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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-02031
MFS SERIES TRUST V
(Exact name of registrant as specified in charter)
500 Boylston Street, Boston, Massachusetts 02116
(Address of principal executive offices) (Zip code)
Susan S. Newton
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
(Name and address of agents for service)
Registrant’s telephone number, including area code: (617) 954-5000
Date of fiscal year end: September 30
Date of reporting period: March 31, 2011
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ITEM 1. | REPORTS TO STOCKHOLDERS. |
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MFS® International New Discovery Fund
SEMIANNUAL REPORT
March 31, 2011
MIO-SEM
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MFS® INTERNATIONAL NEW DISCOVERY FUND
The report is prepared for the general information of shareholders.
It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK GUARANTEE
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Dear Shareholders:
After an extended rebound in the financial markets, uncertainty returned in 2010 as investors began to question the durability of the recovery for global economies and markets. That uncertainty led to increased risk aversion, especially as investors saw the eurozone struggle with the debt woes of many of its members. Last September, the U.S. Federal Reserve Board’s promises to further loosen monetary policy helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment. For 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide will be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, and the Middle East.
As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.
Respectfully,
Robert J. Manning
Chairman and Chief Executive Officer
MFS Investment Management®
May 16, 2011
The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.
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Portfolio structure
Top ten holdings | ||||
Iluka Resources Ltd. | 1.4% | |||
Croda International PLC | 1.4% | |||
Swedish Match AB | 1.2% | |||
Bunzl PLC | 1.2% | |||
Christian Dior S.A. | 1.0% | |||
GEA Group AG | 1.0% | |||
Synthes, Inc. | 0.9% | |||
Hiscox Ltd. | 0.9% | |||
JGC Corp. | 0.9% | |||
Bellway PLC | 0.9% |
Equity sectors | ||||
Financial Services | 16.1 | % | ||
Special Products & Services | 11.8 | % | ||
Basic Materials | 9.8 | % | ||
Health Care | 8.3 | % | ||
Retailing | 8.0 | % | ||
Consumer Staples | 8.0 | % | ||
Industrial Goods & Services | 7.9 | % | ||
Technology | 7.3 | % | ||
Autos & Housing | 5.2 | % | ||
Energy | 5.0 | % | ||
Leisure | 4.0 | % | ||
Utilities & Communications | 3.1 | % | ||
Transportation | 3.0 | % | ||
Country weightings | ||||
United Kingdom | 19.1 | % | ||
Japan | 13.8 | % | ||
Brazil | 7.5 | % | ||
United States | 7.1 | % | ||
Germany | 5.3 | % | ||
Australia | 4.2 | % | ||
France | 4.0 | % | ||
Switzerland | 3.6 | % | ||
Hong Kong | 2.9 | % | ||
Other Countries | 32.5 | % |
Percentages are based on net assets as of 3/31/11.
The portfolio is actively managed and current holdings may be different.
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Fund expenses borne by the shareholders during the period,
October 1, 2010 through March 31, 2011
As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchase or redemption payments, and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period October 1, 2010 through March 31, 2011.
The expenses include the payment of a portion of the transfer-agent-related expenses of MFS funds that invest in the fund. For further information, please see the Notes to the Financial Statements.
Actual Expenses
The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the
3
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Expense Table – continued
relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Share Class | Annualized Expense Ratio | Beginning Account Value 10/01/10 | Ending Account Value 3/31/11 | Expenses Paid During Period (p) 10/01/10-3/31/11 | ||||||||||||||
A | Actual | 1.40% | $1,000.00 | $1,114.28 | $7.38 | |||||||||||||
Hypothetical (h) | 1.40% | $1,000.00 | $1,017.95 | $7.04 | ||||||||||||||
B | Actual | 2.15% | $1,000.00 | $1,109.98 | $11.31 | |||||||||||||
Hypothetical (h) | 2.15% | $1,000.00 | $1,014.21 | $10.80 | ||||||||||||||
C | Actual | 2.15% | $1,000.00 | $1,110.44 | $11.31 | |||||||||||||
Hypothetical (h) | 2.15% | $1,000.00 | $1,014.21 | $10.80 | ||||||||||||||
I | Actual | 1.15% | $1,000.00 | $1,115.54 | $6.07 | |||||||||||||
Hypothetical (h) | 1.15% | $1,000.00 | $1,019.20 | $5.79 | ||||||||||||||
R1 | Actual | 2.15% | $1,000.00 | $1,110.57 | $11.31 | |||||||||||||
Hypothetical (h) | 2.15% | $1,000.00 | $1,014.21 | $10.80 | ||||||||||||||
R2 | Actual | 1.65% | $1,000.00 | $1,112.82 | $8.69 | |||||||||||||
Hypothetical (h) | 1.65% | $1,000.00 | $1,016.70 | $8.30 | ||||||||||||||
R3 | Actual | 1.40% | $1,000.00 | $1,113.80 | $7.38 | |||||||||||||
Hypothetical (h) | 1.40% | $1,000.00 | $1,017.95 | $7.04 | ||||||||||||||
R4 | Actual | 1.15% | $1,000.00 | $1,115.66 | $6.07 | |||||||||||||
Hypothetical (h) | 1.15% | $1,000.00 | $1,019.20 | $5.79 | ||||||||||||||
529A | Actual | 1.50% | $1,000.00 | $1,113.77 | $7.90 | |||||||||||||
Hypothetical (h) | 1.50% | $1,000.00 | $1,017.45 | $7.54 | ||||||||||||||
529B | Actual | 2.25% | $1,000.00 | $1,109.42 | $11.83 | |||||||||||||
Hypothetical (h) | 2.25% | $1,000.00 | $1,013.71 | $11.30 | ||||||||||||||
529C | Actual | 2.25% | $1,000.00 | $1,109.35 | $11.83 | |||||||||||||
Hypothetical (h) | 2.25% | $1,000.00 | $1,013.71 | $11.30 |
(h) | 5% class return per year before expenses. |
(p) | Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
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3/31/11 (unaudited)
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Common Stocks - 97.5% | ||||||||
Issuer | Shares/Par | Value ($) | ||||||
Aerospace - 0.4% | ||||||||
Cobham PLC | 666,166 | $ | 2,460,063 | |||||
Meggitt PLC | 1,837,786 | 10,109,296 | ||||||
$ | 12,569,359 | |||||||
Airlines - 1.3% | ||||||||
Copa Holdings S.A., “A” | 136,280 | �� | $ | 7,195,584 | ||||
Grupo Aeroportuario del Sureste S.A. de C.V., ADR | 151,300 | 8,891,901 | ||||||
Qantas Airways Ltd. (a) | 6,768,813 | 15,262,880 | ||||||
Stagecoach Group PLC | 1,578,950 | 5,455,978 | ||||||
$ | 36,806,343 | |||||||
Alcoholic Beverages - 0.5% | ||||||||
Carlsberg Group | 72,700 | $ | 7,827,977 | |||||
Davide Campari-Milano S.p.A. | 967,834 | 6,548,087 | ||||||
$ | 14,376,064 | |||||||
Apparel Manufacturers - 2.7% | ||||||||
ANTA Sports Products Ltd. | 3,982,000 | $ | 6,184,001 | |||||
Arezzo Indústria e Comércio S.A. NPV (a) | 395,240 | 5,507,432 | ||||||
Billabong International Ltd. | 1,215,618 | 9,493,177 | ||||||
Burberry Group PLC | 758,690 | 14,288,642 | ||||||
Cia.Hering | 659,400 | 12,116,498 | ||||||
GERRY WEBER International AG | 113,595 | 6,610,119 | ||||||
Li & Fung Ltd. | 1,821,000 | 9,329,097 | ||||||
Stella International Holdings Ltd. | 6,483,500 | 14,453,065 | ||||||
$ | 77,982,031 | |||||||
Automotive - 1.6% | ||||||||
Geely Automobile Holdings Ltd. | 21,655,000 | $ | 8,045,580 | |||||
GKN PLC | 1,873,600 | 6,038,309 | ||||||
Mando Corp. | 152,400 | 24,104,471 | ||||||
NGK Spark Plug Co. Ltd | 154,000 | 2,103,198 | ||||||
USS Co. Ltd. | 99,820 | 7,764,310 | ||||||
$ | 48,055,868 | |||||||
Biotechnology - 0.7% | ||||||||
Abcam PLC | 675,000 | $ | 4,082,288 | |||||
Actelion Ltd. (a) | 127,884 | 7,358,376 |
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Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Biotechnology - continued | ||||||||
Lonza Group AG | 44,248 | $ | 3,711,822 | |||||
TECHNE Corp. | 90,900 | 6,508,440 | ||||||
$ | 21,660,926 | |||||||
Broadcasting - 1.5% | ||||||||
Havas S.A. | 2,390,900 | $ | 12,838,585 | |||||
Nippon Television Network Corp. | 20,610 | 2,931,189 | ||||||
Proto Corp. | 173,300 | 6,291,969 | ||||||
Publicis Groupe | 150,000 | 8,412,853 | ||||||
Rightmove PLC | 860,287 | 13,110,688 | ||||||
$ | 43,585,284 | |||||||
Brokerage & Asset Managers - 4.9% | ||||||||
Aberdeen Asset Management PLC | 7,080,445 | $ | 23,943,612 | |||||
Bolsa Mexicana de Valores S.A. de C.V. | 2,190,400 | 4,605,669 | ||||||
CETIP S.A. - Balcao Organizado de Ativos e Derivativos | 580,600 | 9,601,691 | ||||||
Daiwa Securities Group, Inc. | 2,052,000 | 9,423,708 | ||||||
GAM Holding Ltd. | 126,423 | 2,401,831 | ||||||
ICAP PLC | 1,544,363 | 13,081,026 | ||||||
IG Group Holdings PLC | 1,802,955 | 13,206,244 | ||||||
Osaka Securities Exchange Co. Ltd. | 2,717 | 13,637,263 | ||||||
Rathbone Brothers PLC | 641,435 | 12,512,519 | ||||||
Schroders PLC | 902,534 | 25,134,590 | ||||||
Van Lanschot N.V. | 48,159 | 2,149,904 | ||||||
Yuanta Financial Holding Co. Ltd. | 20,074,000 | 14,437,798 | ||||||
$ | 144,135,855 | |||||||
Business Services - 8.2% | ||||||||
Amadeus Fire AG | 253,777 | $ | 11,839,769 | |||||
Amadeus Holdings AG (a) | 1,133,819 | 21,692,452 | ||||||
Bunzl PLC | 2,878,250 | 34,375,714 | ||||||
Cabcharge Australia Ltd. | 1,682,709 | 9,607,615 | ||||||
Capgemini | 122,461 | 7,113,018 | ||||||
Cielo S.A. | 895,940 | 7,594,898 | ||||||
Cognizant Technology Solutions Corp., “A” (a) | 163,550 | 13,312,970 | ||||||
CTS Eventim AG | 152,750 | 9,855,129 | ||||||
Delek Automotive Systems Ltd. | 244,781 | 3,003,275 | ||||||
Electrocomponents PLC | 1,130,717 | 4,848,545 | ||||||
Hays PLC | 4,500,000 | 8,395,581 | ||||||
HomeServe PLC | 1,176,128 | 8,382,806 | ||||||
Intertek Group PLC | 500,239 | 16,322,512 | ||||||
LPS Brasil - Consultoria de Imoveis S.A. | 429,700 | 10,080,244 | ||||||
LSL Property Services PLC | 2,039,488 | 8,015,779 |
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Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Business Services - continued | ||||||||
Misumi Group Inc. | 100,200 | $ | 2,487,533 | |||||
MITIE Group PLC | 816,400 | 2,573,499 | ||||||
MSCI, Inc., “A” (a) | 175,684 | 6,468,685 | ||||||
Nomura Research Institute Ltd. | 637,000 | 14,060,255 | ||||||
Premier Farnell PLC | 1,460,610 | 6,356,859 | ||||||
Redecard S.A. | 268,200 | 3,950,761 | ||||||
Serco Group PLC | 264,225 | 2,365,193 | ||||||
Sodexo | 216,434 | 15,805,811 | ||||||
TAKKT AG | 357,368 | 5,697,697 | ||||||
Wolseley PLC (a) | 166,269 | 5,598,636 | ||||||
$ | 239,805,236 | |||||||
Cable TV - 0.7% | ||||||||
Naspers | 213,477 | $ | 11,486,420 | |||||
Telenet Group Holding N.V. | 205,000 | 9,606,242 | ||||||
$ | 21,092,662 | |||||||
Chemicals - 0.8% | ||||||||
Nissan Chemical Industries Ltd. | 150,000 | $ | 1,550,854 | |||||
Nufarm Ltd. (a) | 2,786,831 | 14,902,828 | ||||||
Victrex PLC | 372,623 | 8,069,785 | ||||||
$ | 24,523,467 | |||||||
Computer Software - 1.1% | ||||||||
Dassault Systemes S.A. | 11,683 | $ | 897,894 | |||||
OBIC Co. Ltd. | 114,440 | 21,710,305 | ||||||
Totvs S.A. | 494,500 | 9,495,345 | ||||||
$ | 32,103,544 | |||||||
Computer Software - Systems - 2.6% | ||||||||
Acer, Inc. | 5,094,348 | $ | 10,394,331 | |||||
Konica Minolta Holdings, Inc. | 2,502,000 | 20,965,304 | ||||||
NICE Systems Ltd. (a) | 323,183 | 11,932,768 | ||||||
Venture Corp. Ltd. | 3,330,000 | 25,387,783 | ||||||
Wincor Nixdorf AG | 76,514 | 6,194,928 | ||||||
$ | 74,875,114 | |||||||
Conglomerates - 1.4% | ||||||||
Alfa S.A.B de C.V. (a) | 434,150 | $ | 5,655,709 | |||||
Ansell Ltd. | 171,839 | 2,403,067 | ||||||
DCC PLC | 431,544 | 13,742,296 | ||||||
First Pacific Co. Ltd. | 8,252,000 | 7,383,628 | ||||||
Smiths Group PLC | 262,605 | 5,463,884 |
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Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Conglomerates - continued | ||||||||
Sulzer AG | 50,824 | $ | 7,658,184 | |||||
$ | 42,306,768 | |||||||
Construction - 3.6% | ||||||||
Bellway PLC | 2,335,757 | $ | 26,079,269 | |||||
BUZZI UNICEM S.p.A (l) | 943,300 | 13,742,764 | ||||||
China Shanshui Cement Group Ltd. | 15,221,000 | 14,206,306 | ||||||
Corporacion GEO S.A.B. de C.V. (a) | 3,156,200 | 8,841,484 | ||||||
Corporacion Moctezuma S.A. de C.V. | 1,415,100 | 3,558,436 | ||||||
Duratex S.A. | 1,789,875 | 18,911,184 | ||||||
Geberit AG | 52,784 | 11,493,522 | ||||||
Urbi Desarrollos Urbanos S.A.B. de C.V. (a) | 4,101,200 | 9,571,633 | ||||||
$ | 106,404,598 | |||||||
Consumer Products - 4.1% | ||||||||
Beiersdorf AG | 208,068 | $ | 12,698,747 | |||||
Christian Dior S.A. | 205,568 | 28,937,905 | ||||||
Dabur India Ltd. | 6,184,133 | 13,326,498 | ||||||
Dr. Ci:Labo Co. Ltd. | 605 | 2,240,202 | ||||||
Hengan International Group Co. Ltd. | 961,500 | 7,132,248 | ||||||
Henkel KGaA, IPS (l) | 205,879 | 12,753,342 | ||||||
Kimberly-Clark de Mexico S.A. de C.V., “A” | 808,060 | 5,006,875 | ||||||
Kose Corp. | 107,300 | 2,666,375 | ||||||
Milbon Co. Ltd. | 173,030 | 4,780,271 | ||||||
Oriflame Cosmetics S.A. | 187,600 | 9,707,087 | ||||||
PZ Cussons | 427,300 | 2,238,075 | ||||||
Shiseido Co. Ltd. | 191,300 | 3,311,758 | ||||||
Uni-Charm Corp. | 402,400 | 14,634,047 | ||||||
$ | 119,433,430 | |||||||
Consumer Services - 1.7% | ||||||||
Anhanguera Educacional Participacoes S.A. | 787,600 | $ | 19,286,588 | |||||
Dignity PLC | 924,216 | 10,319,086 | ||||||
Kakaku.com, Inc. | 200 | 1,114,451 | ||||||
Kroton Educacional S.A., IEU (a) | 491,316 | 6,331,601 | ||||||
Rakuten NPV | 4,019 | 3,614,104 | ||||||
Thomas Cook Group PLC | 3,488,852 | 9,548,169 | ||||||
$ | 50,213,999 | |||||||
Containers - 1.4% | ||||||||
Klabin S.A., IPS | 2,136,200 | $ | 8,635,605 | |||||
Mayr-Melnhof Karton AG | 85,690 | 10,010,288 | ||||||
Owens-Illinois, Inc. (a) | 450,600 | 13,603,614 |
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Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Containers - continued | ||||||||
Viscofan S.A. | 207,728 | $ | 8,242,979 | |||||
$ | 40,492,486 | |||||||
Electrical Equipment - 1.9% | ||||||||
Kaba Holding AG | 6,972 | $ | 2,907,214 | |||||
Legrand S.A. | 289,820 | 12,057,064 | ||||||
OMRON Corp. | 88,821 | 2,496,556 | ||||||
Pfeiffer Vacuum Technology AG | 66,499 | 9,328,111 | ||||||
Prysmian S.p.A. | 113,356 | 2,432,213 | ||||||
Sensata Technologies Holding B.V. (a) | 360,000 | 12,502,800 | ||||||
Spectris PLC | 699,270 | 15,289,711 | ||||||
$ | 57,013,669 | |||||||
Electronics - 3.1% | ||||||||
Advantech Co. Ltd. | 6,004,352 | $ | 18,580,791 | |||||
ASM International N.V (a) | 38,866 | 1,525,741 | ||||||
Domino Printing Sciences PLC | 487,529 | 4,931,103 | ||||||
Halma PLC | 1,188,055 | 6,680,102 | ||||||
Hirose Electric Co. Ltd. (l) | 68,408 | 7,368,787 | ||||||
Infineon Technologies AG | 1,139,532 | 11,684,125 | ||||||
Melexis N.V. | 237,947 | 4,242,209 | ||||||
Sanken Electric Co. Ltd. | 204,000 | 1,201,731 | ||||||
Seoul Semiconductor Co. Ltd. | 302,085 | 11,800,303 | ||||||
Siliconware Precision Industries Co. | 11,093,000 | 13,882,046 | ||||||
Tripod Technology Corp. | 2,255,000 | 9,930,543 | ||||||
$ | 91,827,481 | |||||||
Energy - Independent - 2.0% | ||||||||
Bankers Petroleum Ltd. (a) | 2,027,080 | $ | 18,190,403 | |||||
Cairn Energy PLC (a) | 1,400,000 | 10,378,211 | ||||||
Cobalt International Energy, Inc. (a) | 273,400 | 4,595,854 | ||||||
EnQuest PLC (a) | 207,119 | 452,871 | ||||||
Motor Oil (Hellas) Corinth Refineries S.A. | 118,394 | 1,536,938 | ||||||
Niko Resources Ltd. | 150,000 | 14,388,860 | ||||||
Resource Generation Ltd. (a) | 3,589,134 | 3,433,989 | ||||||
Santos Ltd. | 415,307 | 6,679,857 | ||||||
$ | 59,656,983 | |||||||
Engineering - Construction - 1.6% | ||||||||
Cape PLC | 309,325 | $ | 2,442,639 | |||||
Foster Wheeler AG (a) | 118,800 | 4,469,256 | ||||||
JGC Corp. | 1,150,000 | 26,918,129 | ||||||
Outotec Oyj (l) | 134,946 | 8,116,458 |
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Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Engineering - Construction - continued | ||||||||
Toshiba Plant Kensetsu Co. Ltd. | 329,000 | $ | 3,721,916 | |||||
$ | 45,668,398 | |||||||
Food & Beverages - 1.9% | ||||||||
Associated British Foods PLC | 305,308 | $ | 4,858,569 | |||||
Britvic PLC | 1,185,071 | 7,518,815 | ||||||
Coca-Cola Hellenic Bottling Co. S.A. | 351,298 | 9,434,438 | ||||||
Cranswick PLC | 8,402 | 111,939 | ||||||
Grupo Continental S.A. | 1,277,790 | 4,379,816 | ||||||
Kerry Group PLC | 298,968 | 11,130,532 | ||||||
M Dias Branco S.A Industria e Comercio de Alimentos | 396,100 | 9,461,856 | ||||||
Tiger Brands Ltd. | 352,653 | 9,123,104 | ||||||
$ | 56,019,069 | |||||||
Food & Drug Stores - 1.4% | ||||||||
Cosmos Pharmaceutical Corp. | 44,300 | $ | 1,845,390 | |||||
Dairy Farm International Holdings Ltd. | 645,300 | 5,368,896 | ||||||
FamilyMart Co. Ltd. | 111,500 | 4,188,958 | ||||||
Lawson, Inc. | 260,700 | 12,568,009 | ||||||
Magnit OJSC, GDR | 420,300 | 12,739,293 | ||||||
Sundrug Co. Ltd. | 189,100 | 5,381,098 | ||||||
$ | 42,091,644 | |||||||
Forest & Paper Products - 0.2% | ||||||||
Suzano Papel e Celulose S.A., IPS | 557,350 | $ | 5,137,732 | |||||
Gaming & Lodging - 1.2% | ||||||||
InterContinental Hotels Group PLC | 386,784 | $ | 7,929,720 | |||||
Ladbrokes PLC | 2,106,324 | 4,477,129 | ||||||
Paddy Power PLC | 125,840 | 5,510,720 | ||||||
Sands China Ltd. (a) | 4,316,400 | 9,633,248 | ||||||
William Hill PLC | 2,302,608 | 6,674,776 | ||||||
$ | 34,225,593 | |||||||
General Merchandise - 0.6% | ||||||||
Dunelm Group PLC | 99,785 | $ | 614,528 | |||||
Lojas Renner S.A. | 155,900 | 5,050,409 | ||||||
Shinsegae Co. Ltd. | 47,734 | 11,357,468 | ||||||
$ | 17,022,405 | |||||||
Health Maintenance Organizations - 0.3% | ||||||||
Odontoprev S.A. | 478,600 | $ | 7,821,057 |
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Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Insurance - 4.3% | ||||||||
Admiral Group PLC | 610,199 | $ | 15,211,814 | |||||
Amlin PLC | 1,988,020 | 12,173,106 | ||||||
Brasil Insurance Paticipaco e Administracao S.A. (a) | 10,700 | 11,796,772 | ||||||
Catlin Group Ltd. | 1,488,461 | 8,617,531 | ||||||
CNinsure, Inc., ADR (l) | 323,235 | 4,189,126 | ||||||
Hiscox Ltd. | 4,484,979 | 27,145,993 | ||||||
Jardine Lloyd Thompson Group PLC | 864,060 | 9,591,985 | ||||||
Mediolanum S.p.A. | 1,750,101 | 9,410,042 | ||||||
Samsung Fire & Marine Insurance Co. Ltd. (a) | 35,398 | 7,825,348 | ||||||
SNS REAAL Groep N.V. (a) | 598,257 | 3,387,160 | ||||||
Storebrand A.S.A. | 2,039,745 | 17,501,180 | ||||||
$ | 126,850,057 | |||||||
Leisure & Toys - 0.6% | ||||||||
Sankyo Co. Ltd. | 170,700 | $ | 8,752,531 | |||||
Shimano, Inc. | 50,200 | 2,507,586 | ||||||
Ubisoft Entertainment S.A. (a) | 500,000 | 5,108,297 | ||||||
$ | 16,368,414 | |||||||
Machinery & Tools - 3.9% | ||||||||
Aalberts Industries N.V. | 235,579 | $ | 5,590,529 | |||||
Beml Ltd. | 303,020 | 4,633,804 | ||||||
Bucyrus International, Inc. | 55,700 | 5,093,765 | ||||||
Burckhardt Compression Holding AG | 17,500 | 5,511,023 | ||||||
Charter International PLC | 451,907 | 5,857,590 | ||||||
Faiveley SA | 33,600 | 3,324,207 | ||||||
GEA Group AG | 850,500 | 28,011,837 | ||||||
GLORY Ltd. | 232,500 | 5,117,907 | ||||||
Kennametal, Inc. | 195,030 | 7,606,170 | ||||||
Neopost S.A. | 119,703 | 10,485,639 | ||||||
Rotork PLC | 166,366 | 4,659,801 | ||||||
Seco Tools AB, “B” | 200,000 | 3,548,852 | ||||||
Sinotruk (Hong Kong) Ltd. | 9,417,000 | 8,062,842 | ||||||
T.K. Corp. (a) | 661,340 | 11,846,785 | ||||||
Union Tool Co. | 175,700 | 4,165,429 | ||||||
$ | 113,516,180 | |||||||
Major Banks - 0.2% | ||||||||
Julius Baer Group Ltd. | 126,423 | $ | 5,486,359 | |||||
Medical & Health Technology & Services - 2.0% | ||||||||
Diagnosticos da America S.A. | 945,600 | $ | 12,162,803 | |||||
Fleury S.A. | 524,100 | 7,784,537 |
11
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Medical & Health Technology & Services - continued | ||||||||
Hogy Medical Co. Ltd. | 43,800 | $ | 1,874,585 | |||||
Kobayashi Pharmaceutical Co. Ltd. | 340,000 | 15,757,394 | ||||||
Miraca Holdings, Inc. | 555,200 | 21,258,860 | ||||||
$ | 58,838,179 | |||||||
Medical Equipment - 3.9% | ||||||||
Cochlear Ltd. | 173,825 | $ | 14,921,261 | |||||
DENTSPLY International, Inc. | 329,600 | 12,191,904 | ||||||
DIASORIN S.p.A. | 92,785 | 4,082,917 | ||||||
Fisher & Paykel Healthcare Corp. Ltd. | 7,033,297 | 16,850,514 | ||||||
Nakanishi, Inc. | 80,000 | 8,030,777 | ||||||
Nihon Kohden Corp. | 167,000 | 3,635,934 | ||||||
Smith & Nephew PLC | 469,638 | 5,296,355 | ||||||
Sonova Holding AG | 149,925 | 13,360,219 | ||||||
Synthes, Inc. | 203,904 | 27,571,994 | ||||||
Waters Corp. (a) | 83,087 | 7,220,260 | ||||||
$ | 113,162,135 | |||||||
Metals & Mining - 3.0% | ||||||||
Iluka Resources Ltd. | 3,074,684 | $ | 42,297,982 | |||||
Inmet Mining Corp. | 149,543 | 10,511,971 | ||||||
Maanshan Iron & Steel Co. Ltd. | 14,672,000 | 7,940,956 | ||||||
MOIL Ltd. | 915,219 | 8,101,417 | ||||||
SSAB Svenskt Stal AB, “A” | 174,000 | 2,755,319 | ||||||
Ternium S.A., ADR | 184,970 | 6,647,822 | ||||||
Usinas Siderurgicas de Minas Gerais S.A., “A”, IPS | 337,200 | 4,079,074 | ||||||
Voestalpine AG | 125,000 | 5,868,979 | ||||||
$ | 88,203,520 | |||||||
Natural Gas - Pipeline - 0.7% | ||||||||
Enagas S.A. | 848,508 | $ | 19,143,888 | |||||
Network & Telecom - 0.5% | ||||||||
Vtech Holdings Ltd. | 1,377,600 | $ | 15,629,288 | |||||
Oil Services - 3.0% | ||||||||
Acergy S.A. (a) | 405,658 | $ | 10,247,353 | |||||
Aker Kvaerner A.S.A. | 508,159 | 11,678,859 | ||||||
Dresser-Rand Group, Inc. (a) | 283,300 | 15,190,546 | ||||||
Fugro N.V. | 137,477 | 12,114,679 | ||||||
Oceaneering International, Inc. (a) | 138,600 | 12,397,770 | ||||||
Petrofac Ltd. | 207,119 | 4,947,356 | ||||||
Petroleum Geo-Services ASA (a) | 253,477 | 4,063,241 |
12
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Oil Services - continued | ||||||||
Schoeller-Bleckmann Nooter Apparatetechnik GMBH | 157,550 | $ | 15,488,924 | |||||
Tecnicas Reunidas S.A. | 50,804 | 3,054,216 | ||||||
$ | 89,182,944 | |||||||
Other Banks & Diversified Financials - 5.0% | ||||||||
Aeon Credit Service Co. Ltd. | 782,500 | $ | 10,771,369 | |||||
Azimut Holding SpA | 741,900 | 8,295,709 | ||||||
Chiba Bank Ltd. | 2,426,451 | 13,593,726 | ||||||
Commercial International Bank | 1,265,222 | 6,997,519 | ||||||
Compartamos S.A.B. de C.V. (a) | 4,033,370 | 7,260,063 | ||||||
Credicorp Ltd. | 42,900 | 4,501,497 | ||||||
CSU Cardsystem S.A. | 1,717,990 | 5,135,082 | ||||||
Federal Bank Ltd. | 1,197,924 | 11,243,213 | ||||||
Housing Development Finance Corp. Ltd. | 463,660 | 7,290,467 | ||||||
Jyske Bank (a) | 373,206 | 16,620,194 | ||||||
PT Bank Negara Indonesia Tbk. | 1,730,000 | 789,750 | ||||||
Public Bank Berhad | 2,170,000 | 9,414,379 | ||||||
Public Bank Berhad | 40,588 | 175,820 | ||||||
Shizuoka Bank Ltd. | 881,000 | 7,286,944 | ||||||
Sydbank A/S | 553,969 | 13,982,947 | ||||||
TISCO Financial Group Public Co. Ltd. | 9,216,100 | 11,960,057 | ||||||
TISCO Financial Group Public Co. Ltd. | 1,224,300 | 1,578,697 | ||||||
Unione di Banche Italiane S.c.p.A. | 1,062,904 | 9,083,276 | ||||||
$ | 145,980,709 | |||||||
Pharmaceuticals - 1.4% | ||||||||
Genomma Lab Internacional S.A., “B” (a) | 2,371,500 | $ | 5,369,268 | |||||
Hisamitsu Pharmaceutical Co., Inc. | 83,500 | 3,367,907 | ||||||
Santen Pharmaceutical Co. Ltd. | 490,400 | 19,544,073 | ||||||
Virbac SA (a) | 70,049 | 11,677,535 | ||||||
$ | 39,958,783 | |||||||
Pollution Control - 0.1% | ||||||||
Daiseki Co. Ltd. | 218,100 | $ | 4,258,168 | |||||
Railroad & Shipping - 0.4% | ||||||||
Diana Shipping, Inc. (a) | 625,000 | $ | 7,400,000 | |||||
Precious Shipping Public Co. Ltd. | 8,078,200 | 4,834,367 | ||||||
$ | 12,234,367 | |||||||
Real Estate - 1.7% | ||||||||
Ascendas Real Estate Investment Trust, REIT | 7,632,466 | $ | 12,291,873 | |||||
Brasil Brokers Participacoes | 2,103,300 | 10,950,326 |
13
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Real Estate - continued | ||||||||
Deutsche Wohnen AG (a) | 1,504,275 | $ | 21,702,320 | |||||
Midland Holdings Ltd. | 5,594,000 | 4,350,901 | ||||||
$ | 49,295,420 | |||||||
Special Products & Services - 0.5% | ||||||||
Filtrona PLC | 2,307,793 | $ | 11,247,167 | |||||
K-Green Trust NPV, IEU | 702,400 | 573,956 | ||||||
SK KAKEN Co. Ltd. | 50,000 | 1,743,208 | ||||||
Tikkurila Oyj (a)(l) | 113,311 | 2,578,985 | ||||||
$ | 16,143,316 | |||||||
Specialty Chemicals - 4.4% | ||||||||
Air Water, Inc. | 323,000 | $ | 3,933,626 | |||||
Chugoku Marine Paints Ltd. | 396,000 | 3,318,250 | ||||||
Croda International PLC | 1,491,287 | 40,143,173 | ||||||
Elementis PLC | 3,525,642 | 8,602,525 | ||||||
Japan Pure Chemical Co. Ltd. | 365 | 1,048,750 | ||||||
Kansai Paint Co. Ltd. | 1,249,000 | 10,826,268 | ||||||
Mexichem S.A.B de C.V. | 1,801,500 | 6,745,903 | ||||||
Nippon Paint Co. Ltd. | 786,000 | 5,272,758 | ||||||
Sika AG | 7,312 | 17,609,302 | ||||||
Symrise AG | 504,491 | 14,792,618 | ||||||
W. R. Grace & Co. (a) | 408,400 | 15,637,636 | ||||||
$ | 127,930,809 | |||||||
Specialty Stores - 3.3% | ||||||||
Abc-Mart, Inc. | 311,100 | $ | 11,313,747 | |||||
Bulgari S.p.A. (l) | 318,751 | 5,524,706 | ||||||
Carpetright PLC | 271,162 | 2,960,162 | ||||||
Delticom AG | 33,194 | 3,003,666 | ||||||
DeNA Co. Ltd. | 113,800 | 4,111,193 | ||||||
Esprit Holdings Ltd. | 2,909,568 | 13,353,591 | ||||||
GS Home Shopping, Inc. | 57,156 | 7,107,050 | ||||||
Halfords Group PLC | 373,500 | 2,086,305 | ||||||
JB Hi-Fi Ltd. (l) | 196,156 | 4,084,255 | ||||||
NEXT PLC | 639,069 | 20,298,851 | ||||||
Nitori Co. Ltd. | 75,000 | 6,591,128 | ||||||
Point, Inc. | 47,890 | 2,003,573 | ||||||
Shimamura Co. Ltd. | 31,100 | 2,740,599 | ||||||
Travis Perkins PLC | 454,700 | 7,411,006 | ||||||
Yamada Denki Co. Ltd. | 75,200 | 5,071,796 | ||||||
$ | 97,661,628 |
14
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Telecommunications - Wireless - 0.5% | ||||||||
Cellcom Israel Ltd. | 200,000 | $ | 6,624,000 | |||||
Vivo Participacoes S.A., ADR | 182,100 | 7,353,198 | ||||||
$ | 13,977,198 | |||||||
Telephone Services - 0.8% | ||||||||
Empresa Nacional de Telecomunicaciones S.A. | 339,472 | $ | 5,550,667 | |||||
PT XL Axiata Tbk (a) | 22,774,500 | 14,254,496 | ||||||
Telekom Austria AG | 275,829 | 4,034,138 | ||||||
$ | 23,839,301 | |||||||
Tobacco - 1.5% | ||||||||
KT&G Corp. | 144,605 | $ | 7,527,185 | |||||
Swedish Match AB | 1,090,740 | 36,272,173 | ||||||
$ | 43,799,358 | |||||||
Trucking - 1.3% | ||||||||
DSV | 881,976 | $ | 21,776,150 | |||||
Yamato Holdings Co. Ltd. | 1,109,700 | 17,209,822 | ||||||
$ | 38,985,972 | |||||||
Utilities - Electric Power - 1.1% | ||||||||
Cheung Kong Infrastructure Holdings Ltd. | 1,279,000 | $ | 6,042,675 | |||||
Eletropaulo Metropolitana S.A., IPS | 353,600 | 7,818,553 | ||||||
Equatorial Energia S.A. | 701,800 | 5,463,436 | ||||||
Manila Water Co. | 12,506,000 | 5,232,925 | ||||||
Tractebel Energia S.A. | 465,600 | 7,870,983 | ||||||
$ | 32,428,572 | |||||||
Total Common Stocks (Identified Cost, $2,341,492,260) | $ | 2,859,781,630 | ||||||
Collateral for Securities Loaned - 1.0% | ||||||||
Goldman Sachs Group, Inc. Repurchase Agreement, 0.12%, dated 3/31/11, due 4/01/11, total to be received $29,004,370 (secured by U.S. Treasury and Federal Agency obligations valued at $29,584,363 in an individually traded account), at Cost and Net Asset Value | 29,004,273 | $ | 29,004,273 | |||||
Money Market Funds (v) - 1.7% | ||||||||
MFS Institutional Money Market Portfolio, 0.19%, at Cost and Net Asset Value | 48,848,975 | $ | 48,848,975 | |||||
Total Investments (Identified Cost, $2,419,345,508) | $ | 2,937,634,878 | ||||||
Other Assets, Less Liabilities - (0.2)% | (5,169,839 | ) | ||||||
Net Assets - 100.0% | $ | 2,932,465,039 |
15
Table of Contents
Portfolio of Investments (unaudited) – continued
(a) | Non-income producing security. |
(l) | A portion of this security is on loan. |
(v) | Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end. |
The following abbreviations are used in this report and are defined:
ADR | American Depository Receipt |
GDR | Global Depository Receipt |
IEU | International Equity Unit |
IPS | International Preference Stock |
PLC | Public Limited Company |
REIT | Real Estate Investment Trust |
See Notes to Financial Statements
16
Table of Contents
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 3/31/11 (unaudited)
This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.
