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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)
111 Huntington Avenue, Boston, Massachusetts 02199
(Address of principal executive offices) (Zip code)
Susan S. Newton
Massachusetts Financial Services Company
111 Huntington Avenue,
Boston, Massachusetts 02199
(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, 2014
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ITEM 1. | REPORTS TO STOCKHOLDERS. |
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SEMIANNUAL REPORT
March 31, 2014
MFS® INTERNATIONAL NEW DISCOVERY FUND
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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LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholders:
The pace of U.S. economic growth slowed early in 2014, largely because of harsh winter weather. However, the U.S. labor market, consumer confidence and other
economic data have all pointed to recovery. The U.S. Federal Reserve’s steady, gradual removal of its bond-buying stimulus, after initially causing concern, is providing some consistency, which can inspire consumer and investor confidence.
Global economic uncertainty and geopolitical tensions have added to market volatility. The eurozone, however, is making progress in its economic recovery. Japan’s progress in its battle to end deflation is expected to experience a temporary setback on the heels of the country’s sales tax increase, introduced in April.
The world’s largest economic concern remains the slowdown in China’s pace of growth as it shifts toward a more consumer-oriented economy. Any reduction in China’s economic growth rate is likely to have a ripple effect on its many trading partners.
In uncertain times such as these, it is particularly important to remember that managing risk should always be a top priority. At MFS®, active risk management is an integral part of our collaborative process. Our global team of investment professionals shares ideas and evaluates opportunities that span continents, investment disciplines and asset classes. Our goal is to build better insights, and ultimately better results, for our clients.
We understand and appreciate the economic challenges investors face, and we believe in the value of maintaining a long-term view and applying proven principles, such as asset allocation and diversification. We are confident that our unique approach can serve investors well as they work with their financial advisors to identify and pursue the most suitable opportunities.
Respectfully,
Robert J. Manning
Chairman and Chief Executive Officer
MFS Investment Management
May 13, 2014
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
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Portfolio structure
Top ten holdings | ||||
Bunzl PLC | 3.2% | |||
Croda International PLC | 2.1% | |||
Bellway PLC | 1.5% | |||
Amadeus Holdings AG | 1.4% | |||
OBIC Co. Ltd. | 1.1% | |||
NEXT PLC | 1.1% | |||
Christian Dior S.A. | 1.0% | |||
Sonova Holding AG | 1.0% | |||
Schroders PLC | 1.0% | |||
Jyske Bank | 1.0% | |||
Equity sectors | ||||
Financial Services | 17.2% | |||
Special Products & Services | 15.0% | |||
Retailing | 8.7% | |||
Industrial Goods & Services | 7.7% | |||
Basic Materials | 7.5% | |||
Technology | 7.4% | |||
Health Care | 7.0% | |||
Consumer Staples | 6.5% | |||
Leisure | 5.6% | |||
Autos & Housing | 4.8% | |||
Transportation | 3.2% | |||
Energy | 3.1% | |||
Utilities & Communications | 2.6% |
Issuer country weightings (x) | ||||
United Kingdom | 28.5% | |||
Japan | 14.0% | |||
Germany | 6.4% | |||
France | 5.3% | |||
United States | 4.4% | |||
Brazil | 4.1% | |||
Denmark | 3.5% | |||
Hong Kong | 3.0% | |||
Switzerland | 2.9% | |||
Other Countries | 27.9% | |||
Currency exposure weightings (y) | ||||
British Pound Sterling | 28.5% | |||
Euro | 17.0% | |||
Japanese Yen | 14.0% | |||
United States Dollar | 5.6% | |||
Hong Kong Dollar | 4.1% | |||
Brazilian Real | 4.1% | |||
Danish Krone | 3.5% | |||
Swiss Franc | 2.9% | |||
Canadian Dollar | 2.8% | |||
Other Currencies | 17.5% |
2
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Portfolio Composition – continued
(x) | Represents the portfolio’s exposure to issuer countries as a percentage of a portfolio’s net assets. For purposes of this presentation, United States includes Cash & Other. |
(y) | Represents the portfolio’s exposure to a particular currency as a percentage of a portfolio’s net assets. For purposes of this presentation, United States Dollar includes Cash & Other. |
Percentages are based on net assets as of 3/31/14.
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, 2013 through March 31, 2014
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, 2013 through March 31, 2014.
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
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Expense Table – continued
Share Class | Annualized Ratio | Beginning Account Value 10/01/13 | Ending Account Value | Expenses Paid During Period (p) 10/01/13-3/31/14 | ||||||||||||||
A | Actual | 1.35% | $1,000.00 | $1,052.16 | $6.91 | |||||||||||||
Hypothetical (h) | 1.35% | $1,000.00 | $1,018.20 | $6.79 | ||||||||||||||
B | Actual | 2.10% | $1,000.00 | $1,048.18 | $10.72 | |||||||||||||
Hypothetical (h) | 2.10% | $1,000.00 | $1,014.46 | $10.55 | ||||||||||||||
C | Actual | 2.10% | $1,000.00 | $1,048.26 | $10.72 | |||||||||||||
Hypothetical (h) | 2.10% | $1,000.00 | $1,014.46 | $10.55 | ||||||||||||||
I | Actual | 1.10% | $1,000.00 | $1,053.10 | $5.63 | |||||||||||||
Hypothetical (h) | 1.10% | $1,000.00 | $1,019.45 | $5.54 | ||||||||||||||
R1 | Actual | 2.10% | $1,000.00 | $1,048.01 | $10.72 | |||||||||||||
Hypothetical (h) | 2.10% | $1,000.00 | $1,014.46 | $10.55 | ||||||||||||||
R2 | Actual | 1.60% | $1,000.00 | $1,050.46 | $8.18 | |||||||||||||
Hypothetical (h) | 1.60% | $1,000.00 | $1,016.95 | $8.05 | ||||||||||||||
R3 | Actual | 1.35% | $1,000.00 | $1,051.75 | $6.91 | |||||||||||||
Hypothetical (h) | 1.35% | $1,000.00 | $1,018.20 | $6.79 | ||||||||||||||
R4 | Actual | 1.10% | $1,000.00 | $1,053.31 | $5.63 | |||||||||||||
Hypothetical (h) | 1.10% | $1,000.00 | $1,019.45 | $5.54 | ||||||||||||||
R5 | Actual | 0.99% | $1,000.00 | $1,053.66 | $5.07 | |||||||||||||
Hypothetical (h) | 0.99% | $1,000.00 | $1,020.00 | $4.99 | ||||||||||||||
529A | Actual | 1.34% | $1,000.00 | $1,051.77 | $6.85 | |||||||||||||
Hypothetical (h) | 1.34% | $1,000.00 | $1,018.25 | $6.74 | ||||||||||||||
529B | Actual | 2.13% | $1,000.00 | $1,047.77 | $10.87 | |||||||||||||
Hypothetical (h) | 2.13% | $1,000.00 | $1,014.31 | $10.70 | ||||||||||||||
529C | Actual | 2.14% | $1,000.00 | $1,047.64 | $10.92 | |||||||||||||
Hypothetical (h) | 2.14% | $1,000.00 | $1,014.26 | $10.75 |
(h) | 5% class return per year before expenses. |
(p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Notes to Expense Table
Each class with a Rule 12b-1 service fee is subject to a rebate of a portion of such fee. Such rebates are included in the expense ratios above. For Class 529A and Class 529B shares, this rebate reduced the expense ratios above by 0.05% and 0.02%, respectively. See Note 3 in the Notes to Financial Statements for additional information.
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3/31/14 (unaudited)
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Common Stocks - 96.3% | ||||||||
Issuer | Shares/Par | Value ($) | ||||||
Aerospace - 1.0% | ||||||||
Cobham PLC | 2,610,209 | $ | 13,011,310 | |||||
Meggitt PLC | 2,361,020 | 18,889,701 | ||||||
MTU Aero Engines AG | 155,880 | 14,486,906 | ||||||
Saab AB, “B” | 199,440 | 6,088,924 | ||||||
|
| |||||||
$ | 52,476,841 | |||||||
Airlines - 1.6% | ||||||||
Controladora Vuela Compania de Aviacion S.A.B. de C.V., ADR (a) | 1,183,130 | $ | 9,819,979 | |||||
Copa Holdings S.A., “A” | 89,981 | 13,064,341 | ||||||
Koninklijke Vopak N.V. | 230,324 | 12,860,406 | ||||||
Stagecoach Group PLC | 6,988,526 | 45,986,185 | ||||||
|
| |||||||
$ | 81,730,911 | |||||||
Alcoholic Beverages - 0.5% | ||||||||
Carlsberg Group | 147,199 | $ | 14,640,180 | |||||
Davide Campari-Milano S.p.A. | 1,242,119 | 10,181,671 | ||||||
|
| |||||||
$ | 24,821,851 | |||||||
Apparel Manufacturers - 2.3% | ||||||||
Burberry Group PLC | 506,753 | $ | 11,785,424 | |||||
Christian Dior S.A. | 263,947 | 50,816,815 | ||||||
Cia. Hering S.A. | 838,300 | 10,115,758 | ||||||
Gerry Weber International AG | 380,243 | 18,800,681 | ||||||
Li & Fung Ltd. | 4,225,138 | 6,242,517 | ||||||
Stella International Holdings Ltd. | 7,507,591 | 17,964,403 | ||||||
|
| |||||||
$ | 115,725,598 | |||||||
Automotive - 2.5% | ||||||||
D’Ieteren S.A. | 261,869 | $ | 12,276,793 | |||||
Exide Industries Ltd. | 8,502,893 | 17,248,533 | ||||||
Ford Otomotiv Sanayi S.A. | 290,456 | 2,966,053 | ||||||
GKN PLC | 2,397,446 | 15,599,909 | ||||||
Guangzhou Automobile Group Co. Ltd., “H” | 25,307,750 | 26,591,654 | ||||||
Koito Manufacturing Co. Ltd. | 550,000 | 9,309,209 | ||||||
Motherson Sumi Systems Ltd. | 3,263,216 | 13,963,160 | ||||||
Takata Corp. | 438,900 | 11,030,437 | ||||||
Tofas Turk Otomobil Fabriikasi A.S. | 595,860 | 3,383,511 | ||||||
USS Co. Ltd. | 1,161,900 | 16,311,516 | ||||||
|
| |||||||
$ | 128,680,775 |
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Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Biotechnology - 0.2% | ||||||||
Abcam PLC | 550,379 | $ | 3,569,325 | |||||
Lonza Group AG | 57,685 | 5,882,363 | ||||||
|
| |||||||
$ | 9,451,688 | |||||||
Broadcasting - 1.1% | ||||||||
Havas S.A. | 2,199,204 | $ | 16,463,571 | |||||
Nippon Television Holdings, Inc. | 610,800 | 9,977,317 | ||||||
Proto Corp. | 568,700 | 7,906,646 | ||||||
Rightmove PLC | 475,113 | 20,895,192 | ||||||
|
| |||||||
$ | 55,242,726 | |||||||
Brokerage & Asset Managers - 5.3% | ||||||||
Aberdeen Asset Management PLC | 6,970,788 | $ | 45,358,125 | |||||
Bolsa Mexicana de Valores S.A. de C.V. | 5,397,996 | 10,646,731 | ||||||
CETIP S.A. Mercados Organizados | 1,066,157 | 12,921,691 | ||||||
Computershare Ltd. | 2,134,790 | 23,955,630 | ||||||
Daiwa Securities Group, Inc. | 2,388,000 | 20,776,283 | ||||||
Hargreaves Lansdown PLC | 1,131,583 | 27,505,441 | ||||||
ICAP PLC | 1,982,375 | 12,479,364 | ||||||
IG Group Holdings PLC | 2,141,489 | 22,402,900 | ||||||
Osaka Securities Exchange Co. Ltd. | 250,200 | 6,103,799 | ||||||
Rathbone Brothers PLC | 947,957 | 28,668,211 | ||||||
Schroders PLC | 1,156,966 | 50,111,155 | ||||||
Yuanta Financial Holding Co. Ltd. | 25,371,360 | 12,788,782 | ||||||
|
| |||||||
$ | 273,718,112 | |||||||
Business Services - 12.0% | ||||||||
Amadeus Fire AG | 183,730 | $ | 16,072,843 | |||||
Amadeus Holdings AG | 1,729,808 | 71,849,560 | ||||||
Brenntag AG | 168,681 | 31,290,422 | ||||||
Brunel International N.V. | 147,909 | 10,367,657 | ||||||
Bunzl PLC | 6,163,489 | 163,996,350 | ||||||
Cabcharge Australia Ltd. (l) | 2,412,838 | 9,062,547 | ||||||
Capgemini | 157,646 | 11,934,097 | ||||||
Capita PLC | 1,705,503 | 31,162,889 | ||||||
Cognizant Technology Solutions Corp., “A” (a) | 446,266 | 22,585,522 | ||||||
Compass Group PLC | 2,574,950 | 39,279,375 | ||||||
CTS Eventim AG | 135,447 | 9,031,370 | ||||||
DKSH Holding Ltd. | 50,944 | 4,051,087 | ||||||
Edenred | 303,993 | 9,538,078 | ||||||
Electrocomponents PLC | 1,448,122 | 6,832,289 | ||||||
Intertek Group PLC | 632,964 | 32,417,155 | ||||||
LPS Brasil - Consultoria de Imoveis S.A. | 1,362,800 | 7,747,959 | ||||||
LSL Property Services PLC | 2,219,605 | 16,087,552 |
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Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Business Services - continued | ||||||||
MITIE Group PLC | 1,841,882 | $ | 9,995,107 | |||||
Nomura Research Institute Ltd. | 741,800 | 23,429,424 | ||||||
Premier Farnell PLC | 2,240,743 | 8,737,696 | ||||||
Serco Group PLC | 3,846,675 | 26,998,663 | ||||||
Sodexo | 371,989 | 39,014,390 | ||||||
Travis Perkins PLC | 386,837 | 12,156,653 | ||||||
Wolseley PLC | 75,502 | 4,293,533 | ||||||
|
| |||||||
$ | 617,932,218 | |||||||
Cable TV - 2.0% | ||||||||
Astro Malaysia Holdings Berhad | 34,486,259 | $ | 33,794,527 | |||||
Eutelsat Communications | 534,604 | 18,154,656 | ||||||
SES | 490,340 | 18,309,886 | ||||||
Ziggo N.V. | 738,569 | 32,814,039 | ||||||
|
| |||||||
$ | 103,073,108 | |||||||
Chemicals - 0.3% | ||||||||
Victrex PLC | 478,278 | $ | 16,018,986 | |||||
Computer Software - 1.8% | ||||||||
AVEVA Group PLC | 147,785 | $ | 5,159,192 | |||||
Dassault Systemes S.A. | 87,342 | 10,232,583 | ||||||
OBIC Business Consultants Co. Ltd. | 286,400 | 9,670,145 | ||||||
OBIC Co. Ltd. | 1,853,600 | 58,545,134 | ||||||
Totvs S.A. | 670,100 | 10,513,689 | ||||||
|
| |||||||
$ | 94,120,743 | |||||||
Computer Software - Systems - 1.8% | ||||||||
Asustek Computer, Inc. | 1,844,000 | $ | 18,256,826 | |||||
Brother Industries Ltd. | 1,293,000 | 18,076,820 | ||||||
Konica Minolta, Inc. | 1,593,500 | 14,867,418 | ||||||
Linx S.A. | 421,700 | 8,290,893 | ||||||
NICE Systems Ltd. | 413,463 | 18,316,855 | ||||||
Venture Corp. Ltd. | 2,177,000 | 12,910,740 | ||||||
|
| |||||||
$ | 90,719,552 | |||||||
Conglomerates - 0.9% | ||||||||
DCC PLC | 470,603 | $ | 25,576,844 | |||||
First Pacific Co. Ltd. | 11,719,150 | 11,648,894 | ||||||
Smiths Group PLC | 335,505 | 7,114,769 | ||||||
|
| |||||||
$ | 44,340,507 | |||||||
Construction - 2.2% | ||||||||
Bellway PLC | 2,694,534 | $ | 74,570,392 | |||||
Geberit AG | 94,956 | 31,095,257 |
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Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Construction - continued | ||||||||
Semen Indonesia Persero Tbk PT | 5,152,720 | $ | 7,234,446 | |||||
|
| |||||||
$ | 112,900,095 | |||||||
Consumer Products - 2.6% | ||||||||
Beiersdorf AG | 267,000 | $ | 26,042,545 | |||||
Dabur India Ltd. | 7,147,854 | 21,501,310 | ||||||
Henkel KGaA, IPS | 264,562 | 28,472,696 | ||||||
Kimberly-Clark de Mexico S.A. de C.V., “A” | 3,253,524 | 8,712,282 | ||||||
Milbon Co. Ltd. | 241,596 | 8,040,326 | ||||||
PZ Cussons | 531,867 | 3,122,965 | ||||||
Shiseido Co. Ltd. | 222,500 | 3,914,741 | ||||||
Societe BIC S.A. | 49,516 | 6,504,369 | ||||||
Uni-Charm Corp. | 468,500 | 25,023,887 | ||||||
|
| |||||||
$ | 131,335,121 | |||||||
Consumer Services - 2.1% | ||||||||
Abril Educacao S.A., IEU (a) | 516,890 | $ | 6,332,985 | |||||
Anhanguera Educacional Participacoes S.A. | 2,555,700 | 15,768,973 | ||||||
Dignity PLC | 1,700,539 | 41,590,236 | ||||||
Estacio Participacoes S.A. | 1,736,620 | 17,496,313 | ||||||
Kakaku.com, Inc. | 289,200 | 4,704,421 | ||||||
Kroton Educacional S.A. | 799,610 | 17,585,077 | ||||||
Rakuten | 436,800 | 5,827,386 | ||||||
|
| |||||||
$ | 109,305,391 | |||||||
Containers - 0.7% | ||||||||
Mayr-Melnhof Karton AG | 127,604 | $ | 15,962,063 | |||||
Viscofan S.A. | 366,636 | 19,175,973 | ||||||
|
| |||||||
$ | 35,138,036 | |||||||
Electrical Equipment - 1.9% | ||||||||
Domino Printing Sciences PLC | 1,206,483 | $ | 15,819,567 | |||||
IMI PLC | 595,477 | 14,474,287 | ||||||
Kaba Holding AG | 4,278 | 2,042,097 | ||||||
Keyence Corp. | 15,500 | 6,392,821 | ||||||
Legrand S.A. | 238,002 | 14,785,904 | ||||||
OMRON Corp. | 103,621 | 4,276,757 | ||||||
Pfeiffer Vacuum Technology AG | 69,906 | 8,539,453 | ||||||
Sensata Technologies Holding B.V. (a) | 107,328 | 4,576,466 | ||||||
Spectris PLC | 750,418 | 28,999,556 | ||||||
|
| |||||||
$ | 99,906,908 | |||||||
Electronics - 2.8% | ||||||||
Advantech Co. Ltd. | 2,475,787 | $ | 16,056,742 | |||||
ASM International N.V. | 352,065 | 14,131,126 |
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Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Electronics - continued | ||||||||
Chroma Ate, Inc. | 8,414,000 | $ | 20,059,319 | |||||
Halma PLC | 1,384,817 | 13,298,098 | ||||||
Hirose Electric Co. Ltd. | 79,708 | 10,950,535 | ||||||
Infineon Technologies AG | 1,431,553 | 17,083,014 | ||||||
Seoul Semiconductor Co. Ltd. | 515,028 | 21,918,144 | ||||||
Siliconware Precision Industries Co. | 15,848,000 | 21,076,890 | ||||||
Stanley Electric Co. Ltd. | 471,231 | 10,459,625 | ||||||
|
| |||||||
$ | 145,033,493 | |||||||
Energy - Independent - 1.4% | ||||||||
Cairn Energy PLC (a) | 1,719,978 | $ | 4,785,793 | |||||
Canadian Oil Sands Ltd. | 684,710 | 14,363,116 | ||||||
Gran Tierra Energy, Inc. (a) | 3,385,220 | 25,415,944 | ||||||
Japan Petroleum Exploration Co. Ltd. | 313,200 | 10,423,311 | ||||||
MEG Energy Corp. (a) | 438,942 | 14,833,897 | ||||||
|
| |||||||
$ | 69,822,061 | |||||||
Engineering - Construction - 1.5% | ||||||||
JGC Corp. | 1,103,000 | $ | 38,364,288 | |||||
Mills Estruturas e Servicos de Engenharia S.A. | 1,220,500 | 15,061,260 | ||||||
Outotec Oyj (l) | 428,741 | 4,748,867 | ||||||
Promotora y Operadora de Infraestructura S.A.B. de C.V. (a) | 1,226,360 | 16,539,962 | ||||||
Toshiba Plant Kensetsu Co. Ltd. | 291,000 | 4,336,172 | ||||||
|
| |||||||
$ | 79,050,549 | |||||||
Food & Beverages - 3.1% | ||||||||
Arca Continental S.A.B de C.V. | 1,281,818 | $ | 7,656,250 | |||||
Booker Group PLC | 7,942,950 | 21,862,689 | ||||||
Britvic PLC | 833,189 | 10,306,759 | ||||||
Calbee, Inc. | 306,800 | 7,220,047 | ||||||
Chr. Hansen Holding A.S. | 429,346 | 17,033,296 | ||||||
Coca-Cola HBC AG | 320,235 | 7,976,164 | ||||||
Kerry Group PLC | 292,910 | 22,359,457 | ||||||
M. Dias Branco S.A. Industria e Comercio de Alimentos | 374,300 | 15,077,576 | ||||||
P/f Bakkafrost | 794,729 | 13,139,746 | ||||||
Shenguan Holdings Group Ltd. | 48,263,505 | 20,035,904 | ||||||
Tate & Lyle PLC | 488,682 | 5,438,164 | ||||||
Want Want China Holdings Ltd. | 7,185,146 | 10,727,002 | ||||||
|
| |||||||
$ | 158,833,054 | |||||||
Food & Drug Stores - 2.1% | ||||||||
Alimentation Couche-Tard, Inc. | 271,047 | $ | 21,921,585 | |||||
Cosmos Pharmaceutical Corp. | 108,000 | 12,619,096 | ||||||
Dairy Farm International Holdings Ltd. | 1,655,709 | 16,126,606 |
10
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Food & Drug Stores - continued | ||||||||
E-Mart Co. Ltd. | 40,821 | $ | 9,357,249 | |||||
FamilyMart Co. Ltd. | 130,000 | 5,711,864 | ||||||
Lawson, Inc. | 303,700 | 21,479,533 | ||||||
Sundrug Co. Ltd. | 280,100 | 12,795,345 | ||||||
Welcia Holdings Co. Ltd. | 32,900 | 1,851,950 | ||||||
Wumart Stores, Inc. | 5,319,514 | 5,184,752 | ||||||
|
| |||||||
$ | 107,047,980 | |||||||
Forest & Paper Products - 0.2% | ||||||||
Fibria Celulose S.A. (a) | 861,000 | $ | 9,573,834 | |||||
Furniture & Appliances - 0.1% | ||||||||
SEB S.A. | 39,266 | $ | 3,388,499 | |||||
Gaming & Lodging - 0.9% | ||||||||
Ladbrokes PLC | 1,528,474 | $ | 3,440,064 | |||||
Minor International Public Co. Ltd. | 5,990,359 | 4,579,559 | ||||||
Paddy Power PLC | 161,279 | 12,842,352 | ||||||
Shangri-La Asia Ltd. | 9,386,495 | 15,368,850 | ||||||
William Hill PLC | 1,783,087 | 10,136,816 | ||||||
|
| |||||||
$ | 46,367,641 | |||||||
General Merchandise - 1.6% | ||||||||
Dollarama, Inc. | 574,277 | $ | 43,749,985 | |||||
Mitra Adiperkasa Tbk. | 16,240,692 | 8,935,240 | ||||||
Poundland Group PLC (a) | 1,324,210 | 8,389,095 | ||||||
Seria Co. Ltd. | 108,300 | 4,013,443 | ||||||
Woolworths Holdings Ltd. | 2,281,249 | 15,900,271 | ||||||
|
| |||||||
$ | 80,988,034 | |||||||
Health Maintenance Organizations - 0.6% | ||||||||
Odontoprev S.A. | 4,081,100 | $ | 16,223,677 | |||||
Qualicorp S.A. (a) | 1,276,200 | 12,908,237 | ||||||
|
| |||||||
$ | 29,131,914 | |||||||
Insurance - 3.7% | ||||||||
Admiral Group PLC | 354,924 | $ | 8,449,641 | |||||
Amlin PLC | 2,552,151 | 20,606,086 | ||||||
Austbrokers Holdings Ltd. | 844,686 | 8,068,626 | ||||||
Brasil Insurance Paticipaco e Administracao S.A. | 1,536,800 | 7,728,025 | ||||||
Catlin Group Ltd. | 3,478,177 | 31,196,698 | ||||||
Hiscox Ltd. | 4,010,417 | 45,598,292 | ||||||
Insurance Australia Group Ltd. | 1,910,475 | 9,868,784 | ||||||
Jardine Lloyd Thompson Group PLC | 1,478,438 | 26,225,237 |
11
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Insurance - continued | ||||||||
Samsung Fire & Marine Insurance Co. Ltd. | 40,976 | $ | 9,219,552 | |||||
Sony Financial Holdings, Inc. | 653,000 | 10,691,954 | ||||||
Storebrand A.S.A. (a) | 1,722,818 | 9,940,773 | ||||||
|
| |||||||
$ | 187,593,668 | |||||||
Internet - 0.2% | ||||||||
51job, Inc., ADR (a) | 168,110 | $ | 11,977,838 | |||||
Leisure & Toys - 0.1% | ||||||||
Shimano, Inc. | 57,700 | $ | 5,797,113 | |||||
Machinery & Tools - 2.9% | ||||||||
Aalberts Industries N.V. | 242,140 | $ | 8,439,680 | |||||
Burckhardt Compression Holding AG | 33,597 | 17,481,613 | ||||||
ElringKlinger AG | 270,538 | 10,663,138 | ||||||
Faiveley S.A. | 35,347 | 2,564,808 | ||||||
Finning International, Inc. | 386,833 | 10,952,395 | ||||||
GEA Group AG | 862,720 | 39,435,300 | ||||||
GLORY Ltd. | 95,200 | 2,609,318 | ||||||
Neopost S.A. | 167,887 | 13,257,516 | ||||||
Rotork PLC | 213,210 | 9,408,842 | ||||||
Spirax-Sarco Engineering PLC | 288,928 | 13,920,734 | ||||||
T.K. Corp. (a) | 850,766 | 15,785,261 | ||||||
Thermax Ltd. | 476,970 | 5,975,452 | ||||||
|
| |||||||
$ | 150,494,057 | |||||||
Medical & Health Technology & Services - 1.0% | ||||||||
Hogy Medical Co. Ltd. | 51,200 | $ | 2,619,154 | |||||
Kobayashi Pharmaceutical Co. Ltd. | 401,300 | 23,133,605 | ||||||
Miraca Holdings, Inc. | 630,400 | 27,606,530 | ||||||
|
| |||||||
$ | 53,359,289 | |||||||
Medical Equipment - 3.4% | ||||||||
Ansell Ltd. | 1,323,372 | $ | 22,594,504 | |||||
Fisher & Paykel Healthcare Corp. Ltd. | 8,307,531 | 30,641,183 | ||||||
Nakanishi, Inc. | 466,000 | 14,876,423 | ||||||
Nihon Kohden Corp. | 260,800 | 10,397,636 | ||||||
ResMed, Inc. (l) | 2,865,570 | 12,623,265 | ||||||
Smith & Nephew PLC | 846,063 | 12,821,571 | ||||||
Sonova Holding AG | 346,486 | 50,637,397 | ||||||
Sysmex Corp. | 181,600 | 5,788,538 | ||||||
Top Glove Corp. | 8,069,577 | 12,232,248 | ||||||
William Demant Holdings A/S (a) | 21,298 | 1,821,944 | ||||||
|
| |||||||
$ | 174,434,709 |
12
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Metals & Mining - 0.8% | ||||||||
Iluka Resources Ltd. | 2,144,836 | $ | 19,712,187 | |||||
MOIL Ltd. | 5,264,681 | 22,165,918 | ||||||
|
| |||||||
$ | 41,878,105 | |||||||
Network & Telecom - 0.7% | ||||||||
VTech Holdings Ltd. | 2,857,844 | $ | 36,733,971 | |||||
Oil Services - 1.7% | ||||||||
AMEC PLC | 954,855 | $ | 17,860,966 | |||||
Fugro N.V. | 176,598 | 10,859,260 | ||||||
John Wood Group PLC | 955,796 | 12,221,802 | ||||||
Petroleum Geo-Services A.S.A | 239,848 | 2,920,091 | ||||||
Schoeller-Bleckmann Nooter Apparatetechnik GMBH | 91,563 | 10,706,913 | ||||||
Technip | 215,380 | 22,227,165 | ||||||
WorleyParsons Ltd. | 841,730 | 11,818,592 | ||||||
|
| |||||||
$ | 88,614,789 | |||||||
Other Banks & Diversified Financials - 5.4% | ||||||||
Aeon Financial Service Co. Ltd. (l) | 730,200 | $ | 16,462,485 | |||||
Aeon Thana Sinsap (Thailand) PLC, NVDR | 2,917,300 | 7,868,796 | ||||||
Aeon Thana Sinsap (Thailand) PLC, NVDR | 1,200 | 3,237 | ||||||
BDO Unibank, Inc. | 10,088,490 | 19,121,901 | ||||||
Canadian Western Bank | 361,061 | 12,152,944 | ||||||
Chiba Bank Ltd. | 2,538,451 | 15,641,669 | ||||||
Credicorp Ltd. | 211,464 | 29,165,115 | ||||||
E.Sun Financial Holding Co. Ltd. | 34,215,000 | 20,617,199 | ||||||
Federal Bank Ltd. | 14,223,575 | 22,803,923 | ||||||
Julius Baer Group Ltd. | 175,283 | 7,778,239 | ||||||
Jyske Bank (a) | 909,428 | 49,974,196 | ||||||
Public Bank Berhad | 2,503,377 | 14,718,983 | ||||||
Shizuoka Bank Ltd. | 1,025,000 | 10,000,242 | ||||||
Sydbank A/S (a) | 1,301,137 | 33,300,618 | ||||||
Wing Hang Bank | 1,361,660 | 21,592,752 | ||||||
|
| |||||||
$ | 281,202,299 | |||||||
Pharmaceuticals - 1.8% | ||||||||
Genomma Lab Internacional S.A., “B” (a) | 4,536,891 | $ | 11,665,844 | |||||
Hisamitsu Pharmaceutical Co., Inc. | 97,000 | 4,384,101 | ||||||
KYORIN Holdings Ltd. | 154,000 | 2,940,793 | ||||||
Santen Pharmaceutical Co. Ltd. | 570,600 | 25,319,459 | ||||||
Tsumura & Co. | 513,000 | 12,326,115 | ||||||
Virbac SA | 153,803 | 34,325,646 | ||||||
|
| |||||||
$ | 90,961,958 |
13
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Pollution Control - 0.2% | ||||||||
Daiseki Co. Ltd. | 686,500 | $ | 11,839,074 | |||||
Railroad & Shipping - 0.2% | ||||||||
Precious Shipping Public Co. Ltd. | 9,349,818 | $ | 8,142,181 | |||||
Real Estate - 2.8% | ||||||||
Ascendas India Trust, REIT | 33,778,000 | $ | 20,676,572 | |||||
Brasil Brokers Participacoes S.A. | 3,080,000 | 6,922,874 | ||||||
Concentradora Fibra Danhos S.A. de C.V., REIT | 5,101,100 | 10,389,357 | ||||||
Concentradora Fibra Hotelera Mexicana S.A. de C.V., REIT | 7,558,800 | 12,760,595 | ||||||
Deutsche Wohnen AG (a) | 624,005 | 13,032,453 | ||||||
Deutsche Wohnen AG | 562,394 | 12,055,609 | ||||||
Foxtons Group PLC (a) | 2,017,570 | 12,092,112 | ||||||
IGB Trust, REIT | 17,393,700 | 6,072,215 | ||||||
LEG Immobilien AG (a) | 179,700 | 11,786,508 | ||||||
Macquarie Mexico Real Estate S.A. de C.V., REIT | 5,119,865 | 9,600,115 | ||||||
Midland Holdings Ltd. (a)(h) | 42,823,351 | 22,856,788 | ||||||
TAG Immobilien AG | 237,520 | 2,944,975 | ||||||
|
| |||||||
$ | 141,190,173 | |||||||
Restaurants - 1.6% | ||||||||
Ajisen (China) Holdings Ltd. | 13,082,037 | $ | 11,806,132 | |||||
Domino’s Pizza UK & IRL PLC | 3,026,842 | 27,829,791 | ||||||
Whitbread PLC | 576,043 | 39,969,770 | ||||||
|
| |||||||
$ | 79,605,693 | |||||||
Specialty Chemicals - 5.5% | ||||||||
Air Water, Inc. | 376,000 | $ | 5,202,035 | |||||
Croda International PLC | 2,585,770 | 109,754,658 | ||||||
Elementis PLC | 3,641,079 | 17,391,194 | ||||||
Filtrona PLC | 890,916 | 12,959,160 | ||||||
Fuchs Petrolub SE, IPS | 245,720 | 24,650,747 | ||||||
Japan Pure Chemical Co. Ltd. | 41,700 | 924,377 | ||||||
Kansai Paint Co. Ltd. | 1,037,000 | 14,819,309 | ||||||
Marine Harvest A.S.A | 1,252,087 | 14,177,411 | ||||||
Sika AG | 7,849 | 32,104,501 | ||||||
SK KAKEN Co. Ltd. | 58,000 | 3,950,395 | ||||||
Symrise AG | 885,210 | 44,219,417 | ||||||
Tikkurila Oyj | 145,978 | 3,438,923 | ||||||
|
| |||||||
$ | 283,592,127 | |||||||
Specialty Stores - 2.8% | ||||||||
ABC-Mart, Inc. | 362,200 | $ | 15,721,126 | |||||
Cj O Shopping Co. Ltd. | 41,848 | 14,322,163 |
14
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Specialty Stores - continued | ||||||||
Delticom AG | 42,431 | $ | 2,077,493 | |||||
Esprit Holdings Ltd. | 3,456,199 | 5,748,078 | ||||||
Hyundai Home Shopping Network Corp. | 55,428 | 8,149,262 | ||||||
MonotaRO Co. Ltd. (l) | 740,500 | 18,811,132 | ||||||
NEXT PLC | 520,719 | 57,295,700 | ||||||
Nitori Co. Ltd. | 174,900 | 7,582,982 | ||||||
Point, Inc. | 55,910 | 1,394,297 | ||||||
Shimamura Co. Ltd. | 52,800 | 4,568,173 | ||||||
Super Retail Group Ltd. | 929,400 | 9,515,658 | ||||||
