2/15/2013 | 490,000 | 477,750 |
144A, 7.25%, 2/15/2013 | 15,000 | 14,625 |
Crown Euro Holdings SA, 10.875%, 3/1/2013 | 270,000 | 311,512 |
ISPAT Inland ULC, 9.75%, 4/1/2014 (e) | 476,000 | 554,540 |
Novelis, Inc., 144A, 7.25%, 2/15/2015 | 70,000 | 68,600 |
Rhodia SA, 8.875%, 6/1/2011 (e) | 975,000 | 936,000 |
Sino-Forest Corp., 144A, 9.125%, 8/17/2011 | 15,000 | 16,013 |
Tembec Industries, Inc.: | | |
8.5%, 2/1/2011 (e) | 1,530,000 | 1,170,450 |
8.625%, 6/30/2009 (e) | 650,000 | 526,500 |
| 4,330,965 |
Emerging Market Sovereign Bonds 42.9% |
Aries Vermogensverwaltung GmbH, Series C, 9.6%, 10/25/2014 | 3,750,000 | 4,820,325 |
Central Bank of Nigeria, Series WW, 6.25%, 11/15/2020 | 3,250,000 | 3,136,250 |
Dominican Republic: | | |
Floating Rate Note Debt Conversion Bond, LIBOR plus ..8125%, 3.5%**, 8/30/2024 | 250,000 | 222,500 |
9.04%, 1/23/2018 | 1,790,000 | 1,790,000 |
144A, 9.04%, 1/23/2018 | 190,000 | 190,000 |
9.5%, 9/27/2011 | 1,590,000 | 1,681,425 |
Federative Republic of Brazil: | | |
8.875%, 10/14/2019 | 285,000 | 297,397 |
9.25%, 10/22/2010 | 660,000 | 731,280 |
11.0%, 1/11/2012 | 2,280,000 | 2,698,380 |
11.0%, 8/17/2040 | 3,780,000 | 4,488,750 |
14.5%, 10/15/2009 | 3,000,000 | 3,907,500 |
Republic of Argentina, 8.28%, 12/31/2033 | 5,828,384 | 5,050,295 |
Republic of Bulgaria, 8.25%, 1/15/2015 | 3,090,000 | 3,866,517 |
Republic of Colombia, 10.75%, 1/15/2013 | 1,000,000 | 1,187,500 |
Republic of Indonesia, 7.25%, 4/20/2015 | 2,670,000 | 2,653,446 |
Republic of Panama, 9.375%, 1/16/2023 | 1,100,000 | 1,331,000 |
Republic of Peru, 9.875%, 2/6/2015 | 800,000 | 972,800 |
Republic of Philippines: | | |
8.375%, 2/15/2011 | 800,000 | 826,000 |
9.375%, 1/18/2017 | 4,030,000 | 4,342,325 |
9.5%, 2/2/2030 | 1,600,000 | 1,638,000 |
9.875%, 1/15/2019 | 1,050,000 | 1,137,938 |
Republic of Turkey: | | |
7.375%, 2/5/2025 | 2,860,000 | 2,774,200 |
11.5%, 1/23/2012 | 2,500,000 | 3,112,500 |
11.75%, 6/15/2010 | 4,600,000 | 5,658,000 |
11.875%, 1/15/2030 | 1,300,000 | 1,802,125 |
Republic of Uruguay: | | |
7.25%, 2/15/2011 | 620,000 | 604,500 |
9.25%, 5/17/2017 | 2,240,000 | 2,324,000 |
Republic of Venezuela: | | |
Floating Rate Note Debt Conversion Bond, LIBOR plus ..100, 4.15%**, 4/20/2011 | 400,000 | 358,800 |
Series A, Collateralized Par Bond, 6.75%, 3/31/2020 | 2,300,000 | 2,295,400 |
9.25%, 9/15/2027 | 1,800,000 | 1,809,900 |
10.75%, 9/19/2013 (e) | 1,110,000 | 1,259,850 |
Russian Federation, Step-up Coupon, 5.0% to 3/31/2007, 7.5% to 3/31/2030 | 5,300,000 | 5,817,810 |
Russian Ministry of Finance: | | |
Series V, 3.0%, 5/14/2008 | 3,200,000 | 2,996,480 |
Series VII, 3.0%, 5/14/2011 | 2,980,000 | 2,580,680 |
United Mexican States: | | |
Series A, 6.625%, 3/3/2015 | 2,230,000 | 2,439,620 |
8.3%, 8/15/2031 | 200,000 | 247,000 |
Series A, 9.875%, 2/1/2010 | 800,000 | 969,200 |
| 84,019,693 |
Telecommunication Services 2.1% |
Alestra SA de RL de CV, 8.0%, 6/30/2010 | 140,000 | 122,850 |
Axtel SA: | | |
11.0%, 12/15/2013 | 255,000 | 272,850 |
144A, 11.0%, 12/15/2013 | 50,000 | 53,500 |
Embratel, Series B, 11.0%, 12/15/2008 (e) | 198,000 | 225,225 |
Esprit Telecom Group PLC: | | |
10.875%, 6/15/2008* | 200,000 | 0 |
11.5%, 12/15/2007* | 550,000 | 0 |