Assets | ||||
Investments- | ||||
Non-affiliated issuers, at value (identified cost, $2,370,496,533) | $2,888,785,903 | |||
Underlying affiliated funds, at cost and value | 48,848,975 | |||
Total investments, at value, including $27,509,702 of securities on loan (identified cost, $2,419,345,508) | $2,937,634,878 | |||
Foreign currency, at value (identified cost, $10,438,954) | 10,578,997 | |||
Receivables for | ||||
Investments sold | 16,585,077 | |||
Fund shares sold | 6,768,419 | |||
Interest and dividends | 9,354,260 | |||
Other assets | 20,069 | |||
Total assets | $2,980,941,700 | |||
Liabilities | ||||
Payable to custodian | $114,600 | |||
Payables for | ||||
Investments purchased | 12,049,589 | |||
Fund shares reacquired | 4,530,563 | |||
Collateral for securities loaned, at value | 29,004,273 | |||
Payable to affiliates | ||||
Investment adviser | 151,230 | |||
Shareholder servicing costs | 1,353,714 | |||
Distribution and service fees | 37,678 | |||
Program manager fees | 34 | |||
Payable for independent Trustees’ compensation | 11,730 | |||
Accrued expenses and other liabilities | 1,223,250 | |||
Total liabilities | $48,476,661 | |||
Net assets | $2,932,465,039 | |||
Net assets consist of | ||||
Paid-in capital | $2,879,301,219 | |||
Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies (net of $816,124 deferred country tax) | 517,625,166 | |||
Accumulated net realized gain (loss) on investments and foreign currency transactions | (467,114,875 | ) | ||
Undistributed net investment income | 2,653,529 | |||
Net assets | $2,932,465,039 | |||
Shares of beneficial interest outstanding | 130,792,008 |
17
Table of Contents
Statement of Assets and Liabilities (unaudited) – continued
Net assets | Shares outstanding | Net asset value per share (a) | ||||||||||
Class A | $1,542,353,736 | 69,045,595 | $22.34 | |||||||||
Class B | 82,954,033 | 3,861,300 | 21.48 | |||||||||
Class C | 183,078,639 | 8,564,505 | 21.38 | |||||||||
Class I | 922,951,722 | 40,233,460 | 22.94 | |||||||||
Class R1 | 3,086,494 | 147,708 | 20.90 | |||||||||
Class R2 | 53,979,599 | 2,474,526 | 21.81 | |||||||||
Class R3 | 31,592,179 | 1,420,846 | 22.23 | |||||||||
Class R4 | 106,149,640 | 4,752,259 | 22.34 | |||||||||
Class 529A | 4,337,554 | 196,821 | 22.04 | |||||||||
Class 529B | 824,122 | 39,545 | 20.84 | |||||||||
Class 529C | 1,157,321 | 55,443 | 20.87 |
(a) | Maximum offering price per share was equal to the net asset value per share for all share classes, except for Classes A and 529A, for which the maximum offering prices per share were $23.70 [100 / 94.25 x $22.34] and $23.38 [100 / 94.25 x $22.04], respectively. On sales of $50,000 or more, the maximum offering prices of Class A and Class 529A shares are reduced. A contingent deferred sales charge may be imposed on redemptions of Class A, Class B, Class C, Class 529B, and Class 529C shares. Redemption price per share was equal to the net asset value per share for Classes I, R1, R2, R3, R4, and 529A. |
See Notes to Financial Statements
18
Table of Contents
Financial Statements
Six months ended 3/31/11 (unaudited)
This statement describes how much your fund earned in investment income and accrued in expenses.
It also describes any gains and/or losses generated by fund operations.
Net investment income | ||||
Income | ||||
Dividends | $23,045,145 | |||
Interest | 177,777 | |||
Dividends from underlying affiliated funds | 66,588 | |||
Foreign taxes withheld | (1,001,389 | ) | ||
Total investment income | $22,288,121 | |||
Expenses | ||||
Management fee | $12,881,603 | |||
Distribution and service fees | 3,348,067 | |||
Program manager fees | 2,896 | |||
Shareholder servicing costs | 1,923,740 | |||
Administrative services fee | 185,292 | |||
Independent Trustees’ compensation | 29,794 | |||
Custodian fee | 615,253 | |||
Shareholder communications | 75,351 | |||
Auditing fees | 27,917 | |||
Legal fees | 21,899 | |||
Miscellaneous | 130,179 | |||
Total expenses | $19,241,991 | |||
Fees paid indirectly | (178 | ) | ||
Reduction of expenses by investment adviser | (4,276 | ) | ||
Net expenses | $19,237,537 | |||
Net investment income | $3,050,584 | |||
Realized and unrealized gain (loss) on investments and foreign currency transactions | ||||
Realized gain (loss) (identified cost basis) | ||||
Investment transactions (net of $106 country tax refund) | $167,252,974 | |||
Foreign currency transactions | (709,342 | ) | ||
Net realized gain (loss) on investments | $166,543,632 | |||
Change in unrealized appreciation (depreciation) | ||||
Investments (net of $981,151 decrease in deferred country tax) | $124,338,707 | |||
Translation of assets and liabilities in foreign currencies | (26,109 | ) | ||
Net unrealized gain (loss) on investments | $124,312,598 | |||
Net realized and unrealized gain (loss) on investments | $290,856,230 | |||
Change in net assets from operations | $293,906,814 |
See Notes to Financial Statements
19
Table of Contents
Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.
Change in net assets | Six months ended 3/31/11 (unaudited) | Year ended 9/30/10 | ||||||
From operations | ||||||||
Net investment income | $3,050,584 | $26,262,798 | ||||||
Net realized gain (loss) on investments and foreign currency transactions | 166,543,632 | 97,610,407 | ||||||
Net unrealized gain (loss) on investments and foreign currency translation | 124,312,598 | 251,209,323 | ||||||
Change in net assets from operations | $293,906,814 | $375,082,528 | ||||||
Distributions declared to shareholders | ||||||||
From net investment income | $(25,600,271 | ) | $(25,090,658 | ) | ||||
Change in net assets from fund share transactions | $151,206,068 | $(25,605,978 | ) | |||||
Total change in net assets | $419,512,611 | $324,385,892 | ||||||
Net assets | ||||||||
At beginning of period | 2,512,952,428 | 2,188,566,536 | ||||||
At end of period (including undistributed net investment income of $2,653,529 and $25,203,216, respectively) | $2,932,465,039 | $2,512,952,428 |
See Notes to Financial Statements
20
Table of Contents
Financial Statements
The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
Six months 3/31/11 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class A | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning | $20.24 | $17.43 | $17.39 | $30.87 | $26.64 | $24.15 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.02 | $0.21 | $0.20 | $0.27 | $0.25 | $0.20 | ||||||||||||||||||
Net realized and | 2.28 | 2.80 | 1.05 | (8.25 | ) | 6.84 | 4.07 | |||||||||||||||||
Total from investment | $2.30 | $3.01 | $1.25 | $(7.98 | ) | $7.09 | $4.27 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment | $(0.20 | ) | $(0.20 | ) | $(0.26 | ) | $(0.27 | ) | $(0.23 | ) | $(0.13 | ) | ||||||||||||
From net realized gain on | — | — | (0.95 | ) | (5.23 | ) | (2.63 | ) | (1.65 | ) | ||||||||||||||
Total distributions declared | $(0.20 | ) | $(0.20 | ) | $(1.21 | ) | $(5.50 | ) | $(2.86 | ) | $(1.78 | ) | ||||||||||||
Redemption fees added to | $— | $— | $— | $— | $0.00 | (w) | $0.00 | (w) | ||||||||||||||||
Net asset value, end of | $22.34 | $20.24 | $17.43 | $17.39 | $30.87 | $26.64 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 11.43 | (n) | 17.43 | 9.88 | (31.08 | ) | 28.17 | 18.69 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.40 | (a) | 1.44 | 1.54 | 1.50 | 1.51 | 1.55 | |||||||||||||||||
Expenses after expense | 1.40 | (a) | 1.44 | 1.52 | 1.45 | 1.46 | 1.55 | |||||||||||||||||
Net investment income | 0.21 | (a) | 1.14 | 1.48 | 1.14 | 0.88 | 0.77 | |||||||||||||||||
Portfolio turnover | 30 | 34 | 42 | 66 | 67 | 68 | ||||||||||||||||||
Net assets at end of period | $1,542,354 | $1,359,614 | $1,253,375 | $1,472,636 | $2,891,693 | $2,635,185 |
See Notes to Financial Statements
21
Table of Contents
Financial Highlights – continued
Six months 3/31/11 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class B | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning | $19.38 | $16.70 | $16.66 | $29.76 | $25.77 | $23.44 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income | $(0.06 | ) | $0.06 | $0.09 | $0.10 | $0.05 | $0.03 | |||||||||||||||||
Net realized and | 2.19 | 2.70 | 1.02 | (7.93 | ) | 6.61 | 3.95 | |||||||||||||||||
Total from investment | $2.13 | $2.76 | $1.11 | $(7.83 | ) | $6.66 | $3.98 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment | $(0.03 | ) | $(0.08 | ) | $(0.12 | ) | $(0.04 | ) | $(0.04 | ) | $— | |||||||||||||
From net realized gain on | — | — | (0.95 | ) | (5.23 | ) | (2.63 | ) | (1.65 | ) | ||||||||||||||
Total distributions declared | $(0.03 | ) | $(0.08 | ) | $(1.07 | ) | $(5.27 | ) | $(2.67 | ) | $(1.65 | ) | ||||||||||||
Redemption fees added to | $— | $— | $— | $— | $0.00 | (w) | $0.00 | (w) | ||||||||||||||||
Net asset value, end of | $21.48 | $19.38 | $16.70 | $16.66 | $29.76 | $25.77 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 11.00 | (n) | 16.59 | 9.05 | (31.57 | ) | 27.30 | 17.92 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 2.15 | (a) | 2.19 | 2.26 | 2.15 | 2.16 | 2.20 | |||||||||||||||||
Expenses after expense | 2.15 | (a) | 2.19 | 2.26 | 2.15 | 2.16 | 2.20 | |||||||||||||||||
Net investment income (loss) | (0.56 | )(a) | 0.33 | 0.70 | 0.42 | 0.16 | 0.10 | |||||||||||||||||
Portfolio turnover | 30 | 34 | 42 | 66 | 67 | 68 | ||||||||||||||||||
Net assets at end of period | $82,954 | $85,229 | $101,608 | $143,620 | $301,724 | $311,077 |
See Notes to Financial Statements
22
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class C | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning | $19.31 | $16.66 | $16.61 | $29.69 | $25.74 | $23.41 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income | $(0.06 | ) | $0.07 | $0.09 | $0.09 | $0.05 | $0.03 | |||||||||||||||||
Net realized and | 2.19 | 2.68 | 1.01 | (7.89 | ) | 6.59 | 3.95 | |||||||||||||||||
Total from investment | $2.13 | $2.75 | $1.10 | $(7.80 | ) | $6.64 | $3.98 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment | $(0.06 | ) | $(0.10 | ) | $(0.10 | ) | $(0.05 | ) | $(0.06 | ) | $(0.00 | )(w) | ||||||||||||
From net realized gain on | — | — | (0.95 | ) | (5.23 | ) | (2.63 | ) | (1.65 | ) | ||||||||||||||
Total distributions declared | $(0.06 | ) | $(0.10 | ) | $(1.05 | ) | $(5.28 | ) | $(2.69 | ) | $(1.65 | ) | ||||||||||||
Redemption fees added to | $— | $— | $— | $— | $0.00 | (w) | $0.00 | (w) | ||||||||||||||||
Net asset value, end of | $21.38 | $19.31 | $16.66 | $16.61 | $29.69 | $25.74 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 11.04 | (n) | 16.57 | 9.04 | (31.55 | ) | 27.24 | 17.96 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 2.15 | (a) | 2.19 | 2.26 | 2.15 | 2.16 | 2.20 | |||||||||||||||||
Expenses after expense | 2.15 | (a) | 2.19 | 2.26 | 2.15 | 2.16 | 2.20 | |||||||||||||||||
Net investment income (loss) | (0.55 | )(a) | 0.38 | 0.71 | 0.41 | 0.18 | 0.11 | |||||||||||||||||
Portfolio turnover | 30 | 34 | 42 | 66 | 67 | 68 | ||||||||||||||||||
Net assets at end of period | $183,079 | $170,747 | $166,342 | $220,821 | $472,596 | $435,798 |
See Notes to Financial Statements
23
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class I | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning | $20.80 | $17.90 | $17.85 | $31.55 | $27.18 | $24.59 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.05 | $0.27 | $0.23 | $0.37 | $0.35 | $0.29 | ||||||||||||||||||
Net realized and | 2.34 | 2.87 | 1.09 | (8.48 | ) | 6.97 | 4.14 | |||||||||||||||||
Total from investment | $2.39 | $3.14 | $1.32 | $(8.11 | ) | $7.32 | $4.43 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment | $(0.25 | ) | $(0.24 | ) | $(0.32 | ) | $(0.36 | ) | $(0.32 | ) | $(0.19 | ) | ||||||||||||
From net realized gain on | — | — | (0.95 | ) | (5.23 | ) | (2.63 | ) | (1.65 | ) | ||||||||||||||
Total distributions declared | $(0.25 | ) | $(0.24 | ) | $(1.27 | ) | $(5.59 | ) | $(2.95 | ) | $(1.84 | ) | ||||||||||||
Redemption fees added to | $— | $— | $— | $— | $ 0.00 | (w) | $0.00 | (w) | ||||||||||||||||
Net asset value, end of | $22.94 | $20.80 | $17.90 | $17.85 | $31.55 | $27.18 | ||||||||||||||||||
Total return (%) (r)(s) | 11.55 | (n) | 17.72 | 10.19 | (30.87 | ) | 28.54 | 19.09 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.15 | (a) | 1.19 | 1.26 | 1.15 | 1.16 | 1.20 | |||||||||||||||||
Expenses after expense | 1.15 | (a) | 1.19 | 1.26 | 1.15 | 1.16 | 1.20 | |||||||||||||||||
Net investment income | 0.47 | (a) | 1.42 | 1.66 | 1.51 | 1.19 | 1.11 | |||||||||||||||||
Portfolio turnover | 30 | 34 | 42 | 66 | 67 | 68 | ||||||||||||||||||
Net assets at end of period | $922,952 | $774,647 | $584,559 | $691,978 | $1,040,477 | $791,709 |
See Notes to Financial Statements
24
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R1 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning | $18.89 | $16.33 | $16.37 | $29.42 | $25.58 | $23.43 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income | $(0.06 | ) | $0.07 | $0.10 | $0.10 | $0.05 | $0.01 | |||||||||||||||||
Net realized and | 2.14 | 2.61 | 0.97 | (7.79 | ) | 6.50 | 3.93 | |||||||||||||||||
Total from investment | $2.08 | $2.68 | $1.07 | $(7.69 | ) | $6.55 | $3.94 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment | $(0.07 | ) | $(0.12 | ) | $(0.16 | ) | $(0.13 | ) | $(0.08 | ) | $(0.14 | ) | ||||||||||||
From net realized gain on | — | — | (0.95 | ) | (5.23 | ) | (2.63 | ) | (1.65 | ) | ||||||||||||||
Total distributions declared | $(0.07 | ) | $(0.12 | ) | $(1.11 | ) | $(5.36 | ) | $(2.71 | ) | $(1.79 | ) | ||||||||||||
Redemption fees added to | $— | $— | $— | $— | $0.00 | (w) | $0.00 | (w) | ||||||||||||||||
Net asset value, end of | $20.90 | $18.89 | $16.33 | $16.37 | $29.42 | $25.58 | ||||||||||||||||||
Total return (%) (r)(s) | 11.06 | (n) | 16.51 | 9.07 | (31.54 | ) | 27.10 | 17.83 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 2.15 | (a) | 2.19 | 2.25 | 2.20 | 2.30 | 2.40 | |||||||||||||||||
Expenses after expense | 2.15 | (a) | 2.19 | 2.25 | 2.20 | 2.26 | 2.30 | |||||||||||||||||
Net investment income (loss) | (0.55 | )(a) | 0.41 | 0.80 | 0.44 | 0.17 | 0.05 | |||||||||||||||||
Portfolio turnover | 30 | 34 | 42 | 66 | 67 | 68 | ||||||||||||||||||
Net assets at end of period | $3,086 | $2,881 | $2,476 | $2,399 | $3,413 | $1,287 |
See Notes to Financial Statements
25
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R2 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning | $19.75 | $17.02 | $17.04 | $30.35 | $26.27 | $23.91 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (loss) (d) | $(0.00 | )(w) | $0.16 | $0.17 | $0.29 | $0.16 | $0.14 | |||||||||||||||||
Net realized and | 2.22 | 2.74 | 1.00 | (8.18 | ) | 6.73 | 4.01 | |||||||||||||||||
Total from investment | $2.22 | $2.90 | $1.17 | $(7.89 | ) | $6.89 | $4.15 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment | $(0.16 | ) | $(0.17 | ) | $(0.24 | ) | $(0.19 | ) | $(0.18 | ) | $(0.14 | ) | ||||||||||||
From net realized gain on | — | — | (0.95 | ) | (5.23 | ) | (2.63 | ) | (1.65 | ) | ||||||||||||||
Total distributions declared | $(0.16 | ) | $(0.17 | ) | $(1.19 | ) | $(5.42 | ) | $(2.81 | ) | $(1.79 | ) | ||||||||||||
Redemption fees added to | $— | $— | $— | $— | $0.00 | (w) | $0.00 | (w) | ||||||||||||||||
Net asset value, end of | $21.81 | $19.75 | $17.02 | $17.04 | $30.35 | $26.27 | ||||||||||||||||||
Total return (%) (r)(s) | 11.28 | (n) | 17.17 | 9.58 | (31.24 | ) | 27.75 | 18.36 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.65 | (a) | 1.69 | 1.75 | 1.68 | 1.85 | 1.95 | |||||||||||||||||
Expenses after expense | 1.65 | (a) | 1.69 | 1.75 | 1.68 | 1.81 | 1.85 | |||||||||||||||||
Net investment income (loss) | (0.02 | )(a) | 0.89 | 1.27 | 1.27 | 0.57 | 0.54 | |||||||||||||||||
Portfolio turnover | 30 | 34 | 42 | 66 | 67 | 68 | ||||||||||||||||||
Net assets at end of period | $53,980 | $42,679 | $39,097 | $44,529 | $40,709 | $23,313 |
See Notes to Financial Statements
26
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R3 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning | $20.16 | $17.36 | $17.34 | $30.82 | $26.64 | $24.15 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.03 | $0.21 | $0.21 | $0.29 | $0.24 | $0.21 | ||||||||||||||||||
Net realized and | 2.25 | 2.80 | 1.04 | (8.27 | ) | 6.82 | 4.06 | |||||||||||||||||
Total from investment | $2.28 | $3.01 | $1.25 | $(7.98 | ) | $7.06 | $4.27 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment | $(0.21 | ) | $(0.21 | ) | $(0.28 | ) | $(0.27 | ) | $(0.25 | ) | $(0.13 | ) | ||||||||||||
From net realized gain on | — | — | (0.95 | ) | (5.23 | ) | (2.63 | ) | (1.65 | ) | ||||||||||||||
Total distributions declared | $(0.21 | ) | $(0.21 | ) | $(1.23 | ) | $(5.50 | ) | $(2.88 | ) | $(1.78 | ) | ||||||||||||
Redemption fees added to | $— | $— | $— | $— | $0.00 | (w) | $0.00 | (w) | ||||||||||||||||
Net asset value, end of | $22.23 | $20.16 | $17.36 | $17.34 | $30.82 | $26.64 | ||||||||||||||||||
Total return (%) (r)(s) | 11.38 | (n) | 17.48 | 9.92 | (31.12 | ) | 28.08 | 18.71 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.40 | (a) | 1.44 | 1.50 | 1.44 | 1.56 | 1.59 | |||||||||||||||||
Expenses after expense | 1.40 | (a) | 1.44 | 1.50 | 1.44 | 1.56 | 1.59 | |||||||||||||||||
Net investment income | 0.25 | (a) | 1.18 | 1.55 | 1.25 | 0.84 | 0.80 | |||||||||||||||||
Portfolio turnover | 30 | 34 | 42 | 66 | 67 | 68 | ||||||||||||||||||
Net assets at end of period | $31,592 | $21,895 | $15,821 | $15,391 | $21,806 | $8,192 |
See Notes to Financial Statements
27
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R4 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning | $20.26 | $17.44 | $17.43 | $30.92 | $26.70 | $24.19 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.06 | $0.29 | $0.27 | $0.35 | $0.34 | $0.14 | ||||||||||||||||||
Net realized and | 2.27 | 2.77 | 1.01 | (8.28 | ) | 6.81 | 4.20 | |||||||||||||||||
Total from investment | $2.33 | $3.06 | $1.28 | $(7.93 | ) | $7.15 | $4.34 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment | $(0.25 | ) | $(0.24 | ) | $(0.32 | ) | $(0.33 | ) | $(0.30 | ) | $(0.18 | ) | ||||||||||||
From net realized gain on | — | — | (0.95 | ) | (5.23 | ) | (2.63 | ) | (1.65 | ) | ||||||||||||||
Total distributions declared | $(0.25 | ) | $(0.24 | ) | $(1.27 | ) | $(5.56 | ) | $(2.93 | ) | $(1.83 | ) | ||||||||||||
Redemption fees added to | $— | $— | $— | $— | $0.00 | (w) | $0.00 | (w) | ||||||||||||||||
Net asset value, end of | $22.34 | $20.26 | $17.44 | $17.43 | $30.92 | $26.70 | ||||||||||||||||||
Total return (%) (r)(s) | 11.57 | (n) | 17.73 | 10.20 | (30.90 | ) | 28.42 | 19.00 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.15 | (a) | 1.20 | 1.24 | 1.18 | 1.26 | 1.30 | |||||||||||||||||
Expenses after expense | 1.15 | (a) | 1.20 | 1.24 | 1.18 | 1.26 | 1.30 | |||||||||||||||||
Net investment income | 0.55 | (a) | 1.56 | 1.96 | 1.45 | 1.13 | 0.52 | |||||||||||||||||
Portfolio turnover | 30 | 34 | 42 | 66 | 67 | 68 | ||||||||||||||||||
Net assets at end of period | $106,150 | $50,050 | $21,166 | $13,716 | $22,080 | $16,063 |
See Notes to Financial Statements
28
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class 529A | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning | $19.97 | $17.21 | $17.18 | $30.54 | $26.40 | $23.97 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.01 | $0.20 | $0.19 | $0.23 | $0.17 | $0.13 | ||||||||||||||||||
Net realized and | 2.25 | 2.75 | 1.03 | (8.17 | ) | 6.76 | 4.04 | |||||||||||||||||
Total from investment | $2.26 | $2.95 | $1.22 | $(7.94 | ) | $6.93 | $4.17 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment | $(0.19 | ) | $(0.19 | ) | $(0.24 | ) | $(0.19 | ) | $(0.16 | ) | $(0.09 | ) | ||||||||||||
From net realized gain on | — | — | (0.95 | ) | (5.23 | ) | (2.63 | ) | (1.65 | ) | ||||||||||||||
Total distributions declared | $(0.19 | ) | $(0.19 | ) | $(1.19 | ) | $(5.42 | ) | $(2.79 | ) | $(1.74 | ) | ||||||||||||
Redemption fees added to | $— | $— | $— | $— | $0.00 | (w) | $0.00 | (w) | ||||||||||||||||
Net asset value, end of | $22.04 | $19.97 | $17.21 | $17.18 | $30.54 | $26.40 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 11.38 | (n) | 17.29 | 9.75 | (31.22 | ) | 27.78 | 18.38 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.50 | (a) | 1.54 | 1.63 | 1.68 | 1.76 | 1.80 | |||||||||||||||||
Expenses after expense | 1.50 | (a) | 1.54 | 1.63 | 1.68 | 1.76 | 1.80 | |||||||||||||||||
Net investment income | 0.12 | (a) | 1.11 | 1.45 | 1.00 | 0.58 | 0.52 | |||||||||||||||||
Portfolio turnover | 30 | 34 | 42 | 66 | 67 | 68 | ||||||||||||||||||
Net assets at end of period | $4,338 | $3,607 | $2,648 | $2,337 | $3,566 | $2,642 |
See Notes to Financial Statements
29
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class 529B | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning | $18.84 | $16.27 | $16.32 | $29.29 | $25.48 | $23.25 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income | $(0.07 | ) | $0.05 | $0.09 | $0.07 | $(0.01 | ) | $(0.03 | ) | |||||||||||||||
Net realized and | 2.13 | 2.61 | 0.96 | (7.79 | ) | 6.50 | 3.91 | |||||||||||||||||
Total from investment | $2.06 | $2.66 | $1.05 | $(7.72 | ) | $6.49 | $3.88 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment | $(0.06 | ) | $(0.09 | ) | $(0.15 | ) | $(0.02 | ) | $(0.05 | ) | $— | |||||||||||||
From net realized gain on | — | — | (0.95 | ) | (5.23 | ) | (2.63 | ) | (1.65 | ) | ||||||||||||||
Total distributions declared | $(0.06 | ) | $(0.09 | ) | $(1.10 | ) | $(5.25 | ) | $(2.68 | ) | $(1.65 | ) | ||||||||||||
Redemption fees added to | $— | $— | $— | $— | $0.00 | (w) | $0.00 | (w) | ||||||||||||||||
Net asset value, end of | $20.84 | $18.84 | $16.27 | $16.32 | $29.29 | $25.48 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 10.94 | (n) | 16.44 | 8.98 | (31.69 | ) | 26.93 | 17.62 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 2.25 | (a) | 2.29 | 2.35 | 2.33 | 2.41 | 2.45 | |||||||||||||||||
Expenses after expense | 2.25 | (a) | 2.29 | 2.35 | 2.33 | 2.41 | 2.45 | |||||||||||||||||
Net investment income (loss) | (0.66 | )(a) | 0.28 | 0.73 | 0.31 | (0.04 | ) | (0.10 | ) | |||||||||||||||
Portfolio turnover | 30 | 34 | 42 | 66 | 67 | 68 | ||||||||||||||||||
Net assets at end of period | $824 | $834 | $758 | $652 | $1,007 | $727 |
See Notes to Financial Statements
30
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class 529C | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning | $18.88 | $16.32 | $16.33 | $29.31 | $25.45 | $23.22 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income | $(0.06 | ) | $0.06 | $0.10 | $0.08 | $(0.02 | ) | $(0.04 | ) | |||||||||||||||
Net realized and | 2.12 | 2.61 | 0.97 | (7.81 | ) | 6.52 | 3.92 | |||||||||||||||||
Total from investment | $2.06 | $2.67 | $1.07 | $(7.73 | ) | $6.50 | $3.88 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment | $(0.07 | ) | $(0.11 | ) | $(0.13 | ) | $(0.02 | ) | $(0.01 | ) | $— | |||||||||||||
From net realized gain on | — | — | (0.95 | ) | (5.23 | ) | (2.63 | ) | (1.65 | ) | ||||||||||||||
Total distributions declared | $(0.07 | ) | $(0.11 | ) | $(1.08 | ) | $(5.25 | ) | $(2.64 | ) | $(1.65 | ) | ||||||||||||
Redemption fees added to | $— | $— | $— | $— | $0.00 | (w) | $0.00 | (w) | ||||||||||||||||
Net asset value, end of | $20.87 | $18.88 | $16.32 | $16.33 | $29.31 | $25.45 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 10.93 | (n) | 16.45 | 9.02 | (31.72 | ) | 26.97 | 17.64 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 2.25 | (a) | 2.29 | 2.34 | 2.33 | 2.41 | 2.45 | |||||||||||||||||
Expenses after expense | 2.25 | (a) | 2.29 | 2.34 | 2.33 | 2.41 | 2.45 | |||||||||||||||||
Net investment income (loss) | (0.59 | )(a) | 0.33 | 0.80 | 0.35 | (0.06 | ) | (0.14 | ) | |||||||||||||||
Portfolio turnover | 30 | 34 | 42 | 66 | 67 | 68 | ||||||||||||||||||
Net assets at end of period | $1,157 | $770 | $717 | $617 | $895 | $688 | ||||||||||||||||||
Supplemental Ratios (%): |
(a) | Anuualized. |
(d) | Per share data is based on average shares outstanding. |
(f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
(n) | Not annualized. |
(r) | Certain expenses have been reduced without which performance would have been lower. |
(s) | From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. |
(t) | Total returns do not include any applicable sales charges. |
(w) | Per share amount was less than $0.01. |
See Notes to Financial Statements
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(unaudited)
(1) | Business and Organization |
MFS International New Discovery Fund (the fund) is a series of MFS Series Trust V (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
(2) | Significant Accounting Policies |
General – The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests in foreign securities, including securities of emerging market issuers. Investments in foreign securities are vulnerable to the effects of changes in the relative values of the local currency and the U.S. dollar and to the effects of changes in each country’s legal, political, and economic environment. The markets of emerging markets countries are generally more volatile than the markets of developed countries with more mature economies. All of the risks of investing in foreign securities previously described are heightened when investing in emerging markets countries.