|
| |||||||
$ | 145,186,064 | |||||||
Telecommunications - Wireless - 0.7% | ||||||||
Turkcell Iletisim Hizmetleri AS (a) | 6,564,910 | $ | 36,664,334 | |||||
Telephone Services - 1.0% | ||||||||
Bezeq - The Israel Telecommunication Corp. Ltd. | 6,073,425 | $ | 10,816,356 | |||||
PT XL Axiata Tbk | 41,911,387 | 16,286,561 | ||||||
TDC A.S. | 2,666,167 | 24,647,784 | ||||||
|
| |||||||
$ | 51,750,701 | |||||||
Tobacco - 0.4% | ||||||||
Swedish Match AB | 581,683 | $ | 19,008,074 | |||||
Trucking - 1.4% | ||||||||
DSV A.S. | 1,132,621 | $ | 36,553,353 | |||||
Kintetsu World Express, Inc. | 185,300 | 8,231,367 | ||||||
Yamato Holdings Co. Ltd. | 1,291,500 | 27,828,281 | ||||||
|
| |||||||
$ | 72,613,001 | |||||||
Utilities - Electric Power - 0.9% | ||||||||
Alupar Investimento S.A., IEU (a) | 1,151,100 | $ | 9,096,176 | |||||
Energias do Brasil S.A. | 2,184,300 | 9,915,509 | ||||||
Glow Energy PLC | 11,338,300 | 26,563,218 | ||||||
|
| |||||||
$ | 45,574,903 | |||||||
Total Common Stocks (Identified Cost, $3,685,898,434) | $ | 4,944,090,347 | ||||||
Collateral for Securities Loaned - 0.4% | ||||||||
JPMorgan Prime Money Market Fund, 0.06%, at Cost and Net Asset Value (j) | 21,813,675 | $ | 21,813,675 |
15
Table of Contents
Portfolio of Investments (unaudited) – continued
Money Market Funds - 3.5% | ||||||||
Issuer | Shares/Par | Value ($) | ||||||
MFS Institutional Money Market Portfolio, 0.09%, at Cost and Net Asset Value (v) | 178,578,420 | $ | 178,578,420 | |||||
Total Investments (Identified Cost, $3,886,290,529) | $ | 5,144,482,442 | ||||||
Other Assets, Less Liabilities - (0.2)% | (12,959,491 | ) | ||||||
Net Assets - 100.0% | $ | 5,131,522,951 |
(a) | Non-income producing security. |
(h) | Affiliated issuers are those in which the fund’s holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. |
(j) | The rate quoted is the annualized seven-day yield of the fund at period end. |
(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 for the MFS Institutional Money Market Portfolio 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 Depositary Receipt |
GDR | Global Depositary 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 3/31/14 (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, $3,687,691,412) | $4,943,047,234 | |||
Underlying affiliated funds, at cost and value | 178,578,420 | |||
Other affiliated issuers, at value (identified cost, $20,020,697) | 22,856,788 | |||
Total investments, at value, including $20,768,465 of securities on loan (identified cost, $3,886,290,529) | $5,144,482,442 | |||
Cash | 263,959 | |||
Receivables for | ||||
Investments sold | 5,713,955 | |||
Fund shares sold | 49,237,768 | |||
Interest and dividends | 16,135,375 | |||
Other assets | 22,542 | |||
Total assets | $5,215,856,041 | |||
Liabilities | ||||
Payables for | ||||
Investments purchased | $4,051,604 | |||
Fund shares reacquired | 50,839,108 | |||
Collateral for securities loaned, at value | 21,813,675 | |||
Payable to affiliates | ||||
Investment adviser | 513,787 | |||
Shareholder servicing costs | 3,454,421 | |||
Distribution and service fees | 75,994 | |||
Program manager fees | 49 | |||
Payable for independent Trustees’ compensation | 6,456 | |||
Deferred country tax expense payable | 3,084,231 | |||
Accrued expenses and other liabilities | 493,765 | |||
Total liabilities | $84,333,090 | |||
Net assets | $5,131,522,951 | |||
Net assets consist of | ||||
Paid-in capital | $4,137,139,772 | |||
Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies (net of $3,084,231 deferred country tax) | 1,256,323,002 | |||
Accumulated net realized gain (loss) on investments and foreign currency | (271,052,130 | ) | ||
Undistributed net investment income | 9,112,307 | |||
Net assets | $5,131,522,951 | |||
Shares of beneficial interest outstanding | 177,898,362 |
17
Table of Contents
Statement of Assets and Liabilities (unaudited) – continued
Net assets | Shares outstanding | Net asset value per share (a) | ||||||||||
Class A | $1,686,245,551 | 59,110,037 | $28.53 | |||||||||
Class B | 28,732,850 | 1,039,725 | 27.64 | |||||||||
Class C | 194,712,099 | 7,140,758 | 27.27 | |||||||||
Class I | 1,801,657,003 | 61,449,994 | 29.32 | |||||||||
Class R1 | 8,219,434 | 309,854 | 26.53 | |||||||||
Class R2 | 82,440,241 | 2,965,582 | 27.80 | |||||||||
Class R3 | 160,709,635 | 5,674,193 | 28.32 | |||||||||
Class R4 | 359,621,211 | 12,608,295 | 28.52 | |||||||||
Class R5 | 800,196,178 | 27,274,773 | 29.34 | |||||||||
Class 529A | 6,421,752 | 228,347 | 28.12 | |||||||||
Class 529B | 681,913 | 25,637 | 26.60 | |||||||||
Class 529C | 1,885,084 | 71,167 | 26.49 |
(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 $30.27 [100 / 94.25 x $28.53] and $29.84 [100 / 94.25 x $28.12], 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, R5, and 529A. |
See Notes to Financial Statements
18
Table of Contents
Financial Statements
Six months ended 3/31/14 (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 | $41,260,813 | |||
Interest | 180,178 | |||
Dividends from underlying affiliated funds | 84,905 | |||
Foreign taxes withheld | (2,019,416 | ) | ||
Total investment income | $39,506,480 | |||
Expenses | ||||
Management fee | $22,676,236 | |||
Distribution and service fees | 3,584,288 | |||
Program manager fees | 4,336 | |||
Shareholder servicing costs | 2,496,280 | |||
Administrative services fee | 235,846 | |||
Independent Trustees’ compensation | 25,313 | |||
Custodian fee | 655,081 | |||
Shareholder communications | 147,191 | |||
Audit and tax fees | 39,810 | |||
Legal fees | 19,869 | |||
Miscellaneous | 164,254 | |||
Total expenses | $30,048,504 | |||
Fees paid indirectly | (88 | ) | ||
Reduction of expenses by investment adviser and distributor | (82,976 | ) | ||
Net expenses | $29,965,440 | |||
Net investment income | $9,541,040 | |||
Realized and unrealized gain (loss) on investments and foreign currency | ||||
Realized gain (loss) (identified cost basis) | $21,088,998 | |||
Foreign currency | (332,273 | ) | ||
Net realized gain (loss) on investments and foreign currency | $20,756,725 | |||
Change in unrealized appreciation (depreciation) | ||||
Investments (net of $1,922,852 increase in deferred country tax) | $221,800,895 | |||
Translation of assets and liabilities in foreign currencies | (130,729 | ) | ||
Net unrealized gain (loss) on investments and foreign currency translation | $221,670,166 | |||
Net realized and unrealized gain (loss) on investments and foreign currency | $242,426,891 | |||
Change in net assets from operations | $251,967,931 |
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 3/31/14 (unaudited) | Year ended 9/30/13 | ||||||
From operations | ||||||||
Net investment income | $9,541,040 | $46,084,221 | ||||||
Net realized gain (loss) on investments and foreign currency | 20,756,725 | 144,163,804 | ||||||
Net unrealized gain (loss) on investments and foreign currency translation | 221,670,166 | 504,038,518 | ||||||
Change in net assets from operations | $251,967,931 | $694,286,543 | ||||||
Distributions declared to shareholders | ||||||||
From net investment income | $(56,530,561 | ) | $(40,380,082 | ) | ||||
Change in net assets from fund share transactions | $298,130,979 | $634,512,606 | ||||||
Total change in net assets | $493,568,349 | $1,288,419,067 | ||||||
Net assets | ||||||||
At beginning of period | 4,637,954,602 | 3,349,535,535 | ||||||
At end of period (including undistributed net investment income of $9,112,307 and $56,101,828, respectively) | $5,131,522,951 | $4,637,954,602 |
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 (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 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class A | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $27.41 | $23.23 | $18.94 | $20.24 | $17.43 | $17.39 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.04 | $0.27 | $0.25 | $0.24 | $0.21 | $0.20 | ||||||||||||||||||
Net realized and unrealized | 1.38 | 4.17 | 4.28 | (1.34 | ) | 2.80 | 1.05 | |||||||||||||||||
Total from investment | $1.42 | $4.44 | $4.53 | $(1.10 | ) | $3.01 | $1.25 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.30 | ) | $(0.26 | ) | $(0.24 | ) | $(0.20 | ) | $(0.20 | ) | $(0.26 | ) | ||||||||||||
From net realized gain on | — | — | — | — | — | (0.95 | ) | |||||||||||||||||
Total distributions declared to | $(0.30 | ) | $(0.26 | ) | $(0.24 | ) | $(0.20 | ) | $(0.20 | ) | $(1.21 | ) | ||||||||||||
Net asset value, end of | $28.53 | $27.41 | $23.23 | $18.94 | $20.24 | $17.43 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 5.22 | (n) | 19.29 | 24.13 | (5.53 | ) | 17.43 | 9.88 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.35 | (a) | 1.39 | 1.41 | 1.43 | 1.44 | 1.54 | |||||||||||||||||
Expenses after expense | 1.35 | (a) | 1.39 | 1.41 | 1.42 | 1.44 | 1.52 | |||||||||||||||||
Net investment income | 0.27 | (a)(l) | 1.07 | 1.19 | 1.12 | 1.14 | 1.48 | |||||||||||||||||
Portfolio turnover | 8 | (n) | 15 | 21 | 44 | 34 | 42 | |||||||||||||||||
Net assets at end of period | $1,686,246 | $1,581,384 | $1,309,494 | $1,199,483 | $1,359,614 | $1,253,375 |
See Notes to Financial Statements
21
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class B | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $26.40 | $22.34 | $18.15 | $19.38 | $16.70 | $16.66 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (loss) (d) | $(0.07 | ) | $0.04 | $0.07 | $0.07 | $0.06 | $0.09 | |||||||||||||||||
Net realized and unrealized | 1.34 | 4.06 | 4.14 | (1.27 | ) | 2.70 | 1.02 | |||||||||||||||||
Total from investment | $1.27 | $4.10 | $4.21 | $(1.20 | ) | $2.76 | $1.11 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.03 | ) | $(0.04 | ) | $(0.02 | ) | $(0.03 | ) | $(0.08 | ) | $(0.12 | ) | ||||||||||||
From net realized gain on | — | — | — | — | — | (0.95 | ) | |||||||||||||||||
Total distributions declared to | $(0.03 | ) | $(0.04 | ) | $(0.02 | ) | $(0.03 | ) | $(0.08 | ) | $(1.07 | ) | ||||||||||||
Net asset value, end of | $27.64 | $26.40 | $22.34 | $18.15 | $19.38 | $16.70 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 4.82( | n) | 18.39 | 23.21 | (6.21 | ) | 16.59 | 9.05 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 2.10 | (a) | 2.14 | 2.16 | 2.17 | 2.19 | 2.26 | |||||||||||||||||
Expenses after expense | 2.10 | (a) | 2.13 | 2.16 | 2.17 | 2.19 | 2.26 | |||||||||||||||||
Net investment income (loss) | (0.54) | (a)(l) | 0.19 | 0.36 | 0.32 | 0.33 | 0.70 | |||||||||||||||||
Portfolio turnover | 8 | (n) | 15 | 21 | 44 | 34 | 42 | |||||||||||||||||
Net assets at end of period | $28,733 | $33,509 | $45,496 | $57,379 | $85,229 | $101,608 |
See Notes to Financial Statements
22
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class C | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $26.14 | $22.17 | $18.06 | $19.31 | $16.66 | $16.61 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (loss) (d) | $(0.06 | ) | $0.08 | $0.09 | $0.08 | $0.07 | $0.09 | |||||||||||||||||
Net realized and unrealized | 1.32 | 3.99 | 4.08 | (1.27 | ) | 2.68 | 1.01 | |||||||||||||||||
Total from investment | $1.26 | $4.07 | $4.17 | $(1.19 | ) | $2.75 | $1.10 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.13 | ) | $(0.10 | ) | $(0.06 | ) | $(0.06 | ) | $(0.10 | ) | $(0.10 | ) | ||||||||||||
From net realized gain on | — | — | — | — | — | (0.95 | ) | |||||||||||||||||
Total distributions declared to | $(0.13 | ) | $(0.10 | ) | $(0.06 | ) | $(0.06 | ) | $(0.10 | ) | $(1.05 | ) | ||||||||||||
Net asset value, end of | $27.27 | $26.14 | $22.17 | $18.06 | $19.31 | $16.66 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 4.83 | (n) | 18.41 | 23.17 | (6.20 | ) | 16.57 | 9.04 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 2.10 | (a) | 2.14 | 2.16 | 2.18 | 2.19 | 2.26 | |||||||||||||||||
Expenses after expense | 2.10 | (a) | 2.14 | 2.16 | 2.17 | 2.19 | 2.26 | |||||||||||||||||
Net investment income (loss) | (0.49 | )(a)(l) | 0.32 | 0.45 | 0.37 | 0.38 | 0.71 | |||||||||||||||||
Portfolio turnover | 8 | (n) | 15 | 21 | 44 | 34 | 42 | |||||||||||||||||
Net assets at end of period | $194,712 | $184,560 | $152,757 | $142,778 | $170,747 | $166,342 |
See Notes to Financial Statements
23
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class I | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $28.20 | $23.88 | $19.48 | $20.80 | $17.90 | $17.85 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.08 | $0.35 | $0.33 | $0.32 | $0.27 | $0.23 | ||||||||||||||||||
Net realized and unrealized | 1.41 | 4.29 | 4.37 | (1.39 | ) | 2.87 | 1.09 | |||||||||||||||||
Total from investment | $1.49 | $4.64 | $4.70 | $(1.07 | ) | $3.14 | $1.32 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.37 | ) | $(0.32 | ) | $(0.30 | ) | $(0.25 | ) | $(0.24 | ) | $(0.32 | ) | ||||||||||||
From net realized gain on | — | — | — | — | — | (0.95 | ) | |||||||||||||||||
Total distributions declared to | $(0.37 | ) | $(0.32 | ) | $(0.30 | ) | $(0.25 | ) | $(0.24 | ) | $(1.27 | ) | ||||||||||||
Net asset value, end of | $29.32 | $28.20 | $23.88 | $19.48 | $20.80 | $17.90 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 5.31 | (n) | 19.63 | 24.40 | (5.27 | ) | 17.72 | 10.19 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.10 | (a) | 1.14 | 1.16 | 1.18 | 1.19 | 1.26 | |||||||||||||||||
Expenses after expense | 1.10 | (a) | 1.14 | 1.16 | 1.18 | 1.19 | 1.26 | |||||||||||||||||
Net investment income | 0.54 | (a)(l) | 1.34 | 1.52 | 1.42 | 1.42 | 1.66 | |||||||||||||||||
Portfolio turnover | 8 | (n) | 15 | 21 | 44 | 34 | 42 | |||||||||||||||||
Net assets at end of period | $1,801,657 | $1,530,692 | $968,523 | $845,262 | $774,647 | $584,559 |
See Notes to Financial Statements
24
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R1 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $25.52 | $21.64 | $17.65 | $18.89 | $16.33 | $16.37 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (loss) (d) | $(0.07 | ) | $0.17 | $0.09 | $0.07 | $0.07 | $0.10 | |||||||||||||||||
Net realized and unrealized | 1.29 | 3.80 | 3.99 | (1.24 | ) | 2.61 | 0.97 | |||||||||||||||||
Total from investment | $1.22 | $3.97 | $4.08 | $(1.17 | ) | $2.68 | $1.07 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.21 | ) | $(0.09 | ) | $(0.09 | ) | $(0.07 | ) | $(0.12 | ) | $(0.16 | ) | ||||||||||||
From net realized gain on | — | — | — | — | — | (0.95 | ) | |||||||||||||||||
Total distributions declared to | $(0.21 | ) | $(0.09 | ) | $(0.09 | ) | $(0.07 | ) | $(0.12 | ) | $(1.11 | ) | ||||||||||||
Net asset value, end of | $26.53 | $25.52 | $21.64 | $17.65 | $18.89 | $16.33 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 4.80 | (n) | 18.43 | 23.20 | (6.21 | ) | 16.51 | 9.07 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 2.10 | (a) | 2.15 | 2.16 | 2.18 | 2.19 | 2.25 | |||||||||||||||||
Expenses after expense | 2.10 | (a) | 2.15 | 2.16 | 2.18 | 2.19 | 2.25 | |||||||||||||||||
Net investment income (loss) | (0.52 | )(a)(l) | 0.70 | 0.46 | 0.35 | 0.41 | 0.80 | |||||||||||||||||
Portfolio turnover | 8 | (n) | 15 | 21 | 44 | 34 | 42 | |||||||||||||||||
Net assets at end of period | $8,219 | $8,642 | $2,869 | $2,560 | $2,881 | $2,476 |
See Notes to Financial Statements
25
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R2 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $26.72 | $22.66 | $18.47 | $19.75 | $17.02 | $17.04 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.00 | (w) | $0.22 | $0.20 | $0.19 | $0.16 | $0.17 | |||||||||||||||||
Net realized and unrealized | 1.34 | 4.06 | 4.17 | (1.31 | ) | 2.74 | 1.00 | |||||||||||||||||
Total from investment | $1.34 | $4.28 | $4.37 | $(1.12 | ) | $2.90 | $1.17 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.26 | ) | $(0.22 | ) | $(0.18 | ) | $(0.16 | ) | $(0.17 | ) | $(0.24 | ) | ||||||||||||
From net realized gain on | — | — | — | — | — | (0.95 | ) | |||||||||||||||||
Total distributions declared to | $(0.26 | ) | $(0.22 | ) | $(0.18 | ) | $(0.16 | ) | $(0.17 | ) | $(1.19 | ) | ||||||||||||
Net asset value, end of | $27.80 | $26.72 | $22.66 | $18.47 | $19.75 | $17.02 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 5.05 | (n) | 19.03 | 23.82 | (5.76 | ) | 17.17 | 9.58 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.60 | (a) | 1.64 | 1.66 | 1.68 | 1.69 | 1.75 | |||||||||||||||||
Expenses after expense | 1.60 | (a) | 1.64 | 1.66 | 1.67 | 1.69 | 1.75 | |||||||||||||||||
Net investment income | 0.01 | (a)(l) | 0.89 | 0.99 | 0.91 | 0.89 | 1.27 | |||||||||||||||||
Portfolio turnover | 8 | (n) | 15 | 21 | 44 | 34 | 42 | |||||||||||||||||
Net assets at end of period | $82,440 | $76,634 | $48,637 | $40,259 | $42,679 | $39,097 |
See Notes to Financial Statements
26
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R3 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $27.23 | $23.09 | $18.85 | $20.16 | $17.36 | $17.34 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.04 | $0.29 | $0.27 | $0.32 | $0.21 | $0.21 | ||||||||||||||||||
Net realized and unrealized | 1.36 | 4.12 | 4.23 | (1.42 | ) | 2.80 | 1.04 | |||||||||||||||||
Total from investment | $1.40 | $4.41 | $4.50 | $(1.10 | ) | $3.01 | $1.25 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.31 | ) | $(0.27 | ) | $(0.26 | ) | $(0.21 | ) | $(0.21 | ) | $(0.28 | ) | ||||||||||||
From net realized gain on | — | — | — | — | — | (0.95 | ) | |||||||||||||||||
Total distributions declared to | $(0.31 | ) | $(0.27 | ) | $(0.26 | ) | $(0.21 | ) | $(0.21 | ) | $(1.23 | ) | ||||||||||||
Net asset value, end of | $28.32 | $27.23 | $23.09 | $18.85 | $20.16 | $17.36 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 5.18 | (n) | 19.29 | 24.15 | (5.55 | ) | 17.48 | 9.92 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.35 | (a) | 1.39 | 1.41 | 1.44 | 1.44 | 1.50 | |||||||||||||||||
Expenses after expense | 1.35 | (a) | 1.39 | 1.41 | 1.44 | 1.44 | 1.50 | |||||||||||||||||
Net investment income | 0.26 | (a)(l) | 1.15 | 1.29 | 1.46 | 1.18 | 1.55 | |||||||||||||||||
Portfolio turnover | 8 | (n) | 15 | 21 | 44 | 34 | 42 | |||||||||||||||||
Net assets at end of period | $160,710 | $144,977 | $93,526 | $57,720 | $21,895 | $15,821 |
See Notes to Financial Statements
27
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R4 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $27.43 | $23.25 | $18.97 | $20.26 | $17.44 | $17.43 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.07 | $0.34 | $0.34 | $0.35 | $0.29 | $0.27 | ||||||||||||||||||
Net realized and unrealized | 1.38 | 4.16 | 4.24 | (1.39 | ) | 2.77 | 1.01 | |||||||||||||||||
Total from investment | $1.45 | $4.50 | $4.58 | $(1.04 | ) | $3.06 | $1.28 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.36 | ) | $(0.32 | ) | $(0.30 | ) | $(0.25 | ) | $(0.24 | ) | $(0.32 | ) | ||||||||||||
From net realized gain on | — | — | — | — | — | (0.95 | ) | |||||||||||||||||
Total distributions declared to | $(0.36 | ) | $(0.32 | ) | $(0.30 | ) | $(0.25 | ) | $(0.24 | ) | $(1.27 | ) | ||||||||||||
Net asset value, end of | $28.52 | $27.43 | $23.25 | $18.97 | $20.26 | $17.44 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 5.33 | (n) | 19.56 | 24.42 | (5.26 | ) | 17.73 | 10.20 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.10 | (a) | 1.14 | 1.16 | 1.19 | 1.20 | 1.24 | |||||||||||||||||
Expenses after expense | 1.10 | (a) | 1.14 | 1.16 | 1.19 | 1.20 | 1.24 | |||||||||||||||||
Net investment income | 0.49 | (a)(l) | 1.36 | 1.60 | 1.61 | 1.56 | 1.96 | |||||||||||||||||
Portfolio turnover | 8 | (n) | 15 | 21 | 44 | 34 | 42 | |||||||||||||||||
Net assets at end of period | $359,621 | $416,387 | $282,570 | $143,620 | $50,050 | $21,166 |
See Notes to Financial Statements
28
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||
Class R5 | 2013 | 2012 (i) | ||||||||||
Net asset value, beginning of period | $28.22 | $23.88 | $21.12 | |||||||||
Income (loss) from investment operations | ||||||||||||
Net investment income (d) | $0.09 | $0.38 | $0.12 | |||||||||
Net realized and unrealized gain (loss) on investments and | 1.42 | 4.28 | 2.64 | (g) | ||||||||
Total from investment operations | $1.51 | $4.66 | $2.76 | |||||||||
Less distributions declared to shareholders | ||||||||||||
From net investment income | $(0.39 | ) | $(0.32 | ) | $— | |||||||
Net asset value, end of period (x) | $29.34 | $28.22 | $23.88 | |||||||||
Total return (%) (r)(s)(x) | 5.40 | (n) | 19.74 | 13.07 | (n) | |||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||
Expenses before expense reductions (f) | 1.00 | (a) | 1.02 | 1.05 | (a) | |||||||
Expenses after expense reductions (f) | 0.99 | (a) | 1.02 | 1.05 | (a) | |||||||
Net investment income | 0.64 | (a)(l) | 1.48 | 1.61 | (a) | |||||||
Portfolio turnover | 8 | (n) | 15 | 21 | ||||||||
Net assets at end of period (000 omitted) | $800,196 | $652,771 | $438,906 |
See Notes to Financial Statements
29
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class 529A | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $27.03 | $22.90 | $18.68 | $19.97 | $17.21 | $17.18 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.04 | $0.26 | $0.25 | $0.23 | $0.20 | $0.19 | ||||||||||||||||||
Net realized and unrealized | 1.35 | 4.12 | 4.20 | (1.33 | ) | 2.75 | 1.03 | |||||||||||||||||
Total from investment | $1.39 | $4.38 | $4.45 | $(1.10 | ) | $2.95 | $1.22 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.30 | ) | $(0.25 | ) | $(0.23 | ) | $(0.19 | ) | $(0.19 | ) | $(0.24 | ) | ||||||||||||
From net realized gain on | — | — | — | — | — | (0.95 | ) | |||||||||||||||||
Total distributions declared to | $(0.30 | ) | $(0.25 | ) | $(0.23 | ) | $(0.19 | ) | $(0.19 | ) | $(1.19 | ) | ||||||||||||
Net asset value, end of | $28.12 | $27.03 | $22.90 | $18.68 | $19.97 | $17.21 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 5.18 | (n) | 19.32 | 24.03 | (5.60 | ) | 17.29 | 9.75 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.45 | (a) | 1.49 | 1.51 | 1.53 | 1.54 | 1.63 | |||||||||||||||||
Expenses after expense | 1.34 | (a) | 1.40 | 1.46 | 1.51 | 1.54 | 1.63 | |||||||||||||||||
Net investment income | 0.28 | (a)(l) | 1.06 | 1.18 | 1.08 | 1.11 | 1.45 | |||||||||||||||||
Portfolio turnover | 8 | (n) | 15 | 21 | 44 | 34 | 42 | |||||||||||||||||
Net assets at end of period | $6,422 | $5,740 | $4,637 | $3,788 | $3,607 | $2,648 |
See Notes to Financial Statements
30
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class 529B | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $25.50 | $21.62 | $17.60 | $18.84 | $16.27 | $16.32 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (loss) (d) | $(0.07 | ) | $0.06 | $0.07 | $0.05 | $0.05 | $0.09 | |||||||||||||||||
Net realized and unrealized | 1.28 | 3.90 | 4.00 | (1.23 | ) | 2.61 | 0.96 | |||||||||||||||||
Total from investment | $1.21 | $3.96 | $4.07 | $(1.18 | ) | $2.66 | $1.05 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.11 | ) | $(0.08 | ) | $(0.05 | ) | $(0.06 | ) | $(0.09 | ) | $(0.15 | ) | ||||||||||||
From net realized gain on | — | — | — | — | — | (0.95 | ) | |||||||||||||||||
Total distributions declared to | $(0.11 | ) | $(0.08 | ) | $(0.05 | ) | $(0.06 | ) | $(0.09 | ) | $(1.10 | ) | ||||||||||||
Net asset value, end of | $26.60 | $25.50 | $21.62 | $17.60 | $18.84 | $16.27 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 4.78 | (n) | 18.37 | 23.16 | (6.31 | ) | 16.44 | 8.98 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 2.20 | (a) | 2.24 | 2.26 | 2.27 | 2.29 | 2.35 | |||||||||||||||||
Expenses after expense | 2.13 | (a) | 2.17 | 2.21 | 2.26 | 2.29 | 2.35 | |||||||||||||||||
Net investment income (loss) | (0.56 | )(a)(l) | 0.27 | 0.35 | 0.25 | 0.28 | 0.73 | |||||||||||||||||
Portfolio turnover | 8 | (n) | 15 | 21 | 44 | 34 | 42 | |||||||||||||||||
Net assets at end of period | $682 | $748 | $627 | $634 | $834 | $758 |
See Notes to Financial Statements
31
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class 529C | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $25.41 | $21.59 | $17.63 | $18.88 | $16.32 | $16.33 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (loss) (d) | $(0.07 | ) | $0.06 | $0.10 | $0.08 | $0.06 | $0.10 | |||||||||||||||||
Net realized and unrealized | 1.28 | 3.89 | 3.96 | (1.26 | ) | 2.61 | 0.97 | |||||||||||||||||
Total from investment | $1.21 | $3.95 | $4.06 | $(1.18 | ) | $2.67 | $1.07 | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.13 | ) | $(0.13 | ) | $(0.10 | ) | $(0.07 | ) | $(0.11 | ) | $(0.13 | ) | ||||||||||||
From net realized gain on | — | — | — | — | — | (0.95 | ) | |||||||||||||||||
Total distributions declared to | $(0.13 | ) | $(0.13 | ) | $(0.10 | ) | $(0.07 | ) | $(0.11 | ) | $(1.08 | ) | ||||||||||||
Net asset value, end of | $26.49 | $25.41 | $21.59 | $17.63 | $18.88 | $16.32 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 4.76 | (n) | 18.38 | 23.12 | (6.29 | ) | 16.45 | 9.02 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 2.20 | (a) | 2.24 | 2.26 | 2.28 | 2.29 | 2.34 | |||||||||||||||||
Expenses after expense | 2.14 | (a) | 2.19 | 2.21 | 2.26 | 2.29 | 2.34 | |||||||||||||||||
Net investment income (loss) | (0.56 | )(a)(l) | 0.27 | 0.51 | 0.40 | 0.33 | 0.80 | |||||||||||||||||
Portfolio turnover | 8 | (n) | 15 | 21 | 44 | 34 | 42 | |||||||||||||||||
Net assets at end of period | $1,885 | $1,913 | $1,494 | $1,026 | $770 | $717 |
See Notes to Financial Statements
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Financial Highlights – continued
(a) | Annualized. |
(d) | Per share data is based on average shares outstanding. |
(f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
(g) | The per share amount varies from the net realized and unrealized gain/loss for the period because of the timing of sales of fund shares and the per share amount of realized and unrealized gains and losses at such time. |
(i) | For the period from the class inception, June 1, 2012, through the stated period end. |
(l) | Recognition of net investment income by the fund may be affected by the timing of the declaration of dividends by companies in which the fund invests and the actual annual net investment income ratio may differ. |
(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. |
(x) | The net asset values per share and total returns have been calculated on net assets which include adjustments made in accordance with U.S. generally accepted accounting principles required at period end for financial reporting purposes. |
See Notes to Financial Statements
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(unaudited)
(1) Business and Organization
MFS International New Discovery Fund (the fund) is a diversified 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.