Global Crossing UK Finance, 144A, 10.75%, 12/15/2014 | 340,000 | 300,050 |
Grupo Iusacell SA de CV, Series B, 10.0%, 12/29/2004* | 70,000 | 49,000 |
Intelsat Bermuda Ltd., 144A, 7.805%**, 1/15/2012 | 210,000 | 213,150 |
Millicom International Cellular SA, 10.0%, 12/1/2013 | 650,000 | 630,500 |
Mobifon Holdings BV, 12.5%, 7/31/2010 | 620,000 | 750,200 |
Mobile Telesystems Financial, 144A, 8.375%, 10/14/2010 | 60,000 | 61,500 |
Nortel Networks Corp., 6.875%, 9/1/2023 | 125,000 | 113,125 |
Nortel Networks Ltd., 6.125%, 2/15/2006 | 1,235,000 | 1,241,175 |
Rogers Wireless Communications, Inc., 6.375%, 3/1/2014 (e) | 10,000 | 9,950 |
| 4,043,075 |
Total Foreign Bonds — US$ Denominated (Cost $108,886,457) | 110,722,562 |
|
Foreign Bonds — Non US$ Denominated 11.2% |
Consumer Discretionary 0.3% |
IESY Repository GMBH, 144A, 8.75%, 2/15/2015 EUR | 260,000 | 287,948 |
Victoria Acquisition III BV, 144A, 7.875%, 10/1/2014 EUR | 215,000 | 240,757 |
| 528,705 |
Industrials 0.1% |
Grohe Holdings GmbH, 144A, 8.625%, 10/1/2014 EUR | 195,000 | 231,559 |
Emerging Market Sovereign Bonds 10.8% |
Aries Vermogensverwaltung GmbH, Series B, 7.75%, 10/25/2009 EUR | 750,000 | 1,068,834 |
Government of Malaysia, 4.305%, 2/27/2009 MYR | 8,800,000 | 2,382,732 |
Government of Poland, Zero Coupon, 4/12/2006 PLZ | 8,400,000 | 2,370,896 |
Mexican Bonds: | | |
Series M-20, 8.0%, 12/7/2023 MXN | 29,100,000 | 2,233,762 |
Series MI-10, 8.0%, 12/19/2013 MXN | 4,642,500 | 385,541 |
Series MI-10, 9.5%, 12/18/2014 MXN | 1,418,000 | 128,728 |
Series M-20, 10.0%, 12/5/2024 MXN | 17,600,000 | 1,623,630 |
Republic of Argentina: | | |
5.83%, 12/31/2033 ARS | 10,824,673 | 3,715,288 |
7.82%, 12/31/2033 EUR | 2,061,736 | 2,143,822 |
Republic of Colombia, 12.0%, 10/22/2015 COP | 2,805,000,000 | 1,169,164 |
Republic of Peru, 7.5%, 10/14/2014 EUR | 900,000 | 1,226,550 |
Republic of Romania, 8.5%, 5/8/2012 EUR | 1,680,000 | 2,687,521 |
| 21,136,468 |
Total Foreign Bonds — Non US$ Denominated (Cost $21,084,757) | 21,896,732 |
Convertible Bond 0.3% |
Consumer Discretionary |
DIMON, Inc., 6.25%, 3/31/2007 | 475,000 | 475,000 |
HIH Capital Ltd.: | | |
144A, Series DOM, 7.5%, 9/25/2006 | 190,000 | 188,100 |
144A, Series EURO, 7.5%, 9/25/2006 | 35,000 | 34,650 |
Total Convertible Bond (Cost $663,807) | 697,750 |
|
US Government Backed 0.6% |
US Treasury Bond, 12.0%, 8/15/2013 (e) (Cost $1,446,406) | 1,000,000 | 1,249,336 |
| Units | Value ($) |
| |
Other Investments 0.2% |
Hercules, Inc., (Bond Unit)* | 570,000 | 444,600 |
SpinCycle, Inc., "F" (Common Stock Unit)* | 24 | 26 |
SpinCycle, Inc., (Common Stock Unit)* | 3,456 | 3,802 |
Total Other Investments (Cost $463,684) | 448,428 |
| Shares | Value ($) |
| |
Common Stocks 0.1% |
Catalina Restaurant Group, Inc.* | 1,474 | 2,358 |
GEO Specialty Chemicals, Inc.* | 7,125 | 92,625 |
GEO Specialty Chemicals, Inc., 144A* | 649 | 9,735 |
IMPSAT Fiber Networks, Inc.* | 8,203 | 45,117 |
Total Common Stocks (Cost $578,571) | 149,835 |
|
Warrants 0.0% |
Dayton Superior Corp., 144A* | 25 | 0 |
DeCrane Aircraft Holdings, Inc., 144A* | 350 | 0 |
Destia Communications, Inc., 144A* | 370 | 0 |
TravelCenters of America, Inc.* | 85 | 11 |
Total Warrants (Cost $429) | 11 |
| Shares | Value ($) |
| |