Investment Valuations – Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue,
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Notes to Financial Statements (unaudited) – continued
trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.
The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially effected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases,
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Notes to Financial Statements (unaudited) – continued
the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. The following is a summary of the levels used as of March 31, 2011 in valuing the fund’s assets or liabilities:
Investments at Value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Equity Securities: | ||||||||||||||||
United Kingdom | $560,987,479 | $— | $— | $560,987,479 | ||||||||||||
Japan | 404,342,368 | 1,743,208 | — | 406,085,576 | ||||||||||||
Brazil | 219,397,663 | — | — | 219,397,663 | ||||||||||||
Germany | 154,172,409 | — | — | 154,172,409 | ||||||||||||
United States | 136,799,670 | — | — | 136,799,670 | ||||||||||||
Australia | 123,086,914 | — | — | 123,086,914 | ||||||||||||
France | 116,658,809 | — | — | 116,658,809 | ||||||||||||
Switzerland | 105,069,847 | — | — | 105,069,847 | ||||||||||||
Hong Kong | 85,544,390 | — | — | 85,544,390 | ||||||||||||
Other Countries | 934,852,633 | 17,126,240 | — | 951,978,873 | ||||||||||||
Short Term Securities | — | 29,004,273 | — | 29,004,273 | ||||||||||||
Mutual Funds | 48,848,975 | — | — | 48,848,975 | ||||||||||||
Total Investments | $2,889,761,157 | $47,873,721 | $— | $2,937,634,878 |
For further information regarding security characteristics, see the Portfolio of Investments.
Repurchase Agreements – The fund entered into repurchase agreements with approved counterparties. Each repurchase agreement is recorded at cost. The fund requires that the securities collateral in a repurchase transaction be transferred to a custodian. The fund monitors, on a daily basis, the value of the collateral to ensure that its value, including accrued interest, is greater than amounts owed to the fund under each such repurchase agreement.
Foreign Currency Translation – Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on
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Notes to Financial Statements (unaudited) – continued
investments. Gains and losses attributable to foreign exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
Short Sales – The fund may enter into short sales whereby it sells a security it does not own in anticipation of a decline in the value of that security. The fund will realize a gain if the security price decreases and a loss if the security price increases between the date of the short sale and the date on which the fund replaces the borrowed security. Losses from short sales can exceed the proceeds of the security sold; and they can also exceed the potential loss from an ordinary buy and sell transaction. The amount of any premium, dividends, or interest the fund may be required to pay in connection with a short sale will be recognized as a fund expense. The fund segregates cash or marketable securities in an amount that, when combined with the amount of proceeds from the short sale deposited with the broker, at least equals the current market value of the security sold short. At March 31, 2011, the fund has yet to enter into such transactions.
Security Loans – JPMorgan Chase and Co. (“Chase”), as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. Chase provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in short-term securities. A portion of the income generated upon investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund and the lending agent. Income from securities lending is included in interest income on the Statement of Operations. The dividend and interest income earned on the securities loaned is accounted for in the same manner as other dividend and interest income.
Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service
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providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.
Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend and interest payments received in additional securities are recorded on the ex-dividend or ex-interest date in an amount equal to the value of the security on such date. The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended March 31, 2011, is shown as a reduction of total expenses on the Statement of Operations.
Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.
Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.
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Book/tax differences primarily relate to passive foreign investment company adjustments, wash sale loss deferrals, and foreign taxes.
The tax character of distributions made during the current period will be determined at fiscal year end. The tax character of distributions declared to shareholders for the last fiscal year is as follows:
9/30/10 | ||||
Ordinary income (including any short-term capital gains) | $25,090,658 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
As of 3/31/11 | ||||
Cost of investments | $2,442,915,750 | |||
Gross appreciation | 618,591,201 | |||
Gross depreciation | (123,872,073 | ) | ||
Net unrealized appreciation (depreciation) | $494,719,128 | |||
As of 9/30/10 | ||||
Undistributed ordinary income | 25,449,030 | |||
Capital loss carryforwards | (610,088,265 | ) | ||
Other temporary differences | (1,865,060 | ) | ||
Net unrealized appreciation (depreciation) | 371,361,572 |
The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.
As of September 30, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:
9/30/17 | $(99,932,068 | ) | ||
9/30/18 | (510,156,197 | ) | ||
Total | $(610,088,265 | ) |
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Notes to Financial Statements (unaudited) – continued
Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution, service, and program manager fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B and Class 529B shares will convert to Class A and Class 529A shares, respectively, approximately eight years after purchase. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:
From net investment income | ||||||||
Six months ended 3/31/11 | Year ended 9/30/10 | |||||||
Class A | $13,756,193 | $14,493,202 | ||||||
Class B | 125,350 | 466,634 | ||||||
Class C | 518,358 | 957,029 | ||||||
Class I | 9,665,922 | 8,217,119 | ||||||
Class R1 | 11,420 | 19,429 | ||||||
Class R2 | 358,424 | 395,160 | ||||||
Class R3 | 257,202 | 192,171 | ||||||
Class R4 | 866,373 | 311,731 | ||||||
Class 529A | 35,239 | 29,354 | ||||||
Class 529B | 2,458 | 3,924 | ||||||
Class 529C | 3,332 | 4,905 | ||||||
Total | $25,600,271 | $25,090,658 |
(3) | Transactions with Affiliates |
Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund.
The management fee is computed daily and paid monthly at the following annual rates:
First $500 million of average daily net assets | 0.975 | % | ||
Next $4.5 billion of average daily net assets | 0.925 | % | ||
Average daily net assets in excess of $5 billion | 0.85 | % |
The management fee incurred for the six months ended March 31, 2011 was equivalent to an annual effective rate of 0.93% of the fund’s average daily net assets.
The investment adviser had agreed in writing to pay a portion of the fund’s operating expenses, exclusive of management fee, distribution and service fee, program manager fees, interest, taxes, extraordinary expenses, brokerage and transaction costs and investment-related expenses, such that operating expenses
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do not exceed 0.40% annually of the fund’s average daily net assets. This written agreement terminated on February 1, 2011. For the six months ended March 31, 2011, the fund’s actual expenses did not exceed the limit and therefore, the investment advisor did not pay any portion of the fund’s expenses.
Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $144,526 and $2,109 for the six months ended March 31, 2011, as its portion of the initial sales charge on sales of Class A and Class 529A shares of the fund, respectively.
The Board of Trustees has adopted a distribution plan for certain class shares pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund’s distribution plan provides that the fund will pay MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.
Distribution Plan Fee Table:
Distribution Fee Rate (d) | Service Fee Rate (d) | Total Distribution Plan (d) | Annual Effective Rate (e) | Distribution and Service Fee | ||||||||||||||||
Class A | — | 0.25% | 0.25% | 0.25% | $1,842,850 | |||||||||||||||
Class B | 0.75% | 0.25% | 1.00% | 1.00% | 426,957 | |||||||||||||||
Class C | 0.75% | 0.25% | 1.00% | 1.00% | 892,785 | |||||||||||||||
Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 15,225 | |||||||||||||||
Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 122,408 | |||||||||||||||
Class R3 | — | 0.25% | 0.25% | 0.25% | 33,823 | |||||||||||||||
Class 529A | — | 0.25% | 0.25% | 0.25% | 4,980 | |||||||||||||||
Class 529B | 0.75% | 0.25% | 1.00% | 1.00% | 4,208 | |||||||||||||||
Class 529C | 0.75% | 0.25% | 1.00% | 1.00% | 4,831 | |||||||||||||||
Total Distribution and Service Fees | $3,348,067 |
(d) | In accordance with the distribution plan for certain classes, the fund pays distribution and/or service fees equal to these annual percentage rates of each class’ average daily net assets. The distribution and service fee rates disclosed by class represent the current rates in effect at the end of the reporting period. Any rate changes, if applicable, are detailed below. |
(e) | The annual effective rates represent actual fees incurred under the distribution plan for the six months ended March 31, 2011 based on each class’ average daily net assets. |
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Certain Class A shares are subject to a contingent deferred sales charge (CDSC) in the event of a shareholder redemption within 24 months of purchase. Class C and Class 529C shares are subject to a CDSC in the event of a shareholder redemption within 12 months of purchase. Class B and Class 529B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. All contingent deferred sales charges are paid to MFD and during the six months ended March 31, 2011, were as follows:
Amount | ||||
Class A | $157 | |||
Class B | 28,661 | |||
Class C | 4,702 | |||
Class 529B | 27 | |||
Class 529C | — |
The fund has entered into and may from time to time enter into contracts with program managers and other parties which administer the tuition programs through which an investment in the fund’s 529 share classes is made. The fund has entered into an agreement with MFD pursuant to which MFD receives an annual fee of up to 0.10% of the average daily net assets attributable to each 529 share class. The services provided by MFD, or a third party with which MFD contracts, include recordkeeping and tax reporting and account services, as well as services designed to maintain the program’s compliance with the Internal Revenue Code and other regulatory requirements. Program manager fees for the six months ended March 31, 2011, were as follows:
Amount | ||||
Class 529A | $1,992 | |||
Class 529B | 421 | |||
Class 529C | 483 | |||
Total Program Manager Fees | $2,896 |
Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent calculated as a percentage of the average daily net assets of the fund as determined periodically under the supervision of the fund’s Board of Trustees. For the six months ended March 31, 2011, the fee was $283,165, which equated to 0.0205% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses, sub-accounting and other shareholder servicing costs which may be paid to affiliated and unaffiliated service providers. For the six months ended March 31, 2011, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $1,170,295.
Under a Special Servicing Agreement among MFS, each MFS fund which invests in other MFS funds (“MFS fund-of-funds”) and certain underlying
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funds in which a MFS fund-of-funds invests (“underlying funds”), each underlying fund may pay a portion of each MFS fund-of-fund’s transfer agent-related expenses, including sub-accounting fees payable to financial intermediaries, to the extent such payments do not exceed the benefits realized or expected to be realized by the underlying fund from the investment in the underlying fund by the MFS fund-of-fund. For the six months ended March 31, 2011, these costs for the fund amounted to $470,280 and are reflected in the shareholder servicing costs on the Statement of Operations.
Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended March 31, 2011 was equivalent to an annual effective rate of 0.0134% of the fund’s average daily net assets.
Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Prior to December 31, 2001, the fund had an unfunded defined benefit plan (“DB plan”) for independent Trustees. As of December 31, 2001, the Board took action to terminate the DB plan with respect to then-current and any future independent Trustees, such that the DB Plan covers only certain of those former independent Trustees who retired on or before December 31, 2001. Effective January 1, 2002, accrued benefits under the DB Plan for then-current independent Trustees who continued were credited to an unfunded retirement deferral plan (the “Retirement Deferral plan”), which was established for and exists solely with respect to these credited amounts, and is not available for other deferrals by these or other independent Trustees. Although the Retirement Deferral plan is unfunded, amounts deferred under the plan are periodically adjusted for investment experience as if they had been invested in shares of the fund. The Retirement Deferral plan resulted in an expense of $849 and is included in independent Trustees’ compensation for the six months ended March 31, 2011. The liability for deferred retirement benefits payable to certain independent Trustees under the Retirement Deferral plan amounted to $4,174 at March 31, 2011, and is included in payable for independent Trustees’ compensation on the Statement of Assets and Liabilities.
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Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended March 31, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $14,779 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $4,276, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.
The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.
(4) | Portfolio Securities |
Purchases and sales of investments, other than U.S. Government securities, purchased option transactions, and short-term obligations, aggregated $868,295,612 and $793,144,009, respectively.
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(5) | Shares of Beneficial Interest |
The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
Six months ended 3/31/11 | Year ended 9/30/10 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares sold | ||||||||||||||||
Class A | 10,717,722 | $230,677,513 | 14,281,481 | $261,881,964 | ||||||||||||
Class B | 196,404 | 4,069,555 | 329,904 | 5,797,022 | ||||||||||||
Class C | 547,144 | 11,313,179 | 938,150 | 16,447,753 | ||||||||||||
Class I | 5,964,140 | 131,438,769 | 8,329,059 | 155,668,785 | ||||||||||||
Class R1 | 14,377 | 287,881 | 41,474 | 719,787 | ||||||||||||
Class R2 | 700,095 | 14,783,064 | 754,441 | 13,343,852 | ||||||||||||
Class R3 | 512,066 | 10,984,523 | 576,583 | 10,579,574 | ||||||||||||
Class R4 | 2,886,884 | 61,998,208 | 1,978,371 | 36,793,089 | ||||||||||||
Class 529A | 22,303 | 475,011 | 42,406 | 767,872 | ||||||||||||
Class 529B | 2,076 | 42,679 | 5,049 | 86,452 | ||||||||||||
Class 529C | 16,904 | 335,933 | 8,677 | 151,166 | ||||||||||||
21,580,115 | $466,406,315 | 27,285,595 | $502,237,316 | |||||||||||||
Shares issued to shareholders in reinvestment of distributions | ||||||||||||||||
Class A | 578,220 | $12,246,772 | 731,549 | $13,123,984 | ||||||||||||
Class B | 5,411 | 110,500 | 24,804 | 428,866 | ||||||||||||
Class C | 20,217 | 410,721 | 43,940 | 756,647 | ||||||||||||
Class I | 381,391 | 8,287,598 | 377,071 | 6,938,103 | ||||||||||||
Class R1 | 575 | 11,420 | 1,153 | 19,429 | ||||||||||||
Class R2 | 14,107 | 292,011 | 18,089 | 317,469 | ||||||||||||
Class R3 | 12,201 | 257,202 | 10,640 | 190,148 | ||||||||||||
Class R4 | 19,007 | 402,199 | 1,113 | 19,937 | ||||||||||||
Class 529A | 1,686 | 35,239 | 1,657 | 29,354 | ||||||||||||
Class 529B | 124 | 2,458 | 233 | 3,924 | ||||||||||||
Class 529C | 168 | 3,332 | 291 | 4,905 | ||||||||||||
1,033,107 | $22,059,452 | 1,210,540 | $21,832,766 |
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Six months ended 3/31/11 | Year ended 9/30/10 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares reacquired | ||||||||||||||||
Class A | (9,434,007 | ) | $(203,463,127 | ) | (19,751,546 | ) | $(362,047,819 | ) | ||||||||
Class B | (738,351 | ) | (15,249,788 | ) | (2,039,489 | ) | (35,775,640 | ) | ||||||||
Class C | (844,773 | ) | (17,420,009 | ) | (2,123,272 | ) | (36,951,542 | ) | ||||||||
Class I | (3,360,062 | ) | (74,407,511 | ) | (4,120,833 | ) | (76,793,251 | ) | ||||||||
Class R1 | (19,764 | ) | (401,690 | ) | (41,760 | ) | (719,324 | ) | ||||||||
Class R2 | (400,634 | ) | (8,456,561 | ) | (908,066 | ) | (16,144,560 | ) | ||||||||
Class R3 | (189,721 | ) | (4,086,854 | ) | (412,102 | ) | (7,443,911 | ) | ||||||||
Class R4 | (624,461 | ) | (13,420,953 | ) | (722,535 | ) | (13,151,611 | ) | ||||||||
Class 529A | (7,827 | ) | (166,204 | ) | (17,312 | ) | (313,269 | ) | ||||||||
Class 529B | (6,917 | ) | (138,413 | ) | (7,621 | ) | (128,211 | ) | ||||||||
Class 529C | (2,413 | ) | (48,589 | ) | (12,121 | ) | (206,922 | ) | ||||||||
(15,628,930 | ) | $(337,259,699 | ) | (30,156,657 | ) | $(549,676,060 | ) | |||||||||
Net change | ||||||||||||||||
Class A | 1,861,935 | $39,461,158 | (4,738,516 | ) | $(87,041,871 | ) | ||||||||||
Class B | (536,536 | ) | (11,069,733 | ) | (1,684,781 | ) | (29,549,752 | ) | ||||||||
Class C | (277,412 | ) | (5,696,109 | ) | (1,141,182 | ) | (19,747,142 | ) | ||||||||
Class I | 2,985,469 | 65,318,856 | 4,585,297 | 85,813,637 | ||||||||||||
Class R1 | (4,812 | ) | (102,389 | ) | 867 | 19,892 | ||||||||||
Class R2 | 313,568 | 6,618,514 | (135,536 | ) | (2,483,239 | ) | ||||||||||
Class R3 | 334,546 | 7,154,871 | 175,121 | 3,325,811 | ||||||||||||
Class R4 | 2,281,430 | 48,979,454 | 1,256,949 | 23,661,415 | ||||||||||||
Class 529A | 16,162 | 344,046 | 26,751 | 483,957 | ||||||||||||
Class 529B | (4,717 | ) | (93,276 | ) | (2,339 | ) | (37,835 | ) | ||||||||
Class 529C | 14,659 | 290,676 | (3,153 | ) | (50,851 | ) | ||||||||||
6,984,292 | $151,206,068 | (1,660,522 | ) | $(25,605,978 | ) |
The fund is one of several mutual funds in which the MFS funds-of-funds may invest. The MFS funds-of-funds do not invest in the underlying MFS funds for the purpose of exercising management or control. At the end of the period, the MFS International Diversification Fund, MFS Growth Allocation Fund and MFS Aggressive Growth Allocation Fund were the owners of record of approximately 9%, 2% and 2%, respectively, of the value of outstanding voting shares of the fund. In addition, the MFS Moderate Allocation Fund, MFS Lifetime 2020 Fund, MFS Lifetime 2030 Fund, MFS Lifetime 2040 Fund and the MFS Lifetime 2050 Fund were each the owners of record of less than 1% of the value of outstanding voting shares of the fund.
(6) | Line of Credit |
The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made
44
Table of Contents
Notes to Financial Statements (unaudited) – continued
for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended March 31, 2011, the fund’s commitment fee and interest expense were $12,851 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.
(7) | Transactions in Underlying Affiliated Funds-Affiliated Issuers |
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:
Underlying Affiliated Funds | Beginning Shares/Par Amount | Acquisitions Shares/Par Amount | Dispositions Shares/Par Amount | Ending Shares/Par Amount | ||||||||||||
MFS Institutional Money Market Portfolio | 37,168,300 | 346,483,974 | (334,803,299 | ) | 48,848,975 | |||||||||||
Underlying Affiliated Funds | Realized Gain (Loss) | Capital Gain Distributions | Dividend Income | Ending Value | ||||||||||||
MFS Institutional Money Market Portfolio | $— | $— | $66,588 | $48,848,975 |
45
Table of Contents
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT
A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS is available by clicking on the fund’s name under “Mutual Funds” in the “Products and Performance” section of the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site at http://www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section at the above address.
A shareholder can also obtain the quarterly portfolio holdings report at mfs.com.
From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Mutual Funds” in the “Products and Performance” section of mfs.com.
46
Table of Contents
rev. 3/11
FACTS | WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION? |
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include:
•Social Security number and account balances •Account transactions and transaction history •Checking account information and wire transfer instructions
When you are no longer our customer, we continue to share your information as described in this notice. |
How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your personal information | Does MFS share? | Can you limit this sharing? | ||
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No | ||
For our marketing purposes – to offer our products and services to you | No | We don’t share | ||
For joint marketing with other financial companies | No | We don’t share | ||
For our affiliates’ everyday business purposes – information about your transactions and experiences | No | We don’t share | ||
For our affiliates’ everyday business purposes – information about your creditworthiness | No | We don’t share | ||
For nonaffiliates to market to you | No | We don’t share |
Questions? | Call 800-225-2606 or go to mfs.com. |
47
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Page 2 |
Who we are | ||
Who is providing this notice? | MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc. |
What we do | ||
How does MFS protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you. | |
How does MFS collect my personal information? | We collect your personal information, for example, when you
•open an account or provide account information •direct us to buy securities or direct us to sell your securities •make a wire transfer
We also collect your personal information from others, such as credit bureaus, affiliates and other companies. | |
Why can’t I limit all sharing? | Federal law gives you the right to limit only
•sharing for affiliates’ everyday business purposes – information about your creditworthiness •affiliates from using your information to market to you •sharing for nonaffiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. |
Definitions | ||
Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies.
• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice. | |
Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies.
• MFS does not share with nonaffiliates so they can market to you. | |
Joint Marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you.
• MFS doesn’t jointly market. |
Other important information | ||
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. |
48
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MFS® will send you prospectuses, reports, and proxies directly via e-mail so you will get information faster with less mailbox clutter.
To sign up:
1. Go to mfs.com.
2. Log in via MFS® Access.
3. Select eDelivery.
If you own your MFS fund shares through a financial institution or a retirement plan, MFS® TALK, MFS® Access, or eDelivery may not be available to you.
Web site
mfs.com
MFS TALK
1-800-637-8255
24 hours a day
Account service and literature
Shareholders
1-800-225-2606
Financial advisors
1-800-343-2829
Retirement plan services
1-800-637-1255
Mailing address
MFS Service Center, Inc.
P.O. Box 55824
Boston, MA 02205-5824
Overnight mail
MFS Service Center, Inc.
c/o Boston Financial Data Services
30 Dan Road
Canton, MA 02021-2809
Table of Contents
MFS® Research Fund
SEMIANNUAL REPORT
March 31, 2011
MFR-SEM
Table of Contents
The report is prepared for the general information of shareholders.
It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK GUARANTEE
Table of Contents
Dear Shareholders:
After an extended rebound in the financial markets, uncertainty returned in 2010 as investors began to question the durability of the recovery for global economies and markets. That uncertainty led to increased risk aversion, especially as investors saw the eurozone struggle with the debt woes of many of its members. Last September, the U.S. Federal Reserve Board’s promises to further loosen monetary policy helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment. For 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide will be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, and the Middle East.
As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.
Respectfully,
Robert J. Manning
Chairman and Chief Executive Officer
MFS Investment Management®
May 16, 2011
The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.
1
Table of Contents
Portfolio structure
Top ten holdings | ||||
Apple, Inc. | 3.9% | |||
Danaher Corp. | 2.6% | |||
Exxon Mobil Corp. | 2.6% | |||
JPMorgan Chase & Co. | 2.1% | |||
Fluor Corp. | 2.0% | |||
Chevron Corp. | 2.0% | |||
Oracle Corp. | 1.9% | |||
Occidental Petroleum Corp. | 1.8% | |||
EMC Corp. | 1.5% | |||
Bank of America Corp. | 1.4% |
Global equity sectors | ||||
Technology | 18.3% | |||
Energy | 16.2% | |||
Capital Goods (s) | 15.8% | |||
Financial Services | 15.6% | |||
Health Care | 10.6% | |||
Consumer Cyclicals | 10.0% | |||
Consumer Staples | 8.0% | |||
Telecommunications/Cable television | 4.1% |
(s) | Includes both common stocks and securities sold short. |
Percentages are based on net assets as of 3/31/11.
The portfolio is actively managed and current holdings may be different.
2
Table of Contents
Fund expenses borne by the shareholders during the period,
October 1, 2010 through March 31, 2011
As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchase or redemption payments, and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period October 1, 2010 through March 31, 2011.
The expenses include the payment of a portion of the transfer-agent-related expenses of MFS funds that invest in the fund. For further information, please see the Notes to the Financial Statements.
Actual Expenses
The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
3
Table of Contents
Expense Table – continued
Share Class | Annualized Expense Ratio | Beginning Account Value 10/01/10 | Ending Account Value 3/31/11 | Expenses Paid During Period (p) 10/01/10-3/31/11 | ||||||||||||||
A | Actual | 0.90% | $1,000.00 | $1,171.77 | $4.87 | |||||||||||||
Hypothetical (h) | 0.90% | $1,000.00 | $1,020.44 | $4.53 | ||||||||||||||
B | Actual | 1.65% | $1,000.00 | $1,167.55 | $8.92 | |||||||||||||
Hypothetical (h) | 1.65% | $1,000.00 | $1,016.70 | $8.30 | ||||||||||||||
C | Actual | 1.65% | $1,000.00 | $1,167.95 | $8.92 | |||||||||||||
Hypothetical (h) | 1.65% | $1,000.00 | $1,016.70 | $8.30 | ||||||||||||||
I | Actual | 0.65% | $1,000.00 | $1,173.29 | $3.52 | |||||||||||||
Hypothetical (h) | 0.65% | $1,000.00 | $1,021.69 | $3.28 | ||||||||||||||
W | Actual | 0.75% | $1,000.00 | $1,172.72 | $4.06 | |||||||||||||
Hypothetical (h) | 0.75% | $1,000.00 | $1,021.19 | $3.78 | ||||||||||||||
R1 | Actual | 1.65% | $1,000.00 | $1,167.97 | $8.92 | |||||||||||||
Hypothetical (h) | 1.65% | $1,000.00 | $1,016.70 | $8.30 | ||||||||||||||
R2 | Actual | 1.15% | $1,000.00 | $1,170.52 | $6.22 | |||||||||||||
Hypothetical (h) | 1.15% | $1,000.00 | $1,019.20 | $5.79 | ||||||||||||||
R3 | Actual | 0.90% | $1,000.00 | $1,172.18 | $4.87 | |||||||||||||
Hypothetical (h) | 0.90% | $1,000.00 | $1,020.44 | $4.53 | ||||||||||||||
R4 | Actual | 0.65% | $1,000.00 | $1,172.89 | $3.52 | |||||||||||||
Hypothetical (h) | 0.65% | $1,000.00 | $1,021.69 | $3.28 |
(h) | 5% class return per year before expenses. |
(p) | Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Expenses Impacting Table
Expense ratios include 0.01% of investment related expenses from short sales.