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
(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 increases and decreases in net assets from operations 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.
In this reporting period, the fund adopted the disclosure provisions of the FASB Accounting Standards Update 2011-11 (“ASU 2011-11”), Balance Sheet (Topic 210) – Disclosures about Offsetting Assets and Liabilities along with the related scope clarification provisions of FASB Accounting Standards Update 2013-01 (“ASU 2013-01”) entitled Balance Sheet (Topic 210) – Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 is intended to enhance disclosures on the offsetting of financial assets and liabilities by requiring entities to disclose both gross and net information about financial instruments and transactions that are either offset in the statement of financial position or subject to an enforceable Master Netting Agreement or similar arrangement. ASU 2013-01 limits the scope of ASU 2011-11’s disclosure requirements on offsetting to financial assets and financial liabilities related to derivatives, repurchase and reverse repurchase agreements, and securities lending and securities borrowing transactions. The disclosures required by ASU 2011-11, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’s in-scope financial instruments and transactions.
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
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Notes to Financial Statements (unaudited) – continued
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, 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 affected 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
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Notes to Financial Statements (unaudited) – continued
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, 2014 in valuing the fund’s assets or liabilities:
Investments at Value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Equity Securities: | ||||||||||||||||
United Kingdom | $1,461,902,202 | $— | $— | $1,461,902,202 | ||||||||||||
Japan | 711,926,983 | 3,950,395 | — | 715,877,378 | ||||||||||||
Germany | 330,685,569 | — | — | 330,685,569 | ||||||||||||
France | 271,517,981 | — | — | 271,517,981 | ||||||||||||
Brazil | 209,280,505 | — | — | 209,280,505 | ||||||||||||
Denmark | 177,971,370 | — | — | 177,971,370 | ||||||||||||
Hong Kong | 132,690,106 | 21,592,752 | — | 154,282,858 | ||||||||||||
Switzerland | 151,072,554 | — | — | 151,072,554 | ||||||||||||
Canada | 143,389,867 | — | — | 143,389,867 | ||||||||||||
Other Countries | 1,265,304,097 | 62,805,966 | — | 1,328,110,063 | ||||||||||||
Mutual Funds | 200,392,095 | — | — | 200,392,095 | ||||||||||||
Total Investments | $5,056,133,329 | $88,349,113 | $— | $5,144,482,442 |
For further information regarding security characteristics, see the Portfolio of Investments.
Of the level 2 investments presented above, equity investments amounting to $49,064,154 would have been considered level 1 investments at the beginning of the period. Of the level 1 investments presented above, equity investments amounting to $837,138,925 would have been considered level 2 investments at the beginning of the period. The primary reason for changes in the classifications between levels 1 and 2 occurs when foreign equity securities are fair valued using other observable market-based inputs in place of the closing exchange price due to events occurring after the close of the exchange or market on which the investment is principally traded. The fund’s foreign equity securities may often be valued at fair value. The fund’s policy is to recognize transfers between the levels as of the end of the period.
Repurchase Agreements – The fund enters into repurchase agreements under the terms of Master 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,
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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. Upon an event of default under a Master Repurchase Agreement, the non-defaulting party may close out all transactions traded under such agreement and net amounts owed under each transaction to one net amount payable by one party to the other. Absent an event of default, the Master Repurchase 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.
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 – Under its Securities Lending Agency Agreement with the fund, 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. In the event of Borrower default, Chase will for the benefit of the fund either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the fund the market value of the loaned securities. In return, Chase assumes the fund’s rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, Chase is responsible for the shortfall, but only to the extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. On loans collateralized by cash, the cash collateral is invested in a money market fund or short-term securities. At period end, the fund had investment securities on loan with a fair value of $20,768,465 and a related liability of $21,813,675 for collateral received on securities loaned, both of which are presented gross on the Statement of Assets and Liabilities. The liability for collateral for securities loaned is carried at fair value, which is categorized as level 2 within the fair value hierarchy. The collateral received on securities loaned exceeded the value of securities on loan at period end. 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
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Notes to Financial Statements (unaudited) – continued
securities lending is included in “Interest” income in 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. 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, 2014, is shown as a reduction of total expenses in 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, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be subject to capital gains tax imposed by those countries.
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
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Notes to Financial Statements (unaudited) – continued
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.
Book/tax differences primarily relate to passive foreign investment companies, wash sale loss deferrals, and redemptions in-kind.
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:
9/30/13 | ||||
Ordinary income (including any short-term capital gains) | $40,380,082 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
As of 3/31/14 | ||||
Cost of investments | $3,909,124,032 | |||
Gross appreciation | 1,388,259,795 | |||
Gross depreciation | (152,901,385 | ) | ||
Net unrealized appreciation (depreciation) | $1,235,358,410 | |||
As of 9/30/13 | ||||
Undistributed ordinary income | 56,454,228 | |||
Capital loss carryforwards | (267,813,970 | ) | ||
Other temporary differences | (1,329,109 | ) | ||
Net unrealized appreciation (depreciation) | 1,011,634,660 |
The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.
Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), net capital losses recognized for fund fiscal years beginning after September 30, 2011 may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses (“post-enactment losses”). Previously, net capital losses were carried forward for eight years and treated as short-term losses (“pre-enactment losses”). As a transition rule, the Act requires that all post-enactment net capital losses be used before pre-enactment net capital losses.
As of September 30, 2013, the fund had capital loss carryforwards available to offset future realized gains. Such pre-enactment losses expire as follows:
9/30/18 | $(267,813,970 | ) |
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
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Notes to Financial Statements (unaudited) – continued
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 in the Statements of Changes in Net Assets are presented by class as follows:
From net investment income | ||||||||
Six months ended 3/31/14 | Year ended 9/30/13 | |||||||
Class A | $17,382,127 | $14,369,907 | ||||||
Class B | 37,531 | 77,374 | ||||||
Class C | 904,534 | 649,081 | ||||||
Class I | 20,620,255 | 13,545,285 | ||||||
Class R1 | 70,238 | 12,110 | ||||||
Class R2 | 767,979 | 483,056 | ||||||
Class R3 | 1,696,140 | 1,139,762 | ||||||
Class R4 | 5,187,185 | 4,118,307 | ||||||
Class R5 | 9,787,055 | 5,921,317 | ||||||
Class 529A | 64,627 | 52,230 | ||||||
Class 529B | 3,281 | 2,327 | ||||||
Class 529C | 9,609 | 9,326 | ||||||
Total | $56,530,561 | $40,380,082 |
(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 | 0.850 | % |
MFS has agreed in writing to reduce its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund’s Board of Trustees. For the six months ended March 31, 2014, this management fee reduction amounted to $63,181, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended March 31, 2014 was equivalent to an annual effective rate of 0.93% of the fund’s average daily net assets.
Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $471,944 and $1,333 for the six months ended March 31, 2014, 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 share classes 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
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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% | $2,027,758 | |||||||||||||||
Class B | 0.75% | 0.25% | 1.00% | 1.00% | 157,973 | |||||||||||||||
Class C | 0.75% | 0.25% | 1.00% | 1.00% | 943,479 | |||||||||||||||
Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 42,037 | |||||||||||||||
Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 199,636 | |||||||||||||||
Class R3 | — | 0.25% | 0.25% | 0.25% | 192,492 | |||||||||||||||
Class 529A | — | 0.25% | 0.25% | 0.20% | 7,481 | |||||||||||||||
Class 529B | 0.75% | 0.25% | 1.00% | 0.98% | 3,625 | |||||||||||||||
Class 529C | 0.75% | 0.25% | 1.00% | 1.00% | 9,807 | |||||||||||||||
Total Distribution and Service Fees | $3,584,288 |
(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’s 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, 2014 based on each class’s average daily net assets. MFD has voluntarily agreed to rebate a portion of each class’s 0.25% service fee attributable to accounts for which MFD retains the 0.25% service fee except for accounts attributable to MFS or its affiliates’ seed money. For the six months ended March 31, 2014, this rebate amounted to $11,516, $58, $304, $1,316, $1,642, $64, and $26 for Class A, Class B, Class C, Class R3, Class 529A, Class 529B, and Class 529C, respectively, and is included in the reduction of total expenses in the Statement of Operations. |
Certain Class A shares are subject to a contingent deferred sales charge (CDSC) in the event of a shareholder redemption within 18 months of purchase for shares purchased on or after August 1, 2012, and within 24 months of purchase for shares purchased prior to August 1, 2012. 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, 2014, were as follows:
Amount | ||||
Class A | $3,627 | |||
Class B | 14,056 | |||
Class C | 5,621 | |||
Class 529B | — | |||
Class 529C | 100 |
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
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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. MFD has agreed to waive a portion of this fee in an amount equal to 0.05% of the average daily net assets for each 529 share class. This waiver agreement will expire on January 1, 2015, unless MFD elects to extend the waiver. For the six months ended March 31, 2014, this waiver amounted to $2,167 and is included in the reduction of total expenses in the Statement of Operations. The program manager fee incurred for the six months ended March 31, 2014 was equivalent to an annual effective rate of 0.05% 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 and waivers for the six months ended March 31, 2014, were as follows:
Fee | Waiver | |||||||
Class 529A | $2,992 | $1,496 | ||||||
Class 529B | 363 | 181 | ||||||
Class 529C | 981 | 490 | ||||||
Total Program Manager Fees and Waivers | $4,336 | $2,167 |
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, 2014, the fee was $191,367, which equated to 0.0078% 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. Class R5 shares do not incur sub-accounting fees. For the six months ended March 31, 2014, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $2,304,913.
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, 2014 was equivalent to an annual effective rate of 0.0097% 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.
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Notes to Financial Statements (unaudited) – continued
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 $422 and is included in independent Trustees’ compensation for the six months ended March 31, 2014. The liability for deferred retirement benefits payable to certain independent Trustees under the Retirement Deferral plan amounted to $3,327 at March 31, 2014, and is included in “Payable for independent Trustees’ compensation” in the Statement of Assets and Liabilities.
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, 2014, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $15,658 and are included in “Miscellaneous” expense in 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 $2,702, which is included in the 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 current income consistent with preservation of capital and liquidity. Income earned on this investment is included in “Dividends from underlying affiliated funds” in 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, aggregated $593,306,053 and $357,913,998, 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 3/31/14 | Year ended 9/30/13 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares sold | ||||||||||||||||
Class A | 7,234,010 | $201,349,484 | 14,782,603 | $371,539,911 | ||||||||||||
Class B | 48,330 | 1,300,015 | 117,643 | 2,845,161 | ||||||||||||
Class C | 518,206 | 13,764,460 | 1,185,817 | 28,536,247 | ||||||||||||
Class I | 14,004,849 | 400,348,061 | 28,338,203 | 738,481,251 | ||||||||||||
Class R1 | 55,586 | 1,441,194 | 294,470 | 6,984,603 | ||||||||||||
Class R2 | 530,699 | 14,402,778 | 1,605,372 | 39,374,181 | ||||||||||||
Class R3 | 1,025,031 | 28,289,136 | 2,322,354 | 57,634,108 | ||||||||||||
Class R4 | 2,377,309 | 66,152,722 | 6,928,004 | 173,353,935 | ||||||||||||
Class R5 | 4,413,412 | 127,686,343 | 5,190,932 | 136,307,128 | ||||||||||||
Class 529A | 30,107 | 827,985 | 27,309 | 681,072 | ||||||||||||
Class 529B | 507 | 13,155 | 3,736 | 88,382 | ||||||||||||
Class 529C | 6,614 | 171,036 | 12,680 | 289,401 | ||||||||||||
30,244,660 | $855,746,369 | 60,809,123 | $1,556,115,380 | |||||||||||||
Shares issued to shareholders in reinvestment of distributions | ||||||||||||||||
Class A | 591,977 | $16,356,339 | 556,157 | $13,158,677 | ||||||||||||
Class B | 1,341 | 35,984 | 3,150 | 72,187 | ||||||||||||
Class C | 29,395 | 778,095 | 23,895 | 542,407 | ||||||||||||
Class I | 557,856 | 15,831,952 | 437,697 | 10,631,660 | ||||||||||||
Class R1 | 2,728 | 70,238 | 546 | 12,110 | ||||||||||||
Class R2 | 25,679 | 692,046 | 18,516 | 427,895 | ||||||||||||
Class R3 | 61,835 | 1,696,140 | 48,501 | 1,139,762 | ||||||||||||
Class R4 | 162,867 | 4,495,126 | 141,109 | 3,334,395 | ||||||||||||
Class R5 | 344,857 | 9,787,055 | 243,776 | 5,921,317 | ||||||||||||
Class 529A | 2,373 | 64,627 | 2,239 | 52,230 | ||||||||||||
Class 529B | 127 | 3,281 | 105 | 2,327 | ||||||||||||
Class 529C | 374 | 9,609 | 423 | 9,326 | ||||||||||||
1,781,409 | $49,820,492 | 1,476,114 | $35,304,293 |
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Notes to Financial Statements (unaudited) – continued
Six months ended 3/31/14 | Year ended 9/30/13 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares reacquired | ||||||||||||||||
Class A | (6,402,980 | ) | $(178,177,347 | ) | (14,022,073 | ) | $(350,005,160 | ) | ||||||||
Class B | (279,234 | ) | (7,547,116 | ) | (888,445 | ) | (21,393,906 | ) | ||||||||
Class C | (466,160 | ) | (12,381,546 | ) | (1,039,632 | ) | (24,697,746 | ) | ||||||||
Class I | (7,401,247 | ) | (212,178,290 | ) | (15,041,838 | ) | (389,203,963 | ) | ||||||||
Class R1 | (87,116 | ) | (2,258,678 | ) | (88,930 | ) | (2,073,033 | ) | ||||||||
Class R2 | (459,350 | ) | (12,440,209 | ) | (901,599 | ) | (22,241,170 | ) | ||||||||
Class R3 | (737,223 | ) | (20,234,681 | ) | (1,097,495 | ) | (27,453,983 | ) | ||||||||
Class R4 | (5,109,488 | ) | (143,816,583 | ) | (4,047,007 | ) | (101,775,662 | ) | ||||||||
Class R5 | (611,000 | ) | (17,546,061 | ) | (683,793 | ) | (17,322,220 | ) | ||||||||
Class 529A | (16,488 | ) | (452,390 | ) | (19,659 | ) | (495,537 | ) | ||||||||
Class 529B | (4,316 | ) | (112,405 | ) | (3,523 | ) | (83,751 | ) | ||||||||
Class 529C | (11,135 | ) | (290,576 | ) | (6,976 | ) | (160,936 | ) | ||||||||
(21,585,737 | ) | $(607,435,882 | ) | (37,840,970 | ) | $(956,907,067 | ) | |||||||||
Net change | ||||||||||||||||
Class A | 1,423,007 | $39,528,476 | 1,316,687 | $34,693,428 | ||||||||||||
Class B | (229,563 | ) | (6,211,117 | ) | (767,652 | ) | (18,476,558 | ) | ||||||||
Class C | 81,441 | 2,161,009 | 170,080 | 4,380,908 | ||||||||||||
Class I | 7,161,458 | 204,001,723 | 13,734,062 | 359,908,948 | ||||||||||||
Class R1 | (28,802 | ) | (747,246 | ) | 206,086 | 4,923,680 | ||||||||||
Class R2 | 97,028 | 2,654,615 | 722,289 | 17,560,906 | ||||||||||||
Class R3 | 349,643 | 9,750,595 | 1,273,360 | 31,319,887 | ||||||||||||
Class R4 | (2,569,312 | ) | (73,168,735 | ) | 3,022,106 | 74,912,668 | ||||||||||
Class R5 | 4,147,269 | 119,927,337 | 4,750,915 | 124,906,225 | ||||||||||||
Class 529A | 15,992 | 440,222 | 9,889 | 237,765 | ||||||||||||
Class 529B | (3,682 | ) | (95,969 | ) | 318 | 6,958 | ||||||||||
Class 529C | (4,147 | ) | (109,931 | ) | 6,127 | 137,791 | ||||||||||
10,440,332 | $298,130,979 | 24,444,267 | $634,512,606 |
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 funds for the purpose of exercising management or control. At the end of the period, the MFS International Diversification Fund, the MFS Growth Allocation Fund, the MFS Aggressive Growth Allocation Fund, and the MFS Moderate Allocation Fund were the owners of record of approximately 8%, 2%, 1%, and 1%, respectively, of the value of outstanding voting shares of the fund. In addition, the MFS Lifetime 2020 Fund, the MFS Lifetime 2025 Fund, the MFS Lifetime 2030 Fund, the MFS Lifetime 2035 Fund, the MFS Lifetime 2040 Fund, the MFS Lifetime 2045 Fund, the MFS Lifetime 2050 Fund, and the MFS Lifetime 2055 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
45
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Notes to Financial Statements (unaudited) – continued
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, 2014, the fund’s commitment fee and interest expense were $9,729 and $0, respectively, and are included in “Miscellaneous” expense in 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 Fund | Beginning Shares/Par Amount | Acquisitions Shares/Par Amount | Dispositions Shares/Par Amount | Ending Shares/Par Amount | ||||||||||||
MFS Institutional Money Market Portfolio | 183,801,198 | 414,047,437 | (419,270,215 | ) | 178,578,420 | |||||||||||
Underlying Affiliated Fund | Realized Gain (Loss) | Capital Gain Distributions | Dividend Income | Ending Value | ||||||||||||
MFS Institutional Money Market Portfolio | $— | $— | $84,905 | $178,578,420 | ||||||||||||
Other Affiliated Issuer | Beginning Shares/Par Amount | Acquisitions Shares/Par Amount | Dispositions Shares/Par Amount | Ending Shares/Par Amount | ||||||||||||
Midland Holdings Ltd. | 41,565,351 | 1,258,000 | — | 42,823,351 | ||||||||||||
Other Affiliated Issuer | Realized Gain (Loss) | Capital Gain Distributions | Dividend Income | Ending Value | ||||||||||||
Midland Holdings Ltd. | $— | $— | $— | $22,856,788 |
46
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” section of the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
MFS votes proxies on behalf of the fund pursuant to proxy voting policies and procedures that are 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. A shareholder can obtain the quarterly portfolio holdings report at mfs.com. The fund’s Form N-Q is also available on the EDGAR database on the Commission’s Internet Web site at http://www.sec.gov, and 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. Copies of the fund’s Form N-Q also 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.
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 “Commentary & Announcements” and “Market Outlooks” sections of mfs.com or by clicking on the fund’s name under “Mutual Funds” in the “Products” section of mfs.com.
PROVISION OF FINANCIAL REPORTS AND SUMMARY PROSPECTUSES
The fund produces financial reports every six months and updates its summary prospectus and prospectus annually. To avoid sending duplicate copies of materials to households, only one copy of the fund’s annual and semiannual report and summary prospectus may be mailed to shareholders having the same last name and residential address on the fund’s records. However, any shareholder may contact MFSC (please see back cover for address and telephone number) to request that copies of these reports and summary prospectuses be sent personally to that shareholder.
47
Table of Contents
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.
CONTACT
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
SEMIANNUAL REPORT
March 31, 2014
MFS® RESEARCH FUND
MFR-SEM
Table of Contents
MFS® RESEARCH 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
Table of Contents
LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholders:
The pace of U.S. economic growth slowed early in 2014, largely because of harsh winter weather. However, the U.S. labor market, consumer confidence and other
economic data have all pointed to recovery. The U.S. Federal Reserve’s steady, gradual removal of its bond-buying stimulus, after initially causing concern, is providing some consistency, which can inspire consumer and investor confidence.
Global economic uncertainty and geopolitical tensions have added to market volatility. The eurozone, however, is making progress in its economic recovery. Japan’s progress in its battle to end deflation is expected to experience a temporary setback on the heels of the country’s sales tax increase, introduced in April.
The world’s largest economic concern remains the slowdown in China’s pace of growth as it shifts toward a more consumer-oriented economy. Any reduction in China’s economic growth rate is likely to have a ripple effect on its many trading partners.
In uncertain times such as these, it is particularly important to remember that managing risk should always be a top priority. At MFS®, active risk management is an integral part of our collaborative process. Our global team of investment professionals shares ideas and evaluates opportunities that span continents, investment disciplines and asset classes. Our goal is to build better insights, and ultimately better results, for our clients.
We understand and appreciate the economic challenges investors face, and we believe in the value of maintaining a long-term view and applying proven principles, such as asset allocation and diversification. We are confident that our unique approach can serve investors well as they work with their financial advisors to identify and pursue the most suitable opportunities.
Respectfully,
Robert J. Manning
Chairman and Chief Executive Officer
MFS Investment Management
May 13, 2014
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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Table of Contents
Portfolio structure (i)
Top ten holdings (i) | ||||
Exxon Mobil Corp. | 3.2% | |||
Apple, Inc. | 2.4% | |||
Google, Inc., “A” | 2.3% | |||
JPMorgan Chase & Co. | 2.2% | |||
Danaher Corp. | 1.9% | |||
Hewlett-Packard Co. | 1.8% | |||
Wells Fargo & Co. | 1.8% | |||
Visa, Inc., “A” | 1.7% | |||
MetLife, Inc. | 1.6% | |||
Procter & Gamble Co. | 1.4% |
Global equity sectors (i) | ||||
Technology | 16.9% | |||
Financial Services | 16.7% | |||
Capital Goods | 14.8% | |||
Health Care | 13.5% | |||
Energy | 13.2% | |||
Consumer Cyclicals | 12.5% | |||
Consumer Staples | 7.2% | |||
Telecommunications/Cable Television | 3.9% |
(i) | For purposes of this presentation, the components include the market value of securities, less any securities sold short, and reflect the impact of the equivalent exposure of derivative positions. These amounts may be negative from time to time. 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. |
Percentages are based on net assets as of 3/31/14.
The portfolio is actively managed and current holdings may be different.
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Table of Contents
Fund expenses borne by the shareholders during the period, October 1, 2013 through March 31, 2014
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, 2013 through March 31, 2014.
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 Ratio | Beginning Account Value 10/01/13 | Ending Account Value | Expenses Paid During 10/01/13-3/31/14 | ||||||||||||||
A | Actual | 0.83% | $1,000.00 | $1,112.07 | $4.37 | |||||||||||||
Hypothetical (h) | 0.83% | $1,000.00 | $1,020.79 | $4.18 | ||||||||||||||
B | Actual | 1.58% | $1,000.00 | $1,107.87 | $8.30 | |||||||||||||
Hypothetical (h) | 1.58% | $1,000.00 | $1,017.05 | $7.95 | ||||||||||||||
C | Actual | 1.58% | $1,000.00 | $1,107.56 | $8.30 | |||||||||||||
Hypothetical (h) | 1.58% | $1,000.00 | $1,017.05 | $7.95 | ||||||||||||||
I | Actual | 0.58% | $1,000.00 | $1,113.29 | $3.06 | |||||||||||||
Hypothetical (h) | 0.58% | $1,000.00 | $1,022.04 | $2.92 | ||||||||||||||
R1 | Actual | 1.58% | $1,000.00 | $1,108.05 | $8.30 | |||||||||||||
Hypothetical (h) | 1.58% | $1,000.00 | $1,017.05 | $7.95 | ||||||||||||||
R2 | Actual | 1.08% | $1,000.00 | $1,110.75 | $5.68 | |||||||||||||
Hypothetical (h) | 1.08% | $1,000.00 | $1,019.55 | $5.44 | ||||||||||||||
R3 | Actual | 0.83% | $1,000.00 | $1,111.93 | $4.37 | |||||||||||||
Hypothetical (h) | 0.83% | $1,000.00 | $1,020.79 | $4.18 | ||||||||||||||
R4 | Actual | 0.58% | $1,000.00 | $1,113.35 | $3.06 | |||||||||||||
Hypothetical (h) | 0.58% | $1,000.00 | $1,022.04 | $2.92 | ||||||||||||||
R5 | Actual | 0.50% | $1,000.00 | $1,113.67 | $2.63 | |||||||||||||
Hypothetical (h) | 0.50% | $1,000.00 | $1,022.44 | $2.52 |
(h) | 5% class return per year before expenses. |
(p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Notes to Expense 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, the actual expenses paid during the period and the hypothetical expenses paid during the period would have been approximately 0.81%, $4.27 and $4.08 for Class A, 1.56%, $8.20 and $7.85 for Class B, 1.56%, $8.20 and $7.85 for Class C, 0.56%, $2.95 and $2.82 for Class I, 1.56%, $8.20 and $7.85 for Class R1, 1.06%, $5.58 and $5.34 for Class R2, 0.81%, $4.27 and $4.08 for Class R3, 0.56%, $2.95 and $2.82 for Class R4, and 0.48%, $2.53 and $2.42 for Class R5. For further information about the fund’s fee arrangements and changes to those fee arrangements, please see Note 3 in the Notes to Financial Statements.