Preferred Stocks 0.4% |
Paxson Communications Corp., 14.25% (PIK) | 65 | 428,206 |
TNP Enterprises, Inc., 14.5%, "D" (PIK) | 292 | 338,720 |
Total Preferred Stocks (Cost $922,081) | 766,926 |
| Principal
Amount ($)(c) | Value ($) |
| |
Loan Participation 0.8% |
Citigroup Global (Severstal), 8.625%, 2/24/2009 | 184,000 | 189,465 |
Republic of Algeria, Floating Rate Debt Conversion Bond, LIBOR plus .8125, 4.003%**, 3/4/2010 | 1,410,000 | 1,402,950 |
Total Loan Participation (Cost $1,549,163) | 1,592,415 |
| Shares | Value ($) |
| |
Securities Lending Collateral 11.9% |
Scudder Daily Assets Fund Institutional, 3.07% (d) (f) (Cost $23,362,285) | 23,362,285 | 23,362,285 |
|
Cash Equivalents 9.1% |
Scudder Cash Management QP Trust, 3.04% (b) (Cost $17,813,695) | 17,813,695 | 17,813,695 |
| % of Net Assets | Value ($) |
| |
Total Investment Portfolio (Cost $276,171,641) (a) | 139.5 | 273,579,968 |
Other Assets and Liabilities, Net | (8.9) | (17,516,749) |
Notes payable | (30.6) | (60,000,000) |
Net Assets | 100.0 | 196,063,219 |
* Non-income producing security. In the case of a bond, generally denotes that the issuer has defaulted on the payment of principal or interest or has filed for bankruptcy.
The following table represents bonds that are in default:
Security | Coupon | Maturity Date | Principal Amount ($) | Acquisition Cost ($) | Value ($) |
Congoleum Corp. | 8.625 | 8/1/2008 | USD | 280,000 | 278,107 | 270,200 |
Dyersburg Corp. | 9.75 | 9/1/2007 | USD | 1,085,000 | 1,105,200 | 0 |
Esprit Telecom Group PLC: | 10.875 | 6/15/2008 | USD | 200,000 | 198,190 | 0 |
| 11.5 | 12/15/2007 | USD | 550,000 | 554,313 | 0 |
FRD Acquisition Co. | 12.5 | 7/15/2004 | USD | 80,000 | 0 | 0 |
Grupo Iusacell SA de CV | 10.0 | 12/29/2004 | USD | 70,000 | 42,994 | 49,000 |
Imperial Home Decor Group, Inc. | 11.0 | 3/15/2008 | USD | 150,000 | 146,655 | 0 |
Intermet Corp. | 9.75 | 6/15/2009 | USD | 100,000 | 41,000 | 47,000 |
Oxford Automotive, Inc. | 12.0 | 10/15/2010 | USD | 618,158 | 415,667 | 309,079 |
| | | | | $ 2,782,126 | $ 675,279 |
** Floating rate notes are securities whose yields vary with a designated market index or market rate, such as the coupon-equivalent of US Treasury bill rate. These securities are shown at the current rate as of May 31, 2005.
(a) The cost for federal income tax purposes was $277,145,966. At May 31, 2005, net unrealized depreciation for all securities based on tax cost was $3,565,998. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $4,830,158 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $8,396,156.
(b) Scudder Cash Management QP Trust is 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.
(d) Scudder Daily Assets Fund Institutional, an affiliated fund, is managed by Deutsche Asset Management, Inc. The rate shown is the annualized seven-day yield at period end.
(e) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of all securities loaned at May 31, 2005 amounted to $22,958,760, which is 11.7% of net assets.
(f) Represents collateral held in connection with securities lending.
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.
LIBOR: Represents the London InterBank Offered Rate.
PIK: Denotes that all or a portion of income is paid in-kind.