4
Table of Contents
3/31/11 (unaudited)
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Common Stocks - 98.2% | ||||||||
Issuer | Shares/Par | Value ($) | ||||||
Aerospace - 2.3% | ||||||||
Goodrich Corp. | 131,720 | $ | 11,266,012 | |||||
Honeywell International, Inc. | 339,020 | 20,242,875 | ||||||
Precision Castparts Corp. | 139,730 | 20,565,461 | ||||||
$ | 52,074,348 | |||||||
Apparel Manufacturers - 0.7% | ||||||||
NIKE, Inc., “B” | 117,830 | $ | 8,919,731 | |||||
Phillips-Van Heusen Corp. | 112,180 | 7,295,065 | ||||||
$ | 16,214,796 | |||||||
Automotive - 0.9% | ||||||||
General Motors Co. (a) | 288,620 | $ | 8,955,879 | |||||
Johnson Controls, Inc. | 274,340 | 11,404,314 | ||||||
$ | 20,360,193 | |||||||
Biotechnology - 1.2% | ||||||||
Amgen, Inc. (a) | 192,890 | $ | 10,309,971 | |||||
Gilead Sciences, Inc. (a) | 387,950 | 16,464,598 | ||||||
$ | 26,774,569 | |||||||
Broadcasting - 2.0% | ||||||||
Viacom, Inc., “B” | 450,860 | $ | 20,974,007 | |||||
Walt Disney Co. | 560,560 | 24,154,530 | ||||||
$ | 45,128,537 | |||||||
Brokerage & Asset Managers - 2.6% | ||||||||
Affiliated Managers Group, Inc. (a) | 135,590 | $ | 14,829,478 | |||||
Blackrock, Inc. | 57,378 | 11,533,552 | ||||||
CME Group, Inc. | 32,370 | 9,761,174 | ||||||
Franklin Resources, Inc. | 125,620 | 15,712,550 | ||||||
GFI Group, Inc. | 1,359,260 | 6,823,485 | ||||||
$ | 58,660,239 | |||||||
Business Services - 1.0% | ||||||||
Accenture Ltd., “A” | 399,450 | $ | 21,957,767 | |||||
Cable TV - 1.4% | ||||||||
Comcast Corp., “Special A” | 771,540 | $ | 17,915,159 | |||||
DIRECTV, “A” (a) | 235,460 | 11,019,528 |
5
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Cable TV - continued | ||||||||
Virgin Media, Inc. | 123,080 | $ | 3,420,393 | |||||
$ | 32,355,080 | |||||||
Chemicals - 2.1% | ||||||||
Celanese Corp. | 482,510 | $ | 21,408,969 | |||||
Ecolab, Inc. | 210,150 | 10,721,853 | ||||||
Monsanto Co. | 217,040 | 15,683,310 | ||||||
$ | 47,814,132 | |||||||
Computer Software - 4.4% | ||||||||
Autodesk, Inc. (a) | 423,920 | $ | 18,699,111 | |||||
Check Point Software Technologies Ltd. (a) | 234,150 | 11,953,358 | ||||||
Intuit, Inc. (a) | 218,520 | 11,603,412 | ||||||
Oracle Corp. | 1,305,650 | 43,569,541 | ||||||
Red Hat, Inc. (a) | 168,040 | 7,627,336 | ||||||
VeriSign, Inc. | 243,820 | 8,828,722 | ||||||
$ | 102,281,480 | |||||||
Computer Software - Systems - 6.3% | ||||||||
Apple, Inc. (a)(s) | 258,170 | $ | 89,959,337 | |||||
EMC Corp. (a) | 1,339,840 | 35,572,752 | ||||||
International Business Machines Corp. | 115,610 | 18,852,523 | ||||||
$ | 144,384,612 | |||||||
Construction - 0.9% | ||||||||
Owens Corning (a) | 604,560 | $ | 21,758,114 | |||||
Consumer Products - 1.1% | ||||||||
Avon Products, Inc. | 969,610 | $ | 26,218,254 | |||||
Consumer Services - 0.3% | ||||||||
Monster Worldwide, Inc. (a) | 419,890 | $ | 6,676,251 | |||||
Containers - 0.5% | ||||||||
Graham Packaging Co., Inc. (a) | 622,280 | $ | 10,846,340 | |||||
Electrical Equipment - 2.6% | ||||||||
Danaher Corp. | 1,142,320 | $ | 59,286,408 | |||||
Electronics - 3.1% | ||||||||
Advanced Micro Devices, Inc. (a) | 1,611,667 | $ | 13,860,336 | |||||
ASML Holding N.V. | 384,900 | 17,128,050 | ||||||
First Solar, Inc. (a) | 80,710 | 12,981,396 |
6
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Electronics - continued | ||||||||
JDS Uniphase Corp. (a) | 162,440 | $ | 3,385,250 | |||||
Microchip Technology, Inc. | 322,300 | 12,250,623 | ||||||
Samsung Electronics Co. Ltd., GDR | 27,266 | 11,618,043 | ||||||
$ | 71,223,698 | |||||||
Energy - Independent - 3.9% | ||||||||
Apache Corp. | 218,390 | $ | 28,591,619 | |||||
CONSOL Energy, Inc. | 66,190 | 3,549,770 | ||||||
EOG Resources, Inc. | 86,120 | 10,206,081 | ||||||
Occidental Petroleum Corp. | 396,770 | 41,458,497 | ||||||
Southwestern Energy Co. (a) | 136,360 | 5,859,389 | ||||||
$ | 89,665,356 | |||||||
Energy - Integrated - 6.1% | ||||||||
BP PLC, ADR | 311,940 | $ | 13,769,032 | |||||
Chevron Corp. (s) | 428,790 | 46,064,910 | ||||||
EQT Corp. | 83,550 | 4,169,145 | ||||||
Exxon Mobil Corp. | 701,150 | 58,987,750 | ||||||
QEP Resources, Inc. | 405,760 | 16,449,510 | ||||||
$ | 139,440,347 | |||||||
Engineering - Construction - 2.0% | ||||||||
Fluor Corp. | 639,230 | $ | 47,085,682 | |||||
Food & Beverages - 3.7% | ||||||||
Bunge Ltd. | 198,900 | $ | 14,386,437 | |||||
Dr Pepper Snapple Group, Inc. | 352,880 | 13,113,021 | ||||||
General Mills, Inc. | 546,290 | 19,966,900 | ||||||
Groupe Danone | 185,920 | 12,145,379 | ||||||
PepsiCo, Inc. | 397,230 | 25,585,584 | ||||||
$ | 85,197,321 | |||||||
Food & Drug Stores - 0.5% | ||||||||
Walgreen Co. | 276,020 | $ | 11,079,443 | |||||
Gaming & Lodging - 0.4% | ||||||||
Marriott International, Inc., “A” | 267,990 | $ | 9,535,084 | |||||
General Merchandise - 2.4% | ||||||||
Dollar General Corp. (a) | 265,510 | $ | 8,323,739 | |||||
Kohl’s Corp. | 291,720 | 15,472,829 | ||||||
Target Corp. | 616,650 | 30,838,667 | ||||||
$ | 54,635,235 |
7
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Health Maintenance Organizations - 0.4% | ||||||||
WellPoint, Inc. | 133,340 | $ | 9,305,799 | |||||
Insurance - 3.8% | ||||||||
ACE Ltd. | 262,020 | $ | 16,952,694 | |||||
Aon Corp. | 269,890 | 14,293,374 | ||||||
Chubb Corp. | 165,830 | 10,167,037 | ||||||
MetLife, Inc. | 648,030 | 28,986,382 | ||||||
Prudential Financial, Inc. | 274,740 | 16,918,489 | ||||||
$ | 87,317,976 | |||||||
Internet - 1.2% | ||||||||
Google, Inc., “A” (a) | 48,760 | $ | 28,583,600 | |||||
Machinery & Tools - 0.4% | ||||||||
Regal Beloit Corp. | 136,050 | $ | 10,044,572 | |||||
Major Banks - 6.2% | ||||||||
Bank of America Corp. | 2,496,930 | $ | 33,284,077 | |||||
Bank of New York Mellon Corp. | 394,536 | 11,784,790 | ||||||
Goldman Sachs Group, Inc. | 166,740 | 26,423,288 | ||||||
JPMorgan Chase & Co. (s) | 1,054,090 | 48,593,549 | ||||||
KeyCorp | 1,243,850 | 11,045,388 | ||||||
SunTrust Banks, Inc. | 413,250 | 11,918,130 | ||||||
$ | 143,049,222 | |||||||
Medical & Health Technology & Services - 1.9% | ||||||||
AmerisourceBergen Corp. | 183,420 | $ | 7,256,095 | |||||
Medco Health Solutions, Inc. (a) | 261,060 | 14,661,130 | ||||||
Patterson Cos., Inc. | 314,480 | 10,123,111 | ||||||
Quest Diagnostics, Inc. | 206,700 | 11,930,724 | ||||||
$ | 43,971,060 | |||||||
Medical Equipment - 3.2% | ||||||||
Becton, Dickinson & Co. | 127,500 | $ | 10,151,550 | |||||
Covidien PLC | 270,520 | 14,050,809 | ||||||
Medtronic, Inc. | 496,640 | 19,542,784 | ||||||
St. Jude Medical, Inc. | 244,680 | 12,542,297 | ||||||
Thermo Fisher Scientific, Inc. (a) | 305,110 | 16,948,861 | ||||||
$ | 73,236,301 | |||||||
Metals & Mining - 0.7% | ||||||||
Teck Resources Ltd., “B” | 325,839 | $ | 17,271,652 |
8
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Natural Gas - Distribution - 0.6% | ||||||||
AGL Resources, Inc. | 334,800 | $ | 13,338,432 | |||||
Natural Gas - Pipeline - 0.3% | ||||||||
Kinder Morgan, Inc. (a) | 238,780 | $ | 7,077,439 | |||||
Network & Telecom - 2.3% | ||||||||
Cisco Systems, Inc. | 913,810 | $ | 15,671,842 | |||||
F5 Networks, Inc. (a) | 125,290 | 12,850,995 | ||||||
Finisar Corp. (a) | 199,360 | 4,904,256 | ||||||
Juniper Networks, Inc. (a) | 445,970 | 18,766,418 | ||||||
$ | 52,193,511 | |||||||
Oil Services - 3.0% | ||||||||
Cameron International Corp. (a) | 117,000 | $ | 6,680,700 | |||||
Halliburton Co. | 599,530 | 29,880,575 | ||||||
Schlumberger Ltd. | 225,800 | 21,058,108 | ||||||
Transocean, Inc. (a) | 145,070 | 11,308,207 | ||||||
$ | 68,927,590 | |||||||
Other Banks & Diversified Financials - 3.0% | ||||||||
Citigroup, Inc. (a) | 6,594,110 | $ | 29,145,966 | |||||
TCF Financial Corp. | 560,510 | 8,889,689 | ||||||
Visa, Inc., “A” | 279,220 | 20,556,176 | ||||||
Zions Bancorporation | 455,940 | 10,513,976 | ||||||
$ | 69,105,807 | |||||||
Pharmaceuticals - 3.9% | ||||||||
Abbott Laboratories | 621,310 | $ | 30,475,256 | |||||
Johnson & Johnson | 325,320 | 19,275,210 | ||||||
Pfizer, Inc. | 1,327,790 | 26,967,415 | ||||||
Teva Pharmaceutical Industries Ltd., ADR | 254,710 | 12,778,801 | ||||||
$ | 89,496,682 | |||||||
Pollution Control - 0.5% | ||||||||
Republic Services, Inc. | 408,720 | $ | 12,277,949 | |||||
Railroad & Shipping - 0.9% | ||||||||
CSX Corp. | 250,210 | $ | 19,666,506 | |||||
Restaurants - 1.1% | ||||||||
McDonald’s Corp. | 341,550 | $ | 25,988,540 |
9
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Specialty Chemicals - 1.2% | ||||||||
Airgas, Inc. | 412,490 | $ | 27,397,586 | |||||
Specialty Stores - 2.6% | ||||||||
Abercrombie & Fitch Co., “A” | 202,470 | $ | 11,884,989 | |||||
Amazon.com, Inc. (a) | 48,480 | 8,732,702 | ||||||
PetSmart, Inc. | 268,020 | 10,975,419 | ||||||
Staples, Inc. | 309,280 | 6,006,218 | ||||||
Tiffany & Co. | 240,520 | 14,777,549 | ||||||
Urban Outfitters, Inc. (a) | 277,390 | 8,274,544 | ||||||
$ | 60,651,421 | |||||||
Telecommunications - Wireless - 0.1% | ||||||||
Sprint Nextel Corp. (a) | 466,430 | $ | 2,164,235 | |||||
Telephone Services - 2.6% | ||||||||
American Tower Corp., “A” (a) | 144,010 | $ | 7,462,598 | |||||
AT&T, Inc. | 882,320 | 26,998,992 | ||||||
Bezeq - The Israel Telecommunication Corp. Ltd. | 2,129,980 | 6,316,039 | ||||||
Qwest Communications International, Inc. | 1,020,820 | 6,972,201 | ||||||
Verizon Communications, Inc. | 306,900 | 11,827,926 | ||||||
$ | 59,577,756 | |||||||
Tobacco - 3.2% | ||||||||
Altria Group, Inc. | 1,004,090 | $ | 26,136,463 | |||||
Philip Morris International, Inc. | 453,480 | 29,761,892 | ||||||
Reynolds American, Inc. | 476,740 | 16,938,572 | ||||||
$ | 72,836,927 | |||||||
Trucking - 1.0% | ||||||||
Expeditors International of Washington, Inc. | 467,800 | $ | 23,455,492 | |||||
Utilities - Electric Power - 1.7% | ||||||||
American Electric Power Co., Inc. | 473,020 | $ | 16,621,923 | |||||
CMS Energy Corp. | 1,116,820 | 21,934,345 | ||||||
$ | 38,556,268 | |||||||
Total Common Stocks (Identified Cost, $1,960,229,041) | $ | 2,256,145,609 | ||||||
Convertible Preferred Stocks - 0.6% | ||||||||
Energy - Independent - 0.3% | ||||||||
Apache Corp., 6% | 92,200 | $ | 6,533,292 |
10
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Convertible Preferred Stocks - continued | ||||||||
Utilities - Electric Power - 0.3% | ||||||||
PPL Corp., 9.5% | 112,570 | $ | 5,993,227 | |||||
Total Convertible Preferred Stocks (Identified Cost, $10,456,713) | $ | 12,526,519 | ||||||
Money Market Funds (v) - 1.0% | ||||||||
MFS Institutional Money Market Portfolio, 0.19%, at Cost and Net Asset Value | 23,055,428 | $ | 23,055,428 | |||||
Total Investments (Identified Cost, $1,993,741,182) | $ | 2,291,727,556 | ||||||
Securities Sold Short - (0.2)% | ||||||||
Electrical Equipment - (0.2)% | ||||||||
Emerson Electric Co. (Proceeds Received, $4,838,944) | (95,200 | ) | $ | (5,562,536 | ) | |||
Other Assets, Less Liabilities - 0.4% | 10,987,195 | |||||||
Net Assets - 100.0% | $ | 2,297,152,215 |
(a) | Non-income producing security. |
(s) | Security or a portion of the security was pledged to cover collateral requirements for securities sold short. At March 31, 2011, the value of securities pledged amounted to $5,241,437. |
(v) | Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end. |
The following abbreviations are used in this report and are defined:
ADR | American Depository Receipt |
GDR | Global Depository Receipt |
PLC | Public Limited Company |
See Notes to Financial Statements
11
Table of Contents
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 3/31/11 (unaudited)
This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.
Assets | ||||
Investments- | ||||
Non-affiliated issuers, at value (identified cost, $1,970,685,754) | $2,268,672,128 | |||
Underlying affiliated funds, at cost and value | 23,055,428 | |||
Total investments, at value (identified cost, $1,993,741,182) | $2,291,727,556 | |||
Cash | 4,790,640 | |||
Receivables for | ||||
Investments sold | 3,356,005 | |||
Fund shares sold | 8,054,045 | |||
Dividends | 2,236,670 | |||
Other assets | 69,572 | |||
Total assets | $2,310,234,488 | |||
Liabilities | ||||
Payables for | ||||
Securities sold short, at value (proceeds received, $4,838,944) | $5,562,536 | |||
Investments purchased | 3,432,761 | |||
Fund shares reacquired | 3,194,709 | |||
Payable to affiliates | ||||
Investment adviser | 55,787 | |||
Shareholder servicing costs | 521,442 | |||
Distribution and service fees | 28,111 | |||
Payable for independent Trustees’ compensation | 189,580 | |||
Accrued expenses and other liabilities | 97,347 | |||
Total liabilities | $13,082,273 | |||
Net assets | $2,297,152,215 | |||
Net assets consist of | ||||
Paid-in capital | $2,351,168,402 | |||
Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 297,262,782 | |||
Accumulated net realized gain (loss) on investments and foreign currency transactions | (360,275,974 | ) | ||
Undistributed net investment income | 8,997,005 | |||
Net assets | $2,297,152,215 | |||
Shares of beneficial interest outstanding | 87,955,537 |
12
Table of Contents
Statement of Assets and Liabilities (unaudited) – continued
Net assets | Shares outstanding | Net asset value per share (a) | ||||||||||
Class A | $1,467,307,350 | 56,211,843 | $26.10 | |||||||||
Class B | 47,726,971 | 1,962,730 | 24.32 | |||||||||
Class C | 88,612,594 | 3,648,689 | 24.29 | |||||||||
Class I | 659,210,383 | 24,796,499 | 26.58 | |||||||||
Class W | 304,774 | 11,690 | 26.07 | |||||||||
Class R1 | 3,090,996 | 128,857 | 23.99 | |||||||||
Class R2 | 12,412,037 | 485,884 | 25.55 | |||||||||
Class R3 | 7,069,175 | 271,702 | 26.02 | |||||||||
Class R4 | 11,417,935 | 437,643 | 26.09 |
(a) | Maximum offering price per share was equal to the net asset value per share for all share classes, except for Class A, for which the maximum offering price per share was $27.69 [100 / 94.25 x $26.10]. On sales of $50,000 or more, the maximum offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed on redemptions of Class A, Class B, and Class C shares. Redemption price per share was equal to the net asset value per share for Classes I, W, R1, R2, R3, and R4. |
See Notes to Financial Statements
13
Table of Contents
Financial Statements
Six months ended 3/31/11 (unaudited)
This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.
Net investment income | ||||
Income | ||||
Dividends | $18,567,793 | |||
Other (t) | 115,856 | |||
Interest | 28,891 | |||
Dividends from underlying affiliated funds | 15,298 | |||
Foreign taxes withheld | (32,271 | ) | ||
Total investment income | $18,695,567 | |||
Expenses | ||||
Management fee | $4,661,675 | |||
Distribution and service fees | 2,478,286 | |||
Shareholder servicing costs | 1,848,215 | |||
Administrative services fee | 146,846 | |||
Independent Trustees’ compensation | 47,877 | |||
Custodian fee | 79,267 | |||
Shareholder communications | 52,749 | |||
Auditing fees | 22,861 | |||
Legal fees | 17,978 | |||
Dividend and interest expense on securities sold short | 88,065 | |||
Miscellaneous | 122,555 | |||
Total expenses | $9,566,374 | |||
Fees paid indirectly | (55 | ) | ||
Reduction of expenses by investment adviser | (3,367 | ) | ||
Net expenses | $9,562,952 | |||
Net investment income | $9,132,615 | |||
Realized and unrealized gain (loss) on investments and foreign currency transactions | ||||
Realized gain (loss) (identified cost basis) | ||||
Investment transactions (t) | $99,569,889 | |||
Written option transactions | 177,692 | |||
Foreign currency transactions | (3,234 | ) | ||
Net realized gain (loss) on investments | $99,744,347 | |||
Change in unrealized appreciation (depreciation) | ||||
Investments | $231,129,570 | |||
Written options | 184,471 | |||
Securities sold short | (549,304 | ) | ||
Translation of assets and liabilities in foreign currencies | (4,666 | ) | ||
Net unrealized gain (loss) on investments | $230,760,071 | |||
Net realized and unrealized gain (loss) on investments | $330,504,418 | |||
Change in net assets from operations | $339,637,033 |
(t) | Realized gain (loss) on investment transactions includes $170,292 and other income includes $115,856 of proceeds received from a non-recurring administrative proceeding concerning market timing. |
See Notes to Financial Statements
14
Table of Contents
Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.
Change in net assets | Six months ended 3/31/11 (unaudited) | Year ended 9/30/10 | ||||||
From operations | ||||||||
Net investment income | $9,132,615 | $15,413,063 | ||||||
Net realized gain (loss) on investments and foreign currency transactions | 99,744,347 | 149,010,236 | ||||||
Net unrealized gain (loss) on investments and foreign currency translation | 230,760,071 | (3,197,339 | ) | |||||
Change in net assets from operations | $339,637,033 | $161,225,960 | ||||||
Distributions declared to shareholders | ||||||||
From net investment income | $(15,418,433 | ) | $(18,527,496 | ) | ||||
Change in net assets from fund share transactions | $(14,516,528 | ) | $(64,064,263 | ) | ||||
Total change in net assets | $309,702,072 | $78,634,201 | ||||||
Net assets | ||||||||
At beginning of period | 1,987,450,143 | 1,908,815,942 | ||||||
At end of period (including undistributed net investment income of $8,997,005 and $15,282,823, respectively) | $2,297,152,215 | $1,987,450,143 |
See Notes to Financial Statements
15
Table of Contents
Financial Statements
The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years (or life of a particular share class, if shorter). Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
Six months 3/31/11 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class A | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $22.43 | $20.86 | $22.05 | $26.92 | $22.59 | $21.21 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.10 | $0.17 | $0.18 | $0.16 | $0.15 | $0.08 | ||||||||||||||||||
Net realized and unrealized | 3.74 | 1.60 | (1.22 | ) | (4.88 | ) | 4.24 | 1.33 | ||||||||||||||||
Total from investment | $3.84 | $1.77 | $(1.04 | ) | $(4.72 | ) | $4.39 | $1.41 | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.17 | ) | $(0.20 | ) | $(0.15 | ) | $(0.15 | ) | $(0.06 | ) | $(0.03 | ) | ||||||||||||
Net asset value, end of period | $26.10 | $22.43 | $20.86 | $22.05 | $26.92 | $22.59 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 17.18 | (n) | 8.54 | (4.54 | ) | (17.62 | ) | 19.49 | 6.65 | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.90 | (a) | 0.92 | 1.04 | 1.00 | 0.97 | 1.02 | |||||||||||||||||
Expenses after expense | 0.90 | (a) | 0.92 | 1.04 | 1.00 | 0.97 | 1.02 | |||||||||||||||||
Net investment income | 0.82 | (a) | 0.77 | 1.04 | 0.65 | 0.61 | 0.38 | |||||||||||||||||
Portfolio turnover | 36 | 73 | 125 | 104 | 84 | 99 | ||||||||||||||||||
Net assets at end of period | $1,467,307 | $1,279,176 | $1,203,507 | $1,014,501 | $1,377,199 | $1,491,146 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Expenses after expense | 0.89 | (a) | 0.92 | 1.04 | N/A | N/A | N/A |
See Notes to Financial Statements
16
Table of Contents
Financial Highlights – continued
Six months 3/31/11 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class B | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $20.83 | $19.37 | $20.44 | $24.97 | $21.04 | $19.85 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income | $0.01 | $0.00 | (w) | $0.06 | $(0.00 | )(w) | $(0.01 | ) | $(0.06 | ) | ||||||||||||||
Net realized and unrealized | 3.48 | 1.50 | (1.13 | ) | (4.53 | ) | 3.94 | 1.25 | ||||||||||||||||
Total from investment | $3.49 | $1.50 | $(1.07 | ) | $(4.53 | ) | $3.93 | $1.19 | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $— | $(0.04 | ) | $— | $— | $— | $— | |||||||||||||||||
Net asset value, end of period | $24.32 | $20.83 | $19.37 | $20.44 | $24.97 | $21.04 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 16.75 | (n) | 7.77 | (5.23 | ) | (18.14 | ) | 18.68 | 5.99 | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.65 | (a) | 1.67 | 1.75 | 1.65 | 1.62 | 1.68 | |||||||||||||||||
Expenses after expense | 1.65 | (a) | 1.67 | 1.75 | 1.65 | 1.62 | 1.68 | |||||||||||||||||
Net investment income (loss) | 0.08 | (a) | 0.02 | 0.36 | (0.01 | ) | (0.02 | ) | (0.28 | ) | ||||||||||||||
Portfolio turnover | 36 | 73 | 125 | 104 | 84 | 99 | ||||||||||||||||||
Net assets at end of period | $47,727 | $49,123 | $66,795 | $108,949 | $220,062 | $321,822 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Expenses after expense | 1.64 | (a) | 1.67 | 1.75 | N/A | N/A | N/A |
See Notes to Financial Statements
17
Table of Contents
Financial Highlights – continued
Six months 3/31/11 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class C | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $20.80 | $19.39 | $20.46 | $24.99 | $21.05 | $19.86 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income | $0.01 | $0.00 | (w) | $0.05 | $0.00 | (w) | $(0.01 | ) | $(0.06 | ) | ||||||||||||||
Net realized and unrealized | 3.48 | 1.49 | (1.12 | ) | (4.53 | ) | 3.95 | 1.25 | ||||||||||||||||
Total from investment | $3.49 | $1.49 | $(1.07 | ) | $(4.53 | ) | $3.94 | $1.19 | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.00 | )(w) | $(0.08 | ) | $— | $— | $— | $— | ||||||||||||||||
Net asset value, end of period | $24.29 | $20.80 | $19.39 | $20.46 | $24.99 | $21.05 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 16.80 | (n) | 7.69 | (5.23 | ) | (18.13 | ) | 18.72 | 5.99 | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.65 | (a) | 1.67 | 1.75 | 1.65 | 1.62 | 1.68 | |||||||||||||||||
Expenses after expense | 1.65 | (a) | 1.67 | 1.75 | 1.65 | 1.62 | 1.67 | |||||||||||||||||
Net investment income (loss) | 0.07 | (a) | 0.02 | 0.33 | 0.00 | (0.05 | ) | (0.28 | ) | |||||||||||||||
Portfolio turnover | 36 | 73 | 125 | 104 | 84 | 99 | ||||||||||||||||||
Net assets at end of period | $88,613 | $81,879 | $85,919 | $105,748 | $155,741 | $170,718 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Expenses after expense | 1.64 | (a) | 1.67 | 1.75 | N/A | N/A | N/A |
See Notes to Financial Statements
18
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class I | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $22.86 | $21.26 | $22.50 | $27.46 | $23.04 | $21.63 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.13 | $0.23 | $0.25 | $0.26 | $0.23 | $0.16 | ||||||||||||||||||
Net realized and unrealized | 3.82 | 1.62 | (1.27 | ) | (4.97 | ) | 4.34 | 1.35 | ||||||||||||||||
Total from investment | $3.95 | $1.85 | $(1.02 | ) | $(4.71 | ) | $4.57 | $1.51 | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.23 | ) | $(0.25 | ) | $(0.22 | ) | $(0.25 | ) | $(0.15 | ) | $(0.10 | ) | ||||||||||||
Net asset value, end of period | $26.58 | $22.86 | $21.26 | $22.50 | $27.46 | $23.04 | ||||||||||||||||||
Total return (%) (r)(s) | 17.33 | (n) | 8.78 | (4.27 | ) | (17.31 | ) | 19.91 | 7.01 | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.65 | (a) | 0.67 | 0.75 | 0.65 | 0.62 | 0.68 | |||||||||||||||||
Expenses after expense | 0.65 | (a) | 0.67 | 0.75 | 0.65 | 0.62 | 0.67 | |||||||||||||||||
Net investment income | 1.07 | (a) | 1.02 | 1.43 | 1.01 | 0.92 | 0.73 | |||||||||||||||||
Portfolio turnover | 36 | 73 | 125 | 104 | 84 | 99 | ||||||||||||||||||
Net assets at end of period | $659,210 | $554,786 | $535,678 | $786,709 | $932,127 | $760,210 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Expenses after expense | 0.65 | (a) | 0.67 | 0.75 | N/A | N/A | N/A |
See Notes to Financial Statements
19
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class W | 2010 | 2009 | 2008 | 2007 | 2006 (i) | |||||||||||||||||||
Net asset value, beginning of | $22.42 | $20.86 | $22.06 | �� | $26.94 | $22.62 | $22.76 | |||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.12 | $0.20 | $0.22 | $0.23 | $0.20 | $0.06 | ||||||||||||||||||
Net realized and unrealized | 3.74 | 1.60 | (1.23 | ) | (4.87 | ) | 4.25 | (0.20 | ) | |||||||||||||||
Total from investment | $3.86 | $1.80 | $(1.01 | ) | $(4.64 | ) | $4.45 | $(0.14 | ) | |||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.21 | ) | $(0.24 | ) | $(0.19 | ) | $(0.24 | ) | $(0.13 | ) | $— | |||||||||||||
Net asset value, end of period | $26.07 | $22.42 | $20.86 | $22.06 | $26.94 | $22.62 | ||||||||||||||||||
Total return (%) (r)(s) | 17.27 | (n) | 8.69 | (4.35 | ) | (17.40 | ) | 19.77 | (0.62 | )(n) | ||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.75 | (a) | 0.77 | 0.85 | 0.75 | 0.72 | 0.77 | (a) | ||||||||||||||||
Expenses after expense | 0.75 | (a) | 0.77 | 0.85 | 0.75 | 0.72 | 0.77 | (a) | ||||||||||||||||
Net investment income | 0.95 | (a) | 0.93 | 1.27 | 0.91 | 0.79 | 0.66 | (a) | ||||||||||||||||
Portfolio turnover | 36 | 73 | 125 | 104 | 84 | 99 | ||||||||||||||||||
Net assets at end of period | $305 | $197 | $125 | $120 | $198 | $99 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Expenses after expense | 0.74 | (a) | 0.77 | 0.85 | N/A | N/A | N/A |
See Notes to Financial Statements
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Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R1 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $20.54 | $19.16 | $20.21 | $24.82 | $20.93 | $19.84 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income | $0.01 | $(0.00) | (w) | $0.05 | $(0.01 | ) | $(0.04 | ) | $(0.07 | ) | ||||||||||||||
Net realized and unrealized | 3.44 | 1.47 | (1.10 | ) | (4.48 | ) | 3.93 | 1.24 | ||||||||||||||||
Total from investment | $3.45 | $1.47 | $(1.05 | ) | $(4.49 | ) | $3.89 | $1.17 | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $— | $(0.09 | ) | $— | $(0.12 | ) | $— | $(0.08 | ) | |||||||||||||||
Net asset value, end of period | $23.99 | $20.54 | $19.16 | $20.21 | $24.82 | $20.93 | ||||||||||||||||||
Total return (%) (r)(s) | 16.80 | (n) | 7.68 | (5.20 | ) | (18.19 | ) | 18.59 | 5.89 | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.65 | (a) | 1.67 | 1.75 | 1.69 | 1.77 | 1.87 | |||||||||||||||||
Expenses after expense | 1.65 | (a) | 1.67 | 1.75 | 1.69 | 1.72 | 1.77 | |||||||||||||||||
Net investment income (loss) | 0.07 | (a) | 0.02 | 0.34 | (0.03 | ) | (0.19 | ) | (0.36 | ) | ||||||||||||||
Portfolio turnover | 36 | 73 | 125 | 104 | 84 | 99 | ||||||||||||||||||
Net assets at end of period | $3,091 | $2,863 | $2,945 | $3,787 | $3,445 | $1,868 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Expenses after expense | 1.64 | (a) | 1.67 | 1.75 | N/A | N/A | N/A |
See Notes to Financial Statements
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Financial Highlights – continued
Six months 3/31/11 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R2 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $21.95 | $20.43 | $21.59 | $26.42 | $22.22 | $20.91 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.07 | $0.11 | $0.14 | $0.12 | $0.06 | $0.02 | ||||||||||||||||||
Net realized and unrealized | 3.66 | 1.58 | (1.20 | ) | (4.77 | ) | 4.18 | 1.31 | ||||||||||||||||
Total from investment | $3.73 | $1.69 | $(1.06 | ) | $(4.65 | ) | $4.24 | $1.33 | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.13 | ) | $(0.17 | ) | $(0.10 | ) | $(0.18 | ) | $(0.04 | ) | $(0.02 | ) | ||||||||||||
Net asset value, end of period | $25.55 | $21.95 | $20.43 | $21.59 | $26.42 | $22.22 | ||||||||||||||||||
Total return (%) (r)(s) | 17.05 | (n) | 8.32 | (4.79 | ) | (17.73 | ) | 19.12 | 6.34 | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.15 | (a) | 1.17 | 1.25 | 1.18 | 1.31 | 1.42 | |||||||||||||||||
Expenses after expense | 1.15 | (a) | 1.17 | 1.25 | 1.18 | 1.27 | 1.32 | |||||||||||||||||
Net investment income | 0.57 | (a) | 0.52 | 0.81 | 0.49 | 0.24 | 0.09 | |||||||||||||||||
Portfolio turnover | 36 | 73 | 125 | 104 | 84 | 99 | ||||||||||||||||||
Net assets at end of period | $12,412 | $9,733 | $8,304 | $9,046 | $6,079 | $2,632 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Expenses after expense | 1.14 | (a) | 1.17 | 1.25 | N/A | N/A | N/A |
See Notes to Financial Statements
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Six months 3/31/11 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R3 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $22.37 | $20.82 | $21.99 | $26.88 | $22.55 | $21.21 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.10 | $0.17 | $0.18 | $0.18 | $0.11 | $0.08 | ||||||||||||||||||
Net realized and unrealized | 3.74 | 1.59 | (1.21 | ) | (4.87 | ) | 4.27 | 1.32 | ||||||||||||||||
Total from investment | $3.84 | $1.76 | $(1.03 | ) | $(4.69 | ) | $4.38 | $1.40 | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.19 | ) | $(0.21 | ) | $(0.14 | ) | $(0.20 | ) | $(0.05 | ) | $(0.06 | ) | ||||||||||||
Net asset value, end of period | $26.02 | $22.37 | $20.82 | $21.99 | $26.88 | $22.55 | ||||||||||||||||||
Total return (%) (r)(s) | 17.22 | (n) | 8.52 | (4.50 | ) | (17.60 | ) | 19.46 | 6.62 | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.90 | (a) | 0.93 | 1.00 | 0.94 | 1.02 | 1.07 | |||||||||||||||||
Expenses after expense | 0.90 | (a) | 0.92 | 1.00 | 0.94 | 1.02 | 1.07 | |||||||||||||||||
Net investment income | 0.84 | (a) | 0.77 | 1.04 | 0.72 | 0.44 | 0.34 | |||||||||||||||||
Portfolio turnover | 36 | 73 | 125 | 104 | 84 | 99 | ||||||||||||||||||
Net assets at end of period | $7,069 | $8,954 | $5,195 | $4,727 | $5,513 | $1,815 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Expenses after expense | 0.90 | (a) | 0.92 | 1.00 | N/A | N/A | N/A |
See Notes to Financial Statements
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Six months 3/31/11 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R4 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $22.45 | $20.88 | $22.09 | $26.95 | $22.62 | $21.24 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.11 | $0.22 | $0.18 | $0.25 | $0.21 | $0.14 | ||||||||||||||||||
Net realized and unrealized | 3.76 | 1.60 | (1.18 | ) | (4.88 | ) | 4.25 | 1.33 | ||||||||||||||||
Total from investment | $3.87 | $1.82 | $(1.00 | ) | $(4.63 | ) | $4.46 | $1.47 | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.23 | ) | $(0.25 | ) | $(0.21 | ) | $(0.23 | ) | $(0.13 | ) | $(0.09 | ) | ||||||||||||
Net asset value, end of period | $26.09 | $22.45 | $20.88 | $22.09 | $26.95 | $22.62 | ||||||||||||||||||
Total return (%) (r)(s) | 17.29 | (n) | 8.80 | (4.25 | ) | (17.34 | ) | 19.77 | 6.95 | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.65 | (a) | 0.67 | 0.74 | 0.67 | 0.72 | 0.77 | |||||||||||||||||
Expenses after expense | 0.65 | (a) | 0.67 | 0.74 | 0.67 | 0.72 | 0.77 | |||||||||||||||||
Net investment income | 0.89 | (a) | 1.01 | 0.99 | 0.98 | 0.83 | 0.63 | |||||||||||||||||
Portfolio turnover | 36 | 73 | 125 | 104 | 84 | 99 | ||||||||||||||||||
Net assets at end of period | $11,418 | $739 | $348 | $57 | $68 | $57 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Expenses after expense | 0.64 | (a) | 0.67 | 0.74 | N/A | N/A | N/A |
(a) | Annualized. |
(d) | Per share data is based on average shares outstanding. |
(f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
(i) | For the period from the class’ inception May 1, 2006 through the stated period end. |
(n) | Not annualized. |
(r) | Certain expenses have been reduced without which performance would have been lower. |
(s) | From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. |
(t) | Total returns do not include any applicable sales charges. |
(w) | Per share amount was less than $0.01. |
See Notes to Financial Statements
24
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(unaudited)
(1) | Business and Organization |
MFS Research Fund (the fund) is a series of MFS Series Trust V (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
(2) | Significant Accounting Policies |
General – The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests in foreign securities, including securities of emerging market issuers. Investments in foreign securities are vulnerable to the effects of changes in the relative values of the local currency and the U.S. dollar and to the effects of changes in each country’s legal, political, and economic environment. The markets of emerging markets countries are generally more volatile than the markets of developed countries with more mature economies. All of the risks of investing in foreign securities previously described are heightened when investing in emerging markets countries.
Investment Valuations – Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Exchange-traded options are generally valued at the last sale or official closing price as provided by a third-party pricing service on the exchange on which such options are primarily traded. Exchange-traded options for which there were no sales reported that day are generally valued at the last daily bid quotation as
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provided by a third-party pricing service on the exchange on which such options are primarily traded. Options not traded on an exchange are generally valued at a broker/dealer bid quotation. Foreign currency options are generally valued at valuations provided by a third-party pricing service. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.
The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially effected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s
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Notes to Financial Statements (unaudited) – continued
net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. The following is a summary of the levels used as of March 31, 2011 in valuing the fund’s assets or liabilities:
Investments at Value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Equity Securities | $2,268,672,128 | $— | $— | $2,268,672,128 | ||||||||||||
Mutual Funds | 23,055,428 | — | — | 23,055,428 | ||||||||||||
Total Investments | $2,291,727,556 | $— | $— | $2,291,727,556 | ||||||||||||
Short Sales | $(5,562,536 | ) | $— | $— | $(5,562,536 | ) |
For further information regarding security characteristics, see the Portfolio of Investments.
Foreign Currency Translation – Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
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Notes to Financial Statements (unaudited) – continued
Derivatives – The fund uses derivatives for different purposes, including to earn income and enhance returns, to increase or decrease exposure to a particular market, to manage or adjust the risk profile of the fund, or as alternatives to direct investments. Derivatives are used for hedging or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.
The derivative instruments used by the fund were written options and purchased options. At March 31, 2011, the fund did not have any outstanding derivative instruments.