4
Table of Contents
3/31/14 (unaudited)
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Common Stocks - 98.7% | ||||||||
Issuer | Shares/Par | Value ($) | ||||||
Aerospace - 3.2% | ||||||||
Honeywell International, Inc. | 527,140 | $ | 48,897,506 | |||||
Precision Castparts Corp. | 166,666 | 42,126,498 | ||||||
United Technologies Corp. | 424,720 | 49,624,285 | ||||||
|
| |||||||
$ | 140,648,289 | |||||||
Alcoholic Beverages - 0.4% | ||||||||
Constellation Brands, Inc., “A” (a) | 229,520 | $ | 19,502,314 | |||||
Apparel Manufacturers - 1.6% | ||||||||
Guess?, Inc. | 315,557 | $ | 8,709,373 | |||||
Li & Fung Ltd. | 7,742,000 | 11,438,577 | ||||||
NIKE, Inc., “B” | 284,780 | 21,033,851 | ||||||
PVH Corp. | 219,020 | 27,327,125 | ||||||
|
| |||||||
$ | 68,508,926 | |||||||
Automotive - 1.2% | ||||||||
Delphi Automotive PLC | 468,950 | $ | 31,822,947 | |||||
General Motors Co. | 559,820 | 19,269,004 | ||||||
|
| |||||||
$ | 51,091,951 | |||||||
Biotechnology - 1.6% | ||||||||
Alexion Pharmaceuticals, Inc. (a) | 178,820 | $ | 27,203,887 | |||||
Biogen Idec, Inc. (a) | 140,186 | 42,878,692 | ||||||
|
| |||||||
$ | 70,082,579 | |||||||
Broadcasting - 2.6% | ||||||||
Time Warner, Inc. | 451,900 | $ | 29,522,627 | |||||
Twenty-First Century Fox, Inc. | 1,529,330 | 48,892,680 | ||||||
Walt Disney Co. | 476,740 | 38,172,572 | ||||||
|
| |||||||
$ | 116,587,879 | |||||||
Brokerage & Asset Managers - 1.8% | ||||||||
BlackRock, Inc. | 79,524 | $ | 25,008,707 | |||||
Franklin Resources, Inc. | 660,206 | 35,769,961 | ||||||
IntercontinentalExchange Group, Inc. | 95,212 | 18,835,790 | ||||||
|
| |||||||
$ | 79,614,458 | |||||||
Business Services - 1.6% | ||||||||
Accenture PLC, “A” | 374,560 | $ | 29,859,923 | |||||
Fidelity National Information Services, Inc. | 443,690 | 23,715,230 |
5
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Business Services - continued | ||||||||
FleetCor Technologies, Inc. (a) | 159,610 | $ | 18,371,111 | |||||
|
| |||||||
$ | 71,946,264 | |||||||
Cable TV - 1.8% | ||||||||
Comcast Corp., “Special A” | 1,175,460 | $ | 57,315,430 | |||||
Time Warner Cable, Inc. | 148,980 | 20,437,076 | ||||||
|
| |||||||
$ | 77,752,506 | |||||||
Chemicals - 0.8% | ||||||||
Monsanto Co. | 307,125 | $ | 34,941,611 | |||||
Computer Software - 2.6% | ||||||||
Citrix Systems, Inc. (a) | 450,250 | $ | 25,857,857 | |||||
Oracle Corp. | 968,860 | 39,636,063 | ||||||
Qlik Technologies, Inc. (a) | 539,640 | 14,349,028 | ||||||
Salesforce.com, Inc. (a) | 644,639 | 36,802,441 | ||||||
|
| |||||||
$ | 116,645,389 | |||||||
Computer Software - Systems - 5.7% | ||||||||
Apple, Inc. (s) | 200,802 | $ | 107,778,465 | |||||
CDW Corp. | 359,680 | 9,869,619 | ||||||
EMC Corp. | 1,460,820 | 40,041,076 | ||||||
Hewlett-Packard Co. | 2,498,310 | 80,845,312 | ||||||
NCR Corp. (a) | 311,400 | 11,381,670 | ||||||
|
| |||||||
$ | 249,916,142 | |||||||
Construction - 0.5% | ||||||||
Sherwin-Williams Co. | 121,792 | $ | 24,008,857 | |||||
Consumer Products - 2.5% | ||||||||
Colgate-Palmolive Co. | 458,221 | $ | 29,724,796 | |||||
Newell Rubbermaid, Inc. | 587,080 | 17,553,692 | ||||||
Procter & Gamble Co. | 774,140 | 62,395,684 | ||||||
|
| |||||||
$ | 109,674,172 | |||||||
Consumer Services - 0.9% | ||||||||
ITT Educational Services, Inc. (a)(l) | 302,800 | $ | 8,684,304 | |||||
Priceline.com, Inc. (a) | 26,394 | 31,458,745 | ||||||
|
| |||||||
$ | 40,143,049 | |||||||
Containers - 0.6% | ||||||||
Crown Holdings, Inc. (a) | 564,210 | $ | 25,242,755 |
6
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Electrical Equipment - 2.6% | ||||||||
Danaher Corp. (s) | 1,127,170 | $ | 84,537,750 | |||||
W.W. Grainger, Inc. | 122,981 | 31,072,379 | ||||||
|
| |||||||
$ | 115,610,129 | |||||||
Electronics - 2.5% | ||||||||
Altera Corp. | 961,790 | $ | 34,855,270 | |||||
JDS Uniphase Corp. (a) | 1,186,780 | 16,614,920 | ||||||
Mellanox Technologies Ltd. (a)(l) | 281,510 | 11,015,486 | ||||||
Microchip Technology, Inc. | 484,220 | 23,126,347 | ||||||
NXP Semiconductors N.V. (a) | 401,090 | 23,588,103 | ||||||
|
| |||||||
$ | 109,200,126 | |||||||
Energy - Independent - 4.4% | ||||||||
Anadarko Petroleum Corp. | 418,140 | $ | 35,441,546 | |||||
Antero Resources Corp. (a) | 83,130 | 5,203,938 | ||||||
Cabot Oil & Gas Corp. | 899,680 | 30,481,158 | ||||||
EOG Resources, Inc. | 68,746 | 13,485,903 | ||||||
EQT Corp. | 210,010 | 20,364,670 | ||||||
Marathon Petroleum Corp. | 142,370 | 12,391,885 | ||||||
Noble Energy, Inc. | 414,210 | 29,425,478 | ||||||
Occidental Petroleum Corp. | 193,160 | 18,406,216 | ||||||
Pioneer Natural Resources Co. | 165,903 | 31,047,087 | ||||||
|
| |||||||
$ | 196,247,881 | |||||||
Energy - Integrated - 3.2% | ||||||||
Exxon Mobil Corp. (s) | 1,445,560 | $ | 141,202,301 | |||||
Engineering - Construction - 0.4% | ||||||||
Fluor Corp. | 241,740 | $ | 18,790,450 | |||||
Food & Beverages - 2.6% | ||||||||
Coca-Cola Co. | 1,281,770 | $ | 49,553,228 | |||||
General Mills, Inc. | 469,390 | 24,323,790 | ||||||
Mondelez International, Inc. | 1,204,110 | 41,602,001 | ||||||
|
| |||||||
$ | 115,479,019 | |||||||
Food & Drug Stores - 1.1% | ||||||||
CVS Caremark Corp. | 622,370 | $ | 46,590,618 | |||||
Gaming & Lodging - 0.4% | ||||||||
Wynn Resorts Ltd. | 88,799 | $ | 19,726,698 |
7
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
General Merchandise - 1.6% | ||||||||
Kohl’s Corp. | 483,190 | $ | 27,445,192 | |||||
Target Corp. | 732,230 | 44,307,237 | ||||||
|
| |||||||
$ | 71,752,429 | |||||||
Health Maintenance Organizations - 1.0% | ||||||||
UnitedHealth Group, Inc. | 551,060 | $ | 45,181,409 | |||||
Insurance - 2.9% | ||||||||
ACE Ltd. | 245,480 | $ | 24,317,249 | |||||
American International Group, Inc. | 704,720 | 35,243,047 | ||||||
MetLife, Inc. | 1,318,460 | 69,614,688 | ||||||
|
| |||||||
$ | 129,174,984 | |||||||
Internet - 4.5% | ||||||||
eBay, Inc. (a) | 726,440 | $ | 40,128,546 | |||||
Facebook, Inc., “A “ (a) | 502,360 | 30,262,166 | ||||||
Google, Inc., “A” (a) | 89,205 | 99,419,864 | ||||||
LinkedIn Corp., “A” (a) | 97,984 | 18,121,161 | ||||||
Yelp, Inc. (a) | 138,900 | 10,685,577 | ||||||
|
| |||||||
$ | 198,617,314 | |||||||
Machinery & Tools - 2.7% | ||||||||
Eaton Corp. PLC | 475,090 | $ | 35,688,761 | |||||
Joy Global, Inc. (l) | 524,250 | 30,406,500 | ||||||
Roper Industries, Inc. | 403,573 | 53,881,031 | ||||||
|
| |||||||
$ | 119,976,292 | |||||||
Major Banks - 6.9% | ||||||||
Bank of America Corp. | 1,819,470 | $ | 31,294,884 | |||||
Goldman Sachs Group, Inc. | 190,888 | 31,276,999 | ||||||
JPMorgan Chase & Co. | 1,568,260 | 95,209,065 | ||||||
Morgan Stanley | 1,015,210 | 31,644,096 | ||||||
State Street Corp. | 488,720 | 33,990,476 | ||||||
Wells Fargo & Co. | 1,614,550 | 80,307,717 | ||||||
|
| |||||||
$ | 303,723,237 | |||||||
Medical & Health Technology & Services - 1.2% | ||||||||
Cerner Corp. (a) | 199,290 | $ | 11,210,063 | |||||
Express Scripts Holding Co. (a) | 546,220 | 41,015,660 | ||||||
|
| |||||||
$ | 52,225,723 | |||||||
Medical Equipment - 3.7% | ||||||||
Abbott Laboratories | 984,430 | $ | 37,910,399 | |||||
Covidien PLC | 532,530 | 39,226,160 | ||||||
DENTSPLY International, Inc. | 352,980 | 16,251,199 |
8
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Medical Equipment - continued | ||||||||
Stryker Corp. | 326,430 | $ | 26,594,252 | |||||
Thermo Fisher Scientific, Inc. | 348,870 | 41,948,129 | ||||||
|
| |||||||
$ | 161,930,139 | |||||||
Natural Gas - Distribution - 0.5% | ||||||||
Spectra Energy Corp. | 543,920 | $ | 20,092,405 | |||||
Natural Gas - Pipeline - 0.4% | ||||||||
Kinder Morgan, Inc. | 606,038 | $ | 19,690,175 | |||||
Oil Services - 2.0% | ||||||||
Cameron International Corp. (a) | 427,260 | $ | 26,391,850 | |||||
Halliburton Co. | 691,430 | 40,718,313 | ||||||
Schlumberger Ltd. | 238,450 | 23,248,875 | ||||||
|
| |||||||
$ | 90,359,038 | |||||||
Other Banks & Diversified Financials - 5.1% | ||||||||
American Express Co. | 520,660 | $ | 46,875,020 | |||||
BB&T Corp. | 505,040 | 20,287,457 | ||||||
Citigroup, Inc. | 1,279,350 | 60,897,060 | ||||||
Discover Financial Services | 438,910 | 25,540,173 | ||||||
Visa, Inc., “A” | 340,757 | 73,555,806 | ||||||
|
| |||||||
$ | 227,155,516 | |||||||
Pharmaceuticals - 6.0% | ||||||||
Actavis PLC (a) | 202,880 | $ | 41,762,848 | |||||
Bristol-Myers Squibb Co. | 697,000 | 36,209,150 | ||||||
Endo International PLC (a) | 260,490 | 17,882,639 | ||||||
Johnson & Johnson | 454,320 | 44,627,854 | ||||||
Perrigo Co. PLC | 165,288 | 25,563,442 | ||||||
Pfizer, Inc. | 1,627,040 | 52,260,525 | ||||||
Valeant Pharmaceuticals International, Inc. (a) | 224,350 | 29,576,061 | ||||||
Zoetis, Inc. | 643,310 | 18,617,391 | ||||||
|
| |||||||
$ | 266,499,910 | |||||||
Railroad & Shipping - 1.3% | ||||||||
Union Pacific Corp. | 302,180 | $ | 56,707,099 | |||||
Restaurants - 1.3% | ||||||||
McDonald’s Corp. | 310,357 | $ | 30,424,297 | |||||
YUM! Brands, Inc. | 361,320 | 27,239,915 | ||||||
|
| |||||||
$ | 57,664,212 |
9
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Specialty Chemicals - 1.2% | ||||||||
FMC Corp. | 341,880 | $ | 26,174,333 | |||||
W.R. Grace & Co. (a) | 253,650 | 25,154,471 | ||||||
|
| |||||||
$ | 51,328,804 | |||||||
Specialty Stores - 3.0% | ||||||||
Amazon.com, Inc. (a) | 71,391 | $ | 24,024,499 | |||||
AutoZone, Inc. (a) | 49,726 | 26,707,835 | ||||||
Bed Bath & Beyond, Inc. (a) | 306,720 | 21,102,336 | ||||||
Ross Stores, Inc. | 294,810 | 21,093,655 | ||||||
Ulta Salon, Cosmetics & Fragrance, Inc. (a) | 189,460 | 18,468,561 | ||||||
Urban Outfitters, Inc. (a) | 551,500 | 20,113,205 | ||||||
|
| |||||||
$ | 131,510,091 | |||||||
Telecommunications - Wireless - 1.0% | ||||||||
American Tower Corp., REIT | 356,540 | $ | 29,189,930 | |||||
SBA Communications Corp. (a) | 145,850 | 13,266,516 | ||||||
|
| |||||||
$ | 42,456,446 | |||||||
Telephone Services - 1.2% | ||||||||
Verizon Communications, Inc. | 1,112,160 | $ | 52,905,451 | |||||
Tobacco - 1.6% | ||||||||
Lorillard, Inc. | 274,810 | $ | 14,861,725 | |||||
Philip Morris International, Inc. | 699,100 | 57,235,317 | ||||||
|
| |||||||
$ | 72,097,042 | |||||||
Trucking - 0.4% | ||||||||
Expeditors International of Washington, Inc. | 404,540 | $ | 16,031,920 | |||||
Utilities - Electric Power - 2.6% | ||||||||
American Electric Power Co., Inc. | 441,100 | $ | 22,346,126 | |||||
CMS Energy Corp. | 1,098,880 | 32,175,206 | ||||||
Northeast Utilities | 620,560 | 28,235,480 | ||||||
NRG Energy, Inc. | 942,970 | 29,986,446 | ||||||
|
| |||||||
$ | 112,743,258 | |||||||
Total Common Stocks (Identified Cost, $3,358,390,560) | $ | 4,358,977,257 |
Strike Price | First Exercise | |||||||||||||||
Warrants - 0.0% | ||||||||||||||||
Natural Gas - Pipeline - 0.0% | ||||||||||||||||
Kinder Morgan, Inc. (1 share for 1 warrant) (Identified Cost, $0) (a) | $ | 40 | 2/15/12 | 201,996 | $ | 357,533 |
10
Table of Contents
Portfolio of Investments (unaudited) – continued
Money Market Funds - 1.6% | ||||||||
Issuer | Shares/Par | Value ($) | ||||||
MFS Institutional Money Market Portfolio, 0.09%, at Cost and Net Asset Value (v) | 72,245,214 | $ | 72,245,214 | |||||
Collateral for Securities Loaned - 0.8% | ||||||||
JPMorgan Prime Money Market Fund, 0.06%, at Cost and Net Asset Value (j) | 34,952,275 | $ | 34,952,275 | |||||
Total Investments (Identified Cost, $3,465,588,049) | $ | 4,466,532,279 | ||||||
Other Assets, Less Liabilities - (1.1)% | (48,076,552 | ) | ||||||
Net Assets - 100.0% | $ | 4,418,455,727 |
(a) | Non-income producing security. |
(j) | The rate quoted is the annualized seven-day yield of the fund at period end. |
(l) | A portion of this security is on loan. |
(s) | Security or a portion of the security was pledged to cover collateral requirements for securities sold short. At March 31, 2014, the fund had no short sales outstanding. |
(v) | Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. |
At March 31, 2014, the fund had cash collateral of $9,985 and other liquid securities with an aggregate value of $590,028 to cover any commitments for securities sold short. Cash collateral is comprised of “Deposits with brokers” in the Statement of Assets and Liabilities.
The following abbreviations are used in this report and are defined:
PLC | Public Limited Company |
REIT | Real Estate Investment Trust |
See Notes to Financial Statements
11
Table of Contents
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 3/31/14 (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, $3,393,342,835) | $4,394,287,065 | |||
Underlying affiliated funds, at cost and value | 72,245,214 | |||
Total investments, at value, including $34,533,790 of securities on loan | $4,466,532,279 | |||
Deposits with brokers | 9,985 | |||
Receivables for | ||||
Fund shares sold | 25,344,355 | |||
Interest and dividends | 3,539,992 | |||
Other assets | 64,628 | |||
Total assets | $4,495,491,239 | |||
Liabilities | ||||
Payables for | ||||
Investments purchased | $31,305,800 | |||
Fund shares reacquired | 7,562,003 | |||
Collateral for securities loaned, at value | 34,952,275 | |||
Payable to affiliates | ||||
Investment adviser | 210,952 | |||
Shareholder servicing costs | 2,705,068 | |||
Distribution and service fees | 63,455 | |||
Payable for independent Trustees’ compensation | 155,321 | |||
Accrued expenses and other liabilities | 80,638 | |||
Total liabilities | $77,035,512 | |||
Net assets | $4,418,455,727 | |||
Net assets consist of | ||||
Paid-in capital | $3,319,245,947 | |||
Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 1,000,944,230 | |||
Accumulated net realized gain (loss) on investments and foreign currency | 91,835,428 | |||
Undistributed net investment income | 6,430,122 | |||
Net assets | $4,418,455,727 | |||
Shares of beneficial interest outstanding | 119,151,447 |
12
Table of Contents
Statement of Assets and Liabilities (unaudited) – continued
Net assets | Shares outstanding | Net asset value per share (a) | ||||||||||
Class A | $2,096,221,174 | 56,525,016 | $37.08 | |||||||||
Class B | 31,434,392 | 910,822 | 34.51 | |||||||||
Class C | 123,746,929 | 3,602,062 | 34.35 | |||||||||
Class I | 727,375,995 | 19,233,557 | 37.82 | |||||||||
Class R1 | 4,311,684 | 127,050 | 33.94 | |||||||||
Class R2 | 38,252,495 | 1,057,929 | 36.16 | |||||||||
Class R3 | 65,053,767 | 1,763,330 | 36.89 | |||||||||
Class R4 | 46,977,136 | 1,267,160 | 37.07 | |||||||||
Class R5 | 1,285,082,155 | 34,664,521 | 37.07 |
(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 $39.34 [100 / 94.25 x $37.08]. 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, R1, R2, R3, R4, and R5. |
See Notes to Financial Statements
13
Table of Contents
Financial Statements
Six months ended 3/31/14 (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 | $31,124,637 | |||
Interest | 23,766 | |||
Dividends from underlying affiliated funds | 23,403 | |||
Total investment income | $31,171,806 | |||
Expenses | ||||
Management fee | $8,987,793 | |||
Distribution and service fees | 3,486,567 | |||
Shareholder servicing costs | 2,028,881 | |||
Administrative services fee | 235,226 | |||
Independent Trustees’ compensation | 37,950 | |||
Custodian fee | 91,209 | |||
Shareholder communications | 52,930 | |||
Audit and tax fees | 25,492 | |||
Legal fees | 17,039 | |||
Dividend and interest expense on securities sold short | 34,830 | |||
Miscellaneous | 148,582 | |||
Total expenses | $15,146,499 | |||
Fees paid indirectly | (24 | ) | ||
Reduction of expenses by investment adviser and distributor | (46,834 | ) | ||
Net expenses | $15,099,641 | |||
Net investment income | $16,072,165 | |||
Realized and unrealized gain (loss) on investments and foreign currency | ||||
Realized gain (loss) (identified cost basis) | ||||
Investments | $110,179,478 | |||
Written options | 24,998 | |||
Securities sold short | 1,989,973 | |||
Foreign currency | (16,016 | ) | ||
Net realized gain (loss) on investments and foreign currency | $112,178,433 | |||
Change in unrealized appreciation (depreciation) | ||||
Investments | $314,702,619 | |||
Securities sold short | (2,088,977 | ) | ||
Translation of assets and liabilities in foreign currencies | (11,297 | ) | ||
Net unrealized gain (loss) on investments and foreign currency translation | $312,602,345 | |||
Net realized and unrealized gain (loss) on investments and foreign currency | $424,780,778 | |||
Change in net assets from operations | $440,852,943 |
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 3/31/14 (unaudited) | Year ended | ||||||
From operations | ||||||||
Net investment income | $16,072,165 | $34,410,345 | ||||||
Net realized gain (loss) on investments and foreign currency | 112,178,433 | 268,894,727 | ||||||
Net unrealized gain (loss) on investments and foreign currency translation | 312,602,345 | 314,717,464 | ||||||
Change in net assets from operations | $440,852,943 | $618,022,536 | ||||||
Distributions declared to shareholders | ||||||||
From net investment income | $(43,890,103 | ) | $(24,130,435 | ) | ||||
From net realized gain on investments | (77,681,194 | ) | — | |||||
Total distributions declared to shareholders | $(121,571,297 | ) | $(24,130,435 | ) | ||||
Change in net assets from fund share transactions | $238,767,188 | $467,187,438 | ||||||
Total change in net assets | $558,048,834 | $1,061,079,539 | ||||||
Net assets | ||||||||
At beginning of period | 3,860,406,893 | 2,799,327,354 | ||||||
At end of period (including undistributed net investment income of $6,430,122 and $34,248,060, respectively) | $4,418,455,727 | $3,860,406,893 |
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. 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 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class A | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $34.33 | $28.74 | $22.31 | $22.43 | $20.86 | $22.05 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.12 | $0.30 | $0.25 | $0.20 | $0.17 | $0.18 | ||||||||||||||||||
Net realized and unrealized | 3.66 | 5.51 | 6.38 | (0.15 | ) | 1.60 | (1.22 | ) | ||||||||||||||||
Total from investment operations | $3.78 | $5.81 | $6.63 | $0.05 | $1.77 | $(1.04 | ) | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.35 | ) | $(0.22 | ) | $(0.20 | ) | $(0.17 | ) | $(0.20 | ) | $(0.15 | ) | ||||||||||||
From net realized gain on | (0.68 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(1.03 | ) | $(0.22 | ) | $(0.20 | ) | $(0.17 | ) | $(0.20 | ) | $(0.15 | ) | ||||||||||||
Net asset value, end of period (x) | $37.08 | $34.33 | $28.74 | $22.31 | $22.43 | $20.86 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 11.18 | (n) | 20.36 | 29.92 | 0.16 | 8.54 | (4.54 | ) | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.83 | (a) | 0.88 | 0.90 | 0.90 | 0.92 | 1.04 | |||||||||||||||||
Expenses after expense | 0.83 | (a) | 0.87 | 0.90 | 0.90 | 0.92 | 1.04 | |||||||||||||||||
Net investment income | 0.66 | (a) | 0.95 | 0.97 | 0.82 | 0.77 | 1.04 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 46 | 61 | 69 | 73 | 125 | |||||||||||||||||
Net assets at end of period | $2,096,221 | $1,915,947 | $1,541,284 | $1,204,531 | $1,279,176 | $1,203,507 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Ratio of expenses to average net | 0.82 | (a) | 0.87 | 0.88 | 0.89 | 0.92 | 1.04 |
See Notes to Financial Statements
16
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class B | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $31.89 | $26.70 | $20.70 | $20.83 | $19.37 | $20.44 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (loss) (d) | $(0.01 | ) | $0.06 | $0.05 | $0.02 | $0.00 | (w) | $0.06 | ||||||||||||||||
Net realized and unrealized | 3.41 | 5.13 | 5.95 | (0.15 | ) | 1.50 | (1.13 | ) | ||||||||||||||||
Total from investment operations | $3.40 | $5.19 | $6.00 | $(0.13 | ) | $1.50 | $(1.07 | ) | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.10 | ) | $— | $— | $— | $(0.04 | ) | $— | ||||||||||||||||
From net realized gain on | (0.68 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.78 | ) | $— | $— | $— | $(0.04 | ) | $— | ||||||||||||||||
Net asset value, end of period (x) | $34.51 | $31.89 | $26.70 | $20.70 | $20.83 | $19.37 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 10.79 | (n) | 19.44 | 28.99 | (0.62 | ) | 7.77 | (5.23 | ) | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.58 | (a) | 1.62 | 1.65 | 1.65 | 1.67 | 1.75 | |||||||||||||||||
Expenses after expense | 1.58 | (a) | 1.62 | 1.65 | 1.65 | 1.67 | 1.75 | |||||||||||||||||
Net investment income (loss) | (0.09 | )(a) | 0.22 | 0.22 | 0.07 | 0.02 | 0.36 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 46 | 61 | 69 | 73 | 125 | |||||||||||||||||
Net assets at end of period | $31,434 | $31,773 | $33,019 | $34,609 | $49,123 | $66,795 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Ratio of expenses to average net | 1.57 | (a) | 1.62 | 1.63 | 1.64 | 1.67 | 1.75 |
See Notes to Financial Statements
17
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class C | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $31.80 | $26.64 | $20.68 | $20.80 | $19.39 | $20.46 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (loss) (d) | $(0.01 | ) | $0.06 | $0.05 | $0.02 | $0.00 | (w) | $0.05 | ||||||||||||||||
Net realized and unrealized | 3.39 | 5.12 | 5.93 | (0.14 | ) | 1.49 | (1.12 | ) | ||||||||||||||||
Total from investment operations | $3.38 | $5.18 | $5.98 | $(0.12 | ) | $1.49 | $(1.07 | ) | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.15 | ) | $(0.02 | ) | $(0.02 | ) | $(0.00 | )(w) | $(0.08 | ) | $— | |||||||||||||
From net realized gain on | (0.68 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.83 | ) | $(0.02 | ) | $(0.02 | ) | $(0.00 | )(w) | $(0.08 | ) | $— | |||||||||||||
Net asset value, end of period (x) | $34.35 | $31.80 | $26.64 | $20.68 | $20.80 | $19.39 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 10.76 | (n) | 19.47 | 28.94 | (0.56 | ) | 7.69 | (5.23 | ) | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.58 | (a) | 1.63 | 1.65 | 1.65 | 1.67 | 1.75 | |||||||||||||||||
Expenses after expense | 1.58 | (a) | 1.63 | 1.65 | 1.65 | 1.67 | 1.75 | |||||||||||||||||
Net investment income (loss) | (0.09 | )(a) | 0.20 | 0.22 | 0.07 | 0.02 | 0.33 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 46 | 61 | 69 | 73 | 125 | |||||||||||||||||
Net assets at end of period | $123,747 | $107,173 | $85,428 | $72,558 | $81,879 | $85,919 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Ratio of expenses to average net | 1.58 | (a) | 1.62 | 1.63 | 1.64 | 1.67 | 1.75 |
See Notes to Financial Statements
18
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class I | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $35.03 | $29.31 | $22.75 | $22.86 | $21.26 | $22.50 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.17 | $0.37 | $0.33 | $0.27 | $0.23 | $0.25 | ||||||||||||||||||
Net realized and unrealized | 3.74 | 5.63 | 6.50 | (0.15 | ) | 1.62 | (1.27 | ) | ||||||||||||||||
Total from investment operations | $3.91 | $6.00 | $6.83 | $0.12 | $1.85 | $(1.02 | ) | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.44 | ) | $(0.28 | ) | $(0.27 | ) | $(0.23 | ) | $(0.25 | ) | $(0.22 | ) | ||||||||||||
From net realized gain on | (0.68 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(1.12 | ) | $(0.28 | ) | $(0.27 | ) | $(0.23 | ) | $(0.25 | ) | $(0.22 | ) | ||||||||||||
Net asset value, end of period (x) | $37.82 | $35.03 | $29.31 | $22.75 | $22.86 | $21.26 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 11.33 | (n) | 20.67 | 30.27 | 0.42 | 8.78 | (4.27 | ) | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.58 | (a) | 0.64 | 0.65 | 0.65 | 0.67 | 0.75 | |||||||||||||||||
Expenses after expense | 0.58 | (a) | 0.64 | 0.65 | 0.65 | 0.67 | 0.75 | |||||||||||||||||
Net investment income | 0.92 | (a) | 1.15 | 1.26 | 1.07 | 1.02 | 1.43 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 46 | 61 | 69 | 73 | 125 | |||||||||||||||||
Net assets at end of period | $727,376 | $559,067 | $237,389 | $608,723 | $554,786 | $535,678 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Ratio of expenses to average net | 0.58 | (a) | 0.63 | 0.63 | 0.64 | 0.67 | 0.75 |
See Notes to Financial Statements
19
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R1 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $31.42 | $26.32 | $20.42 | $20.54 | $19.16 | $20.21 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (loss) (d) | $(0.02 | ) | $0.05 | $0.05 | $0.02 | $(0.00 | )(w) | $0.05 | ||||||||||||||||
Net realized and unrealized | 3.37 | 5.06 | 5.87 | (0.14 | ) | 1.47 | (1.10 | ) | ||||||||||||||||
Total from investment operations | $3.35 | $5.11 | $5.92 | $(0.12 | ) | $1.47 | $(1.05 | ) | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.15 | ) | $(0.01 | ) | $(0.02 | ) | $— | $(0.09 | ) | $— | ||||||||||||||
From net realized gain on | (0.68 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.83 | ) | $(0.01 | ) | $(0.02 | ) | $— | $(0.09 | ) | $— | ||||||||||||||
Net asset value, end of period (x) | $33.94 | $31.42 | $26.32 | $20.42 | $20.54 | $19.16 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 10.80 | (n) | 19.43 | 28.99 | (0.58 | ) | 7.68 | (5.20 | ) | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.58 | (a) | 1.63 | 1.65 | 1.65 | 1.67 | 1.75 | |||||||||||||||||
Expenses after expense | 1.58 | (a) | 1.63 | 1.65 | 1.65 | 1.67 | 1.75 | |||||||||||||||||
Net investment income (loss) | (0.09 | )(a) | 0.19 | 0.22 | 0.07 | 0.02 | 0.34 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 46 | 61 | 69 | 73 | 125 | |||||||||||||||||
Net assets at end of period | $4,312 | $3,671 | $2,688 | $2,434 | $2,863 | $2,945 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Ratio of expenses to average net | 1.58(a | ) | 1.62 | 1.63 | 1.64 | 1.67 | 1.75 |
See Notes to Financial Statements
20
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R2 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $33.48 | $28.07 | $21.80 | $21.95 | $20.43 | $21.59 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.07 | $0.21 | $0.18 | $0.14 | $0.11 | $0.14 | ||||||||||||||||||
Net realized and unrealized | 3.58 | 5.37 | 6.25 | (0.16 | ) | 1.58 | (1.20 | ) | ||||||||||||||||
Total from investment operations | $3.65 | $5.58 | $6.43 | $(0.02 | ) | $1.69 | $(1.06 | ) | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.29 | ) | $(0.17 | ) | $(0.16 | ) | $(0.13 | ) | $(0.17 | ) | $(0.10 | ) | ||||||||||||
From net realized gain on | (0.68 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.97 | ) | $(0.17 | ) | $(0.16 | ) | $(0.13 | ) | $(0.17 | ) | $(0.10 | ) | ||||||||||||
Net asset value, end of period (x) | $36.16 | $33.48 | $28.07 | $21.80 | $21.95 | $20.43 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 11.08 | (n) | 20.01 | 29.66 | (0.13 | ) | 8.32 | (4.79 | ) | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.08 | (a) | 1.13 | 1.15 | 1.15 | 1.17 | 1.25 | |||||||||||||||||
Expenses after expense | 1.08 | (a) | 1.13 | 1.15 | 1.15 | 1.17 | 1.25 | |||||||||||||||||
Net investment income | 0.41 | (a) | 0.67 | 0.71 | 0.57 | 0.52 | 0.81 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 46 | 61 | 69 | 73 | 125 | |||||||||||||||||
Net assets at end of period | $38,252 | $33,970 | $17,583 | $11,711 | $9,733 | $8,304 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Ratio of expenses to average net | 1.08 | (a) | 1.13 | 1.13 | 1.14 | 1.17 | 1.25 |
See Notes to Financial Statements
21
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R3 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $34.16 | $28.64 | $22.24 | $22.37 | $20.82 | $21.99 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.12 | $0.29 | $0.26 | $0.21 | $0.17 | $0.18 | ||||||||||||||||||
Net realized and unrealized | 3.65 | 5.49 | 6.35 | (0.15 | ) | 1.59 | (1.21 | ) | ||||||||||||||||
Total from investment operations | $3.77 | $5.78 | $6.61 | $0.06 | $1.76 | $(1.03 | ) | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.36 | ) | $(0.26 | ) | $(0.21 | ) | $(0.19 | ) | $(0.21 | ) | $(0.14 | ) | ||||||||||||
From net realized gain on | (0.68 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(1.04 | ) | $(0.26 | ) | $(0.21 | ) | $(0.19 | ) | $(0.21 | ) | $(0.14 | ) | ||||||||||||
Net asset value, end of period (x) | $36.89 | $34.16 | $28.64 | $22.24 | $22.37 | $20.82 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 11.19 | (n) | 20.33 | 29.93 | 0.19 | 8.52 | (4.50 | ) | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.83 | (a) | 0.88 | 0.90 | 0.90 | 0.93 | 1.00 | |||||||||||||||||
Expenses after expense | 0.83 | (a) | 0.88 | 0.90 | 0.90 | 0.92 | 1.00 | |||||||||||||||||
Net investment income | 0.66 | (a) | 0.92 | 0.96 | 0.84 | 0.77 | 1.04 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 46 | 61 | 69 | 73 | 125 | |||||||||||||||||
Net assets at end of period | $65,054 | $61,690 | $35,774 | $8,582 | $8,954 | $5,195 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Ratio of expenses to average net | 0.83 | (a) | 0.88 | 0.89 | 0.89 | 0.92 | 1.00 |
See Notes to Financial Statements
22
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R4 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $34.35 | $28.75 | $22.32 | $22.45 | $20.88 | $22.09 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.16 | $0.37 | $0.32 | $0.26 | $0.22 | $0.18 | ||||||||||||||||||