Currency Abbreviations |
ARS | Argentine Peso | MYR | Malaysian Ringgit |
COP | Colombian Peso | PLZ | Polish Zloty |
EUR | Euro | USD | United States Dollar |
MXN | Mexican Peso | | |
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of May 31, 2005 (Unaudited) |
Assets |
Investments: Investments in securities, at value (cost $234,995,661) — including $22,958,760 of securities loaned | $ 232,403,988 |
Investment in Scudder Cash Management QP Trust (cost $17,813,695) | 17,813,695 |
Investment in Scudder Daily Assets Fund Institutional (cost $23,362,285)* | 23,362,285 |
Total investments in securities, at value (cost $276,171,641) | 273,579,968 |
Cash | 82,858 |
Foreign currency, at value (cost $832,972) | 818,103 |
Receivable for investments sold | 12,717,191 |
Interest receivable | 5,995,730 |
Unrealized appreciation on forward foreign currency exchange contracts | 632,414 |
Other assets | 5,724 |
Total assets | 293,831,988 |
Liabilities |
Payable for investments purchased | 13,954,399 |
Notes payable | 60,000,000 |
Interest on notes payable | 43,899 |
Dividends payable | 66,909 |
Payable upon return of securities loaned | 23,362,285 |
Unrealized depreciation on forward foreign currency exchange contracts | 113,733 |
Net payable on closed forward foreign currency exchange contracts | 2,141 |
Accrued management fee | 137,037 |
Other accrued expenses and payables | 88,366 |
Total liabilities | 97,768,769 |
Net assets, at value | $ 196,063,219 |
Net Assets |
Net assets consist of: Undistributed net investment income | 1,660,523 |
Net unrealized appreciation (depreciation) on: Investments | (2,591,673) |
Foreign currency related transactions | 526,007 |
Accumulated net realized gain (loss) | (17,536,719) |
Paid-in capital | 214,005,081 |
Net assets, at value | $ 196,063,219 |
Net Asset Value |
Net Asset Value per share ($196,063,219 ÷ 20,445,081 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 9.59 |
* Represents collateral on securities loaned.
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended May 31, 2005 (Unaudited) |
Investment Income |
Income: Interest | $ 10,190,394 |
Interest — Scudder Cash Management QP Trust | 144,558 |
Securities lending income, including income from Scudder Daily Assets Fund Institutional, net of borrower rebates | 48,532 |
Dividends | 55,661 |
Total Income | 10,439,145 |
Expenses: Management fee | 832,308 |
Services to shareholders | 20,916 |
Custodian fees | 35,917 |
Auditing | 24,388 |
Legal | 8,829 |
Trustees' fees and expenses | 11,563 |
Reports to shareholders | 69,012 |
Interest expense | 859,380 |
Stock exchange listing fees | 13,740 |
Other | 33,910 |
Total expenses, before expense reductions | 1,909,963 |
Expense reductions | (4,018) |
Total expenses, after expense reductions | 1,905,945 |
Net investment income | 8,533,200 |
Realized and Unrealized Gain (Loss) on Investment Transactions |
Net realized gain (loss) from: Investments | 12,162,380 |
Foreign currency related transactions | (851,985) |
| 11,310,395 |
Net unrealized appreciation (depreciation) during the period on: Investments | (12,179,212) |
Foreign currency related transactions | 1,586,057 |
| (10,593,155) |
Net gain (loss) on investment transactions | 717,240 |
Net increase (decrease) in net assets resulting from operations | $ 9,250,440 |
The accompanying notes are an integral part of the financial statements.
Statement of Cash Flows for the six months ended May 31, 2005 (Unaudited) |
Cash Flows from Operating Activities: | |
Investment income received | $ 10,705,572 |
Payment of operating expenses | (1,508,355) |
Payment of interest expense | (823,840) |
Proceeds from sales and maturities of investments | 230,151,316 |
Purchases of investments | (221,810,447) |
Net purchases, sales and maturities of short-term investments | (34,223,940) |
Proceeds received for collateral on securities loaned | 23,362,285 |
Cash provided (used) by operating activities | $ 5,852,591 |
Cash Flows from Financing Activities: |
Distributions paid (net of reinvestment of distributions) | $ (7,778,761) |
Cash provided (used) by financing activities | (7,778,761) |
Increase (decrease) in cash | (1,926,170) |
Cash at beginning of period* | 2,827,131 |
Cash at end of period* | $ 900,961 |
Reconciliation of Net Increase (Decrease) in Net Assets Resulting from Operations to Cash Provided (Used) by Operating Activities: |
Net increase (decrease) in net assets resulting from operations | $ 9,250,440 |
Net (increase) decrease in cost of investments | (8,199,676) |
Net (increase) decrease in unrealized appreciation (depreciation) on investments | 12,179,212 |
(Increase) decrease in interest receivable | 69,383 |
(Increase) decrease in other assets | 64,877 |
(Increase) decrease in receivable for investments sold | (11,951,072) |
Increase (decrease) in payable for investments purchased | 10,454,882 |
(Increase) decrease in appreciation (depreciation) on forward foreign currency exchange contracts | (1,689,836) |
Increase (decrease) in other accrued expenses and payables | (77,374) |
Increase (decrease) in interest on notes payable | (278,275) |
Increase (decrease) in payable upon return of securities loaned | (3,969,970) |
Cash provided (used) by operating activities | $ 5,852,591 |
Non-Cash Financing Activities: |
Reinvestment of distributions | $ 124,130 |
* Includes foreign currency
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets |
Increase (Decrease) in Net Assets | Six Months Ended May 31, 2005 (Unaudited) | Year Ended November 30, 2004 |
Operations: Net investment income | $ 8,533,200 | $ 15,863,845 |
Net realized gain (loss) on investment transactions | 11,310,395 | 5,737,265 |
Net unrealized appreciation (depreciation) during the period on investment transactions | (10,593,155) | 9,089,428 |
Net increase (decrease) in net assets resulting from operations | 9,250,440 | 30,690,538 |
Distributions to shareholders from: Net investment income | (7,969,800) | (15,222,025) |
Fund share transactions: Reinvestment of distributions | 124,130 | — |
Net increase (decrease) in net assets from Fund share transactions | 124,130 | — |
Increase (decrease) in net assets | 1,404,770 | 15,468,513 |
Net assets at beginning of period | 194,658,449 | 179,189,936 |
Net assets at end of period (including undistributed net investment income of $1,660,523 and $1,097,123, respectively) | $ 196,063,219 | $ 194,658,449 |
Other Information |
Shares outstanding at beginning of period | 20,432,247 | 20,432,247 |
Shares issued to shareholders in reinvestment of distributions | 12,834 | — |
Shares outstanding at end of period | 20,445,081 | 20,432,247 |
The accompanying notes are an integral part of the financial statements.