The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the six months ended March 31, 2011 as reported in the Statement of Operations:
Risk | Investment Transactions (Purchased Options) | Written Options | ||||||
Equity Contracts | $(2,700,571 | ) | $177,692 |
The following table presents, by major type of derivative contract, the change in unrealized appreciation (depreciation) on derivatives held by the fund for the six months ended March 31, 2011 as reported in the Statement of Operations:
Risk | Investments (Purchased Options) | Written Options | ||||||
Equity Contracts | $2,546,904 | $184,471 |
Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain over-the-counter derivatives, the fund attempts to reduce its exposure to counterparty credit risk whenever possible by entering into an International Swaps and Derivatives Association (ISDA) Master Agreement on a bilateral basis with each of the counterparties with whom it undertakes a significant volume of transactions. The ISDA Master Agreement gives each party to the agreement the right to terminate all transactions traded under such agreement if there is a certain deterioration in the credit quality of the other party. The ISDA Master Agreement gives the fund the right, upon an event of default by the applicable counterparty or a termination of the agreement, to close out all transactions traded under such agreement and to net amounts owed under each transaction to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the ISDA Master
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Notes to Financial Statements (unaudited) – continued
Agreement could result in a reduction of the fund’s credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any. However, absent an event of default by the counterparty or a termination of the agreement, the ISDA Master Agreement does not result in an offset of reported amounts of assets and liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty.
Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearing house for exchange traded derivatives (i.e., futures and exchange-traded options) while collateral terms are contract specific for over-the-counter traded derivatives (i.e., forward foreign currency exchange contracts, swaps and over-the-counter options). For derivatives traded under an ISDA Master Agreement, the collateral requirements are netted across all transactions traded under such agreement and one amount is posted from one party to the other to collateralize such obligations. Cash collateral that has been pledged to cover obligations of the fund under derivative contracts, if any, will be reported separately on the Statement of Assets and Liabilities as restricted cash. Securities collateral pledged for the same purpose, if any, is noted in the Portfolio of Investments.
Written Options – In exchange for a premium, the fund wrote call options on securities that it anticipated the price would decline and also wrote put options on securities that it anticipated the price would increase. At the time the option was written, the fund believed the premium received exceeded the potential loss that could result from adverse price changes in the options’ underlying securities. In a written option, the fund as the option writer grants the buyer the right to purchase from, or sell to, the fund a specified number of shares or units of a particular security, currency or index at a specified price within a specified period of time.
The premium received is initially recorded as a liability on the Statement of Assets and Liabilities. The option is subsequently marked-to-market daily with the difference between the premium received and the market value of the written option being recorded as unrealized appreciation or depreciation. When a written option expires, the fund realizes a gain equal to the amount of the premium received. The difference between the premium received and the amount paid on effecting a closing transaction is considered a realized gain or loss. When a written call option is exercised, the premium received is offset against the proceeds to determine the realized gain or loss. When a written put option is exercised, the premium reduces the cost basis of the security purchased by the fund.
At the initiation of the written option contract, for exchange traded options, the fund is required to deposit securities or cash as collateral with the
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Notes to Financial Statements (unaudited) – continued
custodian for the benefit of the broker. For over-the-counter options, the fund may post collateral subject to the terms of an ISDA Master Agreement as generally described above if the market value of the options contract moves against it. The fund, as writer of an option, may have no control over whether the underlying securities may be sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the securities underlying the written option. Losses from writing options can exceed the premium received and can exceed the potential loss from an ordinary buy and sell transaction. Although the fund’s market risk may be significant, the maximum counterparty credit risk to the fund is equal to the market value of any collateral posted to the broker. For over-the-counter options, this risk is mitigated in cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above.
Written Option Transactions
Number of Contracts | Premiums Received | |||||||
Outstanding, beginning of period | 2,145 | $62,204 | ||||||
Options written | 10,236 | 171,258 | ||||||
Options closed | (2,145 | ) | (62,204 | ) | ||||
Options exercised | — | — | ||||||
Options expired | (10,236 | ) | (171,258 | ) | ||||
Outstanding, end of period | — | $— |
Purchased Options – The fund purchased call and put options for a premium. Purchased call and put options entitle the holder to buy and sell a specified number of shares or units of a particular security, currency or index at a specified price at a specified date or within a specified period of time. Purchasing call options may be used to hedge against an anticipated increase in the dollar cost of securities or currency to be acquired or to increase the fund’s exposure to an underlying instrument. Purchasing put options may hedge against a decline in the value of portfolio securities or currency.
The premium paid is initially recorded as an investment in the Statement of Assets and Liabilities. That investment is subsequently marked-to-market daily with the difference between the premium paid and the market value of the purchased option being recorded as unrealized appreciation or depreciation. Premiums paid for purchased call and put options which have expired are treated as realized losses on investments in the Statement of Operations. Upon the exercise or closing of a purchased call option, the premium paid is added to the cost of the security or financial instrument. Upon the exercise or closing of a purchased put option, the premium paid is offset against the proceeds on the sale of the underlying security or financial instrument in order to determine the realized gain or loss on investments.
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Notes to Financial Statements (unaudited) – continued
The risk in purchasing an option is that the fund pays a premium whether or not the option is exercised. The fund’s maximum risk of loss due to counterparty credit risk is limited to the market value of the option. For over-the-counter options, this risk is mitigated in cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above and for posting of collateral by the counterparty to the fund to cover the fund’s exposure to the counterparty under such ISDA Master Agreement.
Short Sales – The fund entered into short sales whereby it sells a security it does not own in anticipation of a decline in the value of that security. The fund will realize a gain if the security price decreases and a loss if the security price increases between the date of the short sale and the date on which the fund replaces the borrowed security. Losses from short sales can exceed the proceeds of the security sold; and they can also exceed the potential loss from an ordinary buy and sell transaction. The amount of any premium, dividends, or interest the fund may be required to pay in connection with a short sale will be recognized as a fund expense. During the six months ended March 31, 2011, this expense amounted to $88,065. The fund segregates cash or marketable securities in an amount that, when combined with the amount of proceeds from the short sale deposited with the broker, at least equals the current market value of the security sold short.
Security Loans – JPMorgan Chase and Co. (“Chase”), as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. Chase provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in short-term securities. A portion of the income generated upon investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund and the lending agent. Income from securities lending is included in interest income on the Statement of Operations. The dividend and interest income earned on the securities loaned is accounted for in the same manner as other dividend and interest income.
Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses
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arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.
Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend and interest payments received in additional securities are recorded on the ex-dividend or ex-interest date in an amount equal to the value of the security on such date.
The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations. On November 1, 2010, the fund received $286,148 from a non-recurring administrative proceeding concerning market timing, of which $170,292 was recorded as realized gain on investment transactions and $115,856 was recorded as other income. (See Note 7 for further details).
Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended March 31, 2011, is shown as a reduction of total expenses on the Statement of Operations.
Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.
Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income,
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Notes to Financial Statements (unaudited) – continued
expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.
Book/tax differences primarily relate to wash sale loss deferrals.
The tax character of distributions made during the current period will be determined at fiscal year end. The tax character of distributions declared to shareholders for the last fiscal year is as follows:
9/30/10 | ||||
Ordinary income (including any short-term capital gains) | $18,527,496 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
As of 3/31/11 | ||||
Cost of investments | $1,995,357,708 | |||
Gross appreciation | 341,485,296 | |||
Gross depreciation | (45,115,448 | ) | ||
Net unrealized appreciation (depreciation) | $296,369,848 | |||
As of 9/30/10 | ||||
Undistributed ordinary income | 15,416,129 | |||
Capital loss carryforwards | (458,403,795 | ) | ||
Other temporary differences | (487,399 | ) | ||
Net unrealized appreciation (depreciation) | 65,240,278 |
The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.
As of September 30, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:
9/30/11 | $(79,360,983 | ) | ||
9/30/17 | (58,928,543 | ) | ||
9/30/18 | (320,114,269 | ) | ||
Total | $(458,403,795 | ) |
Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class.
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Notes to Financial Statements (unaudited) – continued
Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B shares will convert to Class A shares approximately eight years after purchase. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:
From net investment income | ||||||||
Six months ended 3/31/11 | Year ended 9/30/10 | |||||||
Class A | $9,727,250 | $11,546,077 | ||||||
Class B | — | 138,930 | ||||||
Class C | 12,034 | 335,908 | ||||||
Class I | 5,525,072 | 6,362,854 | ||||||
Class W | 1,896 | 1,672 | ||||||
Class R1 | — | 13,827 | ||||||
Class R2 | 65,276 | 70,786 | ||||||
Class R3 | 77,675 | 52,318 | ||||||
Class R4 | 9,230 | 5,124 | ||||||
Total | $15,418,433 | $18,527,496 |
(3) | Transactions with Affiliates |
Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at an annual rate of 0.43% of the fund’s average daily net assets.
Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $23,140 for the six months ended March 31, 2011, as its portion of the initial sales charge on sales of Class A shares of the fund.
The Board of Trustees has adopted a distribution plan for certain class shares pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund’s distribution plan provides that the fund will pay MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.
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Notes to Financial Statements (unaudited) – continued
Distribution Plan Fee Table:
Distribution Fee Rate (d) | Service Fee Rate (d) | Total Distribution Plan (d) | Annual Effective Rate (e) | Distribution and Service Fee | ||||||||||||||||
Class A | — | 0.25% | 0.25% | 0.25% | $1,743,856 | |||||||||||||||
Class B | 0.75% | 0.25% | 1.00% | 1.00% | 248,497 | |||||||||||||||
Class C | 0.75% | 0.25% | 1.00% | 1.00% | 430,588 | |||||||||||||||
Class W | 0.10% | — | 0.10% | 0.10% | 120 | |||||||||||||||
Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 14,960 | |||||||||||||||
Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 28,428 | |||||||||||||||
Class R3 | — | 0.25% | 0.25% | 0.25% | 11,837 | |||||||||||||||
Total Distribution and Service Fees | $2,478,286 |
(d) | In accordance with the distribution plan for certain classes, the fund pays distribution and/or service fees equal to these annual percentage rates of each class’ average daily net assets. The distribution and service fee rates disclosed by class represent the current rates in effect at the end of the reporting period. Any rate changes, if applicable, are detailed below. |
(e) | The annual effective rates represent actual fees incurred under the distribution plan for the six months ended March 31, 2011 based on each class’ average daily net assets. Assets attributable to Class A shares sold prior to March 1, 1991 are subject to a service fee of 0.15% annually. This agreement terminated on January 1, 2011. Effective January 1, 2011 all Class A assets are subject to the full service fee of 0.25%. |
Certain Class A shares are subject to a contingent deferred sales charge (CDSC) in the event of a shareholder redemption within 24 months of purchase. Class C shares are subject to a CDSC in the event of a shareholder redemption within 12 months of purchase. Class B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. All contingent deferred sales charges are paid to MFD and during the six months ended March 31, 2011, were as follows:
Amount | ||||
Class A | $1 | |||
Class B | 27,339 | |||
Class C | 1,274 |
Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent calculated as a percentage of the average daily net assets of the fund as determined periodically under the supervision of the fund’s Board of Trustees. For the six months ended March 31, 2011, the fee was $543,709, which equated to 0.0501% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses, sub-accounting and other shareholder servicing costs which may be paid to affiliated and unaffiliated service providers. For the six months ended March 31, 2011, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $922,062.
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Notes to Financial Statements (unaudited) – continued
Under a Special Servicing Agreement among MFS, each MFS fund which invests in other MFS funds (“MFS fund-of-funds”) and certain underlying funds in which a MFS fund-of-funds invests (“underlying funds”), each underlying fund may pay a portion of each MFS fund-of-fund’s transfer agent-related expenses, including sub-accounting fees payable to financial intermediaries, to the extent such payments do not exceed the benefits realized or expected to be realized by the underlying fund from the investment in the underlying fund by the MFS fund-of-fund. For the six months ended March 31, 2011, these costs for the fund amounted to $382,444 and are reflected in the shareholder servicing costs on the Statement of Operations.
Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended March 31, 2011 was equivalent to an annual effective rate of 0.0135% of the fund’s average daily net assets.
Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Prior to December 31, 2001, the fund had an unfunded defined benefit plan (“DB plan”) for independent Trustees. As of December 31, 2001, the Board took action to terminate the DB plan with respect to then-current and any future independent Trustees, such that the DB Plan covers only certain of those former independent Trustees who retired on or before December 31, 2001. Effective January 1, 2002, accrued benefits under the DB Plan for then-current independent Trustees who continued were credited to an unfunded retirement deferral plan (the “Retirement Deferral plan”), which was established for and exists solely with respect to these credited amounts, and is not available for other deferrals by these or other independent Trustees. Although the Retirement Deferral plan is unfunded, amounts deferred under the plan are periodically adjusted for investment experience as if they had been invested in shares of the fund. The DB Plan resulted in a pension expense of $3,445 and the Retirement Deferral plan resulted in an expense of $21,156. Both amounts are included in independent Trustees’ compensation for the six months ended March 31, 2011. The liability for deferred retirement benefits payable to
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Notes to Financial Statements (unaudited) – continued
certain independent Trustees under both plans amounted to $130,571 at March 31, 2011, and is included in payable for independent Trustees’ compensation on the Statement of Assets and Liabilities.
Deferred Trustee Compensation – Under a Deferred Compensation Plan (the “Plan”), independent Trustees previously were allowed to elect to defer receipt of all or a portion of their annual compensation. Effective January 1, 2005, the Board elected to no longer allow Trustees to defer receipt of future compensation under the Plan. Amounts deferred under the Plan are invested in shares of certain MFS Funds selected by the independent Trustees as notional investments. Deferred amounts represent an unsecured obligation of the fund until distributed in accordance with the Plan. Included in other assets and payable for independent Trustees’ compensation on the Statement of Assets and Liabilities is $53,764 of deferred Trustees’ compensation. There is no current year expense associated with the Plan.
Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended March 31, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $11,832 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $3,367, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.
The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.
(4) | Portfolio Securities |
Purchases and sales of investments, other than U.S. Government securities, purchased option transaction, short sales, and short-term obligations, aggregated $778,033,057 and $802,140,324, respectively.
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Notes to Financial Statements (unaudited) – continued
(5) | Shares of Beneficial Interest |
The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
Six months ended 3/31/11 | Year ended 9/30/10 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares sold | ||||||||||||||||
Class A | 3,077,715 | $76,349,241 | 7,788,363 | $169,014,585 | ||||||||||||
Class B | 75,374 | 1,741,171 | 204,420 | 4,130,821 | ||||||||||||
Class C | 92,037 | 2,120,229 | 244,665 | 4,939,640 | ||||||||||||
Class I | 1,083,393 | 27,653,266 | 2,526,347 | 55,275,802 | ||||||||||||
Class W | 3,978 | 99,638 | 3,572 | 79,191 | ||||||||||||
Class R1 | 7,745 | 176,222 | 27,868 | 552,464 | ||||||||||||
Class R2 | 94,646 | 2,251,123 | 143,877 | 3,006,409 | ||||||||||||
Class R3 | 45,890 | 1,117,438 | 195,371 | 3,991,151 | ||||||||||||
Class R4 | 422,585 | 10,783,889 | 33,713 | 746,728 | ||||||||||||
4,903,363 | $122,292,217 | 11,168,196 | $241,736,791 | |||||||||||||
Shares issued to shareholders in reinvestment of distributions | ||||||||||||||||
Class A | 350,207 | $8,615,180 | 492,614 | $10,482,822 | ||||||||||||
Class B | — | — | 6,516 | 129,526 | ||||||||||||
Class C | 417 | 9,570 | 13,666 | 271,454 | ||||||||||||
Class I | 220,074 | 5,510,645 | 288,820 | 6,252,960 | ||||||||||||
Class W | 72 | 1,783 | 77 | 1,643 | ||||||||||||
Class R1 | — | — | 705 | 13,827 | ||||||||||||
Class R2 | 2,359 | 56,825 | 3,354 | 69,989 | ||||||||||||
Class R3 | 3,168 | 77,675 | 2,464 | 52,318 | ||||||||||||
Class R4 | 375 | 9,230 | 241 | 5,124 | ||||||||||||
576,672 | $14,280,908 | 808,457 | $17,279,663 | |||||||||||||
Shares reacquired | ||||||||||||||||
Class A | (4,249,072 | ) | $(105,301,461 | ) | (8,944,490 | ) | $(194,532,178 | ) | ||||||||
Class B | (471,368 | ) | (10,854,874 | ) | (1,299,973 | ) | (26,478,835 | ) | ||||||||
Class C | (379,708 | ) | (8,615,788 | ) | (754,522 | ) | (15,228,593 | ) | ||||||||
Class I | (774,488 | ) | (19,532,377 | ) | (3,749,316 | ) | (82,182,702 | ) | ||||||||
Class W | (1,148 | ) | (28,476 | ) | (868 | ) | (19,195 | ) | ||||||||
Class R1 | (18,250 | ) | (405,553 | ) | (42,952 | ) | (851,825 | ) | ||||||||
Class R2 | (54,619 | ) | (1,318,078 | ) | (110,104 | ) | (2,336,833 | ) | ||||||||
Class R3 | (177,587 | ) | (4,567,080 | ) | (47,161 | ) | (1,046,380 | ) | ||||||||
Class R4 | (18,235 | ) | (465,966 | ) | (17,706 | ) | (404,176 | ) | ||||||||
(6,144,475 | ) | $(151,089,653 | ) | (14,967,092 | ) | $(323,080,717 | ) |
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Notes to Financial Statements (unaudited) – continued
Six months ended 3/31/11 | Year ended 9/30/10 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Net change | ||||||||||||||||
Class A | (821,150 | ) | $(20,337,040 | ) | (663,513 | ) | $(15,034,771 | ) | ||||||||
Class B | (395,994 | ) | (9,113,703 | ) | (1,089,037 | ) | (22,218,488 | ) | ||||||||
Class C | (287,254 | ) | (6,485,989 | ) | (496,191 | ) | (10,017,499 | ) | ||||||||
Class I | 528,979 | 13,631,534 | (934,149 | ) | (20,653,940 | ) | ||||||||||
Class W | 2,902 | 72,945 | 2,781 | 61,639 | ||||||||||||
Class R1 | (10,505 | ) | (229,331 | ) | (14,379 | ) | (285,534 | ) | ||||||||
Class R2 | 42,386 | 989,870 | 37,127 | 739,565 | ||||||||||||
Class R3 | (128,529 | ) | (3,371,967 | ) | 150,674 | 2,997,089 | ||||||||||
Class R4 | 404,725 | 10,327,153 | 16,248 | 347,676 | ||||||||||||
(664,440 | ) | $(14,516,528 | ) | (2,990,439 | ) | $(64,064,263 | ) |
The fund is one of several mutual funds in which the MFS funds-of-funds may invest. The MFS funds-of-funds do not invest in the underlying MFS funds for the purpose of exercising management or control. At the end of the period, the MFS Growth Allocation Fund, MFS Moderate Allocation Fund, MFS Aggressive Growth Allocation Fund and MFS Conservative Allocation Fund were the owners of record of approximately 10%, 9%, 5% and 3%, respectively, of the value of outstanding voting shares of the fund. In addition, the MFS Lifetime 2010 Fund, MFS Lifetime 2020 Fund, MFS Lifetime 2030 Fund, MFS Lifetime 2040 Fund, MFS Lifetime 2050 Fund, and the MFS Lifetime Retirement Income Fund were each the owners of record of less than 1% of the value of outstanding voting shares of the fund.
(6) | Line of Credit |
The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended March 31, 2011, the fund’s commitment fee and interest expense were $10,340 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.
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Notes to Financial Statements (unaudited) – continued
(7) | Gain Contingency |
The fund’s investment adviser, MFS, was the subject of an administrative proceeding concerning market timing which resulted in the Securities and Exchange Commission (the “SEC”) entering an order approving a settlement with MFS and two of its former officers (the “Settlement Order”). Under the terms of the Settlement Order, MFS transferred $175 million in disgorgement and $50 million in penalty (the “Payments”) to the SEC, which established a Fair Fund from which settlement funds have been, or will be, distributed to eligible current and former shareholders of the fund and certain other affected MFS retail funds. The Payments, along with additional amounts from a third-party settlement, have been distributed to eligible shareholders in accordance with a plan developed by an independent distribution consultant (the “IDC”) in consultation with MFS and the Board of Trustees of the MFS retail funds. The plan was approved in July 2007 by the SEC. Pursuant to the distribution plan, after the distributions to eligible shareholders have been made, any undistributed amounts could be designated “residual” and distributed to the fund and certain other affected MFS retail funds for the benefit of fund shareholders. In November 2010, the SEC issued an order designating certain undistributed amounts residual and ordering that such amounts be distributed to the affected MFS retail funds. The SEC order designated other undistributed amounts for use in funding certain additional distribution efforts to eligible shareholders. As a result of the SEC’s approval of the residual payments, the fund received $286,148. Additional residual amounts may be received by the fund in the future. Certain procedural conditions of the distribution plan (as modified by the November 2010 SEC order) have not been met to date and, as such, the ultimate timing and amount of any payment of additional residual amounts is not known at this time.
(8) | Transactions in Underlying Affiliated Funds-Affiliated Issuers |
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:
Underlying Affiliated Funds | Beginning Shares/Par Amount | Acquisitions Shares/Par Amount | Dispositions Shares/Par Amount | Ending Shares/Par Amount | ||||||||||||
MFS Institutional Money Market Portfolio | 19,329,240 | 133,454,600 | (129,728,412 | ) | 23,055,428 | |||||||||||
Underlying Affiliated Funds | Realized Gain (Loss) | Capital Gain Distributions | Dividend Income | Ending Value | ||||||||||||
MFS Institutional Money Market Portfolio | $— | $— | $15,298 | $23,055,428 |
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BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT
A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS is available by clicking on the fund’s name under “Mutual Funds” in the “Products and Performance” section of the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site at http://www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section at the above address.
A shareholder can also obtain the quarterly portfolio holdings report at mfs.com.
From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Mutual Funds” in the “Products and Performance” section of mfs.com.
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rev. 3/11
FACTS | WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION? | [LOGO] MFS(R) INVESTMENT MANAGEMENT |
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include:
•Social Security number and account balances •Account transactions and transaction history •Checking account information and wire transfer instructions
When you are no longer our customer, we continue to share your information as described in this notice. |
How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your personal information | Does MFS share? | Can you limit this sharing? | ||
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No | ||
For our marketing purposes – to offer our products and services to you | No | We don’t share | ||
For joint marketing with other financial companies | No | We don’t share | ||
For our affiliates’ everyday business purposes – information about your transactions and experiences | No | We don’t share | ||
For our affiliates’ everyday business purposes – information about your creditworthiness | No | We don’t share | ||
For nonaffiliates to market to you | No | We don’t share |
Questions? | Call 800-225-2606 or go to mfs.com. |
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Page 2 |
Who we are | ||
Who is providing this notice? | MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc. |
What we do | ||
How does MFS protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you. | |
How does MFS collect my personal information? | We collect your personal information, for example, when you
•open an account or provide account information •direct us to buy securities or direct us to sell your securities •make a wire transfer
We also collect your personal information from others, such as credit bureaus, affiliates and other companies. | |
Why can’t I limit all sharing? | Federal law gives you the right to limit only
•sharing for affiliates’ everyday business purposes – information about your creditworthiness •affiliates from using your information to market to you •sharing for nonaffiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. |
Definitions | ||
Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies.
• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice. | |
Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies.
• MFS does not share with nonaffiliates so they can market to you. | |
Joint Marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you.
• MFS doesn’t jointly market. |
Other important information | ||
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. |
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MFS® will send you prospectuses, reports, and proxies directly via e-mail so you will get information faster with less mailbox clutter.
To sign up:
1. Go to mfs.com.
2. Log in via MFS® Access.
3. Select eDelivery.
If you own your MFS fund shares through a financial institution or a retirement plan, MFS® TALK, MFS® Access, or eDelivery may not be available to you.
Web site
mfs.com
MFS TALK
1-800-637-8255
24 hours a day
Account service and literature
Shareholders
1-800-225-2606
Financial advisors
1-800-343-2829
Retirement plan services
1-800-637-1255
Mailing address
MFS Service Center, Inc.
P.O. Box 55824
Boston, MA 02205-5824
Overnight mail
MFS Service Center, Inc.
c/o Boston Financial Data Services
30 Dan Road
Canton, MA 02021-2809
Table of Contents
MFS® Total Return Fund
SEMIANNUAL REPORT
March 31, 2011
MTR-SEM
Table of Contents
The report is prepared for the general information of shareholders.
It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK GUARANTEE
Table of Contents
Dear Shareholders:
After an extended rebound in the financial markets, uncertainty returned in 2010 as investors began to question the durability of the recovery for global economies and markets. That uncertainty led to increased risk aversion, especially as investors saw the eurozone struggle with the debt woes of many of its members. Last September, the U.S. Federal Reserve Board’s promises to further loosen monetary policy helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment. For 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide will be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, and the Middle East.
As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.
Respectfully,
Robert J. Manning
Chairman and Chief Executive Officer
MFS Investment Management®
May 16, 2011
The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.
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Portfolio structure (i)
Top ten holdings (i) | ||||
JPMorgan Chase & Co. | 2.2% | |||
Fannie Mae, 5.5%, 30 Years | 2.1% | |||
U.S. Treasury Notes, 3.75%, 2018 | 2.0% | |||
Exxon Mobil Corp. | 1.9% | |||
U.S. Treasury Notes, 2.125%, 2015 | 1.8% | |||
Philip Morris International, Inc. | 1.7% | |||
Lockheed Martin Corp. | 1.7% | |||
Goldman Sachs Group, Inc. | 1.5% | |||
United Technologies Corp. | 1.4% | |||
Apache Corp. | 1.4% |
Composition including fixed income credit quality (a)(i) | ||||
AAA | 1.5% | |||
AA | 1.5% | |||
A | 3.7% | |||
BBB | 5.3% | |||
BB | 0.3% | |||
B | 0.1% | |||
CCC | 0.1% | |||
CC (o) | 0.0% | |||
C (o) | 0.0% | |||
D | 0.1% | |||
U.S. Government | 12.6% | |||
Federal Agencies | 12.9% | |||
Not Rated | 0.1% | |||
Non-Fixed Income | 60.7% | |||
Cash & Other | 1.1% |
Equity sectors | ||||
Financial Services | 14.0% | |||
Energy | 7.6% | |||
Consumer Staples | 6.7% | |||
Health Care | 6.6% | |||
Industrial Goods & Services | 6.1% | |||
Utilities & Communications | 4.7% | |||
Technology | 3.8% | |||
Leisure | 2.9% | |||
Basic Materials | 2.9% | |||
Retailing | 2.4% | |||
Autos & Housing | 1.3% | |||
Special Products & Services | 1.1% | |||
Transportation | 0.6% | |||
Fixed income sectors (i) | ||||
U.S. Treasury Securities | 12.6% | |||
Mortgage-Backed Securities | 12.4% | |||
High Grade Corporates | 8.3% | |||
Commercial Mortgage-Backed Securities | 2.0% | |||
Non-U.S. Government Bonds | 0.8% | |||
Emerging Markets Bonds | 0.8% | |||
U.S. Government Agencies | 0.5% | |||
High Yield Corporates | 0.3% | |||
Collateralized Debt Obligations | 0.3% | |||
Asset-Backed Securities | 0.2% | |||
Residential Mortgage-Backed Securities (o) | 0.0% |
2
Table of Contents
Portfolio Composition – continued
(a) | For all securities other than those specifically described below, ratings are assigned to underlying securities utilizing ratings from Moody’s, Fitch, and Standard & Poor’s rating agencies and applying the following hierarchy: If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). All ratings are subject to change. U.S. Government includes securities issued by the U.S. Department of the Treasury. Federal Agencies includes rated and unrated U.S. Agency fixed-income securities, U.S. Agency MBS, and CMOs of U.S. Agency MBS. Not Rated includes fixed income securities which have not been rated by any rating agency. Non-Fixed Income includes equity securities (including convertible bonds and equity derivatives) and commodities. Cash & Other includes cash, other assets less liabilities, offsets to derivative positions, and short-term securities. The fund may not hold all of these instruments. The fund itself has not been rated. |
(i) | For purposes of this presentation, the components include the market value of securities, and reflect the impact of the equivalent exposure of derivative positions, if applicable. These amounts may be negative from time to time. The bond component will include any accrued interest amounts. Equivalent exposure is a calculated amount that translates the derivative position into a reasonable approximation of the amount of the underlying asset that the portfolio would have to hold at a given point in time to have the same price sensitivity that results from the portfolio’s ownership of the derivative contract. When dealing with derivatives, equivalent exposure is a more representative measure of the potential impact of a position on portfolio performance than market value. Where the fund holds convertible bonds, these are treated as part of the equity portion of the portfolio. |
(o) | Less than 0.1%. |
Percentages are based on net assets as of 3/31/11, unless otherwise noted.
The portfolio is actively managed and current holdings may be different.
3
Table of Contents
Fund expenses borne by the shareholders during the period,
October 1, 2010 through March 31, 2011
As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchase or redemption payments, and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period October 1, 2010 through March 31, 2011.
Actual Expenses
The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
4
Table of Contents
Expense Table – continued
Share Class | Annualized Ratio | Beginning Account Value 10/01/10 | Ending Account Value | Expenses Paid During 10/01/10-3/31/11 | ||||||||||||||
A | Actual | 0.82% | $1,000.00 | $1,092.23 | $4.28 | |||||||||||||
Hypothetical (h) | 0.82% | $1,000.00 | $1,020.84 | $4.13 | ||||||||||||||
B | Actual | 1.52% | $1,000.00 | $1,087.53 | $7.91 | |||||||||||||
Hypothetical (h) | 1.52% | $1,000.00 | $1,017.35 | $7.64 | ||||||||||||||
C | Actual | 1.52% | $1,000.00 | $1,087.95 | $7.91 | |||||||||||||
Hypothetical (h) | 1.52% | $1,000.00 | $1,017.35 | $7.64 | ||||||||||||||
I | Actual | 0.52% | $1,000.00 | $1,093.88 | $2.71 | |||||||||||||
Hypothetical (h) | 0.52% | $1,000.00 | $1,022.34 | $2.62 | ||||||||||||||
R1 | Actual | 1.52% | $1,000.00 | $1,087.77 | $7.91 | |||||||||||||
Hypothetical (h) | 1.52% | $1,000.00 | $1,017.35 | $7.64 | ||||||||||||||
R2 | Actual | 1.02% | $1,000.00 | $1,090.14 | $5.32 | |||||||||||||
Hypothetical (h) | 1.02% | $1,000.00 | $1,019.85 | $5.14 | ||||||||||||||
R3 | Actual | 0.77% | $1,000.00 | $1,092.45 | $4.02 | |||||||||||||
Hypothetical (h) | 0.77% | $1,000.00 | $1,021.09 | $3.88 | ||||||||||||||
R4 | Actual | 0.52% | $1,000.00 | $1,093.81 | $2.71 | |||||||||||||
Hypothetical (h) | 0.52% | $1,000.00 | $1,022.34 | $2.62 | ||||||||||||||
529A | Actual | 0.92% | $1,000.00 | $1,091.10 | $4.80 | |||||||||||||
Hypothetical (h) | 0.92% | $1,000.00 | $1,020.34 | $4.63 | ||||||||||||||
529B | Actual | 1.62% | $1,000.00 | $1,087.88 | $8.43 | |||||||||||||
Hypothetical (h) | 1.62% | $1,000.00 | $1,016.85 | $8.15 | ||||||||||||||
529C | Actual | 1.62% | $1,000.00 | $1,087.47 | $8.43 | |||||||||||||
Hypothetical (h) | 1.62% | $1,000.00 | $1,016.85 | $8.15 |
(h) | 5% class return per year before expenses. |
(p) | Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Expense Changes Impacting the Table
Changes to the fund’s fee arrangements occurred during the six month period. Had these fee changes been in effect throughout the entire six month period, the annualized expense ratios would have been 0.77% and 0.87% for Class A and Class 529A shares, respectively; the actual expenses paid during the period would have been approximately $4.02 and $4.54 for Class A and Class 529A shares, respectively; and the hypothetical expenses paid during the period would have been approximately $3.88 and $4.38 for Class A and Class 529A shares, respectively. For further information about the fund’s fee arrangements and changes to those fee arrangements, please see Note 3 in the Notes to Financial Statements.