Net realized and unrealized | 3.67 | 5.51 | 6.38 | (0.16 | ) | 1.60 | (1.18 | ) | ||||||||||||||||
Total from investment operations | $3.83 | $5.88 | $6.70 | $0.10 | $1.82 | $(1.00 | ) | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.43 | ) | $(0.28 | ) | $(0.27 | ) | $(0.23 | ) | $(0.25 | ) | $(0.21 | ) | ||||||||||||
From net realized gain on | (0.68 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(1.11 | ) | $(0.28 | ) | $(0.27 | ) | $(0.23 | ) | $(0.25 | ) | $(0.21 | ) | ||||||||||||
Net asset value, end of period (x) | $37.07 | $34.35 | $28.75 | $22.32 | $22.45 | $20.88 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 11.33 | (n) | 20.65 | 30.27 | 0.34 | 8.80 | (4.25 | ) | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.58 | (a) | 0.63 | 0.65 | 0.64 | 0.67 | 0.74 | |||||||||||||||||
Expenses after expense | 0.58 | (a) | 0.63 | 0.65 | 0.64 | 0.67 | 0.74 | |||||||||||||||||
Net investment income | 0.91 | (a) | 1.19 | 1.21 | 1.02 | 1.01 | 0.99 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 46 | 61 | 69 | 73 | 125 | |||||||||||||||||
Net assets at end of period | $46,977 | $27,088 | $20,829 | $12,225 | $739 | $348 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Ratio of expenses to average net | 0.58 | (a) | 0.62 | 0.63 | 0.64 | 0.67 | 0.74 |
See Notes to Financial Statements
23
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R5 (y) | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $34.37 | $28.75 | $22.30 | $22.42 | $20.86 | $22.06 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.18 | $0.40 | $0.31 | $0.24 | $0.20 | $0.22 | ||||||||||||||||||
Net realized and unrealized | 3.66 | 5.51 | 6.38 | (0.15 | ) | 1.60 | (1.23 | ) | ||||||||||||||||
Total from investment operations | $3.84 | $5.91 | $6.69 | $0.09 | $1.80 | $(1.01 | ) | |||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.46 | ) | $(0.29 | ) | $(0.24 | ) | $(0.21 | ) | $(0.24 | ) | $(0.19 | ) | ||||||||||||
From net realized gain on | (0.68 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(1.14 | ) | $(0.29 | ) | $(0.24 | ) | $(0.21 | ) | $(0.24 | ) | $(0.19 | ) | ||||||||||||
Net asset value, end of period (x) | $37.07 | $34.37 | $28.75 | $22.30 | $22.42 | $20.86 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 11.37 | (n) | 20.74 | 30.25 | 0.31 | 8.69 | (4.35 | ) | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.50 | (a) | 0.54 | 0.60 | 0.75 | 0.77 | 0.85 | |||||||||||||||||
Expenses after expense | 0.50 | (a) | 0.54 | 0.60 | 0.75 | 0.77 | 0.85 | |||||||||||||||||
Net investment income | 0.99 | (a) | 1.28 | 1.13 | 0.96 | 0.93 | 1.27 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 46 | 61 | 69 | 73 | 125 | |||||||||||||||||
Net assets at end of period | $1,285,082 | $1,120,028 | $825,334 | $219 | $197 | $125 | ||||||||||||||||||
Supplemental Ratios (%): | ||||||||||||||||||||||||
Ratio of expenses to average net | 0.50 | (a) | 0.54 | 0.58 | 0.74 | 0.77 | 0.85 |
See Notes to Financial Statements
24
Table of Contents
Financial Highlights – continued
(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. |
(w) | Per share amount was less than $0.01. |
(x) | The net asset values per share and total returns have been calculated on net assets which include adjustments made in accordance with U.S. generally accepted accounting principles required at period end for financial reporting purposes. |
(y) | On May 10, 2012, sales of Class W shares (including exchanges) were suspended. On May 11, 2012, certain Class W shares were automatically converted to Class I shares. Shareholders of certain Class W shares became shareholders of Class I and received Class I shares with a total net asset value equal to their Class W shares at the time of the conversion. On May 30, 2012, remaining Class W shares, which represented MFS seed money, were redesignated Class R5. Class R5 shares are generally available only to certain eligible retirement plans and to funds distributed by MFD. Class R5 shares do not pay a 12b-1 distribution fee or sub-accounting costs. On June 1, 2012, Class R5 shares were offered for sale to the public. |
See Notes to Financial Statements
25
Table of Contents
(unaudited)
(1) Business and Organization
MFS Research Fund (the fund) is a diversified 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.
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
(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 increases and decreases in net assets from operations 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.
In this reporting period, the fund adopted the disclosure provisions of FASB Accounting Standards Update 2011-11 (“ASU 2011-11”), Balance Sheet (Topic 210) – Disclosures about Offsetting Assets and Liabilities along with the related scope clarification provisions of FASB Accounting Standards Update 2013-01 (“ASU 2013-01”) entitled Balance Sheet (Topic 210) – Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 is intended to enhance disclosures on the offsetting of financial assets and liabilities by requiring entities to disclose both gross and net information about financial instruments and transactions that are either offset in the statement of financial position or subject to an enforceable Master Netting Agreement or similar arrangement. ASU 2013-01 limits the scope of ASU 2011-11’s disclosure requirements on offsetting to financial assets and financial liabilities related to derivatives, repurchase and reverse repurchase agreements, and securities lending and securities borrowing transactions. The disclosures required by ASU 2011-11, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’s in-scope financial instruments and transactions.
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
26
Table of Contents
Notes to Financial Statements (unaudited) – continued
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 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 affected 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
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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, 2014 in valuing the fund’s assets or liabilities:
Investments at Value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Equity Securities | $4,359,334,790 | $— | $— | $4,359,334,790 | ||||||||||||
Mutual Funds | 107,197,489 | — | — | 107,197,489 | ||||||||||||
Total Investments | $4,466,532,279 | $— | $— | $4,466,532,279 |
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.
Derivatives – The fund uses derivatives for different purposes, primarily to increase or decrease exposure to a particular market or segment of the market, or security, to increase or decrease interest rate or currency exposure, 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, 2014, the fund did not have any outstanding derivative instruments.
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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, 2014 as reported in the Statement of Operations:
Risk | Investments (Purchased Options) | Written Options | ||||||
Equity | $440,606 | $24,998 |
There is no change in unrealized appreciation (depreciation) on derivative transactions at period end.
Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain, but not all, 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. Upon an event of default or a termination of the ISDA Master Agreement, the non-defaulting party has the right 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 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. The fund’s right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific ISDA counterparty is subject.
Collateral and margin requirements differ by type of derivative. Margin requirements are set by the broker or clearing house for cleared derivatives (i.e., futures contracts, cleared swaps, and exchange-traded options) while collateral terms are contract specific for over-the-counter traded derivatives (i.e., forward foreign currency exchange contracts, uncleared swap agreements, 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 that has been segregated to cover the fund’s collateral or margin obligations under derivative contracts, if any, will be reported separately in the Statement of Assets and Liabilities as “Restricted cash” or “Deposits with brokers.” Securities pledged as collateral or margin for the same purpose, if any, are noted in the Portfolio of Investments.
The fund’s accounting policy with respect to balance sheet offsetting is that, 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 financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty.
Written Options – In exchange for a premium, the fund wrote call options on securities that it anticipated the price would decline. At the time the option was
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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 in 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.
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 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.
The following table represents the written option activity in the fund during the six months ended March 31, 2014:
Number of Contracts | Premiums Received | |||||||
Outstanding, beginning of period | — | $— | ||||||
Options written | 662 | 24,998 | ||||||
Options expired | (662 | ) | (24,998 | ) | ||||
Outstanding, end of period | — | $— |
Purchased Options – The fund purchased put options for a premium. Purchased put options entitle the holder to 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 put options may hedge against an anticipated decline in the value of portfolio securities or currency or decrease the fund’s exposure to an underlying instrument.
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
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recorded as unrealized appreciation or depreciation. Premiums paid for purchased 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 put option, the premium paid 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.
Whether or not the option is exercised, the fund’s maximum risk of loss from purchasing an option is the amount of premium paid. All option contracts involve credit risk if the counterparty to the option contract fails to perform. 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, 2014, this expense amounted to $34,830. 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, 2014, the fund had no short sales outstanding.
Security Loans – Under its Securities Lending Agency Agreement with the fund, 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. In the event of Borrower default, Chase will for the benefit of the fund either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the fund the market value of the loaned securities. In return, Chase assumes the fund’s rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, Chase is responsible for the shortfall, but only to the extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. On loans collateralized by cash, the cash collateral is invested in a money market fund or short-term securities. At period end, the fund had investment securities on loan with a fair value of $34,533,790 and a related liability of $34,952,275 for collateral received on securities loaned, both of which are presented gross on the Statement of Assets and Liabilities. The liability for collateral for securities loaned is carried at fair value, which is categorized as level 2 within the fair value hierarchy. The collateral received on securities loaned exceeded the value of securities on loan at period end. A portion of
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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 in 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. 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, 2014, is shown as a reduction of total expenses in 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, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be subject to capital gains tax imposed by those countries.
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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.
Book/tax differences primarily relate to treating a portion of the proceeds from redemptions as a distribution for tax purposes.
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:
9/30/13 | ||||
Ordinary income (including any short-term capital gains) | $24,130,435 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
As of 3/31/14 | ||||
Cost of investments | $3,466,006,538 | |||
Gross appreciation | 1,026,783,364 | |||
Gross depreciation | (26,257,623 | ) | ||
Net unrealized appreciation (depreciation) | $1,000,525,741 | |||
As of 9/30/13 | ||||
Undistributed ordinary income | 34,358,951 | |||
Undistributed long-term capital gain | 57,975,888 | |||
Other temporary differences | 1,770,173 | |||
Net unrealized appreciation (depreciation) | 685,823,122 |
The aggregate cost above includes prior fiscal year end tax adjustments, if applicable
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. 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
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approximately eight years after purchase. The fund’s distributions declared to shareholders as reported in the Statements of Changes in Net Assets are presented by class as follows:
From net investment income | From net realized gain on investments | |||||||||||||||
Six months ended 3/31/14 | Year ended 9/30/13 | Six months ended 3/31/14 | Year ended 9/30/13 | |||||||||||||
Class A | $19,451,208 | $12,248,800 | $38,073,954 | $— | ||||||||||||
Class B | 93,400 | — | 656,471 | — | ||||||||||||
Class C | 505,888 | 71,423 | 2,379,834 | — | ||||||||||||
Class I | 7,306,546 | 2,556,786 | 11,477,084 | — | ||||||||||||
Class R1 | 17,737 | 1,148 | 81,284 | — | ||||||||||||
Class R2 | 305,384 | 117,394 | 710,407 | — | ||||||||||||
Class R3 | 643,254 | 332,823 | 1,237,629 | — | ||||||||||||
Class R4 | 358,515 | 211,113 | 569,105 | — | ||||||||||||
Class R5 | 15,208,171 | 8,590,948 | 22,495,426 | — | ||||||||||||
Total | $43,890,103 | $24,130,435 | $77,681,194 | $— |
(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 $99,593 for the six months ended March 31, 2014, 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 share classes 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% | $2,542,954 | |||||||||||||||
Class B | 0.75% | 0.25% | 1.00% | 1.00% | 161,189 | |||||||||||||||
Class C | 0.75% | 0.25% | 1.00% | 1.00% | 587,786 | |||||||||||||||
Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 19,908 | |||||||||||||||
Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 92,656 | |||||||||||||||
Class R3 | — | 0.25% | 0.25% | 0.25% | 82,074 | |||||||||||||||
Total Distribution and Service Fees | $3,486,567 |
(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’s average daily net assets. The |
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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, 2014, based on each class’s average daily net assets. MFD has voluntarily agreed to rebate a portion of each class’s 0.25% service fee attributable to accounts for which MFD retains the 0.25% service fee except for accounts attributable to MFS or its affiliates’ seed money. For the six months ended March 31, 2014, this rebate amounted to $42,276, $658, $1,259 and $318 for Class A, Class B, Class C and Class R3, respectively, and is included in the reduction of total expenses in the Statement of Operations. |
Certain Class A shares are subject to a contingent deferred sales charge (CDSC) in the event of a shareholder redemption within 18 months of purchase for shares purchased on or after August 1, 2012, and within 24 months of purchase for shares purchased prior to August 1, 2012. 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, 2014, were as follows:
Amount | ||||
Class A | $1,662 | |||
Class B | 16,667 | |||
Class C | 4,432 |
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, 2014, the fee was $288,882, which equated to 0.0138% 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. Class R5 shares do not incur sub-accounting fees. For the six months ended March 31, 2014, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $1,391,842.
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, 2014, these costs for the fund amounted to $348,157 and are included in “Shareholder servicing costs” in the Statement of Operations. Effective January 1, 2014, the fund no longer pays any expenses under this agreement.
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
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based on average daily net assets. The administrative services fee incurred for the six months ended March 31, 2014 was equivalent to an annual effective rate of 0.0112% 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 $1,795 and the Retirement Deferral plan resulted in an expense of $12,319. Both amounts are included in independent Trustees’ compensation for the six months ended March 31, 2014. The liability for deferred retirement benefits payable to certain independent Trustees under both plans amounted to $106,504 at March 31, 2014, and is included in “Payable for independent Trustees’ compensation” in 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” in the Statement of Assets and Liabilities is $45,562 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
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time under the terms of the Agreements. For the six months ended March 31, 2014, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $13,424 and are included in “Miscellaneous” expense in 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 $2,323, which is included in the 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 current income consistent with preservation of capital and liquidity. Income earned on this investment is included in “Dividends from underlying affiliated funds” in 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, aggregated $933,993,099 and $815,243,911, respectively.
(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 3/31/14 | Year ended 9/30/13 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares sold | ||||||||||||||||
Class A | 3,897,268 | $140,823,133 | 11,059,118 | $340,610,784 | ||||||||||||
Class B | 47,355 | 1,596,051 | 131,317 | 3,825,706 | ||||||||||||
Class C | 371,715 | 12,449,275 | 612,221 | 18,209,812 | ||||||||||||
Class I | 4,843,313 | 176,861,858 | 10,097,746 | 329,168,412 | ||||||||||||
Class R1 | 14,266 | 477,030 | 32,463 | 946,827 | ||||||||||||
Class R2 | 124,699 | 4,363,125 | 591,809 | 18,293,482 | ||||||||||||
Class R3 | 210,096 | 7,514,270 | 987,895 | 30,855,221 | ||||||||||||
Class R4 | 567,465 | 20,885,974 | 368,857 | 11,270,965 | ||||||||||||
Class R5 | 1,789,291 | 64,225,467 | 4,644,143 | 143,903,562 | ||||||||||||
11,865,468 | $429,196,183 | 28,525,569 | $897,084,771 |
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Notes to Financial Statements (unaudited) – continued
Six months ended 3/31/14 | Year ended 9/30/13 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares issued to shareholders in reinvestment of distributions | ||||||||||||||||
Class A | 1,528,023 | $53,816,975 | 380,245 | $10,969,844 | ||||||||||||
Class B | 22,062 | 724,749 | — | — | ||||||||||||
Class C | 75,032 | 2,453,552 | 2,277 | 61,264 | ||||||||||||
Class I | 518,785 | 18,619,191 | 86,162 | 2,531,434 | ||||||||||||
Class R1 | 3,066 | 99,020 | 43 | 1,148 | ||||||||||||
Class R2 | 26,869 | 923,482 | 3,698 | 104,278 | ||||||||||||
Class R3 | 53,579 | 1,877,419 | 11,574 | 332,296 | ||||||||||||
Class R4 | 26,360 | 927,620 | 7,325 | 211,113 | ||||||||||||
Class R5 | 1,071,734 | 37,703,597 | 298,193 | 8,590,948 | ||||||||||||
3,325,510 | $117,145,605 | 789,517 | $22,802,325 | |||||||||||||
Shares reacquired | ||||||||||||||||
Class A | (4,712,311 | ) | $(170,333,276 | ) | (9,251,680 | ) | $(289,414,077 | ) | ||||||||
Class B | (154,816 | ) | (5,234,529 | ) | (371,748 | ) | (10,733,003 | ) | ||||||||
Class C | (215,179 | ) | (7,210,968 | ) | (450,477 | ) | (12,862,465 | ) | ||||||||
Class I | (2,089,542 | ) | (76,964,716 | ) | (2,321,627 | ) | (75,460,100 | ) | ||||||||
Class R1 | (7,103 | ) | (236,356 | ) | (17,816 | ) | (505,271 | ) | ||||||||
Class R2 | (108,154 | ) | (3,806,245 | ) | (207,484 | ) | (6,334,322 | ) | ||||||||
Class R3 | (306,171 | ) | (11,061,760 | ) | (442,813 | ) | (14,007,818 | ) | ||||||||
Class R4 | (115,132 | ) | (4,176,092 | ) | (312,069 | ) | (10,004,632 | ) | ||||||||
Class R5 | (784,760 | ) | (28,550,658 | ) | (1,063,876 | ) | (33,377,970 | ) | ||||||||
(8,493,168 | ) | $(307,574,600 | ) | (14,439,590 | ) | $(452,699,658 | ) | |||||||||
Net change | ||||||||||||||||
Class A | 712,980 | $24,306,832 | 2,187,683 | $62,166,551 | ||||||||||||
Class B | (85,399 | ) | (2,913,729 | ) | (240,431 | ) | (6,907,297 | ) | ||||||||
Class C | 231,568 | 7,691,859 | 164,021 | 5,408,611 | ||||||||||||
Class I | 3,272,556 | 118,516,333 | 7,862,281 | 256,239,746 | ||||||||||||
Class R1 | 10,229 | 339,694 | 14,690 | 442,704 | ||||||||||||
Class R2 | 43,414 | 1,480,362 | 388,023 | 12,063,438 | ||||||||||||
Class R3 | (42,496 | ) | (1,670,071 | ) | 556,656 | 17,179,699 | ||||||||||
Class R4 | 478,693 | 17,637,502 | 64,113 | 1,477,446 | ||||||||||||
Class R5 | 2,076,265 | 73,378,406 | 3,878,460 | 119,116,540 | ||||||||||||
6,697,810 | $238,767,188 | 14,875,496 | $467,187,438 |
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 Moderate Allocation Fund, the MFS Growth Allocation Fund, the MFS Conservative Allocation Fund, and the MFS Aggressive Growth Allocation Fund were the owners of record of approximately 11%, 9%, 4% and 3%, respectively, of the value of outstanding voting shares of the fund. In addition, the MFS Lifetime 2010 Fund, the MFS Lifetime 2015 Fund, the MFS Lifetime 2020 Fund, the MFS Lifetime 2025 Fund, the MFS Lifetime
38
Table of Contents
Notes to Financial Statements (unaudited) – continued
2030 Fund, the MFS Lifetime 2035 Fund, the MFS Lifetime 2040 Fund, the MFS Lifetime 2045 Fund, the MFS Lifetime 2050 Fund, the MFS Lifetime 2055 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, 2014, the fund’s commitment fee and interest expense were $8,389 and $0, respectively, and are included in “Miscellaneous” expense in 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 an affiliated issuer:
Underlying Affiliated Fund | Beginning Shares/Par Amount | Acquisitions Shares/Par Amount | Dispositions Shares/Par Amount | Ending Shares/Par Amount | ||||||||||||
MFS Institutional Money Market Portfolio | 28,559,515 | 244,076,164 | (200,390,465 | ) | 72,245,214 | |||||||||||
Underlying Affiliated Fund | Realized Gain (Loss) | Capital Gain Distributions | Dividend Income | Ending Value | ||||||||||||
MFS Institutional Money Market Portfolio | $— | $— | $23,403 | $72,245,214 |
39
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” section of the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
MFS votes proxies on behalf of the fund pursuant to proxy voting policies and procedures that are 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. A shareholder can obtain the quarterly portfolio holdings report at mfs.com. The fund’s Form N-Q is also available on the EDGAR database on the Commission’s Internet Web site at http://www.sec.gov, and 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. Copies of the fund’s Form N-Q also 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.
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 “Commentary & Announcements” and “Market Outlooks” sections of mfs.com or by clicking on the fund’s name under “Mutual Funds” in the “Products” section of mfs.com.
PROVISION OF FINANCIAL REPORTS AND SUMMARY PROSPECTUSES
The fund produces financial reports every six months and updates its summary prospectus and prospectus annually. To avoid sending duplicate copies of materials to households, only one copy of the fund’s annual and semiannual report and summary prospectus may be mailed to shareholders having the same last name and residential address on the fund’s records. However, any shareholder may contact MFSC (please see back cover for address and telephone number) to request that copies of these reports and summary prospectuses be sent personally to that shareholder.
40
Table of Contents
Save paper with eDelivery.
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
SEMIANNUAL REPORT
March 31, 2014
MFS® TOTAL RETURN FUND
MTR-SEM
Table of Contents
MFS® TOTAL RETURN 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
Table of Contents
LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholders:
The pace of U.S. economic growth slowed early in 2014, largely because of harsh winter weather. However, the U.S. labor market, consumer confidence and other
economic data have all pointed to recovery. The U.S. Federal Reserve’s steady, gradual removal of its bond-buying stimulus, after initially causing concern, is providing some consistency, which can inspire consumer and investor confidence.
Global economic uncertainty and geopolitical tensions have added to market volatility. The eurozone, however, is making progress in its economic recovery. Japan’s progress in its battle to end deflation is expected to experience a temporary setback on the heels of the country’s sales tax increase, introduced in April.
The world’s largest economic concern remains the slowdown in China’s pace of growth as it shifts toward a more consumer-oriented economy. Any reduction in China’s economic growth rate is likely to have a ripple effect on its many trading partners.
In uncertain times such as these, it is particularly important to remember that managing risk should always be a top priority. At MFS®, active risk management is an integral part of our collaborative process. Our global team of investment professionals shares ideas and evaluates opportunities that span continents, investment disciplines and asset classes. Our goal is to build better insights, and ultimately better results, for our clients.
We understand and appreciate the economic challenges investors face, and we believe in the value of maintaining a long-term view and applying proven principles, such as asset allocation and diversification. We are confident that our unique approach can serve investors well as they work with their financial advisors to identify and pursue the most suitable opportunities.
Respectfully,
Robert J. Manning
Chairman and Chief Executive Officer
MFS Investment Management
May 13, 2014
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 (i)
Top ten holdings (i) | ||||
U.S. Treasury Notes, 0.875%, 12/31/16 | 3.1% | |||
U.S. Treasury Notes, 2.125%, 5/31/15 | 2.8% | |||
U.S. Treasury Bonds, 4.5%, 8/15/39 | 2.5% | |||
U.S. Treasury Notes, 3.125%, 5/15/21 | 2.4% | |||
JPMorgan Chase & Co. | 2.3% | |||
Pfizer, Inc. | 1.6% | |||
Wells Fargo & Co. | 1.6% | |||
Philip Morris International, Inc. | 1.5% | |||
U.S. Treasury Notes, 0.375%, 2/15/16 | 1.4% | |||
Johnson & Johnson | 1.4% | |||
Composition including fixed income credit quality (a)(i) | ||||
AAA | 0.8% | |||
AA | 1.1% | |||
A | 4.9% | |||
BBB | 6.1% | |||
BB | 0.2% | |||
CCC (o) | 0.0% | |||
CC | 0.1% | |||
C | 0.1% | |||
U.S. Government | 14.4% | |||
Federal Agencies | 11.7% | |||
Not Rated (o) | 0.0% | |||
Non-Fixed Income | 58.6% | |||
Cash & Other | 2.0% |
Equity sectors | ||||
Financial Services | 13.1% | |||
Health Care | 7.7% | |||
Consumer Staples | 6.1% | |||
Industrial Goods & Services | 5.6% | |||
Energy | 5.1% | |||
Technology | 4.4% | |||
Utilities & Communications | 4.2% | |||
Leisure | 3.8% | |||
Retailing | 3.0% | |||
Basic Materials | 2.4% | |||
Autos & Housing | 1.9% | |||
Transportation | 0.7% | |||
Special Products & Services | 0.6% | |||
Fixed income sectors (i) | ||||
U.S. Treasury Securities | 14.4% | |||
Mortgage-Backed Securities | 11.3% | |||
High Grade Corporates | 9.9% | |||
Commercial Mortgage-Backed Securities | 1.7% | |||
Emerging Markets Bonds | 0.8% | |||
Non-U.S. Government Bonds | 0.5% | |||
U.S. Government Agencies | 0.4% | |||
Asset-Backed Securities | 0.2% | |||
High Yield Corporates | 0.1% | |||
Collateralized Debt Obligations | 0.1% | |||
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). Securities rated BBB or higher are considered investment grade. 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 mortgage-backed securities, and collateralized mortgage obligations of U.S. Agency mortgage-backed securities. Not Rated includes fixed income securities, including fixed income futures contracts, which have not been rated by any rating agency. Non-Fixed Income includes equity securities (including convertible bonds and equity derivatives) and commodities. The fund may not hold all of these instruments. The fund is not rated by these agencies. |
(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 any. These amounts may be negative from time to time. 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. The bond component will include any accrued interest amounts. |
(o) | Less than 0.1%. |
Where the fund holds convertible bonds, these are treated as part of the equity portion of the portfolio.