Years Ended November 30, | 2005a | 2004 | 2003 | 2002b | 2001 | 2000 |
Selected Per Share Data |
Net asset value, beginning of period | $ 9.53 | $ 8.77 | $ 7.52 | $ 8.04 | $ 8.27 | $ 9.72 |
Income (loss) from investment operations: |
Net investment incomec | .42 | .78 | .73 | .81 | .89 | 1.01 |
Net realized and unrealized gain (loss) on investment transactions | .03 | .73 | 1.28 | (.49) | (.05) | (1.43) |
Total from investment operations | .45 | 1.51 | 2.01 | .32 | .84 | (.42) |
Less distributions from: Net investment income | (.39) | (.75) | (.76) | (.80) | (1.07) | (1.03) |
Tax return of capital | — | — | — | (.04) | — | — |
Total distributions | (.39) | (.75) | (.76) | (.84) | (1.07) | (1.03) |
Net asset value, end of period | $ 9.59 | $ 9.53 | $ 8.77 | $ 7.52 | $ 8.04 | $ 8.27 |
Market value, end of period | $ 10.41 | $ 9.08 | $ 8.57 | $ 7.33 | $ 8.52 | $ 8.06 |
Total Return |
Based on net asset value (%)d | 4.78** | 18.48 | 28.12 | 4.17 | 10.21 | (3.86) |
Based on market value (%)d | 19.38** | 15.52 | 28.44 | (4.18) | 19.80 | 9.60 |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 196 | 195 | 179 | 153 | 163 | 166 |
Ratio of expenses (%) | 1.92* | 1.60 | 1.52 | 1.66 | 2.08 | 2.20 |
Ratio of expenses excluding interest expense (%) | 1.04* | 1.05 | 1.03 | 1.09 | 1.04 | 1.03 |
Ratio of net investment income (%) | 8.74* | 8.59 | 8.93 | 10.45 | 10.80 | 10.90 |
Portfolio turnover rate (%) | 191* | 187 | 224 | 117 | 31 | 26 |
Total debt outstanding end of period ($ thousands) | 60,000 | 60,000 | 50,500 | 38,000 | 30,000 | 30,000 |
Asset coverage per $1,000 of debte | 4,268 | 4,244 | 4,548 | 5,029 | 6,427 | 6,541 |
a For the six months ended May 31, 2005 (Unaudited). b 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. c Based on average shares outstanding during the period. d 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 from or premium to net asset value at which the Fund's shares trade during the period. e Asset coverage equals the total net assets plus borrowings of the Fund divided by the borrowings outstanding at period end. * Annualized ** Not annualized |
Notes to Financial Statements (Unaudited) |
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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 a broker-dealer. 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 or official closing price reported on the exchange (US or foreign) or over-the-counter market on which the security is 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.
Securities Lending. The Fund may lend securities to financial institutions. The Fund retains beneficial ownership of the securities it has loaned and continues to receive interest and dividends paid by the securities and to participate in any changes in their market value. The Fund requires the borrowers of the securities to maintain collateral with the Fund consisting of liquid, unencumbered assets having a value at least equal to the value of the securities loaned. The Fund may invest the cash collateral into a joint trading account in an affiliated money market fund pursuant to Exemptive Orders issued by the SEC. The Fund receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of fees paid to lending agent. Either the Fund or the borrower may terminate the loan. The Fund is subject to all investment risks associated with the value of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments.
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.