5
Table of Contents
3/31/11 (unaudited)
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Common Stocks - 60.5% | ||||||||
Issuer | Shares/Par | Value ($) | ||||||
Aerospace - 4.3% | ||||||||
Honeywell International, Inc. | 755,670 | $ | 45,121,048 | |||||
Huntington Ingalls Industries, Inc. (a) | 64,906 | 2,693,627 | ||||||
Lockheed Martin Corp. | 1,409,070 | 113,289,228 | ||||||
Northrop Grumman Corp. | 389,440 | 24,421,782 | ||||||
Precision Castparts Corp. | 75,460 | 11,106,203 | ||||||
United Technologies Corp. | 1,117,470 | 94,593,836 | ||||||
$ | 291,225,724 | |||||||
Alcoholic Beverages - 0.8% | ||||||||
Diageo PLC | 2,207,481 | $ | 41,963,706 | |||||
Heineken N.V. | 187,524 | 10,246,339 | ||||||
$ | 52,210,045 | |||||||
Apparel Manufacturers - 0.1% | ||||||||
NIKE, Inc., “B” | 110,770 | $ | 8,385,289 | |||||
Automotive - 0.6% | ||||||||
General Motors Co. (a) | 255,950 | $ | 7,942,129 | |||||
Johnson Controls, Inc. | 729,990 | 30,345,684 | ||||||
$ | 38,287,813 | |||||||
Broadcasting - 2.0% | ||||||||
Omnicom Group, Inc. | 759,900 | $ | 37,280,694 | |||||
Viacom, Inc., “B” | 870,080 | 40,476,122 | ||||||
Walt Disney Co. | 1,281,000 | 55,198,290 | ||||||
$ | 132,955,106 | |||||||
Brokerage & Asset Managers - 0.7% | ||||||||
Blackrock, Inc. | 58,020 | $ | 11,662,600 | |||||
Charles Schwab Corp. | 750,830 | 13,537,465 | ||||||
Deutsche Boerse AG | 106,424 | 8,076,630 | ||||||
Franklin Resources, Inc. | 130,170 | 16,281,664 | ||||||
$ | 49,558,359 | |||||||
Business Services - 1.1% | ||||||||
Accenture Ltd., “A” | 925,720 | $ | 50,886,828 | |||||
Dun & Bradstreet Corp. | 144,910 | 11,627,578 | ||||||
Western Union Co. | 610,740 | 12,685,070 | ||||||
$ | 75,199,476 |
6
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Cable TV - 0.3% | ||||||||
Comcast Corp., “Special A” | 889,770 | $ | 20,660,459 | |||||
Chemicals - 2.0% | ||||||||
3M Co. | 602,840 | $ | 56,365,540 | |||||
Celanese Corp. | 92,230 | 4,092,245 | ||||||
E.I. du Pont de Nemours & Co. | 248,180 | 13,642,455 | ||||||
PPG Industries, Inc. | 624,640 | 59,471,974 | ||||||
$ | 133,572,214 | |||||||
Computer Software - 1.3% | ||||||||
Check Point Software Technologies Ltd. (a) | 206,270 | $ | 10,530,084 | |||||
Microsoft Corp. | 348,600 | 8,840,496 | ||||||
Oracle Corp. | 2,006,880 | 66,969,586 | ||||||
$ | 86,340,166 | |||||||
Computer Software - Systems - 1.6% | ||||||||
Hewlett-Packard Co. | 958,060 | $ | 39,251,718 | |||||
International Business Machines Corp. | 407,500 | 66,451,025 | ||||||
$ | 105,702,743 | |||||||
Construction - 0.6% | ||||||||
Pulte Homes, Inc. (a) | 684,070 | $ | 5,062,118 | |||||
Sherwin-Williams Co. | 228,220 | 19,168,198 | ||||||
Stanley Black & Decker, Inc. | 227,491 | 17,425,811 | ||||||
$ | 41,656,127 | |||||||
Consumer Products - 1.1% | ||||||||
Avon Products, Inc. | 627,120 | $ | 16,957,325 | |||||
Procter & Gamble Co. | 719,358 | 44,312,453 | ||||||
Reckitt Benckiser Group PLC | 176,818 | 9,082,519 | ||||||
$ | 70,352,297 | |||||||
Electrical Equipment - 1.0% | ||||||||
Danaher Corp. | 1,315,900 | $ | 68,295,210 | |||||
Electronics - 0.5% | ||||||||
Intel Corp. | 1,292,710 | $ | 26,073,961 | |||||
Microchip Technology, Inc. | 273,320 | 10,388,893 | ||||||
$ | 36,462,854 | |||||||
Energy - Independent - 3.2% | ||||||||
Anadarko Petroleum Corp. | 182,530 | $ | 14,952,858 |
7
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Energy - Independent - continued | ||||||||
Apache Corp. | 711,280 | $ | 93,120,778 | |||||
EOG Resources, Inc. | 270,170 | 32,017,847 | ||||||
Noble Energy, Inc. | 263,760 | 25,492,404 | ||||||
Occidental Petroleum Corp. | 384,440 | 40,170,136 | ||||||
Southwestern Energy Co. (a) | 280,620 | 12,058,241 | ||||||
$ | 217,812,264 | |||||||
Energy - Integrated - 3.9% | ||||||||
Chevron Corp. | 780,915 | $ | 83,893,698 | |||||
Exxon Mobil Corp. | 1,506,248 | 126,720,644 | ||||||
Hess Corp. | 533,200 | 45,433,972 | ||||||
QEP Resources, Inc. | 179,310 | 7,269,227 | ||||||
$ | 263,317,541 | |||||||
Engineering - Construction - 0.3% | ||||||||
Fluor Corp. | 284,060 | $ | 20,923,860 | |||||
Food & Beverages - 2.5% | ||||||||
General Mills, Inc. | 801,490 | $ | 29,294,460 | |||||
Groupe Danone | 156,347 | 10,213,498 | ||||||
J.M. Smucker Co. | 133,650 | 9,541,274 | ||||||
Kellogg Co. | 291,000 | 15,708,180 | ||||||
Nestle S.A. | 948,981 | �� | 54,397,223 | |||||
PepsiCo, Inc. | 743,100 | 47,863,071 | ||||||
$ | 167,017,706 | |||||||
Food & Drug Stores - 0.8% | ||||||||
CVS Caremark Corp. | 843,579 | $ | 28,951,631 | |||||
Kroger Co. | 413,530 | 9,912,314 | ||||||
Walgreen Co. | 425,550 | 17,081,577 | ||||||
$ | 55,945,522 | |||||||
General Merchandise - 1.1% | ||||||||
Kohl’s Corp. | 550,620 | $ | 29,204,885 | |||||
Target Corp. | 950,270 | 47,523,003 | ||||||
$ | 76,727,888 | |||||||
Health Maintenance Organizations - 0.1% | ||||||||
WellPoint, Inc. | 71,750 | $ | 5,007,433 | |||||
Insurance - 4.2% | ||||||||
ACE Ltd. | 511,940 | $ | 33,122,518 | |||||
Allstate Corp. | 91,770 | 2,916,451 |
8
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Insurance - continued | ||||||||
Aon Corp. | 661,130 | $ | 35,013,445 | |||||
Chubb Corp. | 223,290 | 13,689,910 | ||||||
MetLife, Inc. | 1,815,440 | 81,204,631 | ||||||
Prudential Financial, Inc. | 1,018,210 | 62,701,372 | ||||||
Travelers Cos., Inc. | 934,923 | 55,609,220 | ||||||
$ | 284,257,547 | |||||||
Leisure & Toys - 0.3% | ||||||||
Hasbro, Inc. | 474,000 | $ | 22,202,160 | |||||
Machinery & Tools - 0.5% | ||||||||
Eaton Corp. | 593,580 | $ | 32,908,075 | |||||
Major Banks - 8.3% | ||||||||
Bank of America Corp. | 4,951,570 | $ | 66,004,428 | |||||
Bank of New York Mellon Corp. | 3,092,158 | 92,362,759 | ||||||
Goldman Sachs Group, Inc. | 634,652 | 100,573,302 | ||||||
JPMorgan Chase & Co. | 3,262,981 | 150,423,424 | ||||||
PNC Financial Services Group, Inc. | 432,799 | 27,262,009 | ||||||
State Street Corp. | 934,830 | 42,011,260 | ||||||
SunTrust Banks, Inc. | 226,420 | 6,529,953 | ||||||
Wells Fargo & Co. | 2,310,540 | 73,244,118 | ||||||
$ | 558,411,253 | |||||||
Medical & Health Technology & Services - 0.3% | ||||||||
AmerisourceBergen Corp. | 271,510 | $ | 10,740,936 | |||||
Quest Diagnostics, Inc. | 197,360 | 11,391,619 | ||||||
$ | 22,132,555 | |||||||
Medical Equipment - 2.4% | ||||||||
Becton, Dickinson & Co. | 437,070 | $ | 34,799,513 | |||||
Covidien PLC | 331,990 | 17,243,561 | ||||||
Medtronic, Inc. | 1,040,290 | 40,935,412 | ||||||
St. Jude Medical, Inc. | 701,070 | 35,936,848 | ||||||
Thermo Fisher Scientific, Inc. (a) | 540,400 | 30,019,220 | ||||||
$ | 158,934,554 | |||||||
Metals & Mining - 0.2% | ||||||||
Cliffs Natural Resources, Inc. | 103,680 | $ | 10,189,670 | |||||
Natural Gas - Distribution - 0.0% | �� | |||||||
AGL Resources, Inc. | 49,170 | $ | 1,958,933 |
9
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Natural Gas - Pipeline - 0.4% | ||||||||
Kinder Morgan, Inc. (a) | 185,440 | $ | 5,496,442 | |||||
Williams Cos., Inc. | 624,060 | 19,458,191 | ||||||
$ | 24,954,633 | |||||||
Network & Telecom - 0.4% | ||||||||
Cisco Systems, Inc. | 1,585,440 | $ | 27,190,296 | |||||
Oil Services - 0.4% | ||||||||
Schlumberger Ltd. | 131,790 | $ | 12,290,735 | |||||
Transocean, Inc. (a) | 200,220 | 15,607,149 | ||||||
$ | 27,897,884 | |||||||
Other Banks & Diversified Financials - 0.8% | ||||||||
MasterCard, Inc., “A” | 70,282 | $ | 17,691,385 | |||||
TCF Financial Corp. | 617,240 | 9,789,426 | ||||||
Visa, Inc., “A” | 195,880 | 14,420,686 | ||||||
Zions Bancorporation | 434,350 | 10,016,111 | ||||||
$ | 51,917,608 | |||||||
Pharmaceuticals - 3.8% | ||||||||
Abbott Laboratories | 1,344,270 | $ | 65,936,444 | |||||
Bayer AG | 120,712 | 9,347,431 | ||||||
GlaxoSmithKline PLC | 396,619 | 7,568,268 | ||||||
Johnson & Johnson | 1,368,440 | 81,080,070 | ||||||
Merck & Co., Inc. | 238,330 | 7,867,273 | ||||||
Pfizer, Inc. | 3,733,745 | 75,832,361 | ||||||
Roche Holding AG | 63,070 | 9,009,019 | ||||||
$ | 256,640,866 | |||||||
Railroad & Shipping - 0.3% | ||||||||
Canadian National Railway Co. | 143,930 | $ | 10,833,611 | |||||
CSX Corp. | 105,960 | 8,328,456 | ||||||
$ | 19,162,067 | |||||||
Restaurants - 0.3% | ||||||||
McDonald’s Corp. | 304,830 | $ | 23,194,515 | |||||
Specialty Chemicals - 0.7% | ||||||||
Air Products & Chemicals, Inc. | 453,150 | $ | 40,865,067 | |||||
Airgas, Inc. | 102,320 | 6,796,094 | ||||||
$ | 47,661,161 |
10
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Specialty Stores - 0.4% | ||||||||
Advance Auto Parts, Inc. | 140,580 | $ | 9,224,860 | |||||
Staples, Inc. | 945,860 | 18,368,601 | ||||||
$ | 27,593,461 | |||||||
Telecommunications - Wireless - 0.8% | ||||||||
Vodafone Group PLC | 18,047,524 | $ | 51,099,994 | |||||
Vodafone Group PLC, ADR | 108,900 | 3,130,875 | ||||||
$ | 54,230,869 | |||||||
Telephone Services - 1.5% | ||||||||
AT&T, Inc. | 2,834,048 | $ | 86,721,869 | |||||
CenturyLink, Inc. | 328,507 | 13,649,466 | ||||||
$ | 100,371,335 | |||||||
Tobacco - 2.3% | ||||||||
Altria Group, Inc. | 510,090 | $ | 13,277,643 | |||||
Philip Morris International, Inc. | 1,753,240 | 115,065,141 | ||||||
Reynolds American, Inc. | 660,860 | 23,480,356 | ||||||
$ | 151,823,140 | |||||||
Trucking - 0.3% | ||||||||
United Parcel Service, Inc., “B” | 222,200 | $ | 16,513,904 | |||||
Utilities - Electric Power - 2.0% | ||||||||
American Electric Power Co., Inc. | 365,450 | $ | 12,841,913 | |||||
Dominion Resources, Inc. | 218,568 | 9,769,990 | ||||||
Entergy Corp. | 237,270 | 15,946,917 | ||||||
NextEra Energy, Inc. | 182,810 | 10,076,487 | ||||||
NRG Energy, Inc. (a) | 449,040 | 9,672,322 | ||||||
PG&E Corp. | 607,430 | 26,836,257 | ||||||
PPL Corp. | 815,800 | 20,639,740 | ||||||
Public Service Enterprise Group, Inc. | 832,400 | 26,228,924 | ||||||
$ | 132,012,550 | |||||||
Total Common Stocks (Identified Cost, $3,004,704,079) | $ | 4,069,775,132 | ||||||
Bonds - 37.9% | ||||||||
Agency - Other - 0.1% | ||||||||
Financing Corp., 9.65%, 2018 | $ | 2,850,000 | $ | 4,057,853 | ||||
Asset-Backed & Securitized - 2.5% | ||||||||
Anthracite Ltd., “A”, CDO, FRN, 0.702%, 2017 (z) | $ | 7,252,142 | $ | 7,034,578 |
11
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Asset-Backed & Securitized - continued | ||||||||
Banc of America Commercial Mortgage, Inc., FRN, 5.742%, 2051 | $ | 13,600,000 | $ | 14,698,203 | ||||
Bayview Financial Revolving Mortgage Loan Trust, FRN, 1.848%, 2040 (z) | 7,584,035 | 4,258,592 | ||||||
BlackRock Capital Finance LP, 7.75%, 2026 (n) | 1,012,700 | 131,651 | ||||||
Capital Trust Realty Ltd., CDO, 5.16%, 2035 (z) | 8,096,000 | 8,172,102 | ||||||
Citigroup/Deutsche Bank Commercial Mortgage Trust, 5.322%, 2049 | 14,105,112 | 14,825,610 | ||||||
Credit Suisse Mortgage Capital Certificate, FRN, 5.695%, 2040 | 9,759,829 | 10,141,964 | ||||||
Crest G-Star, 2001-1A, “A”, CDO, FRN, 0.781%, 2016 (z) | 961,055 | 953,145 | ||||||
Crest G-Star, CDO, FRN, 0.781%, 2016 | 2,412,632 | 2,394,537 | ||||||
GMAC Mortgage Corp. Loan Trust, FRN, 0.262%, 2036 | 5,429,145 | 3,364,935 | ||||||
JPMorgan Chase Commercial Mortgage Securities Corp., 4.78%, 2042 | 828,000 | 859,549 | ||||||
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 4.948%, 2037 | 1,200,000 | 1,229,038 | ||||||
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 5.221%, 2041 | 2,279,327 | 2,436,312 | ||||||
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 5.475%, 2043 | 7,065,861 | 7,612,317 | ||||||
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 5.863%, 2045 | 7,340,374 | 8,065,806 | ||||||
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 5.818%, 2049 | 16,230,000 | 17,382,585 | ||||||
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 5.987%, 2051 | 12,669,291 | 13,440,467 | ||||||
Merrill Lynch Mortgage Trust, FRN, “C”, 6.02%, 2050 | 5,520,000 | 2,640,765 | ||||||
Merrill Lynch Mortgage Trust, FRN, “A3”, 6.02%, 2050 | 1,948,101 | 2,034,120 | ||||||
Merrill Lynch/Countrywide Commercial Mortgage Trust, FRN, 5.81%, 2050 | 9,759,829 | 10,197,830 | ||||||
Morgan Stanley Capital I, Inc., FRN, 0.598%, 2030 (i)(n) | 37,668,922 | 969,127 | ||||||
Residential Asset Mortgage Products, Inc., FRN, 4.971%, 2034 | 3,295,592 | 3,321,684 | ||||||
Residential Funding Mortgage Securities, Inc., FRN, 5.32%, 2035 | 8,242,000 | 3,005,940 | ||||||
Spirit Master Funding LLC, 5.05%, 2023 (z) | 7,693,008 | 6,688,993 | ||||||
Structured Asset Securities Corp., FRN, 4.67%, 2035 | 1,051,566 | 1,050,564 | ||||||
Wachovia Bank Commercial Mortgage Trust, FRN, 5.899%, 2051 | 18,785,000 | 20,115,401 | ||||||
$ | 167,025,815 | |||||||
Automotive - 0.1% | ||||||||
Toyota Motor Credit Corp., 3.2%, 2015 | $ | 3,480,000 | $ | 3,537,796 | ||||
Broadcasting - 0.2% | ||||||||
Hearst-Argyle Television, Inc., 7.5%, 2027 | $ | 3,800,000 | $ | 2,849,939 |
12
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Broadcasting - continued | ||||||||
News America, Inc., 8.5%, 2025 | $ | 5,903,000 | $ | 7,197,410 | ||||
$ | 10,047,349 | |||||||
Cable TV - 0.3% | ||||||||
Cox Communications, Inc., 4.625%, 2013 | $ | 6,711,000 | $ | 7,123,364 | ||||
DIRECTV Holdings LLC, 4.6%, 2021 | 7,320,000 | 7,136,070 | ||||||
Time Warner Entertainment Co. LP, 8.375%, 2033 | 7,170,000 | 8,770,853 | ||||||
$ | 23,030,287 | |||||||
Conglomerates - 0.1% | ||||||||
Kennametal, Inc., 7.2%, 2012 | $ | 8,542,000 | $ | 8,905,086 | ||||
Consumer Services - 0.2% | ||||||||
Western Union Co., 5.4%, 2011 | $ | 10,085,000 | $ | 10,381,469 | ||||
Defense Electronics - 0.1% | ||||||||
BAE Systems Holdings, Inc., 5.2%, 2015 (n) | $ | 8,973,000 | $ | 9,607,113 | ||||
Electronics - 0.1% | ||||||||
Tyco Electronics Group S.A., 6.55%, 2017 | $ | 7,980,000 | $ | 9,132,360 | ||||
Emerging Market Quasi-Sovereign - 0.2% | ||||||||
Corporacion Nacional del Cobre de Chile, 3.75%, 2020 (n) | $ | 1,789,000 | $ | 1,672,982 | ||||
Petrobras International Finance Co., 6.75%, 2041 | 1,511,000 | 1,556,643 | ||||||
Petroleos Mexicanos, 8%, 2019 | 4,145,000 | 4,978,145 | ||||||
Qtel International Finance Ltd., 6.5%, 2014 (n) | 1,395,000 | 1,529,269 | ||||||
Ras Laffan Liquefied Natural Gas Co. Ltd., 5.832%, 2016 (n) | 5,328,770 | 5,712,441 | ||||||
$ | 15,449,480 | |||||||
Emerging Market Sovereign - 0.2% | ||||||||
Republic of Peru, 7.35%, 2025 | $ | 551,000 | $ | 654,864 | ||||
Russian Federation, 3.625%, 2015 (z) | 12,000,000 | 12,135,000 | ||||||
$ | 12,789,864 | |||||||
Energy - Independent - 0.1% | ||||||||
Anadarko Petroleum Corp., 6.45%, 2036 | $ | 7,610,000 | $ | 7,600,175 | ||||
Energy - Integrated - 0.5% | ||||||||
BP Capital Markets PLC, 4.5%, 2020 | $ | 1,661,000 | $ | 1,648,305 | ||||
BP Capital Markets PLC, 4.742%, 2021 | 7,340,000 | 7,353,689 | ||||||
Hess Corp., 8.125%, 2019 | 1,740,000 | 2,184,311 | ||||||
Husky Energy, Inc., 5.9%, 2014 | 4,370,000 | 4,840,155 |
13
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Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Energy - Integrated - continued | ||||||||
Husky Energy, Inc., 7.25%, 2019 | $ | 4,453,000 | $ | 5,271,448 | ||||
Petro-Canada, 6.05%, 2018 | 9,475,000 | 10,663,914 | ||||||
$ | 31,961,822 | |||||||
Financial Institutions - 0.1% | ||||||||
General Electric Capital Corp., 5.45%, 2013 | $ | 2,383,000 | $ | 2,548,275 | ||||
General Electric Capital Corp., 4.625%, 2021 | 5,210,000 | 5,130,923 | ||||||
$ | 7,679,198 | |||||||
Food & Beverages - 0.3% | ||||||||
Anheuser-Busch InBev Worldwide, Inc., 8%, 2039 | $ | 7,380,000 | $ | 9,864,588 | ||||
Miller Brewing Co., 5.5%, 2013 (n) | 7,006,000 | 7,614,226 | ||||||
$ | 17,478,814 | |||||||
Food & Drug Stores - 0.1% | ||||||||
CVS Caremark Corp., 6.125%, 2016 | $ | 6,630,000 | $ | 7,467,780 | ||||
Gaming & Lodging - 0.1% | ||||||||
Wyndham Worldwide Corp., 6%, 2016 | $ | 6,562,000 | $ | 6,953,358 | ||||
Insurance - 0.3% | ||||||||
ING Groep N.V., 5.775% to 2015, FRN to 2049 | $ | 8,503,000 | $ | 7,865,275 | ||||
MetLife, Inc., 4.75%, 2021 | 1,810,000 | 1,814,127 | ||||||
Metropolitan Life Global Funding, 5.125%, 2013 (n) | 3,340,000 | 3,564,304 | ||||||
Metropolitan Life Global Funding, 5.125%, 2014 (n) | 1,320,000 | 1,430,604 | ||||||
Prudential Financial, Inc., 6.625%, 2040 | 2,420,000 | 2,666,296 | ||||||
$ | 17,340,606 | |||||||
Insurance - Property & Casualty - 0.2% | ||||||||
Chubb Corp., 6.375% to 2017, FRN to 2067 | $ | 7,360,000 | $ | 7,746,400 | ||||
ZFS Finance USA Trust IV, 5.875% to 2012, FRN to 2062 (n) | 770,000 | 766,935 | ||||||
ZFS Finance USA Trust V, 6.5% to 2017, FRN to 2067 (n) | 2,925,000 | 2,932,313 | ||||||
$ | 11,445,648 | |||||||
International Market Quasi-Sovereign - 0.7% | ||||||||
Achmea Hypotheekbank N.V., 3.2%, 2014 (n) | $ | 4,890,000 | $ | 5,063,967 | ||||
ING Bank N.V., 3.9%, 2014 (n) | 6,920,000 | 7,336,266 | ||||||
Irish Life & Permanent PLC, 3.6%, 2013 (e)(n) | 8,600,000 | 7,525,000 | ||||||
KFW International Finance, Inc., 4.875%, 2019 | 7,250,000 | 8,014,237 | ||||||
Royal Bank of Scotland Group PLC, 2.625%, 2012 (n) | 13,020,000 | 13,307,872 | ||||||
Societe Financement de l’ Economie Francaise, 3.375%, 2014 (n) | 4,053,000 | 4,255,926 | ||||||
$ | 45,503,268 |
14
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Local Authorities - 0.1% | ||||||||
New Jersey Turnpike Authority Rev. (Build America Bonds), “F”, 7.414%, 2040 | $ | 5,815,000 | $ | 6,435,635 | ||||
Machinery & Tools - 0.1% | ||||||||
Atlas Copco AB, 5.6%, 2017 (n) | $ | 5,970,000 | $ | 6,324,314 | ||||
Major Banks - 1.6% | ||||||||
ABN Amro Bank N.V., FRN, 2.071%, 2014 (n) | $ | 11,580,000 | $ | 11,586,300 | ||||
Bank of America Corp., 7.375%, 2014 | 2,825,000 | 3,190,340 | ||||||
Bank of America Corp., 5.49%, 2019 | 4,135,000 | 4,161,096 | ||||||
Bank of America Corp., 7.625%, 2019 | 3,980,000 | 4,609,632 | ||||||
BNP Paribas, 7.195% to 2037, FRN to 2049 (n) | 3,200,000 | 3,072,000 | ||||||
Commonwealth Bank of Australia, 5%, 2019 (n) | 3,930,000 | 4,058,279 | ||||||
Credit Suisse New York, 5.5%, 2014 | 8,200,000 | 8,988,077 | ||||||
Goldman Sachs Group, Inc., 5.625%, 2017 | 6,364,000 | 6,706,447 | ||||||
HSBC USA, Inc., 4.875%, 2020 | 4,130,000 | 4,043,047 | ||||||
JPMorgan Chase & Co., 6.3%, 2019 | 6,750,000 | 7,471,487 | ||||||
JPMorgan Chase Capital XXII, 6.45%, 2037 | 3,143,000 | 3,163,112 | ||||||
JPMorgan Chase Capital XXVII, 7%, 2039 | 816,000 | 840,787 | ||||||
Merrill Lynch & Co., Inc., 6.15%, 2013 | 6,790,000 | 7,314,317 | ||||||
Morgan Stanley, 5.75%, 2016 | 6,120,000 | 6,552,531 | ||||||
Morgan Stanley, 6.625%, 2018 | 6,920,000 | 7,605,883 | ||||||
PNC Funding Corp., 5.625%, 2017 | 6,510,000 | 7,061,390 | ||||||
Royal Bank of Scotland PLC, 6.125%, 2021 | 6,760,000 | 6,949,760 | ||||||
UniCredito Luxembourg Finance S.A., 6%, 2017 (n) | 8,740,000 | 8,418,158 | ||||||
Wachovia Corp., 5.25%, 2014 | 4,613,000 | 4,933,470 | ||||||
$ | 110,726,113 | |||||||
Medical & Health Technology & Services - 0.2% | ||||||||
CareFusion Corp., 6.375%, 2019 | $ | 6,240,000 | $ | 6,975,322 | ||||
Hospira, Inc., 6.05%, 2017 | 5,813,000 | 6,441,949 | ||||||
$ | 13,417,271 | |||||||
Metals & Mining - 0.2% | ||||||||
ArcelorMittal, 6.125%, 2018 | $ | 3,465,000 | $ | 3,670,315 | ||||
ArcelorMittal, 5.25%, 2020 | 6,640,000 | 6,493,986 | ||||||
Vale Overseas Ltd., 4.625%, 2020 | 1,631,000 | 1,590,868 | ||||||
Vale Overseas Ltd., 6.875%, 2039 | 1,269,000 | 1,356,428 | ||||||
$ | 13,111,597 | |||||||
Mortgage-Backed - 12.3% | ||||||||
Fannie Mae, 4.01%, 2013 | $ | 954,409 | $ | 992,688 | ||||
Fannie Mae, 4.02%, 2013 | 2,985,733 | 3,113,561 |
15
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Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Mortgage-Backed - continued | ||||||||
Fannie Mae, 4.767%, 2013 | $ | 532,322 | $ | 553,946 | ||||
Fannie Mae, 4.562%, 2014 - 2015 | 4,801,926 | 5,087,924 | ||||||
Fannie Mae, 4.63%, 2014 | 2,383,798 | 2,523,693 | ||||||
Fannie Mae, 4.777%, 2014 | 185,372 | 197,105 | ||||||
Fannie Mae, 4.841%, 2014 | 4,238,126 | 4,509,192 | ||||||
Fannie Mae, 4.88%, 2014 - 2020 | 1,494,680 | 1,583,744 | ||||||
Fannie Mae, 4.78%, 2015 | 2,293,026 | 2,454,011 | ||||||
Fannie Mae, 4.856%, 2015 | 639,800 | 682,942 | ||||||
Fannie Mae, 4.922%, 2015 | 4,574,474 | 4,921,597 | ||||||
Fannie Mae, 5.19%, 2015 | 1,331,700 | 1,440,617 | ||||||
Fannie Mae, 5.09%, 2016 | 2,000,000 | 2,147,816 | ||||||
Fannie Mae, 5.662%, 2016 | 1,215,943 | 1,313,651 | ||||||
Fannie Mae, 5.724%, 2016 | 1,411,973 | 1,534,679 | ||||||
Fannie Mae, 5.05%, 2017 | 2,462,705 | 2,644,255 | ||||||
Fannie Mae, 5.5%, 2017 - 2040 | 145,237,082 | 156,445,005 | ||||||
Fannie Mae, 6%, 2017 - 2037 | 75,897,165 | 83,407,536 | ||||||
Fannie Mae, 3.8%, 2018 | 806,845 | 821,346 | ||||||
Fannie Mae, 4.5%, 2018 - 2041 | 34,575,676 | 35,867,537 | ||||||
Fannie Mae, 5%, 2018 - 2041 | 73,808,230 | 77,815,582 | ||||||
Fannie Mae, 7.5%, 2030 - 2032 | 879,631 | 1,021,164 | ||||||
Fannie Mae, 6.5%, 2031 - 2037 | 26,473,522 | 29,921,035 | ||||||
Freddie Mac, 6%, 2016 - 2037 | 44,765,884 | 49,072,848 | ||||||
Freddie Mac, 3.882%, 2017 | 2,174,445 | 2,213,361 | ||||||
Freddie Mac, 5%, 2017 - 2039 | 68,898,247 | 72,593,090 | ||||||
Freddie Mac, 4.5%, 2019 - 2039 | 45,475,377 | 47,013,070 | ||||||
Freddie Mac, 5.085%, 2019 | 6,789,000 | 7,081,992 | ||||||
Freddie Mac, 5.5%, 2019 - 2035 | 35,251,863 | 38,008,893 | ||||||
Freddie Mac, 3.808%, 2020 | 5,739,000 | 5,609,534 | ||||||
Freddie Mac, 4%, 2024 | 12,454,109 | 12,821,894 | ||||||
Freddie Mac, 6.5%, 2034 - 2037 | 12,535,504 | 14,130,916 | ||||||
Freddie Mac, 4%, 2040 - 2041 | 37,782,841 | 37,152,201 | ||||||
Ginnie Mae, 5.5%, 2032 - 2035 | 17,749,927 | 19,347,553 | ||||||
Ginnie Mae, 6%, 2032 - 2038 | 15,749,622 | 17,390,773 | ||||||
Ginnie Mae, 4.5%, 2033 - 2040 | 29,192,203 | 30,281,017 | ||||||
Ginnie Mae, 5%, 2033 - 2039 | 34,168,435 | 36,324,605 | ||||||
Ginnie Mae, 4%, 2041 | 19,103,825 | 19,134,669 | ||||||
$ | 829,177,042 | |||||||
Natural Gas - Pipeline - 0.2% | ||||||||
Enterprise Products Operating LLC, 6.5%, 2019 | $ | 5,184,000 | $ | 5,892,000 | ||||
Kinder Morgan Energy Partners LP, 7.75%, 2032 | 2,520,000 | 2,931,899 |
16
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Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Natural Gas - Pipeline - continued | ||||||||
Spectra Energy Capital LLC, 8%, 2019 | $ | 5,327,000 | $ | 6,476,993 | ||||
$ | 15,300,892 | |||||||
Network & Telecom - 0.4% | ||||||||
AT&T, Inc., 6.55%, 2039 | $ | 7,210,000 | $ | 7,514,536 | ||||
Telecom Italia Capital, 5.25%, 2013 | 4,186,000 | 4,420,173 | ||||||
Verizon New York, Inc., 6.875%, 2012 | 11,404,000 | 12,072,731 | ||||||
$ | 24,007,440 | |||||||
Other Banks & Diversified Financials - 1.2% | ||||||||
American Express Co., 5.5%, 2016 | $ | 6,317,000 | $ | 6,886,389 | ||||
Banco Bradesco S.A., 6.75%, 2019 (n) | 3,383,000 | 3,552,150 | ||||||
Banco Santander U.S. Debt S.A.U., 3.781%, 2015 (n) | 2,600,000 | 2,513,098 | ||||||
Capital One Financial Corp., 6.15%, 2016 | 8,680,000 | 9,505,129 | ||||||
Groupe BPCE S.A., 12.5% to 2019, FRN to 2049 (n) | 7,712,000 | 8,651,861 | ||||||
HSBC Holdings PLC, 5.1%, 2021 | 3,688,000 | 3,706,923 | ||||||
Lloyds TSB Bank PLC, 4.875%, 2016 | 6,040,000 | 6,227,989 | ||||||
Nordea Bank AB, 4.875%, 2021 (z) | 3,590,000 | 3,645,853 | ||||||
Nordea Bank AB, 5.424% to 2015, FRN to 2049 (n) | 3,333,000 | 3,220,835 | ||||||
Svenska Handelsbanken AB, 4.875%, 2014 (n) | 5,000,000 | 5,360,570 | ||||||
UBS Preferred Funding Trust V, 6.243% to 2016, FRN to 2049 | 12,360,000 | 12,205,500 | ||||||
Woori Bank, 6.125% to 2011, FRN to 2016 (n) | 15,472,000 | 15,514,084 | ||||||
$ | 80,990,381 | |||||||
Pharmaceuticals - 0.2% | ||||||||
Pfizer, Inc., 7.2%, 2039 | $ | 3,040,000 | $ | 3,763,046 | ||||
Roche Holdings, Inc., 6%, 2019 (n) | 8,380,000 | 9,498,487 | ||||||
$ | 13,261,533 | |||||||
Real Estate - 0.3% | ||||||||
Boston Properties, Inc., REIT, 5%, 2015 | $ | 2,006,000 | $ | 2,152,203 | ||||
HCP, Inc., REIT, 5.375%, 2021 | 4,146,000 | 4,186,971 | ||||||
HRPT Properties Trust, REIT, 6.25%, 2016 | 11,278,000 | 12,115,346 | ||||||
Kimco Realty Corp., REIT, 6%, 2012 | 1,750,000 | 1,866,296 | ||||||
WEA Finance LLC, REIT, 6.75%, 2019 (n) | 2,086,000 | 2,393,514 | ||||||
$ | 22,714,330 | |||||||
Retailers - 0.3% | ||||||||
Home Depot, Inc., 5.95%, 2041 | $ | 6,436,000 | $ | 6,418,069 | ||||
Limited Brands, Inc., 5.25%, 2014 | 2,262,000 | 2,352,480 | ||||||
Wal-Mart Stores, Inc., 5.25%, 2035 | 12,347,000 | 12,069,983 | ||||||
$ | 20,840,532 |
17
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Supranational - 0.1% | ||||||||
Asian Development Bank, 2.75%, 2014 | $ | 5,390,000 | $ | 5,586,514 | ||||
Telecommunications - Wireless - 0.2% | ||||||||
Crown Castle Towers LLC, 6.113%, 2020 (n) | $ | 3,852,000 | $ | 4,175,002 | ||||
Crown Castle Towers LLC, 4.883%, 2020 (n) | 2,040,000 | 2,041,375 | ||||||
Rogers Communications, Inc., 6.8%, 2018 | 8,529,000 | 9,970,691 | ||||||
$ | 16,187,068 | |||||||
Transportation - Services - 0.1% | ||||||||
Erac USA Finance Co., 7%, 2037 (n) | $ | 6,381,000 | $ | 6,952,278 | ||||
U.S. Government Agencies and Equivalents - 0.5% | ||||||||
Aid-Egypt, 4.45%, 2015 | $ | 9,559,000 | $ | 10,405,545 | ||||
Small Business Administration, 8.8%, 2011 | 1,999 | 1,999 | ||||||
Small Business Administration, 4.35%, 2023 | 1,215,161 | 1,268,202 | ||||||
Small Business Administration, 4.77%, 2024 | 3,311,920 | 3,495,923 | ||||||
Small Business Administration, 5.18%, 2024 | 5,321,340 | 5,650,924 | ||||||
Small Business Administration, 5.52%, 2024 | 3,256,943 | 3,473,343 | ||||||
Small Business Administration, 4.99%, 2024 | 4,640,697 | 4,920,728 | ||||||
Small Business Administration, 4.95%, 2025 | 3,506,776 | 3,715,789 | ||||||
$ | 32,932,453 | |||||||
U.S. Treasury Obligations - 12.5% | ||||||||
U.S. Treasury Bonds, 2%, 2013 | $ | 11,523,000 | $ | 11,790,368 | ||||
U.S. Treasury Bonds, 8.5%, 2020 | 2,148,000 | 3,032,205 | ||||||
U.S. Treasury Bonds, 6%, 2026 | 6,445,000 | 7,846,788 | ||||||
U.S. Treasury Bonds, 6.75%, 2026 | 926,000 | 1,210,311 | ||||||
U.S. Treasury Bonds, 5.25%, 2029 | 51,694,000 | 58,220,368 | ||||||
U.S. Treasury Bonds, 5.375%, 2031 | 4,690,000 | 5,363,456 | ||||||
U.S. Treasury Bonds, 4.5%, 2036 | 5,928,000 | 5,985,430 | ||||||
U.S. Treasury Bonds, 5%, 2037 | 18,185,000 | 19,759,130 | ||||||
U.S. Treasury Bonds, 4.5%, 2039 | 74,824,000 | 74,800,655 | ||||||
U.S. Treasury Notes, 5.125%, 2011 | 18,109,000 | 18,332,538 | ||||||
U.S. Treasury Notes, 1.375%, 2012 | 31,456,100 | 31,754,681 | ||||||
U.S. Treasury Notes, 1.375%, 2012 | 33,218,000 | 33,625,452 | ||||||
U.S. Treasury Notes, 1.375%, 2013 | 43,903,000 | 44,422,636 | ||||||
U.S. Treasury Notes, 3.875%, 2013 | 9,952,000 | 10,542,900 | ||||||
U.S. Treasury Notes, 3.5%, 2013 | 25,000,000 | 26,431,650 | ||||||
U.S. Treasury Notes, 3.125%, 2013 | 65,703,000 | 69,111,343 | ||||||
U.S. Treasury Notes, 2.75%, 2013 | 54,555,000 | 56,920,450 | ||||||
U.S. Treasury Notes, 1.5%, 2013 | 16,019,000 | 16,170,428 | ||||||
U.S. Treasury Notes, 1.875%, 2014 | 28,430,000 | 28,920,872 |
18
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
U.S. Treasury Obligations - continued | ||||||||
U.S. Treasury Notes, 4.75%, 2014 | $ | 2,962,000 | $ | 3,277,406 | ||||
U.S. Treasury Notes, 2.125%, 2015 | 119,795,000 | 121,105,557 | ||||||
U.S. Treasury Notes, 4.25%, 2015 | 856,000 | 939,527 | ||||||
U.S. Treasury Notes, 2.625%, 2016 | 4,568,000 | 4,660,785 | ||||||
U.S. Treasury Notes, 4.75%, 2017 | 2,870,000 | 3,217,092 | ||||||
U.S. Treasury Notes, 3.75%, 2018 | 125,611,000 | 131,970,057 | ||||||
U.S. Treasury Notes, TIPS, 1.25%, 2020 | 50,237,550 | 51,882,026 | ||||||
$ | 841,294,111 | |||||||
Utilities - Electric Power - 0.9% | ||||||||
Bruce Mansfield Unit, 6.85%, 2034 | $ | 13,607,944 | $ | 14,279,503 | ||||
Enel Finance International S.A., 6.25%, 2017 (n) | 5,446,000 | 5,963,985 | ||||||
MidAmerican Funding LLC, 6.927%, 2029 | 12,485,000 | 14,020,667 | ||||||
Oncor Electric Delivery Co., 7%, 2022 | 8,725,000 | 10,035,251 | ||||||
PSEG Power LLC, 6.95%, 2012 | 6,285,000 | 6,700,237 | ||||||
PSEG Power LLC, 5.32%, 2016 | 5,099,000 | 5,494,764 | ||||||
System Energy Resources, Inc., 5.129%, 2014 (z) | 1,658,608 | 1,700,090 | ||||||