Cash & Other includes cash, other assets less liabilities, offsets to derivative positions, and short-term securities.
Percentages are based on net assets as of 3/31/14.
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, 2013 through March 31, 2014
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, 2013 through March 31, 2014.
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 10/01/13 | Ending Account Value | Expenses Paid During 10/01/13-3/31/14 | ||||||||||||||
A | Actual | 0.73% | $1,000.00 | $1,083.07 | $3.79 | |||||||||||||
Hypothetical (h) | 0.73% | $1,000.00 | $1,021.29 | $3.68 | ||||||||||||||
B | Actual | 1.49% | $1,000.00 | $1,078.90 | $7.72 | |||||||||||||
Hypothetical (h) | 1.49% | $1,000.00 | $1,017.50 | $7.49 | ||||||||||||||
C | Actual | 1.49% | $1,000.00 | $1,078.60 | $7.72 | |||||||||||||
Hypothetical (h) | 1.49% | $1,000.00 | $1,017.50 | $7.49 | ||||||||||||||
I | Actual | 0.49% | $1,000.00 | $1,083.79 | $2.55 | |||||||||||||
Hypothetical (h) | 0.49% | $1,000.00 | $1,022.49 | $2.47 | ||||||||||||||
R1 | Actual | 1.49% | $1,000.00 | $1,079.14 | $7.72 | |||||||||||||
Hypothetical (h) | 1.49% | $1,000.00 | $1,017.50 | $7.49 | ||||||||||||||
R2 | Actual | 0.99% | $1,000.00 | $1,081.49 | $5.14 | |||||||||||||
Hypothetical (h) | 0.99% | $1,000.00 | $1,020.00 | $4.99 | ||||||||||||||
R3 | Actual | 0.74% | $1,000.00 | $1,083.03 | $3.84 | |||||||||||||
Hypothetical (h) | 0.74% | $1,000.00 | $1,021.24 | $3.73 | ||||||||||||||
R4 | Actual | 0.49% | $1,000.00 | $1,084.33 | $2.55 | |||||||||||||
Hypothetical (h) | 0.49% | $1,000.00 | $1,022.49 | $2.47 | ||||||||||||||
R5 | Actual | 0.41% | $1,000.00 | $1,084.21 | $2.13 | |||||||||||||
Hypothetical (h) | 0.41% | $1,000.00 | $1,022.89 | $2.07 | ||||||||||||||
529A | Actual | 0.78% | $1,000.00 | $1,083.03 | $4.05 | |||||||||||||
Hypothetical (h) | 0.78% | $1,000.00 | $1,021.04 | $3.93 | ||||||||||||||
529B | Actual | 1.54% | $1,000.00 | $1,078.68 | $7.98 | |||||||||||||
Hypothetical (h) | 1.54% | $1,000.00 | $1,017.25 | $7.75 | ||||||||||||||
529C | Actual | 1.53% | $1,000.00 | $1,078.40 | $7.93 | |||||||||||||
Hypothetical (h) | 1.53% | $1,000.00 | $1,017.30 | $7.70 |
(h) | 5% class return per year before expenses. |
(p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Notes to Expense Table
Each class with a Rule 12b-1 service fee is subject to a rebate of a portion of such fee. Such rebates are included in the expense ratios above. For Class A and Class 529A shares, this rebate reduced the expense ratios above by 0.01%. See Note 3 in the Notes to Financial Statements for additional information.
5
Table of Contents
3/31/14 (unaudited)
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Common Stocks - 58.4% | ||||||||
Issuer | Shares/Par | Value ($) | ||||||
Aerospace - 3.1% | ||||||||
General Dynamics Corp. | 77,044 | $ | 8,391,604 | |||||
Honeywell International, Inc. | 510,006 | 47,308,157 | ||||||
Lockheed Martin Corp. | 445,460 | 72,716,890 | ||||||
Northrop Grumman Corp. | 157,965 | 19,489,722 | ||||||
Precision Castparts Corp. | 24,183 | 6,112,495 | ||||||
United Technologies Corp. | 475,946 | 55,609,531 | ||||||
|
| |||||||
$ | 209,628,399 | |||||||
Airlines - 0.1% | ||||||||
Copa Holdings S.A., “A” | 42,711 | $ | 6,201,210 | |||||
Alcoholic Beverages - 0.5% | ||||||||
Diageo PLC | 931,063 | $ | 28,886,845 | |||||
Diageo PLC, ADR | 14,890 | 1,855,145 | ||||||
|
| |||||||
$ | 30,741,990 | |||||||
Apparel Manufacturers - 0.1% | ||||||||
Hanesbrands, Inc. | 98,020 | $ | 7,496,570 | |||||
Automotive - 1.7% | ||||||||
Delphi Automotive PLC | 379,670 | $ | 25,764,406 | |||||
General Motors Co. | 1,146,358 | 39,457,642 | ||||||
Johnson Controls, Inc. | 599,553 | 28,370,848 | ||||||
Magna International, Inc. | 214,650 | 20,635,913 | ||||||
|
| |||||||
$ | 114,228,809 | |||||||
Broadcasting - 1.5% | ||||||||
Omnicom Group, Inc. | 309,642 | $ | 22,480,009 | |||||
Time Warner, Inc. | 279,138 | 18,236,086 | ||||||
Twenty-First Century Fox, Inc. | 235,671 | 7,534,402 | ||||||
Viacom, Inc., “B” | 147,251 | 12,514,862 | ||||||
Walt Disney Co. | 512,410 | 41,028,669 | ||||||
|
| |||||||
$ | 101,794,028 | |||||||
Brokerage & Asset Managers - 0.9% | ||||||||
BlackRock, Inc. | 75,032 | $ | 23,596,063 | |||||
Franklin Resources, Inc. | 507,492 | 27,495,917 | ||||||
NASDAQ OMX Group, Inc. | 224,326 | 8,286,602 | ||||||
|
| |||||||
$ | 59,378,582 |
6
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Business Services - 0.7% | ||||||||
Accenture PLC, “A” | 415,192 | $ | 33,099,106 | |||||
Fidelity National Information Services, Inc. | 67,207 | 3,592,214 | ||||||
Fiserv, Inc. (a) | 120,420 | 6,826,610 | ||||||
|
| |||||||
$ | 43,517,930 | |||||||
Cable TV - 1.4% | ||||||||
Comcast Corp., “Special A” | 1,109,810 | $ | 54,114,336 | |||||
Time Warner Cable, Inc. | 263,940 | 36,207,289 | ||||||
|
| |||||||
$ | 90,321,625 | |||||||
Chemicals - 1.5% | ||||||||
3M Co. | 365,311 | $ | 49,558,090 | |||||
Celanese Corp. | 138,817 | 7,705,732 | ||||||
LyondellBasell Industries N.V., “A” | 92,090 | 8,190,485 | ||||||
PPG Industries, Inc. | 193,253 | 37,386,725 | ||||||
|
| |||||||
$ | 102,841,032 | |||||||
Computer Software - 1.2% | ||||||||
CA, Inc. | 266,370 | $ | 8,249,479 | |||||
Microsoft Corp. | 463,320 | 18,991,487 | ||||||
Oracle Corp. | 864,527 | 35,367,800 | ||||||
Symantec Corp. | 701,960 | 14,018,141 | ||||||
|
| |||||||
$ | 76,626,907 | |||||||
Computer Software - Systems - 1.7% | ||||||||
Apple, Inc. | 15,608 | $ | 8,377,438 | |||||
EMC Corp. | 245,050 | 6,716,821 | ||||||
Hewlett-Packard Co. | 1,535,773 | 49,697,614 | ||||||
International Business Machines Corp. | 215,308 | 41,444,637 | ||||||
Western Digital Corp. | 76,110 | 6,988,420 | ||||||
|
| |||||||
$ | 113,224,930 | |||||||
Construction - 0.2% | ||||||||
Stanley Black & Decker, Inc. | 173,378 | $ | 14,085,229 | |||||
Consumer Products - 0.6% | ||||||||
Procter & Gamble Co. | 429,118 | $ | 34,586,911 | |||||
Reckitt Benckiser Group PLC | 88,758 | 7,231,435 | ||||||
|
| |||||||
$ | 41,818,346 | |||||||
Containers - 0.2% | ||||||||
Crown Holdings, Inc. (a) | 107,080 | $ | 4,790,759 | |||||
Packaging Corp. of America | 84,110 | 5,918,821 | ||||||
|
| |||||||
$ | 10,709,580 |
7
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Electrical Equipment - 1.4% | ||||||||
Danaher Corp. | 657,276 | $ | 49,295,700 | |||||
Pentair Ltd. | 155,577 | 12,343,479 | ||||||
Siemens AG | 80,417 | 10,823,839 | ||||||
Tyco International Ltd. | 554,523 | 23,511,775 | ||||||
|
| |||||||
$ | 95,974,793 | |||||||
Electronics - 0.9% | ||||||||
Hoya Corp. | 210,300 | $ | 6,546,470 | |||||
Intel Corp. | 565,918 | 14,606,344 | ||||||
Microchip Technology, Inc. | 658,360 | 31,443,274 | ||||||
Taiwan Semiconductor Manufacturing Co. Ltd., ADR | 443,060 | 8,870,061 | ||||||
|
| |||||||
$ | 61,466,149 | |||||||
Energy - Independent - 2.2% | ||||||||
Anadarko Petroleum Corp. | 179,961 | $ | 15,253,494 | |||||
Apache Corp. | 232,398 | 19,277,414 | ||||||
Canadian Natural Resources Ltd. | 170,118 | 6,527,428 | ||||||
EOG Resources, Inc. | 26,503 | 5,199,094 | ||||||
EQT Corp. | 105,881 | 10,267,281 | ||||||
Marathon Petroleum Corp. | 144,140 | 12,545,946 | ||||||
Noble Energy, Inc. | 289,987 | 20,600,676 | ||||||
Occidental Petroleum Corp. | 325,802 | 31,045,673 | ||||||
Valero Energy Corp. | 424,280 | 22,529,268 | ||||||
|
| |||||||
$ | 143,246,274 | |||||||
Energy - Integrated - 2.6% | ||||||||
Chevron Corp. | 422,826 | $ | 50,278,240 | |||||
Exxon Mobil Corp. | 948,268 | 92,626,818 | ||||||
Petroleo Brasileiro S.A., ADR (l) | 615,340 | 8,534,766 | ||||||
Royal Dutch Shell PLC, “A” | 520,436 | 19,010,099 | ||||||
|
| |||||||
$ | 170,449,923 | |||||||
Engineering - Construction - 0.1% | ||||||||
Fluor Corp. | 77,594 | $ | 6,031,382 | |||||
Entertainment - 0.1% | ||||||||
Regal Entertainment Group, “A” (l) | 190,540 | $ | 3,559,287 | |||||
Food & Beverages - 2.2% | ||||||||
Coca-Cola Co. | 196,108 | $ | 7,581,535 | |||||
Coca-Cola Enterprises, Inc. | 94,797 | 4,527,505 | ||||||
Dr Pepper Snapple Group, Inc. | 117,651 | 6,407,273 | ||||||
General Mills, Inc. | 807,430 | 41,841,023 | ||||||
Groupe Danone | 244,740 | 17,306,734 |
8
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Food & Beverages - continued | ||||||||
Ingredion, Inc. | 73,960 | $ | 5,035,197 | |||||
Kellogg Co. | 59,984 | 3,761,597 | ||||||
Kraft Foods Group, Inc. | 39,128 | 2,195,081 | ||||||
Mondelez International, Inc. | 213,295 | 7,369,342 | ||||||
Nestle S.A. | 541,370 | 40,753,547 | ||||||
Nestle S.A., ADR | 31,900 | 2,399,518 | ||||||
Tyson Foods, Inc., “A” | 230,600 | 10,148,706 | ||||||
|
| |||||||
$ | 149,327,058 | |||||||
Food & Drug Stores - 1.5% | ||||||||
CVS Caremark Corp. | 868,149 | $ | 64,989,634 | |||||
Kroger Co. | 632,530 | 27,609,935 | ||||||
Walgreen Co. | 98,847 | 6,526,867 | ||||||
|
| |||||||
$ | 99,126,436 | |||||||
Gaming & Lodging - 0.2% | ||||||||
Hilton Worldwide Holdings, Inc. (a) | 95,880 | $ | 2,132,371 | |||||
Wynn Resorts Ltd. | 46,844 | 10,406,395 | ||||||
|
| |||||||
$ | 12,538,766 | |||||||
General Merchandise - 1.0% | ||||||||
Kohl’s Corp. | 238,455 | $ | 13,544,244 | |||||
Macy’s, Inc. | 361,850 | 21,454,087 | ||||||
Target Corp. | 571,800 | 34,599,618 | ||||||
|
| |||||||
$ | 69,597,949 | |||||||
Insurance - 4.0% | ||||||||
ACE Ltd. | 354,899 | $ | 35,156,295 | |||||
American International Group, Inc. | 103,110 | 5,156,531 | ||||||
Aon PLC | 260,899 | 21,988,568 | ||||||
Chubb Corp. | 104,910 | 9,368,463 | ||||||
Delta Lloyd N.V. | 569,910 | 15,800,872 | ||||||
Everest Re Group Ltd. | 61,868 | 9,468,897 | ||||||
MetLife, Inc. | 1,213,410 | 64,068,048 | ||||||
Prudential Financial, Inc. | 415,869 | 35,203,311 | ||||||
Travelers Cos., Inc. | 453,330 | 38,578,383 | ||||||
Validus Holdings Ltd. | 419,850 | 15,832,544 | ||||||
Zurich Insurance Group AG | 44,309 | 13,602,695 | ||||||
|
| |||||||
$ | 264,224,607 | |||||||
Internet - 0.6% | ||||||||
Facebook, Inc., “A “ (a) | 358,590 | $ | 21,601,462 | |||||
Google, Inc., “A” (a) | 16,389 | 18,265,704 | ||||||
|
| |||||||
$ | 39,867,166 |
9
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Leisure & Toys - 0.2% | ||||||||
Hasbro, Inc. | 217,713 | $ | 12,109,197 | |||||
Mattel, Inc. | 68,550 | 2,749,541 | ||||||
|
| |||||||
$ | 14,858,738 | |||||||
Machinery & Tools - 0.9% | ||||||||
Cummins, Inc. | 145,629 | $ | 21,697,265 | |||||
Eaton Corp. PLC | 291,916 | 21,928,730 | ||||||
Illinois Tool Works, Inc. | 190,117 | 15,462,216 | ||||||
|
| |||||||
$ | 59,088,211 | |||||||
Major Banks - 6.7% | ||||||||
Bank of America Corp. | 1,050,626 | $ | 18,070,767 | |||||
Bank of New York Mellon Corp. | 1,223,802 | 43,187,973 | ||||||
BOC Hong Kong Holdings Ltd. | 1,305,000 | 3,718,236 | ||||||
Goldman Sachs Group, Inc. | 261,953 | 42,920,999 | ||||||
HSBC Holdings PLC | 749,046 | 7,586,290 | ||||||
JPMorgan Chase & Co. | 2,573,811 | 156,256,066 | ||||||
Mizuho Financial Group, Inc. | 4,784,900 | 9,457,149 | ||||||
Morgan Stanley | 338,222 | 10,542,380 | ||||||
PNC Financial Services Group, Inc. | 191,194 | 16,633,878 | ||||||
State Street Corp. | 380,463 | 26,461,202 | ||||||
Sumitomo Mitsui Financial Group, Inc. | 166,800 | 7,125,139 | ||||||
Wells Fargo & Co. | 2,102,490 | 104,577,853 | ||||||
|
| |||||||
$ | 446,537,932 | |||||||
Medical & Health Technology & Services - 0.8% | ||||||||
AmerisourceBergen Corp. | 101,824 | $ | 6,678,636 | |||||
Cardinal Health, Inc. | 298,890 | 20,916,322 | ||||||
Express Scripts Holding Co. (a) | 294,874 | 22,142,089 | ||||||
Quest Diagnostics, Inc. | 79,777 | 4,620,684 | ||||||
|
| |||||||
$ | 54,357,731 | |||||||
Medical Equipment - 2.0% | ||||||||
Abbott Laboratories | 862,743 | $ | 33,224,233 | |||||
Covidien PLC | 357,948 | 26,366,450 | ||||||
Medtronic, Inc. | 243,355 | 14,976,067 | ||||||
St. Jude Medical, Inc. | 368,222 | 24,078,037 | ||||||
Thermo Fisher Scientific, Inc. | 306,695 | 36,877,007 | ||||||
|
| |||||||
$ | 135,521,794 | |||||||
Metals & Mining - 0.4% | ||||||||
Rio Tinto PLC | 118,400 | $ | 6,587,910 | |||||
Vale S.A., ADR | 818,640 | 11,321,791 | ||||||
Vale S.A., IPS | 654,300 | 8,175,145 | ||||||
|
| |||||||
$ | 26,084,846 |
10
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Natural Gas - Distribution - 0.2% | ||||||||
GDF Suez | 564,012 | $ | 15,431,441 | |||||
Natural Gas - Pipeline - 0.2% | ||||||||
Williams Cos., Inc. | 313,315 | $ | 12,714,323 | |||||
Oil Services - 0.4% | ||||||||
Ensco PLC, “A” | 251,310 | $ | 13,264,142 | |||||
Noble Corp. PLC | 199,261 | 6,523,805 | ||||||
Schlumberger Ltd. | 67,620 | 6,592,950 | ||||||
|
| |||||||
$ | 26,380,897 | |||||||
Other Banks & Diversified Financials - 1.1% | ||||||||
American Express Co. | 85,777 | $ | 7,722,503 | |||||
BB&T Corp. | 296,370 | 11,905,183 | ||||||
Discover Financial Services | 114,730 | 6,676,139 | ||||||
Fifth Third Bancorp | 192,160 | 4,410,072 | ||||||
SunTrust Banks, Inc. | 150,244 | 5,978,209 | ||||||
U.S. Bancorp | 327,930 | 14,055,080 | ||||||
Visa, Inc., “A” | 77,639 | 16,759,155 | ||||||
Western Union Co. | 214,523 | 3,509,596 | ||||||
|
| |||||||
$ | 71,015,937 | |||||||
Pharmaceuticals - 4.8% | ||||||||
Actavis PLC (a) | 48,580 | $ | 10,000,193 | |||||
Bayer AG | 61,801 | 8,359,060 | ||||||
Bristol-Myers Squibb Co. | 517,520 | 26,885,164 | ||||||
Eli Lilly & Co. | 336,460 | 19,804,036 | ||||||
GlaxoSmithKline PLC | 411,950 | 10,930,142 | ||||||
Johnson & Johnson | 963,440 | 94,638,711 | ||||||
Merck & Co., Inc. | 541,160 | 30,721,653 | ||||||
Novartis AG | 47,260 | 4,009,389 | ||||||
Pfizer, Inc. | 3,273,825 | 105,155,259 | ||||||
Roche Holding AG | 13,557 | 4,063,803 | ||||||
Valeant Pharmaceuticals International, Inc. (a) | 55,090 | 7,262,515 | ||||||
Zoetis, Inc. | 27,110 | 784,563 | ||||||
|
| |||||||
$ | 322,614,488 | |||||||
Printing & Publishing - 0.1% | ||||||||
McGraw-Hill Cos., Inc. | 67,247 | $ | 5,130,946 | |||||
Moody’s Corp. | 47,511 | 3,768,573 | ||||||
|
| |||||||
$ | 8,899,519 |
11
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Railroad & Shipping - 0.2% | ||||||||
Canadian National Railway Co. | 139,958 | $ | 7,868,439 | |||||
Union Pacific Corp. | 34,430 | 6,461,134 | ||||||
|
| |||||||
$ | 14,329,573 | |||||||
Real Estate - 0.5% | ||||||||
American Capital Agency Corp., REIT | 108,260 | $ | 2,326,507 | |||||
Annaly Mortgage Management, Inc., REIT | 682,000 | 7,481,540 | ||||||
Corio N.V., REIT | 141,661 | 6,473,433 | ||||||
Digital Realty Trust, Inc., REIT | 273,010 | 14,491,371 | ||||||
EPR Properties, REIT | 95,710 | 5,109,957 | ||||||
|
| |||||||
$ | 35,882,808 | |||||||
Restaurants - 0.3% | ||||||||
McDonald’s Corp. | 223,904 | $ | 21,949,309 | |||||
Specialty Chemicals - 0.3% | ||||||||
FMC Corp. | 89,110 | $ | 6,822,262 | |||||
Marine Harvest A.S.A | 306,540 | 3,470,960 | ||||||
Praxair, Inc. | 49,644 | 6,501,875 | ||||||
Valspar Corp. | 16,390 | 1,182,047 | ||||||
|
| |||||||
$ | 17,977,144 | |||||||
Specialty Stores - 0.3% | ||||||||
Advance Auto Parts, Inc. | 59,143 | $ | 7,481,590 | |||||
Bed Bath & Beyond, Inc. (a) | 48,500 | 3,336,800 | ||||||
Staples, Inc. | 908,786 | 10,305,633 | ||||||
|
| |||||||
$ | 21,124,023 | |||||||
Telecommunications - Wireless - 0.1% | ||||||||
Vodafone Group PLC | 2,234,853 | $ | 8,208,015 | |||||
Telephone Services - 2.0% | ||||||||
AT&T, Inc. | 514,544 | $ | 18,045,058 | |||||
Bezeq - The Israel Telecommunication Corp. Ltd. | 1,640,980 | 2,922,474 | ||||||
CenturyLink, Inc. | 407,133 | 13,370,248 | ||||||
Frontier Communications Corp. (l) | 3,859,220 | 21,997,554 | ||||||
TDC A.S. | 1,062,035 | 9,818,143 | ||||||
Telecom Italia S.p.A. | 5,949,678 | 5,565,474 | ||||||
Telefonica Brasil S.A., ADR (l) | 275,550 | 5,852,682 | ||||||
Verizon Communications, Inc. | 1,127,837 | 53,651,206 | ||||||
Windstream Holdings, Inc. (l) | 409,790 | 3,376,670 | ||||||
|
| |||||||
$ | 134,599,509 |
12
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Common Stocks - continued | ||||||||
Tobacco - 2.8% | ||||||||
Altria Group, Inc. | 622,260 | $ | 23,291,192 | |||||
Imperial Tobacco Group PLC | 62,958 | 2,543,191 | ||||||
Japan Tobacco, Inc. | 315,300 | 9,897,515 | ||||||
Lorillard, Inc. | 949,620 | 51,355,450 | ||||||
Philip Morris International, Inc. | 1,228,476 | 100,575,330 | ||||||
|
| |||||||
$ | 187,662,678 | |||||||
Trucking - 0.4% | ||||||||
United Parcel Service, Inc., “B” | 297,515 | $ | 28,972,011 | |||||
Utilities - Electric Power - 1.5% | ||||||||
American Electric Power Co., Inc. | 309,630 | $ | 15,685,856 | |||||
Companhia Energetica de Minas Gerais, IPS | 1,750,715 | 11,766,595 | ||||||
Duke Energy Corp. | 136,180 | 9,698,740 | ||||||
E.ON AG | 650,452 | 12,715,591 | ||||||
Edison International | 74,610 | 4,223,672 | ||||||
NRG Energy, Inc. | 193,338 | 6,148,148 | ||||||
PG&E Corp. | 257,600 | 11,128,320 | ||||||
PPL Corp. | 579,149 | 19,192,998 | ||||||
Public Service Enterprise Group, Inc. | 249,931 | 9,532,368 | ||||||
|
| |||||||
$ | 100,092,288 | |||||||
Total Common Stocks (Identified Cost, $2,739,923,632) | $ | 3,902,328,172 | ||||||
Bonds - 39.2% | ||||||||
Agency - Other - 0.1% | ||||||||
Financing Corp., 9.65%, 11/02/18 | $ | 2,850,000 | $ | 3,826,316 | ||||
Asset-Backed & Securitized - 2.0% | ||||||||
Bayview Financial Revolving Mortgage Loan Trust, FRN, 1.753%, 12/28/40 (z) | $ | 6,248,680 | $ | 4,135,739 | ||||
BlackRock Capital Finance LP, 7.75%, 9/25/26 (z) | 629,862 | 74,028 | ||||||
Capital Trust Realty Ltd., CDO, 5.16%, 6/25/35 (n) | 224,385 | 230,192 | ||||||
Citigroup/Deutsche Bank Commercial Mortgage Trust, 5.322%, 12/11/49 | 7,105,112 | 7,775,913 | ||||||
Credit Suisse Mortgage Capital Certificate, FRN, 5.695%, 9/15/40 | 9,759,829 | 10,770,274 | ||||||
GMAC Mortgage Corp. Loan Trust, FRN, 5.805%, 10/25/36 | 2,881,458 | 2,725,318 | ||||||
Goldman Sachs Mortgage Securities Corp., FRN, 5.819%, 8/10/45 | 19,763,928 | 21,916,536 | ||||||
JPMorgan Chase Commercial Mortgage Securities Corp., 4.78%, 7/15/42 | 828,000 | 860,328 | ||||||
JPMorgan Chase Commercial Mortgage Securities Corp., “A3”, FRN, 5.96%, 2/15/51 | 6,810,124 | 6,842,506 | ||||||
JPMorgan Chase Commercial Mortgage Securities Corp., “A4”, FRN, 5.815%, 6/15/49 | 8,257,080 | 9,128,986 |
13
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Asset-Backed & Securitized - continued | ||||||||
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 4.948%, 9/12/37 | $ | 1,200,000 | $ | 1,256,954 | ||||
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 5.546%, 5/15/41 | 143,345 | 143,177 | ||||||
Merrill Lynch Mortgage Trust, “A3”, FRN, 5.841%, 6/12/50 | 1,408,639 | 1,444,951 | ||||||
Merrill Lynch/Countrywide Commercial Mortgage Trust, FRN, 5.745%, 6/12/50 | 22,737,134 | 25,150,976 | ||||||
Morgan Stanley Capital I, Inc., FRN, 0.575%, 11/15/30 (i)(n) | 14,378,809 | 390,658 | ||||||
Race Point CLO Ltd., “A1A”, FRN, 0.438%, 8/01/21 (n) | 4,250,773 | 4,209,209 | ||||||
Residential Funding Mortgage Securities, Inc., FRN, 5.32%, 12/25/35 | 6,589,757 | 5,293,097 | ||||||
Spirit Master Funding LLC, 5.05%, 7/20/23 (z) | 5,637,029 | 5,772,881 | ||||||
Wachovia Bank Commercial Mortgage Trust, “A4”, FRN, 5.953%, 2/15/51 | 9,392,500 | 10,290,695 | ||||||
Wachovia Bank Commercial Mortgage Trust, FRN, 5.741%, 6/15/49 | 11,717,014 | 12,915,676 | ||||||
|
| |||||||
$ | 131,328,094 | |||||||
Automotive - 0.2% | ||||||||
Nissan Motor Acceptance Corp., 2.35%, 3/04/19 (n) | $ | 2,097,000 | $ | 2,084,282 | ||||
Toyota Motor Credit Corp., 3.2%, 6/17/15 | 3,480,000 | 3,591,492 | ||||||
Toyota Motor Credit Corp., 3.4%, 9/15/21 | 4,890,000 | 5,031,404 | ||||||
Volkswagen International Finance N.V., 2.375%, 3/22/17 (n) | 4,856,000 | 4,995,367 | ||||||
|
| |||||||
$ | 15,702,545 | |||||||
Broadcasting - 0.2% | ||||||||
Discovery Communications, Inc., 4.875%, 4/01/43 | $ | 3,740,000 | $ | 3,643,100 | ||||
News America, Inc., 8.5%, 2/23/25 | 5,903,000 | 7,694,283 | ||||||
|
| |||||||
$ | 11,337,383 | |||||||
Cable TV - 0.3% | ||||||||
Comcast Corp., 2.85%, 1/15/23 | $ | 6,030,000 | $ | 5,813,475 | ||||
DIRECTV Holdings LLC, 4.6%, 2/15/21 | 3,220,000 | 3,397,303 | ||||||
Time Warner Entertainment Co. LP, 8.375%, 7/15/33 | 7,170,000 | 9,880,877 | ||||||
|
| |||||||
$ | 19,091,655 | |||||||
Computer Software - Systems - 0.0% | ||||||||
Apple, Inc., 3.85%, 5/04/43 | $ | 2,060,000 | $ | 1,826,808 | ||||
Conglomerates - 0.1% | ||||||||
ABB Finance (USA), Inc., 2.875%, 5/08/22 | $ | 1,772,000 | $ | 1,723,219 | ||||
General Electric Co., 2.7%, 10/09/22 | 5,120,000 | 4,962,335 | ||||||
United Technologies Corp., 3.1%, 6/01/22 | 2,450,000 | 2,445,661 | ||||||
|
| |||||||
$ | 9,131,215 |
14
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Consumer Products - 0.1% | ||||||||
Reckitt Benckiser Treasury Services PLC, 3.625%, 9/21/23 (n) | $ | 6,003,000 | $ | 6,041,569 | ||||
Consumer Services - 0.0% | ||||||||
eBay, Inc., 1.35%, 7/15/17 | $ | 1,644,000 | $ | 1,643,525 | ||||
Defense Electronics - 0.1% | ||||||||
BAE Systems Holdings, Inc., 5.2%, 8/15/15 (n) | $ | 3,942,000 | $ | 4,161,684 | ||||
Emerging Market Quasi-Sovereign - 0.3% | ||||||||
CNOOC Finance (2012) Ltd., 3.875%, 5/02/22 (n) | $ | 5,880,000 | $ | 5,779,934 | ||||
Corporacion Nacional del Cobre de Chile, 3.75%, 11/04/20 (n) | 1,789,000 | 1,809,649 | ||||||
Petroleos Mexicanos, 3.125%, 1/23/19 (z) | 2,358,000 | 2,414,592 | ||||||
Petroleos Mexicanos, 8%, 5/03/19 | 4,145,000 | 5,056,900 | ||||||
Qtel International Finance Ltd., 6.5%, 6/10/14 (n) | 1,395,000 | 1,406,021 | ||||||
Ras Laffan Liquefied Natural Gas Co. Ltd., 5.832%, 9/30/16 (n) | 2,840,320 | 3,024,941 | ||||||
|
| |||||||
$ | 19,492,037 | |||||||
Emerging Market Sovereign - 0.1% | ||||||||
Republic of Peru, 7.35%, 7/21/25 | $ | 551,000 | $ | 708,724 | ||||
United Mexican States, 4.75%, 3/08/44 | 7,817,000 | 7,426,150 | ||||||
|
| |||||||
$ | 8,134,874 | |||||||
Energy - Independent - 0.1% | ||||||||
Apache Corp., 3.25%, 4/15/22 | $ | 2,382,000 | $ | 2,402,571 | ||||
Apache Corp., 4.75%, 4/15/43 | 1,827,000 | 1,836,643 | ||||||
EOG Resources, Inc., 2.625%, 3/15/23 | 1,718,000 | 1,623,067 | ||||||