Loan Participations/Assignments. The Fund may invest in US dollar-denominated fixed and floating rate loans ("Loans") arranged through private negotiations between a foreign sovereign entity and one or more financial institutions ("Lenders"). The Fund invests in such Loans in the form of participations in Loans ("Participations") or assignments of all or a portion of loans from third parties ("Assignments"). Participations typically result in the Fund having a contractual relationship only with the Lender, not with the sovereign borrower. The Fund has the right to receive payments of principal, interest and any fees to which it is entitled from the Lender selling the Participation and only upon receipt by the Lender of the payments from the borrower. In connection with purchasing Participations, the Fund generally has no right to enforce compliance by the borrower with the terms of the loan agreement relating to the Loan, nor any rights of set-off against the borrower, and the Fund will not benefit directly from any collateral supporting the Loan in which it has purchased the Participation. As a result, the Fund assumes the credit risk of both the borrower and the Lender that is selling the Participation.
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, 2004, the Fund had a net tax basis capital loss carryforward of approximately $28,000,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until November 30, 2009 ($11,800,000) and November 30, 2010 ($16,200,000), the respective expiration dates, whichever occurs first.
Distribution of Income and Gains. 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.
The tax character of current year distributions, will be determined at the end of the current fiscal year.
Statement of Cash Flows. Information on 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 the Fund's custodian bank at May 31, 2005. Significant non-cash activity from market discount accretion and premium amortization has been excluded from the Statement of Cash Flows.
Contingencies. In the normal course of business, the Fund may enter into contracts with service providers that contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet been made. However, based on experience, the Fund expects the risk of loss to be remote.
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 in default of principal.
B. Purchases and Sales of Securities
During the six months ended May 31, 2005, purchases and sales of investment securities (excluding short-term investments and US Treasury obligations) aggregated $198,438,505 and $208,743,376, respectively. Purchases and sales of US Treasury obligations aggregated $33,858,523 and $34,567,557, respectively.
C. Related Parties
Management Agreement. Under the Management Agreement with Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor"), an indirect, wholly owned subsidiary of Deutsche Bank AG, 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 the Fund's 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. 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. For the six months ended May 31, 2005, the amount charged to the Fund by SISC aggregated $12,963, of which $899 is unpaid at May 31, 2005.
Typesetting and Filing Fees. Under an agreement with Deutsche Investment Management Americas Inc. ("DeIM"), an indirect, wholly owned subsidiary of Deutsche Bank AG, DeIM is compensated for providing typesetting and regulatory filing services to the Fund. For the six months ended May 31, 2005, the amount charged to the Fund by DeIM included in the reports to shareholders aggregated $8,640, of which $4,320 is unpaid at May 31, 2005.
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.
Insurance Brokerage Commissions. The Fund paid insurance premiums to an unaffiliated insurance broker in 2002 and 2003. This broker in turn paid a portion of its commissions to an affiliate of the Advisor, which performed certain insurance brokerage services for the broker. The Advisor has reimbursed the Fund for the portion of commissions (plus interest) paid to the affiliate of the Advisor attributable to the premiums paid by the Fund. The amounts for 2002 and 2003 were $54 and $56, respectively.
D. 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 impair the ability of issuers to repay principal and interest. Also, an increase in interest rates would likely have an adverse impact on the value of such obligations. Moreover, high yield securities may be less liquid to the extent that there is no established retail secondary market and because of a decline in the value of such securities.
E. 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.
F. Expense Reductions
For the six months ended May 31, 2005, the Advisor agreed to reimburse the Fund $1,509, which represents a portion of the fee savings expected to be realized by the Advisor related to the outsourcing by the Advisor of certain administrative services to an unaffiliated service provider.
In addition, the Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund's custodian expenses. During the six months ended May 31, 2005, the Fund's custodian fees were reduced by $2,509 for custody credits earned.
G. Forward Foreign Currency Exchange Contracts
As of May 31, 2005, the Fund had the following open forward foreign currency exchange contracts:
Contracts to Deliver | | In Exchange For | | Settlement Date | | Unrealized Appreciation (US$) |
EUR | 5,885,000 | | USD | 7,733,596 | | 7/28/2005 | | $ 479,052 |
EUR | 992,000 | | USD | 1,303,607 | | 7/28/2005 | | 80,751 |
EUR | 275,000 | | USD | 355,850 | | 7/28/2005 | | 16,853 |
USD | 700,000 | | MXN | 7,739,900 | | 7/28/2005 | | 3,543 |
EUR | 29,010 | | USD | 39,114 | | 9/9/2005 | | 3,293 |
EUR | 105,795 | | USD | 137,734 | | 9/9/2005 | | 7,102 |
EUR | 133,390 | | USD | 172,691 | | 9/27/2005 | | 7,857 |
EUR | 1,210,048 | | USD | 1,532,641 | | 11/18/2005 | | 33,963 |
Total unrealized appreciation | | $ 632,414 |
Contracts to Deliver | | In Exchange For | | Settlement Date | | Unrealized Depreciation (US$) |
USD | 356,902 | | EUR | 275,000 | | 7/28/2005 | | $ (17,904) |
USD | 970,000 | | EUR | 768,335 | | 7/28/2005 | | (22,860) |
MXN | 23,600,740 | | USD | 2,102,048 | | 7/28/2005 | | (43,216) |
MXN | 14,461,020 | | USD | 1,288,000 | | 7/28/2005 | | (26,480) |
MXN | 5,552,456 | | USD | 492,470 | | 11/10/2005 | | (3,273) |
Total unrealized depreciation | | $ (113,733) |
Currency Abbreviations |
EUR | Euro |
MXN | Mexican Peso |
USD | United States Dollar |
H. Borrowings
The notes payable represents a secured loan of $60,000,000 from Barton Capital LLC at May 31, 2005. The note bears interest at the commercial paper rate plus dealer fees (3.07% at May 31, 2005) 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 June 27, 2005. Effective June 24, 2005, the size of the revolving credit agreement was increased to an amount not to exceed $75,000,000 and which is renewable annually until June 24, 2010.