Waterford 3 Funding Corp., 8.09%, 2017 | 4,576,028 | 4,582,389 | ||||||
$ | 62,776,886 | |||||||
Total Bonds (Identified Cost, $2,469,877,247) | $ | 2,549,431,531 | ||||||
Convertible Preferred Stocks - 0.2% | ||||||||
Automotive - 0.1% | ||||||||
General Motors Co., 4.75% | 197,800 | $ | 9,533,960 | |||||
Energy - Independent - 0.1% | ||||||||
Apache Corp., 6% | 59,700 | $ | 4,230,342 | |||||
Utilities - Electric Power - 0.0% | ||||||||
PPL Corp., 9.5% | 61,130 | $ | 3,254,561 | |||||
Total Convertible Preferred Stocks (Identified Cost, $15,931,500) | $ | 17,018,863 | ||||||
Money Market Funds (v) - 1.6% | ||||||||
MFS Institutional Money Market Portfolio, 0.19%, at Cost and Net Asset Value | 107,406,229 | $ | 107,406,229 | |||||
Total Investments (Identified Cost, $5,597,919,055) | $ | 6,743,631,755 | ||||||
Other Assets, Less Liabilities - (0.2)% | (16,517,083 | ) | ||||||
Net Assets - 100.0% | $ | 6,727,114,672 |
19
Table of Contents
Portfolio of Investments (unaudited) – continued
(a) | Non-income producing security. |
(e) | Guaranteed by Minister for Finance of Ireland. |
(i) | Interest only security for which the fund receives interest on notional principal (Par amount). Par amount shown is the notional principal and does not reflect the cost of the security. |
(n) | Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $176,716,286, representing 2.63% of net assets. |
(v) | Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end. |
(z) | Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities: |
Restricted Securities | Acquisition Date | Cost | Value | |||||||
Anthracite Ltd., “A”, CDO, FRN, 0.702%, 2017 | 3/19/10 | $6,781,508 | $7,034,578 | |||||||
Bayview Financial Revolving Mortgage Loan Trust, FRN, 1.848%, 2040 | 3/01/06 | 7,584,035 | 4,258,592 | |||||||
Capital Trust Realty Ltd., CDO, 5.16%, 2035 | 4/07/06-9/14/10 | 8,017,920 | 8,172,102 | |||||||
Crest G-Star, 2001-1A, “A”, CDO, FRN, 0.781%, 2016 | 10/27/10 | 948,153 | 953,145 | |||||||
Nordea Bank AB, 4.875%, 2021 | 1/11/11 | 3,573,160 | 3,645,853 | |||||||
Russian Federation, 3.625%, 2015 | 4/22/10 | 11,947,769 | 12,135,000 | |||||||
Spirit Master Funding LLC, 5.05%, 2023 | 10/04/05 | 7,615,614 | 6,688,993 | |||||||
System Energy Resources, Inc., 5.129%, 2014 | 4/16/04 | 1,658,608 | 1,700,090 | |||||||
Total Restricted Securities | $44,588,353 | |||||||||
% of Net Assets | 0.7% |
The following abbreviations are used in this report and are defined:
ADR | American Depository Receipt |
CDO | Collateralized Debt Obligation |
FRN | Floating Rate Note. Interest rate resets periodically and may not be the rate reported at period end. |
PLC | Public Limited Company |
REIT | Real Estate Investment Trust |
TIPS | Treasury Inflation Protected Security |
See Notes to Financial Statements
20
Table of Contents
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 3/31/11 (unaudited)
This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.
Assets | ||||
Investments- | ||||
Non-affiliated issuers, at value (identified cost, $5,490,512,826) | $6,636,225,526 | |||
Underlying affiliated funds, at cost and value | 107,406,229 | |||
Total investments, at value (identified cost, $5,597,919,055) | $6,743,631,755 | |||
Cash | 1,631,362 | |||
Receivables for | ||||
Investments sold | 1,271,492 | |||
Fund shares sold | 5,142,575 | |||
Interest and dividends | 25,652,363 | |||
Other assets | 100,611 | |||
Total assets | $6,777,430,158 | |||
Liabilities | ||||
Payables for | ||||
Distributions | $1,479,371 | |||
Investments purchased | 23,700,832 | |||
Fund shares reacquired | 22,125,457 | |||
Payable to affiliates | ||||
Investment adviser | 134,191 | |||
Shareholder servicing costs | 2,221,273 | |||
Distribution and service fees | 146,929 | |||
Program manager fees | 114 | |||
Payable for independent Trustees’ compensation | 198,646 | |||
Accrued expenses and other liabilities | 308,673 | |||
Total liabilities | $50,315,486 | |||
Net assets | $6,727,114,672 | |||
Net assets consist of | ||||
Paid-in capital | $6,686,269,261 | |||
Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 1,145,777,302 | |||
Accumulated net realized gain (loss) on investments and foreign currency transactions | (1,099,785,081 | ) | ||
Accumulated distributions in excess of net investment income | (5,146,810 | ) | ||
Net assets | $6,727,114,672 | |||
Shares of beneficial interest outstanding | 462,388,611 |
21
Table of Contents
Statement of Assets and Liabilities – continued
Net assets | Shares outstanding | Net asset value per share (a) | ||||||||||
Class A | $4,522,886,386 | 311,112,163 | $14.54 | |||||||||
Class B | 522,084,668 | 35,899,964 | 14.54 | |||||||||
Class C | 866,244,616 | 59,300,178 | 14.61 | |||||||||
Class I | 104,233,075 | 7,170,382 | 14.54 | |||||||||
Class R1 | 17,985,882 | 1,238,354 | 14.52 | |||||||||
Class R2 | 178,332,920 | 12,237,520 | 14.57 | |||||||||
Class R3 | 172,984,624 | 11,892,236 | 14.55 | |||||||||
Class R4 | 321,561,987 | 22,107,493 | 14.55 | |||||||||
Class 529A | 10,188,732 | 702,188 | 14.51 | |||||||||
Class 529B | 4,982,661 | 342,769 | 14.54 | |||||||||
Class 529C | 5,629,121 | 385,364 | 14.61 |
(a) | Maximum offering price per share was equal to the net asset value per share for all share classes, except for Classes A and 529A, for which the maximum offering prices per share were $15.43 [100 / 94.25 x $14.54] and $15.40 [100 / 94.25 x $14.51], respectively. On sales of $50,000 or more, the maximum offering prices of Class A and Class 529A shares are reduced. A contingent deferred sales charge may be imposed on redemptions of Class A, Class B, Class C, Class 529B, and Class 529C shares. Redemption price per share was equal to the net asset value per share for Classes I, R1, R2, R3, R4, and 529A. |
See Notes to Financial Statements
22
Table of Contents
Financial Statements
Six months ended 3/31/11 (unaudited)
This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.
Net investment income | ||||
Income | ||||
Interest | $54,301,183 | |||
Dividends | 45,206,103 | |||
Other (t) | 441,506 | |||
Dividends from underlying affiliated funds | 79,347 | |||
Foreign taxes withheld | (105,040 | ) | ||
Total investment income | $99,923,099 | |||
Expenses | ||||
Management fee | $11,626,716 | |||
Distribution and service fees | 14,513,108 | |||
Program manager fees | 9,941 | |||
Shareholder servicing costs | 4,572,993 | |||
Administrative services fee | 438,487 | |||
Independent Trustees’ compensation | 79,277 | |||
Custodian fee | 148,587 | |||
Shareholder communications | 171,383 | |||
Auditing fees | 33,670 | |||
Legal fees | 60,665 | |||
Miscellaneous | 221,301 | |||
Total expenses | $31,876,128 | |||
Fees paid indirectly | (122 | ) | ||
Reduction of expenses by investment adviser | (10,166 | ) | ||
Net expenses | $31,865,840 | |||
Net investment income | $68,057,259 | |||
Realized and unrealized gain (loss) on investments and foreign currency transactions | ||||
Realized gain (loss) (identified cost basis) | ||||
Investment transactions (t) | $107,589,010 | |||
Foreign currency transactions | 27,048 | |||
Net realized gain (loss) on investments | $107,616,058 | |||
Change in unrealized appreciation (depreciation) | ||||
Investments | $404,344,738 | |||
Translation of assets and liabilities in foreign currencies | 6,887 | |||
Net unrealized gain (loss) on investments | $404,351,625 | |||
Net realized and unrealized gain (loss) on investments | $511,967,683 | |||
Change in net assets from operations | $580,024,942 |
(t) | Realized gain (loss) on investment transactions includes $648,955 and other income includes $441,506 of proceeds received from a non-recurring administrative proceeding concerning market timing. |
See Notes to Financial Statements
23
Table of Contents
Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.
Change in net assets | Six months ended 3/31/11 (unaudited) | Year ended | ||||||
From operations | ||||||||
Net investment income | $68,057,259 | $147,902,365 | ||||||
Net realized gain (loss) on investments and foreign currency transactions | 107,616,058 | 36,954,375 | ||||||
Net unrealized gain (loss) on investments and foreign currency translation | 404,351,625 | 281,937,693 | ||||||
Change in net assets from operations | $580,024,942 | $466,794,433 | ||||||
Distributions declared to shareholders | ||||||||
From net investment income | $(69,002,516 | ) | $(153,592,223 | ) | ||||
Change in net assets from fund share transactions | $(308,246,993 | ) | $(497,366,899 | ) | ||||
Total change in net assets | $202,775,433 | $(184,164,689 | ) | |||||
Net assets | ||||||||
At beginning of period | 6,524,339,239 | 6,708,503,928 | ||||||
At end of period (including accumulated distributions in excess of net investment income of $5,146,810 and $4,201,553, respectively) | $6,727,114,672 | $6,524,339,239 |
See Notes to Financial Statements
24
Table of Contents
Financial Statements
The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
Six months 3/31/11 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class A | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $13.46 | $12.84 | $13.17 | $16.86 | $16.06 | $16.11 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.15 | $0.31 | $0.34 | $0.39 | $0.44 | $0.40 | ||||||||||||||||||
Net realized and unrealized | 1.09 | 0.63 | (0.31 | ) | (2.36 | ) | 1.38 | 0.68 | ||||||||||||||||
Total from investment | $1.24 | $0.94 | $0.03 | $(1.97 | ) | $1.82 | $1.08 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.16 | ) | $(0.32 | ) | $(0.36 | ) | $(0.41 | ) | $(0.48 | )�� | $(0.42 | ) | ||||||||||||
From net realized gain on | — | — | — | (1.31 | ) | (0.54 | ) | (0.71 | ) | |||||||||||||||
Total distributions declared to | $(0.16 | ) | $(0.32 | ) | $(0.36 | ) | $(1.72 | ) | $(1.02 | ) | $(1.13 | ) | ||||||||||||
Net asset value, end of period | $14.54 | $13.46 | $12.84 | $13.17 | $16.86 | $16.06 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 9.22 | (n) | 7.45 | 0.61 | (12.77 | ) | 11.65 | 7.16 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.82 | (a) | 0.88 | 0.92 | 0.87 | 0.87 | 0.90 | |||||||||||||||||
Expenses after expense | 0.82 | (a) | 0.88 | 0.92 | 0.87 | 0.87 | 0.90 | |||||||||||||||||
Net investment income | 2.18 | (a) | 2.36 | 2.94 | 2.62 | 2.63 | 2.56 | |||||||||||||||||
Portfolio turnover | 14 | 32 | 56 | 53 | 45 | 48 | ||||||||||||||||||
Net assets at end of period | $4,522,886 | $4,357,041 | $4,373,436 | $5,025,291 | $7,017,623 | $7,157,485 |
See Notes to Financial Statements
25
Table of Contents
Financial Highlights – continued
Six months 3/31/11 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class B | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $13.47 | $12.84 | $13.17 | $16.85 | $16.06 | $16.10 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.10 | $0.23 | $0.26 | $0.29 | $0.33 | $0.30 | ||||||||||||||||||
Net realized and unrealized | 1.08 | 0.64 | (0.31 | ) | (2.35 | ) | 1.37 | 0.69 | ||||||||||||||||
Total from investment | $1.18 | $0.87 | $(0.05 | ) | $(2.06 | ) | $1.70 | $0.99 | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.11 | ) | $(0.24 | ) | $(0.28 | ) | $(0.31 | ) | $(0.37 | ) | $(0.32 | ) | ||||||||||||
From net realized gain on | — | — | — | (1.31 | ) | (0.54 | ) | (0.71 | ) | |||||||||||||||
Total distributions declared to | $(0.11 | ) | $(0.24 | ) | $(0.28 | ) | $(1.62 | ) | $(0.91 | ) | $(1.03 | ) | ||||||||||||
Net asset value, end of period | $14.54 | $13.47 | $12.84 | $13.17 | $16.85 | $16.06 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 8.75 | (n) | 6.81 | (0.05 | ) | (13.30 | ) | 10.87 | 6.54 | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.52 | (a) | 1.53 | 1.57 | 1.52 | 1.52 | 1.55 | |||||||||||||||||
Expenses after expense | 1.52 | (a) | 1.53 | 1.57 | 1.52 | 1.52 | 1.55 | |||||||||||||||||
Net investment income | 1.48 | (a) | 1.72 | 2.32 | 1.96 | 1.98 | 1.91 | |||||||||||||||||
Portfolio turnover | 14 | 32 | 56 | 53 | 45 | 48 | ||||||||||||||||||
Net assets at end of period | $522,085 | $574,454 | $775,219 | $1,148,445 | $1,844,219 | $2,245,907 |
See Notes to Financial Statements
26
Table of Contents
Financial Highlights – continued
Six months 3/31/11 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class C | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $13.53 | $12.90 | $13.23 | $16.92 | $16.12 | $16.16 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.10 | $0.23 | $0.26 | $0.29 | $0.33 | $0.30 | ||||||||||||||||||
Net realized and unrealized | 1.09 | 0.64 | (0.31 | ) | (2.36 | ) | 1.38 | 0.69 | ||||||||||||||||
Total from investment | $1.19 | $0.87 | $(0.05 | ) | $(2.07 | ) | $1.71 | $0.99 | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.11 | ) | $(0.24 | ) | $(0.28 | ) | $(0.31 | ) | $(0.37 | ) | $(0.32 | ) | ||||||||||||
From net realized gain on | — | — | — | (1.31 | ) | (0.54 | ) | (0.71 | ) | |||||||||||||||
Total distributions declared to | $(0.11 | ) | $(0.24 | ) | $(0.28 | ) | $(1.62 | ) | $(0.91 | ) | $(1.03 | ) | ||||||||||||
Net asset value, end of period | $14.61 | $13.53 | $12.90 | $13.23 | $16.92 | $16.12 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 8.80 | (n) | 6.79 | (0.04 | ) | (13.30 | ) | 10.90 | 6.52 | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.52 | (a) | 1.53 | 1.57 | 1.52 | 1.52 | 1.55 | |||||||||||||||||
Expenses after expense | 1.52 | (a) | 1.53 | 1.57 | 1.52 | 1.52 | 1.55 | |||||||||||||||||
Net investment income | 1.48 | (a) | 1.71 | 2.29 | 1.97 | 1.98 | 1.91 | |||||||||||||||||
Portfolio turnover | 14 | 32 | 56 | 53 | 45 | 48 | ||||||||||||||||||
Net assets at end of period | $866,245 | $840,204 | $861,667 | $1,014,651 | $1,424,639 | $1,488,592 |
See Notes to Financial Statements
27
Table of Contents
Financial Highlights – continued
Six months 3/31/11 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class I | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $13.46 | $12.84 | $13.17 | $16.85 | $16.06 | $16.11 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.17 | $0.36 | $0.38 | $0.44 | $0.50 | $0.45 | ||||||||||||||||||
Net realized and unrealized | 1.09 | 0.63 | (0.31 | ) | (2.35 | ) | 1.37 | 0.69 | ||||||||||||||||
Total from investment | $1.26 | $0.99 | $0.07 | $(1.91 | ) | $1.87 | $1.14 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.18 | ) | $(0.37 | ) | $(0.40 | ) | $(0.46 | ) | $(0.54 | ) | $(0.48 | ) | ||||||||||||
From net realized gain on | — | — | — | (1.31 | ) | (0.54 | ) | (0.71 | ) | |||||||||||||||
Total distributions declared to | $(0.18 | ) | $(0.37 | ) | $(0.40 | ) | $(1.77 | ) | $(1.08 | ) | $(1.19 | ) | ||||||||||||
Net asset value, end of period | $14.54 | $13.46 | $12.84 | $13.17 | $16.85 | $16.06 | ||||||||||||||||||
Total return (%) (r)(s) | 9.39 | (n) | 7.83 | 0.96 | (12.40 | ) | 11.98 | 7.54 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.52 | (a) | 0.53 | 0.57 | 0.52 | 0.52 | 0.55 | |||||||||||||||||
Expenses after expense | 0.52 | (a) | 0.53 | 0.57 | 0.52 | 0.52 | 0.55 | |||||||||||||||||
Net investment income | 2.48 | (a) | 2.72 | 3.30 | 2.97 | 2.98 | 2.91 | |||||||||||||||||
Portfolio turnover | 14 | 32 | 56 | 53 | 45 | 48 | ||||||||||||||||||
Net assets at end of period | $104,233 | $98,214 | $104,557 | $155,134 | $269,510 | $242,806 |
See Notes to Financial Statements
28
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R1 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $13.45 | $12.83 | $13.16 | $16.84 | $16.06 | $16.10 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.10 | $0.23 | $0.26 | $0.29 | $0.30 | $0.28 | ||||||||||||||||||
Net realized and unrealized | 1.08 | 0.63 | (0.30 | ) | (2.35 | ) | 1.38 | 0.70 | ||||||||||||||||
Total from investment | $1.18 | $0.86 | $(0.04 | ) | $(2.06 | ) | $1.68 | $0.98 | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.11 | ) | $(0.24 | ) | $(0.29 | ) | $(0.31 | ) | $(0.36 | ) | $(0.31 | ) | ||||||||||||
From net realized gain on | — | — | — | (1.31 | ) | (0.54 | ) | (0.71 | ) | |||||||||||||||
Total distributions declared to | $(0.11 | ) | $(0.24 | ) | $(0.29 | ) | $(1.62 | ) | $(0.90 | ) | $(1.02 | ) | ||||||||||||
Net asset value, end of period | $14.52 | $13.45 | $12.83 | $13.16 | $16.84 | $16.06 | ||||||||||||||||||
Total return (%) (r)(s) | 8.78 | (n) | 6.76 | (0.04 | ) | (13.32 | ) | 10.75 | 6.43 | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.52 | (a) | 1.53 | 1.57 | 1.56 | 1.66 | 1.74 | |||||||||||||||||
Expenses after expense | 1.52 | (a) | 1.53 | 1.57 | 1.56 | 1.62 | 1.64 | |||||||||||||||||
Net investment income | 1.48 | (a) | 1.71 | 2.29 | 1.93 | 1.83 | 1.83 | |||||||||||||||||
Portfolio turnover | 14 | 32 | 56 | 53 | 45 | 48 | ||||||||||||||||||
Net assets at end of period | $17,986 | $17,670 | $16,811 | $19,505 | $16,936 | $5,289 |
See Notes to Financial Statements
29
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R2 | 2010 | 2009 | �� | 2008 | 2007 | 2006 | ||||||||||||||||||
Net asset value, beginning of | $13.50 | $12.87 | $13.20 | $16.89 | $16.10 | $16.14 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.14 | $0.29 | $0.32 | $0.36 | $0.38 | $0.36 | ||||||||||||||||||
Net realized and unrealized | 1.07 | 0.64 | (0.31 | ) | (2.36 | ) | 1.38 | 0.69 | ||||||||||||||||
Total from investment | $1.21 | $0.93 | $0.01 | $(2.00 | ) | $1.76 | $1.05 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.14 | ) | $(0.30 | ) | $(0.34 | ) | $(0.38 | ) | $(0.43 | ) | $(0.38 | ) | ||||||||||||
From net realized gain on | — | — | — | (1.31 | ) | (0.54 | ) | (0.71 | ) | |||||||||||||||
Total distributions declared to | $(0.14 | ) | $(0.30 | ) | $(0.34 | ) | $(1.69 | ) | $(0.97 | ) | $(1.09 | ) | ||||||||||||
Net asset value, end of period | $14.57 | $13.50 | $12.87 | $13.20 | $16.89 | $16.10 | ||||||||||||||||||
Total return (%) (r)(s) | 9.01 | (n) | 7.35 | 0.46 | (12.90 | ) | 11.25 | 6.90 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.02 | (a) | 1.03 | 1.07 | 1.05 | 1.22 | 1.29 | |||||||||||||||||
Expenses after expense | 1.02 | (a) | 1.03 | 1.07 | 1.05 | 1.17 | 1.19 | |||||||||||||||||
Net investment income | 1.98 | (a) | 2.21 | 2.79 | 2.45 | 2.30 | 2.28 | |||||||||||||||||
Portfolio turnover | 14 | 32 | 56 | 53 | 45 | 48 | ||||||||||||||||||
Net assets at end of period | $178,333 | $166,794 | $152,115 | $166,407 | $102,667 | $51,797 |
See Notes to Financial Statements
30
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R3 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $13.47 | $12.85 | $13.18 | $16.86 | $16.07 | $16.11 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.16 | $0.32 | $0.34 | $0.40 | $0.42 | $0.39 | ||||||||||||||||||
Net realized and unrealized | 1.08 | 0.64 | (0.30 | ) | (2.35 | ) | 1.38 | 0.70 | ||||||||||||||||
Total from investment | $1.24 | $0.96 | $0.04 | $(1.95 | ) | $1.80 | $1.09 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.16 | ) | $(0.34 | ) | $(0.37 | ) | $(0.42 | ) | $(0.47 | ) | $(0.42 | ) | ||||||||||||
From net realized gain on | — | — | — | (1.31 | ) | (0.54 | ) | (0.71 | ) | |||||||||||||||
Total distributions declared to | $(0.16 | ) | $(0.34 | ) | $(0.37 | ) | $(1.73 | ) | $(1.01 | ) | $(1.13 | ) | ||||||||||||
Net asset value, end of period | $14.55 | $13.47 | $12.85 | $13.18 | $16.86 | $16.07 | ||||||||||||||||||
Total return (%) (r)(s) | 9.24 | (n) | 7.55 | 0.71 | (12.65 | ) | 11.54 | 7.17 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.77 | (a) | 0.78 | 0.82 | 0.81 | 0.92 | 0.94 | |||||||||||||||||
Expenses after expense | 0.77 | (a) | 0.78 | 0.82 | 0.81 | 0.92 | 0.94 | |||||||||||||||||
Net investment income | 2.23 | (a) | 2.46 | 3.00 | 2.68 | 2.54 | 2.55 | |||||||||||||||||
Portfolio turnover | 14 | 32 | 56 | 53 | 45 | 48 | ||||||||||||||||||
Net assets at end of period | $172,985 | $160,057 | $142,968 | $106,360 | $133,204 | $57,485 |
See Notes to Financial Statements
31
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Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R4 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $13.47 | $12.85 | $13.18 | $16.86 | $16.06 | $16.11 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.17 | $0.36 | $0.38 | $0.43 | $0.50 | $0.45 | ||||||||||||||||||
Net realized and unrealized | 1.09 | 0.63 | (0.31 | ) | (2.34 | ) | 1.36 | 0.67 | ||||||||||||||||
Total from investment | $1.26 | $0.99 | $0.07 | $(1.91 | ) | $1.86 | $1.12 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.18 | ) | $(0.37 | ) | $(0.40 | ) | $(0.46 | ) | $(0.52 | ) | $(0.46 | ) | ||||||||||||
From net realized gain on | — | — | — | (1.31 | ) | (0.54 | ) | (0.71 | ) | |||||||||||||||
Total distributions declared to | $(0.18 | ) | $(0.37 | ) | $(0.40 | ) | $(1.77 | ) | $(1.06 | ) | $(1.17 | ) | ||||||||||||
Net asset value, end of period | $14.55 | $13.47 | $12.85 | $13.18 | $16.86 | $16.06 | ||||||||||||||||||
Total return (%) (r)(s) | 9.38 | (n) | 7.82 | 0.96 | (12.42 | ) | 11.93 | 7.43 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.52 | (a) | 0.53 | 0.57 | 0.54 | 0.63 | 0.65 | |||||||||||||||||
Expenses after expense | 0.52 | (a) | 0.53 | 0.57 | 0.54 | 0.63 | 0.64 | |||||||||||||||||
Net investment income | 2.49 | (a) | 2.71 | 3.27 | 2.94 | 2.85 | 2.80 | |||||||||||||||||
Portfolio turnover | 14 | 32 | 56 | 53 | 45 | 48 | ||||||||||||||||||
Net assets at end of period | $321,562 | $291,138 | $264,796 | $257,120 | $202,523 | $10,122 |
See Notes to Financial Statements
32
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Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class 529A | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $13.44 | $12.82 | $13.15 | $16.83 | $16.04 | $16.08 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.15 | $0.30 | $0.33 | $0.36 | $0.39 | $0.36 | ||||||||||||||||||
Net realized and unrealized | 1.07 | 0.63 | (0.31 | ) | (2.35 | ) | 1.38 | 0.69 | ||||||||||||||||
Total from investment | $1.22 | $0.93 | $0.02 | $(1.99 | ) | $1.77 | $1.05 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.15 | ) | $(0.31 | ) | $(0.35 | ) | $(0.38 | ) | $(0.44 | ) | $(0.38 | ) | ||||||||||||
From net realized gain on | — | — | — | (1.31 | ) | (0.54 | ) | (0.71 | ) | |||||||||||||||
Total distributions declared to | $(0.15 | ) | $(0.31 | ) | $(0.35 | ) | $(1.69 | ) | $(0.98 | ) | $(1.09 | ) | ||||||||||||
Net asset value, end of period | $14.51 | $13.44 | $12.82 | $13.15 | $16.83 | $16.04 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 9.11 | (n) | 7.36 | 0.50 | (12.88 | ) | 11.34 | 6.97 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.92 | (a) | 0.98 | 1.02 | 1.05 | 1.12 | 1.15 | |||||||||||||||||
Expenses after expense | 0.92 | (a) | 0.98 | 1.02 | 1.05 | 1.12 | 1.14 | |||||||||||||||||
Net investment income | 2.08 | (a) | 2.26 | 2.84 | 2.44 | 2.37 | 2.32 | |||||||||||||||||
Portfolio turnover | 14 | 32 | 56 | 53 | 45 | 48 | ||||||||||||||||||
Net assets at end of period | $10,189 | $8,965 | $8,228 | $13,149 | $14,753 | $12,360 |
See Notes to Financial Statements
33
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Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class 529B | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $13.46 | $12.84 | $13.17 | $16.85 | $16.06 | $16.11 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.10 | $0.21 | $0.25 | $0.27 | $0.29 | $0.26 | ||||||||||||||||||
Net realized and unrealized | 1.08 | 0.64 | (0.31 | ) | (2.35 | ) | 1.37 | 0.68 | ||||||||||||||||
Total from investment | $1.18 | $0.85 | $(0.06 | ) | $(2.08 | ) | $1.66 | $0.94 | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.10 | ) | $(0.23 | ) | $(0.27 | ) | $(0.29 | ) | $(0.33 | ) | $(0.28 | ) | ||||||||||||
From net realized gain on | — | — | — | (1.31 | ) | (0.54 | ) | (0.71 | ) | |||||||||||||||
Total distributions declared to | $(0.10 | ) | $(0.23 | ) | $(0.27 | ) | $(1.60 | ) | $(0.87 | ) | $(0.99 | ) | ||||||||||||
Net asset value, end of period | $14.54 | $13.46 | $12.84 | $13.17 | $16.85 | $16.06 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 8.79 | (n) | 6.65 | (0.14 | ) | (13.44 | ) | 10.61 | 6.21 | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.62 | (a) | 1.63 | 1.67 | 1.70 | 1.77 | 1.80 | |||||||||||||||||
Expenses after expense | 1.62 | (a) | 1.63 | 1.67 | 1.70 | 1.77 | 1.79 | |||||||||||||||||
Net investment income | 1.38 | (a) | 1.61 | 2.19 | 1.79 | 1.72 | 1.67 | |||||||||||||||||
Portfolio turnover | 14 | 32 | 56 | 53 | 45 | 48 | ||||||||||||||||||
Net assets at end of period | $4,983 | $4,828 | $4,609 | $5,018 | $5,809 | $5,069 |
See Notes to Financial Statements
34
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Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class 529C | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of | $13.53 | $12.90 | $13.23 | $16.92 | $16.12 | $16.17 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.10 | $0.21 | $0.25 | $0.27 | $0.29 | $0.26 | ||||||||||||||||||
Net realized and unrealized | 1.08 | 0.65 | (0.31 | ) | (2.36 | ) | 1.38 | 0.68 | ||||||||||||||||
Total from investment | $1.18 | $0.86 | $(0.06 | ) | $(2.09 | ) | $1.67 | $0.94 | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.10 | ) | $(0.23 | ) | $(0.27 | ) | $(0.29 | ) | $(0.33 | ) | $(0.28 | ) | ||||||||||||
From net realized gain on | — | — | — | (1.31 | ) | (0.54 | ) | (0.71 | ) | |||||||||||||||
Total distributions declared to | $(0.10 | ) | $(0.23 | ) | $(0.27 | ) | $(1.60 | ) | $(0.87 | ) | $(0.99 | ) | ||||||||||||
Net asset value, end of period | $14.61 | $13.53 | $12.90 | $13.23 | $16.92 | $16.12 | ||||||||||||||||||
Total return (%) (r)(s)(t) | 8.75 | (n) | 6.69 | (0.14 | ) | (13.45 | ) | 10.63 | 6.18 | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.62 | (a) | 1.63 | 1.67 | 1.70 | 1.77 | 1.80 | |||||||||||||||||
Expenses after expense | 1.62 | (a) | 1.63 | 1.67 | 1.70 | 1.77 | 1.79 | |||||||||||||||||
Net investment income | 1.38 | (a) | 1.60 | 2.18 | 1.79 | 1.72 | 1.67 | |||||||||||||||||
Portfolio turnover | 14 | 32 | 56 | 53 | 45 | 48 | ||||||||||||||||||
Net assets at end of period | $5,629 | $4,973 | $4,100 | $4,372 | $5,342 | $4,566 |
(a) | Annualized. |
(d) | Per share data is based on average shares outstanding. |
(f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
(n) | Not annualized. |
(r) | Certain expenses have been reduced without which performance would have been lower. |
(s) | From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. |
(t) | Total returns do not include any applicable sales charges. |
See Notes to Financial Statements
35
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(unaudited)
(1) | Business and Organization |
MFS Total Return Fund (the fund) is a series of MFS Series Trust V (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
(2) | Significant Accounting Policies |
General – The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests a significant portion of its assets in asset-backed and/or mortgage-backed securities. The value of these securities may depend, in part, on the issuer’s or borrower’s credit quality or ability to pay principal and interest when due and may fall if an issuer or borrower defaults on its obligation to pay principal or interest or if the instrument’s credit rating is downgraded by a credit rating agency. U.S. Government securities not supported as to the payment of principal or interest by the U.S. Treasury, such as those issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, are subject to greater credit risk than are U.S. Government securities supported by the U.S. Treasury, such as those issued by Ginnie Mae. The fund invests in foreign securities, including securities of emerging market issuers. Investments in foreign securities are vulnerable to the effects of changes in the relative values of the local currency and the U.S. dollar and to the effects of changes in each country’s legal, political, and economic environment. The markets of emerging markets countries are generally more volatile than the markets of developed countries with more mature economies. All of the risks of investing in foreign securities previously described are heightened when investing in emerging markets countries.