Hess Corp., 8.125%, 2/15/19 | 1,740,000 | 2,178,393 | ||||||
|
| |||||||
$ | 8,040,674 | |||||||
Energy - Integrated - 0.6% | ||||||||
BP Capital Markets PLC, 4.5%, 10/01/20 | $ | 1,661,000 | $ | 1,806,876 | ||||
BP Capital Markets PLC, 4.742%, 3/11/21 | 4,892,000 | 5,427,219 | ||||||
Husky Energy, Inc., 5.9%, 6/15/14 | 4,370,000 | 4,417,559 | ||||||
Husky Energy, Inc., 7.25%, 12/15/19 | 4,453,000 | 5,447,564 | ||||||
Petro-Canada, 6.05%, 5/15/18 | 9,475,000 | 10,910,406 | ||||||
Total Capital International S.A., 1.55%, 6/28/17 | 7,071,000 | 7,140,536 | ||||||
Total Capital International S.A., 3.75%, 4/10/24 | 6,370,000 | 6,505,681 | ||||||
|
| |||||||
$ | 41,655,841 | |||||||
Financial Institutions - 0.1% | ||||||||
General Electric Capital Corp., 2.3%, 1/14/19 | $ | 5,500,000 | $ | 5,549,324 | ||||
General Electric Capital Corp., 3.1%, 1/09/23 | 3,339,000 | 3,267,378 | ||||||
|
| |||||||
$ | 8,816,702 |
15
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Food & Beverages - 0.4% | ||||||||
Anheuser-Busch InBev S.A., 8%, 11/15/39 | $ | 5,850,000 | $ | 8,793,966 | ||||
Conagra Foods, Inc., 3.2%, 1/25/23 | 2,934,000 | 2,802,193 | ||||||
Diageo Capital PLC, 2.625%, 4/29/23 | 6,190,000 | 5,769,996 | ||||||
Kraft Foods Group, Inc., 3.5%, 6/06/22 | 2,361,000 | 2,375,232 | ||||||
Kraft Foods Group, Inc., 5%, 6/04/42 | 2,130,000 | 2,230,436 | ||||||
Wm. Wrigley Jr. Co., 2.4%, 10/21/18 (n) | 1,411,000 | 1,415,081 | ||||||
|
| |||||||
$ | 23,386,904 | |||||||
Insurance - 0.2% | ||||||||
American International Group, Inc., 4.875%, 6/01/22 | $ | 10,460,000 | $ | 11,453,930 | ||||
Metropolitan Life Global Funding I, 5.125%, 6/10/14 (n) | 1,320,000 | 1,332,036 | ||||||
|
| |||||||
$ | 12,785,966 | |||||||
Insurance - Health - 0.1% | ||||||||
WellPoint, Inc., 3.3%, 1/15/23 | $ | 3,410,000 | $ | 3,270,135 | ||||
Insurance - Property & Casualty - 0.4% | ||||||||
ACE Ltd., 2.7%, 3/13/23 | $ | 5,960,000 | $ | 5,634,131 | ||||
Allstate Corp., 5.75%, 8/15/53 | 1,774,000 | 1,862,700 | ||||||
Chubb Corp., 6.375% to 4/15/17, FRN to 3/29/67 | 8,200,000 | 9,102,000 | ||||||
Liberty Mutual Group, Inc., 4.25%, 6/15/23 (n) | 3,278,000 | 3,326,665 | ||||||
Marsh & McLennan Cos., Inc., 4.8%, 7/15/21 | 5,360,000 | 5,859,397 | ||||||
ZFS Finance USA Trust V, 6.5% to 5/09/17, FRN to 5/09/67 (n) | 2,925,000 | 3,137,063 | ||||||
|
| |||||||
$ | 28,921,956 | |||||||
International Market Quasi-Sovereign - 0.3% | ||||||||
Achmea Hypotheekbank N.V., 3.2%, 11/03/14 (n) | $ | 394,000 | $ | 400,698 | ||||
KFW International Finance, Inc., 4.875%, 6/17/19 | 7,250,000 | 8,278,268 | ||||||
Societe Financement de l’ Economie Francaise, 3.375%, 5/05/14 (n) | 4,053,000 | 4,064,332 | ||||||
Temasek Financial I Ltd., 2.375%, 1/23/23 (n) | 10,140,000 | 9,336,729 | ||||||
|
| |||||||
$ | 22,080,027 | |||||||
International Market Sovereign - 0.1% | ||||||||
Republic of Iceland, 4.875%, 6/16/16 (n) | $ | 5,610,000 | $ | 5,911,538 | ||||
Internet - 0.1% | ||||||||
Baidu, Inc., 3.5%, 11/28/22 | $ | 6,460,000 | $ | 6,150,592 | ||||
Local Authorities - 0.1% | ||||||||
New Jersey Turnpike Authority Rev. (Build America Bonds), “F”, 7.414%, 1/01/40 | $ | 5,815,000 | $ | 8,154,898 |
16
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Machinery & Tools - 0.1% | ||||||||
Atlas Copco AB, 5.6%, 5/22/17 (n) | $ | 5,970,000 | $ | 6,717,217 | ||||
Major Banks - 2.1% | ||||||||
Banco Santander U.S. Debt S.A.U., 3.781%, 10/07/15 (n) | $ | 2,600,000 | $ | 2,689,068 | ||||
Bank of America Corp., 7.375%, 5/15/14 | 2,825,000 | 2,847,736 | ||||||
Bank of America Corp., 5.49%, 3/15/19 | 4,135,000 | 4,592,922 | ||||||
Bank of America Corp., 7.625%, 6/01/19 | 3,980,000 | 4,898,473 | ||||||
Bank of America Corp., 4.1%, 7/24/23 | 7,970,000 | 8,084,099 | ||||||
Bank of America Corp., 4.125%, 1/22/24 | 10,657,000 | 10,777,094 | ||||||
BNP Paribas, 7.195% to 6/29/37, FRN to 6/29/49 (n) | 3,200,000 | 3,416,000 | ||||||
Commonwealth Bank of Australia, 5%, 10/15/19 (n) | 3,930,000 | 4,381,911 | ||||||
Credit Suisse Group AG, 6.5%, 8/08/23 (n) | 6,960,000 | 7,638,600 | ||||||
Credit Suisse New York, 5.5%, 5/01/14 | 5,410,000 | 5,432,111 | ||||||
Goldman Sachs Group, Inc., 5.625%, 1/15/17 | 7,504,000 | 8,284,138 | ||||||
HSBC Holdings PLC, 5.1%, 4/05/21 | 3,688,000 | 4,123,568 | ||||||
HSBC Holdings PLC, 5.25%, 3/14/44 | 1,394,000 | 1,409,551 | ||||||
ING Bank N.V., 3.75%, 3/07/17 (n) | 4,761,000 | 5,061,205 | ||||||
ING Bank N.V., 5.8%, 9/25/23 (n) | 6,238,000 | 6,652,496 | ||||||
JPMorgan Chase & Co., 6.3%, 4/23/19 | 6,750,000 | 7,935,854 | ||||||
JPMorgan Chase & Co., 3.25%, 9/23/22 | 1,884,000 | 1,855,911 | ||||||
JPMorgan Chase & Co., 3.2%, 1/25/23 | 7,972,000 | 7,730,209 | ||||||
JPMorgan Chase & Co., 3.875%, 2/01/24 | 7,865,000 | 7,935,565 | ||||||
Morgan Stanley, 6.625%, 4/01/18 | 11,740,000 | 13,686,034 | ||||||
PNC Funding Corp., 5.625%, 2/01/17 | 6,510,000 | 7,206,869 | ||||||
Royal Bank of Scotland PLC, 2.55%, 9/18/15 | 1,405,000 | 1,434,799 | ||||||
Wachovia Corp., 5.25%, 8/01/14 | 4,613,000 | 4,686,218 | ||||||
Wells Fargo & Co., 2.1%, 5/08/17 | 6,600,000 | 6,757,945 | ||||||
|
| |||||||
$ | 139,518,376 | |||||||
Medical & Health Technology & Services - 0.3% | ||||||||
Baxter International, Inc., 3.2%, 6/15/23 | $ | 3,460,000 | $ | 3,375,005 | ||||
CareFusion Corp., 6.375%, 8/01/19 | 6,240,000 | 7,123,771 | ||||||
Express Scripts Holding Co., 2.65%, 2/15/17 | 7,200,000 | 7,446,024 | ||||||
|
| |||||||
$ | 17,944,800 | |||||||
Metals & Mining - 0.2% | ||||||||
Freeport-McMoRan Copper & Gold, Inc., 3.875%, 3/15/23 | $ | 5,930,000 | $ | 5,670,106 | ||||
Rio Tinto Finance (USA) PLC, 3.5%, 3/22/22 | 5,540,000 | 5,542,100 | ||||||
Vale Overseas Ltd., 4.625%, 9/15/20 | 1,631,000 | 1,694,857 | ||||||
Vale Overseas Ltd., 6.875%, 11/10/39 | 1,269,000 | 1,356,654 | ||||||
|
| |||||||
$ | 14,263,717 |
17
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Mortgage-Backed - 11.2% | ||||||||
Fannie Mae, 2.62%, 5/01/23 | $ | 689,873 | $ | 668,683 | ||||
Fannie Mae, 3.5%, 7/01/43 | 12,373,308 | 12,457,013 | ||||||
Fannie Mae, 4.787%, 8/01/14 | 829,691 | 832,085 | ||||||
Fannie Mae, 4.962%, 1/01/15 | 90,784 | 90,448 | ||||||
Fannie Mae, 4.908%, 4/01/15 | 2,051,280 | 2,099,220 | ||||||
Fannie Mae, 4.78%, 8/01/15 | 2,146,570 | 2,218,430 | ||||||
Fannie Mae, 4.856%, 8/01/15 | 599,553 | 619,299 | ||||||
Fannie Mae, 5.19%, 11/01/15 | 1,248,367 | 1,309,496 | ||||||
Fannie Mae, 5.663%, 2/01/16 | 1,134,961 | 1,210,774 | ||||||
Fannie Mae, 5.732%, 7/01/16 | 1,847,893 | 2,016,699 | ||||||
Fannie Mae, 5.09%, 12/01/16 | 1,967,278 | 2,148,387 | ||||||
Fannie Mae, 5.05%, 1/01/17 | 2,354,545 | 2,531,470 | ||||||
Fannie Mae, 6%, 1/01/17 - 7/01/37 | 27,808,470 | 30,789,374 | ||||||
Fannie Mae, 5.5%, 11/01/17 - 4/01/40 | 49,380,417 | 54,699,775 | ||||||
Fannie Mae, 3.8%, 2/01/18 | 773,016 | 822,170 | ||||||
Fannie Mae, 3.91%, 2/01/18 | 1,149,589 | 1,236,608 | ||||||
Fannie Mae, 5%, 2/01/18 - 3/01/41 | 32,242,274 | 35,113,410 | ||||||
Fannie Mae, 4.5%, 6/01/18 - 4/01/41 | 19,386,812 | 20,727,213 | ||||||
Fannie Mae, 3.849%, 7/01/18 | 1,406,132 | 1,514,664 | ||||||
Fannie Mae, 2.578%, 9/25/18 | 4,000,000 | 4,123,724 | ||||||
Fannie Mae, 4.6%, 9/01/19 | 755,663 | 831,142 | ||||||
Fannie Mae, 4.88%, 3/01/20 | 461,560 | 500,310 | ||||||
Fannie Mae, 2.67%, 3/01/22 | 966,436 | 952,809 | ||||||
Fannie Mae, 2.73%, 4/01/23 | 689,280 | 673,736 | ||||||
Fannie Mae, 2.41%, 5/01/23 | 1,045,259 | 997,488 | ||||||
Fannie Mae, 2.55%, 5/01/23 | 985,694 | 950,562 | ||||||
Fannie Mae, 2.59%, 5/01/23 | 1,029,970 | 995,493 | ||||||
Fannie Mae, 3%, 3/01/27 - 4/01/27 | 4,568,435 | 4,697,394 | ||||||
Fannie Mae, 2.5%, 2/01/28 - 5/01/28 | 4,208,432 | 4,210,171 | ||||||
Fannie Mae, 7.5%, 3/01/30 - 2/01/32 | 436,515 | 498,800 | ||||||
Fannie Mae, 6.5%, 6/01/31 - 7/01/37 | 9,746,236 | 11,053,925 | ||||||
Fannie Mae, 4%, 2/01/41 | 1,937,946 | 2,014,320 | ||||||
Fannie Mae, 3.5%, 11/01/41 - 6/01/43 | 12,053,172 | 12,139,499 | ||||||
Fannie Mae, 3.5%, 4/01/43 - 9/01/43 | 48,437,264 | 48,765,611 | ||||||
Fannie Mae, TBA, 3%, 5/25/29 | 30,743,000 | 31,492,361 | ||||||
Fannie Mae, TBA, 4%, 5/25/44 | 72,810,000 | 75,415,233 | ||||||
Fannie Mae, TBA, 4.5%, 5/25/44 | 33,542,000 | 35,659,340 | ||||||
Freddie Mac, 3.034%, 10/25/20 | 1,781,000 | 1,834,840 | ||||||
Freddie Mac, 6%, 4/01/16 - 6/01/37 | 15,446,983 | 17,205,237 | ||||||
Freddie Mac, 3.882%, 11/25/17 | 2,574,445 | 2,758,878 | ||||||
Freddie Mac, 5%, 12/01/17 - 7/01/39 | 19,053,342 | 20,679,749 | ||||||
Freddie Mac, 3.154%, 2/25/18 | 712,000 | 750,991 | ||||||
Freddie Mac, 2.412%, 8/25/18 | 1,963,000 | 2,010,014 |
18
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Mortgage-Backed - continued | ||||||||
Freddie Mac, 4.5%, 1/01/19 - 10/01/39 | $ | 12,510,494 | $ | 13,333,657 | ||||
Freddie Mac, 5.5%, 1/01/19 - 10/01/35 | 13,814,021 | 15,252,838 | ||||||
Freddie Mac, 5.085%, 3/25/19 | 6,789,000 | 7,655,168 | ||||||
Freddie Mac, 1.869%, 11/25/19 | 2,123,000 | 2,073,780 | ||||||
Freddie Mac, 2.313%, 3/25/20 | 600,000 | 596,637 | ||||||
Freddie Mac, 3.808%, 8/25/20 | 5,739,000 | 6,141,005 | ||||||
Freddie Mac, 2.682%, 10/25/22 | 1,960,000 | 1,905,373 | ||||||
Freddie Mac, 3.32%, 2/25/23 | 1,059,000 | 1,073,609 | ||||||
Freddie Mac, 3.458%, 8/25/23 | 5,373,000 | 5,477,166 | ||||||
Freddie Mac, 6.5%, 5/01/34 - 7/01/37 | 5,498,034 | 6,184,772 | ||||||
Freddie Mac, 4%, 11/01/40 - 11/01/43 | 30,284,102 | 31,429,900 | ||||||
Freddie Mac, 3.5%, 2/01/42 - 8/01/43 | 29,929,029 | 30,119,188 | ||||||
Freddie Mac, 3%, 4/01/43 - 7/01/43 | 34,264,413 | 33,090,774 | ||||||
Freddie Mac, TBA, 4%, 5/15/44 | 19,172,000 | 19,819,804 | ||||||
Ginnie Mae, 4.5%, 6/20/41 | 1,709,001 | 1,842,755 | ||||||
Ginnie Mae, 4%, 2/20/42 | 5,132,430 | 5,400,491 | ||||||
Ginnie Mae, 3%, 2/15/43 - 6/20/43 | 12,659,569 | 12,478,206 | ||||||
Ginnie Mae, 6%, 9/15/32 - 1/15/38 | 7,522,847 | 8,593,980 | ||||||
Ginnie Mae, 5.5%, 12/15/32 - 4/20/35 | 7,338,778 | 8,150,994 | ||||||
Ginnie Mae, 4.5%, 7/15/33 - 1/20/41 | 18,575,752 | 20,107,106 | ||||||
Ginnie Mae, 5%, 7/20/33 - 10/15/34 | 2,132,870 | 2,348,552 | ||||||
Ginnie Mae, 4%, 1/20/41 - 4/20/41 | 16,838,836 | 17,727,726 | ||||||
Ginnie Mae, 3.5%, 12/15/41 - 7/20/43 | 32,386,860 | 33,104,993 | ||||||
Ginnie Mae, 3%, 7/20/43 | 5,205,907 | 5,132,636 | ||||||
Ginnie Mae, TBA, 4.5%, 5/15/44 | 6,636,000 | 7,134,737 | ||||||
|
| |||||||
$ | 750,492,692 | |||||||
Natural Gas - Pipeline - 0.4% | ||||||||
Energy Transfer Partners LP, 3.6%, 2/01/23 | $ | 3,288,000 | $ | 3,144,906 | ||||
Energy Transfer Partners LP, 4.9%, 2/01/24 | 2,630,000 | 2,737,180 | ||||||
Enterprise Products Operating LP, 6.5%, 1/31/19 | 5,184,000 | 6,130,749 | ||||||
Kinder Morgan Energy Partners LP, 4.15%, 2/01/24 | 5,700,000 | 5,665,903 | ||||||
Kinder Morgan Energy Partners LP, 7.75%, 3/15/32 | 2,520,000 | 3,179,600 | ||||||
Spectra Energy Capital LLC, 8%, 10/01/19 | 5,327,000 | 6,527,264 | ||||||
|
| |||||||
$ | 27,385,602 | |||||||
Network & Telecom - 0.3% | ||||||||
Verizon Communications, Inc., 6.4%, 9/15/33 | $ | 7,225,000 | $ | 8,577,860 | ||||
Verizon Communications, Inc., 6.55%, 9/15/43 | 10,620,000 | 12,923,850 | ||||||
|
| |||||||
$ | 21,501,710 | |||||||
Oil Services - 0.1% | ||||||||
Transocean, Inc., 3.8%, 10/15/22 | $ | 2,855,000 | $ | 2,729,403 |
19
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Other Banks & Diversified Financials - 1.1% | ||||||||
American Express Co., 5.5%, 9/12/16 | $ | 6,317,000 | $ | 6,994,454 | ||||
Banco Bradesco S.A., 6.75%, 9/29/19 (n) | 3,383,000 | 3,814,333 | ||||||
Banco de Credito del Peru, 5.375%, 9/16/20 | 4,872,000 | 5,158,230 | ||||||
Bank of Tokyo-Mitsubishi UFJ Ltd., 4.1%, 9/09/23 (n) | 4,960,000 | 5,133,848 | ||||||
BBVA Bancomer S.A. de C.V., 6.75%, 9/30/22 (n) | 4,730,000 | 5,179,350 | ||||||
Capital One Financial Corp., 6.15%, 9/01/16 | 8,680,000 | 9,686,967 | ||||||
Citigroup, Inc., 2.5%, 9/26/18 | 10,880,000 | 10,939,068 | ||||||
Discover Bank, 4.2%, 8/08/23 | 4,000,000 | 4,101,152 | ||||||
Groupe BPCE S.A., 12.5% to 9/30/19, FRN to 8/29/49 (n) | 5,168,000 | 6,666,720 | ||||||
SunTrust Banks, Inc., 2.35%, 11/01/18 | 2,541,000 | 2,541,907 | ||||||
Svenska Handelsbanken AB, 4.875%, 6/10/14 (n) | 5,000,000 | 5,042,415 | ||||||
Swedbank AB, 2.125%, 9/29/17 (n) | 1,317,000 | 1,331,014 | ||||||
U.S. Bancorp, 3.7%, 1/30/24 | 4,692,000 | 4,755,459 | ||||||
|
| |||||||
$ | 71,344,917 | |||||||
Pharmaceuticals - 0.5% | ||||||||
AbbVie, Inc., 1.2%, 11/06/15 | $ | 10,860,000 | $ | 10,952,679 | ||||
Gilead Sciences, Inc., 3.7%, 4/01/24 | 1,862,000 | 1,862,780 | ||||||
Hospira, Inc., 6.05%, 3/30/17 | 5,813,000 | 6,434,596 | ||||||
Roche Holdings, Inc., 6%, 3/01/19 (n) | 4,251,000 | 4,994,330 | ||||||
Teva Pharmaceutical Finance IV LLC, 3.65%, 11/10/21 | 7,330,000 | 7,342,182 | ||||||
|
| |||||||
$ | 31,586,567 | |||||||
Real Estate - 0.4% | ||||||||
Boston Properties, Inc., REIT, 5%, 6/01/15 | $ | 2,006,000 | $ | 2,102,438 | ||||
ERP Operating LP, REIT, 5.375%, 8/01/16 | 1,460,000 | 1,604,806 | ||||||
ERP Operating LP, REIT, 4.625%, 12/15/21 | 5,212,000 | 5,634,610 | ||||||
HCP, Inc., REIT, 5.375%, 2/01/21 | 4,146,000 | 4,641,994 | ||||||
Simon Property Group, Inc., REIT, 4.375%, 3/01/21 | 4,500,000 | 4,895,384 | ||||||
WEA Finance LLC, 6.75%, 9/02/19 (n) | 1,505,000 | 1,809,141 | ||||||
WEA Finance LLC, REIT, 4.625%, 5/10/21 (n) | 5,810,000 | 6,357,476 | ||||||
|
| |||||||
$ | 27,045,849 | |||||||
Retailers - 0.4% | ||||||||
Gap, Inc., 5.95%, 4/12/21 | $ | 3,740,000 | $ | 4,210,945 | ||||
Home Depot, Inc., 3.75%, 2/15/24 | 3,600,000 | 3,677,558 | ||||||
Home Depot, Inc., 5.95%, 4/01/41 | 1,578,000 | 1,914,894 | ||||||
Limited Brands, Inc., 5.25%, 11/01/14 | 2,262,000 | 2,310,068 | ||||||
Wal-Mart Stores, Inc., 5.25%, 9/01/35 | 12,347,000 | 13,928,824 | ||||||
|
| |||||||
$ | 26,042,289 | |||||||
Supermarkets - 0.1% | ||||||||
The Kroger Co., 4%, 2/01/24 | $ | 8,000,000 | $ | 8,086,072 |
20
Table of Contents
Portfolio of Investments (unaudited) – continued
Issuer | Shares/Par | Value ($) | ||||||
Bonds - continued | ||||||||
Supranational - 0.1% | ||||||||
Asian Development Bank, 2.75%, 5/21/14 | $ | 5,390,000 | $ | 5,409,081 | ||||
Asian Development Bank, 1.125%, 3/15/17 | 3,322,000 | 3,335,089 | ||||||
|
| |||||||
$ | 8,744,170 | |||||||
Telecommunications - Wireless - 0.3% | ||||||||
American Tower Trust I, 3.07%, 3/15/23 (n) | $ | 5,960,000 | $ | 5,697,289 | ||||
Crown Castle Towers LLC, 6.113%, 1/15/20 (n) | 3,852,000 | 4,415,582 | ||||||
Crown Castle Towers LLC, 4.883%, 8/15/20 (n) | 2,040,000 | 2,211,952 | ||||||
Rogers Communications, Inc., 6.8%, 8/15/18 | 8,529,000 | 10,129,586 | ||||||
|
| |||||||
$ | 22,454,409 | |||||||
Tobacco - 0.2% | ||||||||
Altria Group, Inc., 2.85%, 8/09/22 | $ | 6,040,000 | $ | 5,667,948 | ||||
B.A.T. International Finance PLC, 3.25%, 6/07/22 (n) | 5,833,000 | 5,724,022 | ||||||
|
| |||||||
$ | 11,391,970 | |||||||
Transportation - Services - 0.1% | ||||||||
ERAC USA Finance Co., 7%, 10/15/37 (n) | $ | 6,381,000 | $ | 8,025,141 | ||||
U.S. Government Agencies and Equivalents - 0.3% | ||||||||
Aid-Egypt, 4.45%, 9/15/15 | $ | 9,559,000 | $ | 10,122,694 | ||||
Small Business Administration, 4.35%, 7/01/23 | 561,085 | 593,349 | ||||||
Small Business Administration, 4.77%, 4/01/24 | 1,681,477 | 1,788,400 | ||||||
Small Business Administration, 5.18%, 5/01/24 | 2,795,551 | 3,029,030 | ||||||
Small Business Administration, 5.52%, 6/01/24 | 1,468,285 | 1,598,681 | ||||||
Small Business Administration, 4.99%, 9/01/24 | 2,426,209 | 2,626,100 | ||||||
Small Business Administration, 4.95%, 3/01/25 | 1,955,041 | 2,093,007 | ||||||
|
| |||||||
$ | 21,851,261 | |||||||
U.S. Treasury Obligations - 14.4% | ||||||||
U.S. Treasury Bonds, 8.5%, 2/15/20 | $ | 2,148,000 | $ | 2,931,517 | ||||
U.S. Treasury Bonds, 6%, 2/15/26 | 1,524,000 | 2,003,822 | ||||||
U.S. Treasury Bonds, 6.75%, 8/15/26 | 926,000 | 1,296,834 | ||||||
U.S. Treasury Bonds, 5.25%, 2/15/29 | 5,294,000 | 6,623,292 | ||||||
U.S. Treasury Bonds, 5.375%, 2/15/31 | 4,690,000 | 5,999,537 | ||||||
U.S. Treasury Bonds, 4.5%, 2/15/36 | 1,557,000 | 1,827,529 | ||||||
U.S. Treasury Bonds, 5%, 5/15/37 | 2,452,000 | 3,079,560 | ||||||
U.S. Treasury Bonds, 4.5%, 8/15/39 | 138,888,000 | 163,367,010 | ||||||
U.S. Treasury Notes, 4.75%, 5/15/14 | 2,962,000 | 2,978,661 | ||||||
U.S. Treasury Notes, 2.125%, 5/31/15 | 179,336,000 | 183,413,025 | ||||||
U.S. Treasury Notes, 4.25%, 8/15/15 | 856,000 | 903,448 | ||||||
U.S. Treasury Notes, 0.375%, 2/15/16 | 95,901,500 | 95,897,760 | ||||||
U.S. Treasury Notes, 2.625%, 2/29/16 | 4,568,000 | 4,762,140 | ||||||
U.S. Treasury Notes, 0.875%, 12/31/16 | 204,051,000 | 204,529,296 |
21
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%, 8/15/17 | $ | 2,870,000 | $ | 3,217,988 | ||||
U.S. Treasury Notes, 3.75%, 11/15/18 | 4,535,000 | 4,971,494 | ||||||
U.S. Treasury Notes, 3.125%, 5/15/19 | 52,370,000 | 55,859,989 | ||||||
U.S. Treasury Notes, 3.5%, 5/15/20 | 55,133,000 | 59,728,832 | ||||||
U.S. Treasury Notes, 3.125%, 5/15/21 | 147,456,000 | 155,312,603 | ||||||
|
| |||||||
$ | 958,704,337 | |||||||
Utilities - Electric Power - 0.6% | ||||||||
MidAmerican Energy Holdings Co., 3.75%, 11/15/23 (n) | $ | 3,550,000 | $ | 3,531,618 | ||||
MidAmerican Funding LLC, 6.927%, 3/01/29 | 2,785,000 | 3,466,785 | ||||||
Oncor Electric Delivery Co., 7%, 9/01/22 | 4,555,000 | 5,660,990 | ||||||
Pacific Gas & Electric Co., 4.6%, 6/15/43 | 4,920,000 | 4,930,676 | ||||||
PPL Capital Funding, Inc., 5%, 3/15/44 | 1,773,000 | 1,796,132 | ||||||
PPL Corp., 3.4%, 6/01/23 | 4,920,000 | 4,759,731 | ||||||
Progress Energy, Inc., 3.15%, 4/01/22 | 6,169,000 | 6,059,963 | ||||||
PSEG Power LLC, 5.32%, 9/15/16 | 5,099,000 | 5,616,390 | ||||||
Waterford 3 Funding Corp., 8.09%, 1/02/17 | 2,987,364 | 2,982,719 | ||||||
|
| |||||||
$ | 38,805,004 | |||||||
Total Bonds (Identified Cost, $2,544,236,832) | $ | 2,615,528,441 | ||||||
Convertible Preferred Stocks - 0.2% | ||||||||
Aerospace - 0.0% | ||||||||
United Technologies Corp., 7.5% | 27,887 | $ | 1,856,438 | |||||
Utilities - Electric Power - 0.2% | ||||||||
PPL Corp., 8.75% | 158,840 | $ | 8,688,548 | |||||
Total Convertible Preferred Stocks (Identified Cost, $10,263,565) | $ | 10,544,986 | ||||||
Money Market Funds - 4.5% | ||||||||
MFS Institutional Money Market Portfolio, 0.09%, at Cost and Net Asset Value (v) | 303,389,881 | $ | 303,389,881 | |||||
Collateral for Securities Loaned - 0.5% | ||||||||
JPMorgan Prime Money Market Fund, 0.06%, at Cost and Net Asset Value (j) | 32,576,528 | $ | 32,576,528 | |||||
Total Investments (Identified Cost, $5,630,390,438) | $ | 6,864,368,008 | ||||||
Other Assets, Less Liabilities - (2.8)% | (187,157,102 | ) | ||||||
Net Assets - 100.0% | $ | 6,677,210,906 |
22
Table of Contents
Portfolio of Investments (unaudited) – continued
(a) | Non-income producing security. |
(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. |
(j) | The rate quoted is the annualized seven-day yield of the fund at period end. |
(l) | A portion of this security is on loan. |
(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 $169,548,376, representing 2.5% of net assets. |
(v) | Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio 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 | |||||||
Bayview Financial Revolving Mortgage Loan Trust, FRN, 1.753%, 12/28/40 | 3/01/06 | $6,248,680 | $4,135,739 | |||||||
BlackRock Capital Finance LP, 7.75%, 9/25/26 | 10/10/96 | 612,970 | 74,028 | |||||||
Petroleos Mexicanos, 3.125%, 1/23/19 | 1/15/14 | 2,358,000 | 2,414,592 | |||||||
Spirit Master Funding LLC, 5.05%, 7/20/23 | 10/04/05 | 5,591,035 | 5,772,881 | |||||||
Total Restricted Securities | $12,397,240 | |||||||||
% of Net assets | 0.2% |
The following abbreviations are used in this report and are defined:
ADR | American Depositary Receipt |
CDO | Collateralized Debt Obligation |
CLO | Collateralized Loan Obligation |
FRN | Floating Rate Note. Interest rate resets periodically and may not be the rate reported at period end. |
IPS | International Preference Stock |
PLC | Public Limited Company |
REIT | Real Estate Investment Trust |
TBA | To Be Announced |
See Notes to Financial Statements
23
Table of Contents
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 3/31/14 (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, $5,327,000,557) | $6,560,978,127 | |||
Underlying affiliated funds, at cost and value | 303,389,881 | |||
Total investments, at value, including $32,061,271 of securities on loan | $6,864,368,008 | |||
Cash | 601,108 | |||
Receivables for | ||||
Investments sold | 6,432,066 | |||
Fund shares sold | 7,575,718 | |||
Interest and dividends | 23,298,992 | |||
Other assets | 74,139 | |||
Total assets | $6,902,350,031 | |||
Liabilities | ||||
Payables for | ||||
Distributions | $931,242 | |||
Investments purchased | 5,756,980 | |||
TBA purchase commitments | 170,173,057 | |||
Fund shares reacquired | 10,372,847 | |||
Collateral for securities loaned, at value | 32,576,528 | |||
Payable to affiliates | ||||
Investment adviser | 259,724 | |||
Shareholder servicing costs | 4,524,718 | |||
Distribution and service fees | 231,346 | |||
Program manager fees | 148 | |||
Payable for independent Trustees’ compensation | 141,539 | |||
Accrued expenses and other liabilities | 170,996 | |||
Total liabilities | $225,139,125 | |||
Net assets | $6,677,210,906 | |||
Net assets consist of | ||||
Paid-in capital | $5,417,857,032 | |||
Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 1,233,994,865 | |||
Accumulated net realized gain (loss) on investments and foreign currency | 28,575,899 | |||
Accumulated distributions in excess of net investment income | (3,216,890 | ) | ||
Net assets | $6,677,210,906 | |||
Shares of beneficial interest outstanding | 374,274,685 |
24
Table of Contents
Statement of Assets and Liabilities (unaudited) – continued
Net assets | Shares outstanding | Net asset value per share (a) | ||||||||||
Class A | $4,646,478,256 | 260,663,154 | $17.83 | |||||||||