The weighted average outstanding daily balance of all loans (based on the number of days the loans were outstanding) during the six months ended May 31, 2005 was $60,000,000 with a weighted average interest rate of 2.43%.
I. Regulatory Matters and Litigation
Since at least July 2003, federal, state and industry regulators have been conducting ongoing inquiries and investigations ("inquiries") into the mutual fund industry, and have requested information from numerous mutual fund companies, including Scudder Investments. It is not possible to determine what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors. Publicity about mutual fund practices arising from these industry-wide inquiries serves as the general basis of a number of private lawsuits against the Scudder funds. These lawsuits, which previously have been reported in the press, involve purported class action and derivative lawsuits, making various allegations and naming as defendants various persons, including certain Scudder funds, the funds' investment advisors and their affiliates, certain individuals, including in some cases fund Trustees/Directors, officers, and other parties. Each Scudder fund's investment advisor has agreed to indemnify the applicable Scudder funds in connection with these lawsuits, or other lawsuits or regulatory actions that may be filed making allegations similar to these lawsuits regarding market timing, revenue sharing, fund valuation or other subjects arising from or related to the pending inquiries. Based on currently available information, the funds' investment advisors believe the likelihood that the pending lawsuits will have a material adverse financial impact on a Scudder fund is remote and such actions are not likely to materially affect their ability to perform under their investment management agreements with the Scudder funds.
In connection with litigation or regulatory action related to possible improper market timing or other improper trading activity or possible improper marketing and sales activity in the Fund, the Fund's investment advisor has agreed, subject to applicable law and regulation, to indemnify and hold harmless the applicable Funds against any and all loss, damage, liability and expense, arising from market timing or marketing and sales matters alleged in any enforcement actions brought by governmental authorities involving or potentially affecting the Fund or the investment advisor ("Enforcement Actions") or that are the basis for private actions brought by shareholders of the Fund against the Fund, their directors and officers, the Fund's investment advisor and/or certain other parties ("Private Litigation"), or any proceedings or actions that may be threatened or commenced in the future by any person (including governmental authorities), arising from or similar to the matters alleged in the Enforcement Actions or Private Litigation. In recognition of its undertaking to indemnify the applicable Funds and in light of the rebuttable presumption generally afforded to independent directors/trustees of investment companies that they have not engaged in disabling conduct, the Fund's investment advisor has also agreed, subject to applicable law and regulation, to indemnify the applicable Funds' Independent Trustees against certain liabilities the Independent Trustees may incur from the matters alleged in any Enforcement Actions or Private Litigation or arising from or similar to the matters alleged in the Enforcement Actions or Private Litigation, and advance expenses that may be incurred by the Independent Trustees in connection with any Enforcement Actions or Private Litigation. The applicable investment advisor is not, however, required to provide indemnification and advancement of expenses: (1) with respect to any proceeding or action with respect to which the applicable Fund's Board determines that the Independent Trustee ultimately would not be entitled to indemnification or (2) for any liability of the Independent Trustee to the Fund or their shareholders to which the Independent Trustee would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the Independent Trustee's duties as a director or trustee of the Fund as determined in a final adjudication in such action or proceeding. The estimated amount of any expenses that may be advanced to the Independent Trustees or indemnity that may be payable under the indemnity agreements is currently unknown. These agreements by the Fund's investment advisor will survive the termination of the investment management agreements between the applicable investment advisor and the Fund.
Dividend Reinvestment Plan |
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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 H 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.
Shareholder Meeting Results |
|
The Annual Meeting of Shareholders of Scudder Multi-Market Income Trust (the "fund") was held on May 25, 2005. The following matters were voted upon by the shareholders of said fund (the resulting votes are presented below):
1. To elect nine individuals to constitute the Board of Trustees of the fund.
| Number of Votes: |
| For | Withheld |
John W. Ballantine | 18,063,113 | 192,653 |
Donald L. Dunaway | 18,056,932 | 198,834 |
James R. Edgar | 18,056,652 | 199,114 |
Paul K. Freeman | 18,071,529 | 184,237 |
Robert B. Hoffman | 18,053,452 | 202,314 |
William McClayton | 18,070,657 | 185,109 |
Shirley D. Peterson | 18,065,463 | 190,303 |
William N. Shiebler | 18,066,755 | 189,011 |
Robert H. Wadsworth | 18,078,013 | 177,753 |
2. To ratify the selection of Ernst & Young LLP as the Independent Registered Public Accounting Firm for the fund.
Number of Votes: |
For | Against | Abstain |
18,068,819 | 67,639 | 119,308 |
Changes in Trustees and Officers
Lewis A. Burnham and John G. Weithers retired from the Board of Trustees effective May 25, 2005 in connection with the fund's Annual Meeting of Shareholders.