Investment Valuations – Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which
36
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Notes to Financial Statements (unaudited) – continued
such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Debt instruments and floating rate loans (other than short-term instruments), including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.
The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially effected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with
37
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Notes to Financial Statements (unaudited) – continued
price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. The following is a summary of the levels used as of March 31, 2011 in valuing the fund’s assets or liabilities:
Investments at Value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Equity Securities | $4,086,793,995 | $— | $— | $4,086,793,995 | ||||||||||||
U.S. Treasury Bonds & U.S. Government Agency & Equivalents | — | 878,284,417 | — | 878,284,417 | ||||||||||||
Non-U.S. Sovereign Debt | — | 79,329,126 | — | 79,329,126 | ||||||||||||
Corporate Bonds | — | 405,470,866 | — | 405,470,866 | ||||||||||||
Residential Mortgage-Backed Securities | — | 840,051,815 | — | 840,051,815 | ||||||||||||
Commercial Mortgage-Backed Securities | — | 133,338,086 | — | 133,338,086 | ||||||||||||
Asset-Backed Securities (including CDOs) | — | 22,812,955 | — | 22,812,955 | ||||||||||||
Foreign Bonds | — | 190,144,266 | — | 190,144,266 | ||||||||||||
Mutual Funds | 107,406,229 | — | — | 107,406,229 | ||||||||||||
Total Investments | $4,194,200,224 | $2,549,431,531 | $— | $6,743,631,755 |
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Notes to Financial Statements (unaudited) – continued
For further information regarding security characteristics, see the Portfolio of Investments.
Inflation-Adjusted Debt Securities – The fund invests in inflation-adjusted debt securities issued by the U.S. Treasury. The fund may also invest in inflation-adjusted debt securities issued by U.S. Government agencies and instrumentalities other than the U.S. Treasury and by other entities such as U.S. and foreign corporations and foreign governments. The principal value of these debt securities is adjusted through income according to changes in the Consumer Price Index or another general price or wage index. These debt securities typically pay a fixed rate of interest, but this fixed rate is applied to the inflation-adjusted principal amount. The principal paid at maturity of the debt security is typically equal to the inflation-adjusted principal amount, or the security’s original par value, whichever is greater. Other types of inflation-adjusted securities may use other methods to adjust for other measures of inflation.
Foreign Currency Translation – Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
Security Loans – JPMorgan Chase and Co. (“Chase”), as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. Chase provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in short-term securities. A portion of the income generated upon investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the
39
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Notes to Financial Statements (unaudited) – continued
fund and the lending agent. Income from securities lending is included in interest income on the Statement of Operations. The dividend and interest income earned on the securities loaned is accounted for in the same manner as other dividend and interest income.
Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.
Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted upward or downward to the rate of inflation. Interest is accrued based on the principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation-indexed bond is generally recorded as an increase or decrease in interest income, respectively, even though the adjusted principal is not received until maturity. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend and interest payments received in additional securities are recorded on the ex-dividend or ex-interest date in an amount equal to the value of the security on such date.
The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations. On November 1, 2010, the fund received $1,090,461 from a non-recurring administrative proceeding concerning market timing, of which $648,955 was recorded as realized gain on investment transactions and $441,506 was recorded as other income. (See Note 7 for further information).
The fund entered into “TBA” (to be announced) purchase commitments to purchase securities for a fixed unit price at a future date. Although the unit price has been established, the principal value has not been finalized. However, the principal amount of the commitments will not fluctuate more than 0.01%.
40
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Notes to Financial Statements (unaudited) – continued
The fund holds, and maintains until settlement date, cash or high-grade debt obligations in an amount sufficient to meet the purchase price, or the fund may enter into offsetting contracts for the forward sale of other securities it owns. Income on the securities will not be earned until settlement date. TBA purchase commitments may be considered securities in themselves, and involve a risk of loss if the value of the security to be purchased declines prior to settlement date, which is in addition to the risk of decline in the value of the fund’s other assets. Unsettled TBA purchase commitments are valued at the current market value of the underlying securities.
The fund entered into “TBA” (to be announced) sale commitments to hedge its portfolio positions or to sell mortgage-backed securities it owns under delayed delivery arrangements. Proceeds of TBA sale commitments are not received until the contractual settlement date. During the time a TBA sale commitment is outstanding, equivalent deliverable securities, or an offsetting TBA purchase commitment deliverable on or before the sale commitment date, are held as “cover” for the transaction.
Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended March 31, 2011, is shown as a reduction of total expenses on the Statement of Operations.
Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.
Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income, or distributions for financial statement and tax purposes.
41
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Notes to Financial Statements (unaudited) – continued
Book/tax differences primarily relate to amortization and accretion of debt securities and wash sale loss deferrals.
The tax character of distributions made during the current period will be determined at fiscal year end. The tax character of distributions declared to shareholders for the last fiscal year is as follows:
9/30/10 | ||||
Ordinary income (including any short-term capital gains) | $153,592,223 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
As of 3/31/11 | ||||
Cost of investments | $5,835,965,236 | |||
Gross appreciation | 957,461,909 | |||
Gross depreciation | (49,795,390 | ) | ||
Net unrealized appreciation (depreciation) | $907,666,519 | |||
As of 9/30/10 | ||||
Undistributed ordinary income | 7,854,105 | |||
Capital loss carryforwards | (951,149,308 | ) | ||
Post-October capital loss deferral | (18,875,967 | ) | ||
Other temporary differences | (11,997,943 | ) | ||
Net unrealized appreciation (depreciation) | 503,992,098 |
The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.
As of September 30, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:
9/30/17 | $(166,059,755 | ) | ||
9/30/18 | (785,089,553 | ) | ||
$(951,149,308 | ) |
Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution, service, and program manager fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B and Class 529B shares will convert to Class A and Class 529A shares, respectively, approximately eight years after purchase.
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Notes to Financial Statements (unaudited) – continued
The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:
From net investment income | ||||||||
Six months ended 3/31/11 | Year ended 9/30/10 | |||||||
Class A | $49,227,149 | $107,047,715 | ||||||
Class B | 4,088,898 | 11,937,410 | ||||||
Class C | 6,426,131 | 15,335,907 | ||||||
Class I | 1,305,782 | 2,769,820 | ||||||
Class R1 | 136,489 | 314,657 | ||||||
Class R2 | 1,729,869 | 3,719,427 | ||||||
Class R3 | 1,900,389 | 3,986,050 | ||||||
Class R4 | 4,012,701 | 8,113,449 | ||||||
Class 529A | 101,579 | 207,046 | ||||||
Class 529B | 35,134 | 81,068 | ||||||
Class 529C | 38,395 | 79,674 | ||||||
Total | $69,002,516 | $153,592,223 |
(3) | Transactions with Affiliates |
Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund.
The management fee is computed daily and paid monthly at the following annual rates:
First $6.3 billion of average daily net assets | 0.35 | % | ||
Average daily net assets in excess of $6.3 billion | 0.34 | % |
The management fee incurred for the six months ended March 31, 2011 was equivalent to an annual effective rate of 0.35% of the fund’s average daily net assets.
Effective December 1, 2007, if at the end of any month, the fund’s fiscal year-to-date average daily net assets exceed $11.5 billion and the total expenses for Class A exceed 0.87% of fiscal year-to-date average daily net assets, MFS has agreed in writing to reimburse Class A expenses such that Class A total expenses for the fund year-to-date are no greater than 0.87% of fiscal year-to-date average daily net assets, and to reduce the total expenses of the other share classes by the same percentage. If at the end of any month, the fund’s fiscal year-to-date average daily net assets exceed $12.5 billion and the total expenses for Class A exceed 0.85% of fiscal year-to-date average daily net assets, MFS has agreed in writing to reimburse Class A expenses such that Class A total expenses for the fund year-to-date are no greater than 0.85% of fiscal year-to-date average daily net assets, and to reduce the total expenses of the other share classes by the same percentage. This written agreement excludes interest, taxes, extraordinary expenses, brokerage and transaction
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Notes to Financial Statements (unaudited) – continued
costs and investment-related expenses, and will continue until at least November 30, 2012. For the six months ended March 31, 2011, the fund’s fiscal year-to-date average daily net assets did not exceed the limits and therefore, the investment adviser did not pay any portion of the fund’s expenses.
Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $358,083 and $2,818 for the six months ended March 31, 2011, as its portion of the initial sales charge on sales of Class A and Class 529A shares of the fund, respectively.
The Board of Trustees has adopted a distribution plan for certain class shares pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund’s distribution plan provides that the fund will pay MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.
Distribution Plan Fee Table:
Distribution Fee Rate (d) | Service Fee Rate (d) | Total Distribution Plan (d) | Annual Effective Rate (e) | Distribution and Service Fee | ||||||||||||||||
Class A | — | 0.25 | % | 0.25 | % | 0.30 | % | $6,669,798 | ||||||||||||
Class B | 0.75% | 0.25 | % | 1.00 | % | 1.00 | % | 2,770,320 | ||||||||||||
Class C | 0.75% | 0.25 | % | 1.00 | % | 1.00 | % | 4,277,198 | ||||||||||||
Class R1 | 0.75% | 0.25 | % | 1.00 | % | 1.00 | % | 89,665 | ||||||||||||
Class R2 | 0.25% | 0.25 | % | 0.50 | % | 0.50 | % | 430,450 | ||||||||||||
Class R3 | — | 0.25 | % | 0.25 | % | 0.25 | % | 209,565 | ||||||||||||
Class 529A | — | 0.25 | % | 0.25 | % | 0.30 | % | 14,201 | ||||||||||||
Class 529B | 0.75% | 0.25 | % | 1.00 | % | 1.00 | % | 24,961 | ||||||||||||
Class 529C | 0.75% | 0.25 | % | 1.00 | % | 1.00 | % | 26,950 | ||||||||||||
Total Distribution and Service Fees | $14,513,108 |
(d) | In accordance with the distribution plan for certain classes, the fund pays distribution and/or service fees equal to these annual percentage rates of each class’ average daily net assets. The distribution and service fee rates disclosed by class represent the current rates in effect at the end of the reporting period. Any rate changes, if applicable, are detailed below. |
(e) | The annual effective rates represent actual fees incurred under the distribution plan for the six months ended March 31, 2011 based on each class’ average daily net assets. Assets attributable to Class A shares sold prior to October 1, 1989 are subject to a service fee of 0.15% annually. This agreement terminated on January 1, 2011. Effective January 1, 2011, all Class A assets are subject to the full service fee of 0.25%. Effective January 1, 2011, the 0.10% Class A and Class 529A distribution fees were eliminated. |
Certain Class A shares are subject to a contingent deferred sales charge (CDSC) in the event of a shareholder redemption within 24 months of purchase. Class C and Class 529C shares are subject to a CDSC in the event of a shareholder redemption within 12 months of purchase. Class B and Class 529B shares are
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Notes to Financial Statements (unaudited) – continued
subject to a CDSC in the event of a shareholder redemption within six years of purchase. All contingent deferred sales charges are paid to MFD and during the six months ended March 31, 2011, were as follows:
Amount | ||||
Class A | $2,475 | |||
Class B | 244,122 | |||
Class C | 18,119 | |||
Class 529B | 94 |
The fund has entered into and may from time to time enter into contracts with program managers and other parties which administer the tuition programs through which an investment in the fund’s 529 share classes is made. The fund has entered into an agreement with MFD pursuant to which MFD receives an annual fee of up to 0.10% of the average daily net assets attributable to each 529 share class. The services provided by MFD, or a third party with which MFD contracts, include recordkeeping and tax reporting and account services, as well as services designed to maintain the program’s compliance with the Internal Revenue Code and other regulatory requirements. Program manager fees for the six months ended March 31, 2011, were as follows:
Amount | ||||
Class 529A | $4,750 | |||
Class 529B | 2,496 | |||
Class 529C | 2,695 | |||
Total Program Manager Fees | $9,941 |
Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent calculated as a percentage of the average daily net assets of the fund as determined periodically under the supervision of the fund’s Board of Trustees. For the six months ended March 31, 2011, the fee was $1,399,099, which equated to 0.0420% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses, sub-accounting and other shareholder servicing costs which may be paid to affiliated and unaffiliated service providers. For the six months ended March 31, 2011, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $3,173,894.
Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended March 31, 2011 was equivalent to an annual effective rate of 0.0132% of the fund’s average daily net assets.
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Notes to Financial Statements (unaudited) – continued
Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Prior to December 31, 2001, the fund had an unfunded defined benefit plan (“DB plan”) for independent Trustees. As of December 31, 2001, the Board took action to terminate the DB plan with respect to then-current and any future independent Trustees, such that the DB plan covers only certain of those former independent Trustees who retired on or before December 31, 2001. Effective January 1, 2002, accrued benefits under the DB plan for then-current independent Trustees who continued were credited to an unfunded retirement deferral plan (the “Retirement Deferral plan”), which was established for and exists solely with respect to these credited amounts, and is not available for other deferrals by these or other independent Trustees. Although the Retirement Deferral plan is unfunded, amounts deferred under the plan are periodically adjusted for investment experience as if they had been invested in shares of the fund. The DB plan resulted in a pension expense of $4,425 and the Retirement Deferral plan resulted in an expense of $9,038. Both amounts are included in independent Trustees’ compensation for the six months ended March 31, 2011. The liability for deferred retirement benefits payable to certain independent Trustees under both plans amounted to $125,734 at March 31, 2011, and is included in payable for independent Trustees’ compensation on the Statement of Assets and Liabilities.
Deferred Trustee Compensation – Under a Deferred Compensation Plan (the “Plan”), independent Trustees previously were allowed to elect to defer receipt of all or a portion of their annual compensation. Effective January 1, 2005, the Board elected to no longer allow Trustees to defer receipt of future compensation under the Plan. Amounts deferred under the Plan are invested in shares of certain MFS Funds selected by the independent Trustees as notional investments. Deferred amounts represent an unsecured obligation of the fund until distributed in accordance with the Plan. Included in other assets and payable for independent Trustees’ compensation on the Statement of Assets and Liabilities is $53,764 of deferred Trustees’ compensation. There is no current year expense associated with the Plan.
Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO)
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Notes to Financial Statements (unaudited) – continued
and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended March 31, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $37,581 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $10,166, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.
The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.
(4) | Portfolio Securities |
Purchases and sales of investments, other than purchased option transactions, and short-term obligations, were as follows:
Purchases | Sales | |||||||
U.S. Government securities | $386,059,661 | $367,443,295 | ||||||
Investments (non-U.S. Government securities) | $558,750,149 | $927,962,898 |
(5) | Shares of Beneficial Interest |
The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
Six months ended 3/31/11 | Year ended 9/30/10 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares sold | ||||||||||||||||
Class A | 17,916,402 | $252,677,078 | 41,276,546 | $545,354,152 | ||||||||||||
Class B | 1,473,050 | 20,769,653 | 3,606,024 | 47,613,500 | ||||||||||||
Class C | 3,356,272 | 47,582,840 | 7,792,674 | 103,193,442 | ||||||||||||
Class I | 1,099,178 | 15,380,314 | 1,411,473 | 18,635,058 | ||||||||||||
Class R1 | 116,807 | 1,641,578 | 341,802 | 4,515,092 | ||||||||||||
Class R2 | 1,870,132 | 26,458,728 | 3,999,596 | 52,931,509 | ||||||||||||
Class R3 | 2,165,375 | 30,448,776 | 3,792,095 | 49,990,877 | ||||||||||||
Class R4 | 3,338,243 | 46,836,647 | 6,025,693 | 79,409,942 | ||||||||||||
Class 529A | 51,879 | 735,190 | 109,934 | 1,445,553 | ||||||||||||
Class 529B | 12,162 | 171,854 | 38,058 | 502,468 | ||||||||||||
Class 529C | 49,630 | 700,226 | 110,939 | 1,470,872 | ||||||||||||
31,449,130 | $443,402,884 | 68,504,834 | $905,062,465 |
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Notes to Financial Statements (unaudited) – continued
Six months ended 3/31/11 | Year ended 9/30/10 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares issued to shareholders in reinvestment of distributions | ||||||||||||||||
Class A | 3,055,641 | $43,118,698 | 7,218,202 | $94,564,262 | ||||||||||||
Class B | 255,675 | 3,602,789 | 815,567 | 10,679,977 | ||||||||||||
Class C | 321,470 | 4,553,530 | 833,078 | 10,964,272 | ||||||||||||
Class I | 72,017 | 1,015,133 | 181,346 | 2,374,339 | ||||||||||||
Class R1 | 9,687 | 136,414 | 24,030 | 314,559 | ||||||||||||
Class R2 | 105,869 | 1,497,149 | 243,638 | 3,200,702 | ||||||||||||
Class R3 | 133,463 | 1,884,632 | 303,185 | 3,975,337 | ||||||||||||
Class R4 | 220,241 | 3,110,462 | 451,215 | 5,917,506 | ||||||||||||
Class 529A | 7,206 | 101,560 | 15,824 | 206,964 | ||||||||||||
Class 529B | 2,493 | 35,134 | 6,188 | 81,055 | ||||||||||||
Class 529C | 2,710 | 38,395 | 6,049 | 79,653 | ||||||||||||
4,186,472 | $59,093,896 | 10,098,322 | $132,358,626 | |||||||||||||
Shares reacquired | ||||||||||||||||
Class A | (33,482,740 | ) | $(471,363,240 | ) | (65,376,179 | ) | $(861,325,401 | ) | ||||||||
Class B | (8,485,095 | ) | (119,728,747 | ) | (22,119,618 | ) | (292,576,167 | ) | ||||||||
Class C | (6,489,146 | ) | (91,852,858 | ) | (13,296,093 | ) | (176,009,851 | ) | ||||||||
Class I | (1,296,274 | ) | (18,306,703 | ) | (2,438,811 | ) | (32,218,184 | ) | ||||||||
Class R1 | (201,763 | ) | (2,836,397 | ) | (362,204 | ) | (4,777,494 | ) | ||||||||
Class R2 | (2,098,007 | ) | (29,581,713 | ) | (3,699,645 | ) | (49,003,391 | ) | ||||||||
Class R3 | (2,288,357 | ) | (32,237,325 | ) | (3,338,487 | ) | (44,041,365 | ) | ||||||||
Class R4 | (3,064,458 | ) | (43,572,163 | ) | (5,468,829 | ) | (72,045,820 | ) | ||||||||
Class 529A | (24,036 | ) | (337,041 | ) | (100,406 | ) | (1,319,146 | ) | ||||||||
Class 529B | (30,519 | ) | (434,905 | ) | (44,466 | ) | (583,747 | ) | ||||||||
Class 529C | (34,614 | ) | (492,681 | ) | (67,040 | ) | (887,424 | ) | ||||||||
(57,495,009 | ) | $(810,743,773 | ) | (116,311,778 | ) | $(1,534,787,990 | ) | |||||||||
Net change | ||||||||||||||||
Class A | (12,510,697 | ) | $(175,567,464 | ) | (16,881,431 | ) | $(221,406,987 | ) | ||||||||
Class B | (6,756,370 | ) | (95,356,305 | ) | (17,698,027 | ) | (234,282,690 | ) | ||||||||
Class C | (2,811,404 | ) | (39,716,488 | ) | (4,670,341 | ) | (61,852,137 | ) | ||||||||
Class I | (125,079 | ) | (1,911,256 | ) | (845,992 | ) | (11,208,787 | ) | ||||||||
Class R1 | (75,269 | ) | (1,058,405 | ) | 3,628 | 52,157 | ||||||||||
Class R2 | (122,006 | ) | (1,625,836 | ) | 543,589 | 7,128,820 | ||||||||||
Class R3 | 10,481 | 96,083 | 756,793 | 9,924,849 | ||||||||||||
Class R4 | 494,026 | 6,374,946 | 1,008,079 | 13,281,628 | ||||||||||||
Class 529A | 35,049 | 499,709 | 25,352 | 333,371 | ||||||||||||
Class 529B | (15,864 | ) | (227,917 | ) | (220 | ) | (224 | ) | ||||||||
Class 529C | 17,726 | 245,940 | 49,948 | 663,101 | ||||||||||||
(21,859,407 | ) | $(308,246,993 | ) | (37,708,622 | ) | $(497,366,899 | ) |
(6) | Line of Credit |
The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided
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Notes to Financial Statements (unaudited) – continued
by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended March 31, 2011, the fund’s commitment fee and interest expense were $34,239 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.
(7) | Gain Contingency |
The fund’s investment adviser, MFS, was the subject of an administrative proceeding concerning market timing which resulted in the Securities and Exchange Commission (the “SEC”) entering an order approving a settlement with MFS and two of its former officers (the “Settlement Order”). Under the terms of the Settlement Order, MFS transferred $175 million in disgorgement and $50 million in penalty (the “Payments”) to the SEC, which established a Fair Fund from which settlement funds have been, or will be, distributed to eligible current and former shareholders of the fund and certain other affected MFS retail funds. The Payments, along with additional amounts from a third-party settlement, have been distributed to eligible shareholders in accordance with a plan developed by an independent distribution consultant (the “IDC”) in consultation with MFS and the Board of Trustees of the MFS retail funds. The plan was approved in July 2007 by the SEC. Pursuant to the distribution plan, after the distributions to eligible shareholders have been made, any undistributed amounts could be designated “residual” and distributed to the fund and certain other affected MFS retail funds for the benefit of fund shareholders. In November 2010, the SEC issued an order designating certain undistributed amounts residual and ordering that such amounts be distributed to the affected MFS retail funds. The SEC order designated other undistributed amounts for use in funding certain additional distribution efforts to eligible shareholders. As a result of the SEC’s approval of the residual payments, the fund received $1,090,461. Additional residual amounts may be received by the fund in the future. Certain procedural conditions of the distribution plan (as modified by the November 2010 SEC order) have not been met to date and, as such, the ultimate timing and amount of any payment of additional residual amounts is not known at this time.
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Notes to Financial Statements (unaudited) – continued
(8) | Transactions in Underlying Affiliated Funds-Affiliated Issuers |
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:
Underlying Affiliated Funds | Beginning Shares/Par Amount | Acquisitions Shares/Par Amount | Dispositions Shares/Par Amount | Ending Shares/Par Amount | ||||||||||||
MFS Institutional Money Market Portfolio | 77,437,958 | 491,748,659 | (461,780,388 | ) | 107,406,229 | |||||||||||
Underlying Affiliated Funds | Realized Gain (Loss) | Capital Gain Distributions | Dividend Income | Ending Value | ||||||||||||
MFS Institutional Money Market Portfolio | $— | $— | $ 79,347 | $107,406,229 |
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BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT
A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS is available by clicking on the fund’s name under “Mutual Funds” in the “Products and Performance” section of the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site at http://www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section at the above address.
A shareholder can also obtain the quarterly portfolio holdings report at mfs.com.
From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Mutual Funds” in the “Products and Performance” section of mfs.com.
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rev. 3/11
FACTS | WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION? |
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include:
•Social Security number and account balances •Account transactions and transaction history •Checking account information and wire transfer instructions
When you are no longer our customer, we continue to share your information as described in this notice. |
How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your personal information | Does MFS share? | Can you limit this sharing? | ||
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No | ||
For our marketing purposes – to offer our products and services to you | No | We don’t share | ||
For joint marketing with other financial companies | No | We don’t share | ||
For our affiliates’ everyday business purposes – information about your transactions and experiences | No | We don’t share | ||
For our affiliates’ everyday business purposes – information about your creditworthiness | No | We don’t share | ||
For nonaffiliates to market to you | No | We don’t share |
Questions? | Call 800-225-2606 or go to mfs.com. |
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Page 2 |
Who we are | ||
Who is providing this notice? | MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc. |
What we do | ||
How does MFS protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you. | |
How does MFS collect my personal information? | We collect your personal information, for example, when you
•open an account or provide account information •direct us to buy securities or direct us to sell your securities •make a wire transfer
We also collect your personal information from others, such as credit bureaus, affiliates and other companies. | |
Why can’t I limit all sharing? | Federal law gives you the right to limit only
•sharing for affiliates’ everyday business purposes – information about your creditworthiness •affiliates from using your information to market to you •sharing for nonaffiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. |
Definitions | ||
Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies.
• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice. | |
Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies.
•MFS does not share with nonaffiliates so they can market to you. | |
Joint Marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you.
• MFS doesn’t jointly market. |
Other important information | ||
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. |
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MFS® will send you prospectuses, reports, and proxies directly via e-mail so you will get information faster with less mailbox clutter.
To sign up:
1. Go to mfs.com.
2. Log in via MFS® Access.
3. Select eDelivery.
If you own your MFS fund shares through a financial institution or a retirement plan, MFS® TALK, MFS® Access, or eDelivery may not be available to you.
Web site
mfs.com
MFS TALK
1-800-637-8255
24 hours a day
Account service and literature
Shareholders
1-800-225-2606
Financial advisors
1-800-343-2829
Retirement plan services
1-800-637-1255
Mailing address
MFS Service Center, Inc.
P.O. Box 55824
Boston, MA 02205-5824
Overnight mail
MFS Service Center, Inc.
c/o Boston Financial Data Services
30 Dan Road
Canton, MA 02021-2809
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ITEM 2. | CODE OF ETHICS. |
During the period covered by this report, the Registrant has not amended any provision in its Code of Ethics (the “Code”) that relates to an element of the Code’s definitions enumerated in paragraph (b) of Item 2 of this Form N-CSR. During the period covered by this report, the Registrant did not grant a waiver, including an implicit waiver, from any provision of the Code.
ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Not applicable for semi-annual reports.
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Not applicable for semi-annual reports.
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable to the Registrant.
ITEM 6. | INVESTMENTS |
A schedule of investments for each series of the Registrant is included as part of the report to shareholders of such series under Item 1 of this Form N-CSR.
ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable to the Registrant.
ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable to the Registrant.
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable to the Registrant.
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
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There were no material changes to the procedures by which shareholders may send recommendations to the Board for nominees to the Registrant’s Board since the Registrant last provided disclosure as to such procedures in response to the requirements of Item 407 (c)(2)(iv) of Regulation S-K or this Item.
ITEM 11. | CONTROLS AND PROCEDURES. |
(a) | Based upon their evaluation of the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as conducted within 90 days of the filing date of this report on Form N-CSR, the registrant’s principal financial officer and principal executive officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. |
(b) | There were no changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by the report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
ITEM 12. | EXHIBITS. |
(a) | File the exhibits listed below as part of this form. Letter or number the exhibits in the sequence indicated. |
(1) | Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. |
(2) | A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2): Attached hereto. |
(b) | If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference: Attached hereto. |
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Notice
A copy of the Amended and Restated Declaration of Trust, as amended, of the Registrant is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually, but are binding only upon the assets and property of the respective constituent series of the Registrant.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) MFS SERIES TRUST V
By (Signature and Title)* | MARIA F. DIORIODWYER | |
Maria F. DiOrioDwyer, President |
Date: May 16, 2011
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* | MARIA F. DIORIODWYER | |
Maria F. DiOrioDwyer, President (Principal Executive Officer) |
Date: May 16, 2011
By (Signature and Title)* | JOHN M. CORCORAN | |
John M. Corcoran, Treasurer (Principal Financial Officer and Accounting Officer) |
Date: May 16, 2011
* | Print name and title of each signing officer under his or her signature. |