On May 11, 2005, the Board of Trustees appointed Scott M. McHugh as Assistant Treasurer of the fund. Kevin Gay and Salvatore Schiavone resigned as Assistant Treasurers of the fund in connection with their resignation as Vice President and Director, respectively, of Deutsche Asset Management.
Additional Information (continued) |
|
Automated Information Lines | Scudder Closed-End Fund Info Line (800) 349-4281 |
Web Sites | www.scudder.com or visit our Direct Link: www.cef.scudder.com 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 and information about how the fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available 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 of the fund's policies and procedures without charge, upon request, call us toll free at (800) 621-1048. |
Legal Counsel | Vedder, Price, Kaufman & Kammholz, P.C. 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 Registered Public Accounting Firm | Ernst & Young LLP 200 Clarendon Street Boston, MA 02116 |
NYSE Symbol | KMM |
CUSIP Number | 81118Q101 |
This privacy statement is issued by Deutsche Investment Management Americas Inc., Deutsche Asset Management, Inc., Scudder Distributors, Inc., Scudder Investor Services, Inc., Scudder Trust Company and the Scudder Funds.
We never sell customer lists or individual client information. We consider privacy fundamental to our client relationships and adhere to the policies and practices described below to protect current and former clients' information. Internal policies are in place to protect confidentiality, while allowing client needs to be served. Only individuals who need to do so in carrying out their job responsibilities may access client information. We maintain physical, electronic and procedural safeguards that comply with federal and state standards to protect confidentiality. These safeguards extend to all forms of interaction with us, including the Internet.
In the normal course of business, clients give us nonpublic personal information on applications and other forms, on our websites, and through transactions with us or our affiliates. Examples of the nonpublic personal information collected are name, address, Social Security number and transaction and balance information. To be able to serve our clients, certain of this client information is shared with affiliated and nonaffiliated third party service providers such as transfer agents, custodians, and broker-dealers to assist us in processing transactions and servicing your account with us. In addition, we may disclose all of the information we collect to companies that perform marketing services on our behalf or to other financial institutions with which we have joint marketing agreements. The organizations described above that receive client information may only use it for the purpose designated by the Scudder Companies listed above.
We may also disclose nonpublic personal information about you to other parties as required or permitted by law. For example, we are required or we may provide information to government entities or regulatory bodies in response to requests for information or subpoenas, to private litigants in certain circumstances, to law enforcement authorities, or any time we believe it necessary to protect the firm.
Questions on this policy may be sent to:
Scudder Investments
Attention: Correspondence — Chicago
P.O. Box 219415
Kansas City, MO 64121-9415
September 2004
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Applicable
ITEM 6. SCHEDULE OF INVESTMENTS
Not Applicable
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS
Period Total Number of Shares Average Price Paid
Purchased Per Share
December 1- December 31, 2004 N/A N/A
January 1- January 31, 2005 N/A N/A
February 1-February 28, 2005 N/A N/A
March 1- March 31, 2005 N/A N/A
April 1- April 30, 2005 N/A N/A
May 1- May 31, 2005 N/A N/A
Purchased as Part of Shares they May Yet be
Period Publicly Announced Purchased under the
Plans or Programs Plans or Programs
December 1- December 31, 2004 N/A N/A
January 1- January 31, 2005 N/A N/A
February 1-February 28, 2005 N/A N/A
March 1- March 31, 2005 N/A N/A
April 1- April 30, 2005 N/A N/A
May 1- May 31, 2005 N/A N/A
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The primary function of the Nominating and Governance Committee is to identify
and recommend individuals for membership on the Board and oversee the
administration of the Board Governance Procedures and Guidelines. Shareholders
may recommend candidates for Board positions by forwarding their correspondence
by U.S. mail or courier service to the Fund's Secretary for the attention of the
Chairman of the Nominating and Governance Committee, Two International Place,
Boston, MA 02110. Suggestions for candidates must include a resume of the
candidate.
ITEM 11. 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) There have been no changes in the registrant's internal control over
financial reporting that occurred during the registrant's last half-year (the
registrant's second fiscal half-year in the case of the annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal controls over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) 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/Julian Sluyters
------------------
Julian Sluyters
Chief Executive Officer
Date: August 2, 2005
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/Julian Sluyters
------------------
Julian Sluyters
Chief Executive Officer
Date: August 2, 2005
By: /s/Paul Schubert
----------------
Paul Schubert
Chief Financial Officer
Date: August 2, 2005