Class B | 262,299,606 | 14,702,399 | 17.84 | |||||||||
Class C | 904,811,021 | 50,498,559 | 17.92 | |||||||||
Class I | 183,827,866 | 10,314,098 | 17.82 | |||||||||
Class R1 | 17,324,581 | 973,014 | 17.81 | |||||||||
Class R2 | 167,277,834 | 9,360,023 | 17.87 | |||||||||
Class R3 | 229,504,243 | 12,867,854 | 17.84 | |||||||||
Class R4 | 211,996,926 | 11,883,471 | 17.84 | |||||||||
Class R5 | 26,491,137 | 1,486,293 | 17.82 | |||||||||
Class 529A | 17,141,843 | 963,749 | 17.79 | |||||||||
Class 529B | 2,401,758 | 134,647 | 17.84 | |||||||||
Class 529C | 7,655,835 | 427,424 | 17.91 |
(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 $18.92 [100 / 94.25 x $17.83] and $18.88 [100 / 94.25 x $17.79], 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, R5, and 529A. |
See Notes to Financial Statements
25
Table of Contents
Financial Statements
Six months ended 3/31/14 (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 | $50,641,703 | |||
Interest | 39,791,391 | |||
Dividends from underlying affiliated funds | 241,004 | |||
Foreign taxes withheld | (462,204 | ) | ||
Total investment income | $90,211,894 | |||
Expenses | ||||
Management fee | $11,342,441 | |||
Distribution and service fees | 12,214,217 | |||
Program manager fees | 13,058 | |||
Shareholder servicing costs | 3,653,729 | |||
Administrative services fee | 235,846 | |||
Independent Trustees’ compensation | 55,761 | |||
Custodian fee | 133,576 | |||
Shareholder communications | 126,304 | |||
Audit and tax fees | 38,447 | |||
Legal fees | 30,948 | |||
Miscellaneous | 190,687 | |||
Total expenses | $28,035,014 | |||
Fees paid indirectly | (65 | ) | ||
Reduction of expenses by investment adviser and distributor | (138,172 | ) | ||
Net expenses | $27,896,777 | |||
Net investment income | $62,315,117 | |||
Realized and unrealized gain (loss) on investments and foreign currency | ||||
Realized gain (loss) (identified cost basis) | ||||
Investments | $106,950,160 | |||
Foreign currency | 62,096 | |||
Net realized gain (loss) on investments and foreign currency | $107,012,256 | |||
Change in unrealized appreciation (depreciation) | ||||
Investments | $340,903,843 | |||
Translation of assets and liabilities in foreign currencies | (19,546 | ) | ||
Net unrealized gain (loss) on investments and foreign currency translation | $340,884,297 | |||
Net realized and unrealized gain (loss) on investments and foreign currency | $447,896,553 | |||
Change in net assets from operations | $510,211,670 |
See Notes to Financial Statements
26
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 3/31/14 (unaudited) | Year ended 9/30/13 | ||||||
From operations | ||||||||
Net investment income | $62,315,117 | $118,655,181 | ||||||
Net realized gain (loss) on investments and foreign currency | 107,012,256 | 580,226,693 | ||||||
Net unrealized gain (loss) on investments and foreign currency translation | 340,884,297 | 18,450,207 | ||||||
Change in net assets from operations | $510,211,670 | $717,332,081 | ||||||
Distributions declared to shareholders | ||||||||
From net investment income | $(63,636,127 | ) | $(127,400,078 | ) | ||||
From net realized gain on investments | (52,872,854 | ) | — | |||||
Total distributions declared to shareholders | $(116,508,981 | ) | $— | |||||
Change in net assets from fund share transactions | $39,611,943 | $(241,060,316 | ) | |||||
Total change in net assets | $433,314,632 | $348,871,687 | ||||||
Net assets | ||||||||
At beginning of period | 6,243,896,274 | 5,895,024,587 | ||||||
At end of period (including accumulated distributions in excess of net investment income of $3,216,890 and $1,895,880, respectively) | $6,677,210,906 | $6,243,896,274 |
See Notes to Financial Statements
27
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 ended 3/31/14 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class A | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $16.77 | $15.19 | $13.18 | $13.46 | $12.84 | $13.17 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.18 | $0.34 | $0.34 | $0.32 | $0.31 | $0.34 | ||||||||||||||||||
Net realized and unrealized | 1.20 | 1.60 | 2.04 | (0.28 | ) | 0.63 | (0.31 | ) | ||||||||||||||||
Total from investment | $1.38 | $1.94 | $2.38 | $0.04 | $0.94 | $0.03 | ||||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.18 | ) | $(0.36 | ) | $(0.37 | ) | $(0.32 | ) | $(0.32 | ) | $(0.36 | ) | ||||||||||||
From net realized gain on | (0.14 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.32 | ) | $(0.36 | ) | $(0.37 | ) | $(0.32 | ) | $(0.32 | ) | $(0.36 | ) | ||||||||||||
Net asset value, end of period (x) | $17.83 | $16.77 | $15.19 | $13.18 | $13.46 | $12.84 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 8.31 | (n) | 12.93 | 18.21 | 0.14 | 7.45 | 0.61 | |||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.74 | (a) | 0.75 | 0.77 | 0.79 | 0.88 | 0.92 | |||||||||||||||||
Expenses after expense | 0.73 | (a) | 0.75 | 0.77 | 0.79 | 0.88 | 0.92 | |||||||||||||||||
Net investment income | 2.05 | (a) | 2.11 | 2.33 | 2.28 | 2.36 | 2.94 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 53 | 23 | 24 | 32 | 56 | |||||||||||||||||
Net assets at end of period | $4,646,478 | $4,399,349 | $4,152,753 | $3,898,883 | $4,357,041 | $4,373,436 |
See Notes to Financial Statements
28
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class B | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $16.78 | $15.20 | $13.19 | $13.47 | $12.84 | $13.17 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.11 | $0.22 | $0.23 | $0.22 | $0.23 | $0.26 | ||||||||||||||||||
Net realized and unrealized | 1.20 | 1.60 | 2.04 | (0.29 | ) | 0.64 | (0.31 | ) | ||||||||||||||||
Total from investment | $1.31 | $1.82 | $2.27 | $(0.07 | ) | $0.87 | $(0.05 | ) | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.11 | ) | $(0.24 | ) | $(0.26 | ) | $(0.21 | ) | $(0.24 | ) | $(0.28 | ) | ||||||||||||
From net realized gain on | (0.14 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.25 | ) | $(0.24 | ) | $(0.26 | ) | $(0.21 | ) | $(0.24 | ) | $(0.28 | ) | ||||||||||||
Net asset value, end of period (x) | $17.84 | $16.78 | $15.20 | $13.19 | $13.47 | $12.84 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 7.89 | (n) | 12.05 | 17.30 | (0.60 | ) | 6.81 | (0.05 | ) | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.49 | (a) | 1.50 | 1.52 | 1.52 | 1.53 | 1.57 | |||||||||||||||||
Expenses after expense | 1.49 | (a) | 1.50 | 1.52 | 1.52 | 1.53 | 1.57 | |||||||||||||||||
Net investment income | 1.29 | (a) | 1.36 | 1.59 | 1.55 | 1.72 | 2.32 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 53 | 23 | 24 | 32 | 56 | |||||||||||||||||
Net assets at end of period | $262,300 | $272,887 | $338,115 | $394,233 | $574,454 | $775,219 |
See Notes to Financial Statements
29
Table of Contents
Financial Highlights – continued
Six months 3/31/14 (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class C | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $16.86 | $15.27 | $13.25 | $13.53 | $12.90 | $13.23 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.11 | $0.22 | $0.23 | $0.22 | $0.23 | $0.26 | ||||||||||||||||||
Net realized and unrealized | 1.21 | 1.61 | 2.05 | (0.29 | ) | 0.64 | (0.31 | ) | ||||||||||||||||
Total from investment | $1.32 | $1.83 | $2.28 | $(0.07 | ) | $0.87 | $(0.05 | ) | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.12 | ) | $(0.24 | ) | $(0.26 | ) | $(0.21 | ) | $(0.24 | ) | $(0.28 | ) | ||||||||||||
From net realized gain on | (0.14 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.26 | ) | $(0.24 | ) | $(0.26 | ) | $(0.21 | ) | $(0.24 | ) | $(0.28 | ) | ||||||||||||
Net asset value, end of period (x) | $17.92 | $16.86 | $15.27 | $13.25 | $13.53 | $12.90 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 7.86 | (n) | 12.08 | 17.31 | (0.59 | ) | 6.79 | (0.04 | ) | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.49 | (a) | 1.50 | 1.52 | 1.52 | 1.53 | 1.57 | |||||||||||||||||
Expenses after expense | 1.49 | (a) | 1.50 | 1.52 | 1.52 | 1.53 | 1.57 | |||||||||||||||||
Net investment income | 1.29 | (a) | 1.35 | 1.58 | 1.56 | 1.71 | 2.29 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 53 | 23 | 24 | 32 | 56 | |||||||||||||||||
Net assets at end of period | $904,811 | $836,471 | $769,540 | $734,645 | $840,204 | $861,667 |
See Notes to Financial Statements
30
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class I | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $16.77 | $15.19 | $13.18 | $13.46 | $12.84 | $13.17 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.20 | $0.38 | $0.37 | $0.36 | $0.36 | $0.38 | ||||||||||||||||||
Net realized and unrealized | 1.19 | 1.60 | 2.05 | (0.28 | ) | 0.63 | (0.31 | ) | ||||||||||||||||
Total from investment | $1.39 | $1.98 | $2.42 | $0.08 | $0.99 | $0.07 | ||||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.20 | ) | $(0.40 | ) | $(0.41 | ) | $(0.36 | ) | $(0.37 | ) | $(0.40 | ) | ||||||||||||
From net realized gain on | (0.14 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.34 | ) | $(0.40 | ) | $(0.41 | ) | $(0.36 | ) | $(0.37 | ) | $(0.40 | ) | ||||||||||||
Net asset value, end of period (x) | $17.82 | $16.77 | $15.19 | $13.18 | $13.46 | $12.84 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 8.38 | (n) | 13.21 | 18.50 | 0.42 | 7.83 | 0.96 | |||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.49 | (a) | 0.50 | 0.52 | 0.52 | 0.53 | 0.57 | |||||||||||||||||
Expenses after expense | 0.49 | (a) | 0.50 | 0.52 | 0.52 | 0.53 | 0.57 | |||||||||||||||||
Net investment income | 2.29 | (a) | 2.35 | 2.59 | 2.57 | 2.72 | 3.30 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 53 | 23 | 24 | 32 | 56 | |||||||||||||||||
Net assets at end of period | $183,828 | $160,246 | $121,687 | $109,575 | $98,214 | $104,557 |
See Notes to Financial Statements
31
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R1 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $16.75 | $15.18 | $13.17 | $13.45 | $12.83 | $13.16 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.11 | $0.22 | $0.23 | $0.22 | $0.23 | $0.26 | ||||||||||||||||||
Net realized and unrealized | 1.21 | 1.59 | 2.04 | (0.29 | ) | 0.63 | (0.30 | ) | ||||||||||||||||
Total from investment | $1.32 | $1.81 | $2.27 | $(0.07 | ) | $0.86 | $(0.04 | ) | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.12 | ) | $(0.24 | ) | $(0.26 | ) | $(0.21 | ) | $(0.24 | ) | $(0.29 | ) | ||||||||||||
From net realized gain on | (0.14 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.26 | ) | $(0.24 | ) | $(0.26 | ) | $(0.21 | ) | $(0.24 | ) | $(0.29 | ) | ||||||||||||
Net asset value, end of period (x) | $17.81 | $16.75 | $15.18 | $13.17 | $13.45 | $12.83 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 7.91 | (n) | 12.02 | 17.36 | (0.58 | ) | 6.76 | (0.04 | ) | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.49 | (a) | 1.50 | 1.52 | 1.52 | 1.53 | 1.57 | |||||||||||||||||
Expenses after expense | 1.49 | (a) | 1.50 | 1.52 | 1.52 | 1.53 | 1.57 | |||||||||||||||||
Net investment income | 1.29 | (a) | 1.36 | 1.58 | 1.56 | 1.71 | 2.29 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 53 | 23 | 24 | 32 | 56 | |||||||||||||||||
Net assets at end of period | $17,325 | $16,134 | $17,900 | $15,441 | $17,670 | $16,811 |
See Notes to Financial Statements
32
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R2 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $16.81 | $15.23 | $13.22 | $13.50 | $12.87 | $13.20 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.16 | $0.30 | $0.30 | $0.29 | $0.29 | $0.32 | ||||||||||||||||||
Net realized and unrealized | 1.20 | 1.60 | 2.04 | (0.28 | ) | 0.64 | (0.31 | ) | ||||||||||||||||
Total from investment | $1.36 | $1.90 | $2.34 | $0.01 | $0.93 | $0.01 | ||||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.16 | ) | $(0.32 | ) | $(0.33 | ) | $(0.29 | ) | $(0.30 | ) | $(0.34 | ) | ||||||||||||
From net realized gain on | (0.14 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.30 | ) | $(0.32 | ) | $(0.33 | ) | $(0.29 | ) | $(0.30 | ) | $(0.34 | ) | ||||||||||||
Net asset value, end of period (x) | $17.87 | $16.81 | $15.23 | $13.22 | $13.50 | $12.87 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 8.15 | (n) | 12.61 | 17.86 | (0.08 | ) | 7.35 | 0.46 | ||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.99 | (a) | 1.00 | 1.02 | 1.02 | 1.03 | 1.07 | |||||||||||||||||
Expenses after expense | 0.99 | (a) | 1.00 | 1.02 | 1.02 | 1.03 | 1.07 | |||||||||||||||||
Net investment income | 1.79 | (a) | 1.85 | 2.08 | 2.06 | 2.21 | 2.79 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 53 | 23 | 24 | 32 | 56 | |||||||||||||||||
Net assets at end of period | $167,278 | $162,091 | $154,925 | $151,437 | $166,794 | $152,115 |
See Notes to Financial Statements
33
Table of Contents
Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R3 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $16.78 | $15.20 | $13.19 | $13.47 | $12.85 | $13.18 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.18 | $0.34 | $0.34 | $0.33 | $0.32 | $0.34 | ||||||||||||||||||
Net realized and unrealized | 1.20 | 1.60 | 2.04 | (0.29 | ) | 0.64 | (0.30 | ) | ||||||||||||||||
Total from investment | $1.38 | $1.94 | $2.38 | $0.04 | $0.96 | $0.04 | ||||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.18 | ) | $(0.36 | ) | $(0.37 | ) | $(0.32 | ) | $(0.34 | ) | $(0.37 | ) | ||||||||||||
From net realized gain on | (0.14 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.32 | ) | $(0.36 | ) | $(0.37 | ) | $(0.32 | ) | $(0.34 | ) | $(0.37 | ) | ||||||||||||
Net asset value, end of period (x) | $17.84 | $16.78 | $15.20 | $13.19 | $13.47 | $12.85 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 8.30 | (n) | 12.92 | 18.20 | 0.17 | 7.55 | 0.71 | |||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.74 | (a) | 0.75 | 0.77 | 0.77 | 0.78 | 0.82 | |||||||||||||||||
Expenses after expense | 0.74 | (a) | 0.75 | 0.77 | 0.77 | 0.78 | 0.82 | |||||||||||||||||
Net investment income | 2.05 | (a) | 2.11 | 2.32 | 2.31 | 2.46 | 3.00 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 53 | 23 | 24 | 32 | 56 | |||||||||||||||||
Net assets at end of period | $229,504 | $178,646 | $192,389 | $153,259 | $160,057 | $142,968 |
See Notes to Financial Statements
34
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Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class R4 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $16.78 | $15.21 | $13.19 | $13.47 | $12.85 | $13.18 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.20 | $0.38 | $0.38 | $0.36 | $0.36 | $0.38 | ||||||||||||||||||
Net realized and unrealized | 1.20 | 1.59 | 2.04 | (0.28 | ) | 0.63 | (0.31 | ) | ||||||||||||||||
Total from investment | $1.40 | $1.97 | $2.42 | $0.08 | $0.99 | $0.07 | ||||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.20 | ) | $(0.40 | ) | $(0.40 | ) | $(0.36 | ) | $(0.37 | ) | $(0.40 | ) | ||||||||||||
From net realized gain on | (0.14 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.34 | ) | $(0.40 | ) | $(0.40 | ) | $(0.36 | ) | $(0.37 | ) | $(0.40 | ) | ||||||||||||
Net asset value, end of period (x) | $17.84 | $16.78 | $15.21 | $13.19 | $13.47 | $12.85 | ||||||||||||||||||
Total return (%) (r)(s)(x) | 8.43 | (n) | 13.13 | 18.49 | 0.42 | 7.82 | 0.96 | |||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.49 | (a) | 0.50 | 0.52 | 0.52 | 0.53 | 0.57 | |||||||||||||||||
Expenses after expense | 0.49 | (a) | 0.50 | 0.52 | 0.52 | 0.53 | 0.57 | |||||||||||||||||
Net investment income | 2.30 | (a) | 2.34 | 2.64 | 2.56 | 2.71 | 3.27 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 53 | 23 | 24 | 32 | 56 | |||||||||||||||||
Net assets at end of period | $211,997 | $182,332 | $125,421 | $268,667 | $291,138 | $264,796 |
See Notes to Financial Statements
35
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Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||
Class R5 | 2013 | 2012 (i) | ||||||||||
Net asset value, beginning of period | $16.77 | $15.19 | $14.30 | |||||||||
Income (loss) from investment operations | ||||||||||||
Net investment income (d) | $0.21 | $0.40 | $0.11 | |||||||||
Net realized and unrealized gain (loss) on investments | 1.19 | 1.59 | 0.91 | (g) | ||||||||
Total from investment operations | $1.40 | $1.99 | $1.02 | |||||||||
Less distributions declared to shareholders | ||||||||||||
From net investment income | $(0.21 | ) | $(0.41 | ) | $(0.13 | ) | ||||||
From net realized gain on investments | (0.14 | ) | — | — | ||||||||
Total distributions declared to shareholders | $(0.35 | ) | $(0.41 | ) | $(0.13 | ) | ||||||
Net asset value, end of period (x) | $17.82 | $16.77 | $15.19 | |||||||||
Total return (%) (r)(s)(x) | 8.42 | (n) | 13.30 | 7.17 | (n) | |||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||
Expenses before expense reductions (f) | 0.41 | (a) | 0.41 | 0.44 | (a) | |||||||
Expenses after expense reductions (f) | 0.41 | (a) | 0.41 | 0.44 | (a) | |||||||
Net investment income | 2.39 | (a) | 2.42 | 2.29 | (a)(l) | |||||||
Portfolio turnover | 20 | (n) | 53 | 23 | ||||||||
Net assets at end of period (000 omitted) | $26,491 | $10,800 | $107 |
See Notes to Financial Statements
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Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class 529A | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $16.73 | $15.16 | $13.16 | $13.44 | $12.82 | $13.15 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.17 | $0.33 | $0.33 | $0.31 | $0.30 | $0.33 | ||||||||||||||||||
Net realized and unrealized | 1.21 | 1.59 | 2.03 | (0.28 | ) | 0.63 | (0.31 | ) | ||||||||||||||||
Total from investment | $1.38 | $1.92 | $2.36 | $0.03 | $0.93 | $0.02 | ||||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.18 | ) | $(0.35 | ) | $(0.36 | ) | $(0.31 | ) | $(0.31 | ) | $(0.35 | ) | ||||||||||||
From net realized gain on | (0.14 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.32 | ) | $(0.35 | ) | $(0.36 | ) | $(0.31 | ) | $(0.31 | ) | $(0.35 | ) | ||||||||||||
Net asset value, end of period (x) | $17.79 | $16.73 | $15.16 | $13.16 | $13.44 | $12.82 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 8.30 | (n) | 12.84 | 18.11 | 0.06 | 7.36 | 0.50 | |||||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 0.84 | (a) | 0.85 | 0.87 | 0.89 | 0.98 | 1.02 | |||||||||||||||||
Expenses after expense | 0.78 | (a) | 0.80 | 0.82 | 0.88 | 0.98 | 1.02 | |||||||||||||||||
Net investment income | 2.00 | (a) | 2.05 | 2.27 | 2.20 | 2.26 | 2.84 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 53 | 23 | 24 | 32 | 56 | |||||||||||||||||
Net assets at end of period | $17,142 | $15,581 | $13,064 | $9,758 | $8,965 | $8,228 |
See Notes to Financial Statements
37
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Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class 529B | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $16.78 | $15.20 | $13.19 | $13.46 | $12.84 | $13.17 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.11 | $0.21 | $0.22 | $0.21 | $0.21 | $0.25 | ||||||||||||||||||
Net realized and unrealized | 1.20 | 1.60 | 2.04 | (0.28 | ) | 0.64 | (0.31 | ) | ||||||||||||||||
Total from investment | $1.31 | $1.81 | $2.26 | $(0.07 | ) | $0.85 | $(0.06 | ) | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.11 | ) | $(0.23 | ) | $(0.25 | ) | $(0.20 | ) | $(0.23 | ) | $(0.27 | ) | ||||||||||||
From net realized gain on | (0.14 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.25 | ) | $(0.23 | ) | $(0.25 | ) | $(0.20 | ) | $(0.23 | ) | $(0.27 | ) | ||||||||||||
Net asset value, end of period (x) | $17.84 | $16.78 | $15.20 | $13.19 | $13.46 | $12.84 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 7.87 | (n) | 11.99 | 17.24 | (0.60 | ) | 6.65 | (0.14 | ) | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.59 | (a) | 1.60 | 1.62 | 1.62 | 1.63 | 1.67 | |||||||||||||||||
Expenses after expense | 1.54 | (a) | 1.55 | 1.57 | 1.61 | 1.63 | 1.67 | |||||||||||||||||
Net investment income | 1.24 | (a) | 1.31 | 1.54 | 1.47 | 1.61 | 2.19 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 53 | 23 | 24 | 32 | 56 | |||||||||||||||||
Net assets at end of period | $2,402 | $2,369 | $3,095 | $4,007 | $4,828 | $4,609 |
See Notes to Financial Statements
38
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Financial Highlights – continued
Six months (unaudited) | Years ended 9/30 | |||||||||||||||||||||||
Class 529C | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
Net asset value, beginning of | $16.85 | $15.27 | $13.25 | $13.53 | $12.90 | $13.23 | ||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||
Net investment income (d) | $0.11 | $0.21 | $0.22 | $0.21 | $0.21 | $0.25 | ||||||||||||||||||
Net realized and unrealized | 1.20 | 1.60 | 2.05 | (0.29 | ) | 0.65 | (0.31 | ) | ||||||||||||||||
Total from investment | $1.31 | $1.81 | $2.27 | $(0.08 | ) | $0.86 | $(0.06 | ) | ||||||||||||||||
Less distributions declared to shareholders | ||||||||||||||||||||||||
From net investment income | $(0.11 | ) | $(0.23 | ) | $(0.25 | ) | $(0.20 | ) | $(0.23 | ) | $(0.27 | ) | ||||||||||||
From net realized gain on | (0.14 | ) | — | — | — | — | — | |||||||||||||||||
Total distributions declared to | $(0.25 | ) | $(0.23 | ) | $(0.25 | ) | $(0.20 | ) | $(0.23 | ) | $(0.27 | ) | ||||||||||||
Net asset value, end of period (x) | $17.91 | $16.85 | $15.27 | $13.25 | $13.53 | $12.90 | ||||||||||||||||||
Total return (%) (r)(s)(t)(x) | 7.84 | (n) | 11.97 | 17.26 | (0.66 | ) | 6.69 | (0.14 | ) | |||||||||||||||
Ratios (%) (to average net assets) and Supplemental data: | ||||||||||||||||||||||||
Expenses before expense | 1.59 | (a) | 1.60 | 1.62 | 1.62 | 1.63 | 1.67 | |||||||||||||||||
Expenses after expense | 1.53 | (a) | 1.55 | 1.57 | 1.61 | 1.63 | 1.67 | |||||||||||||||||
Net investment income | 1.25 | (a) | 1.30 | 1.53 | 1.47 | 1.60 | 2.18 | |||||||||||||||||
Portfolio turnover | 20 | (n) | 53 | 23 | 24 | 32 | 56 | |||||||||||||||||
Net assets at end of period | $7,656 | $6,989 | $6,028 | $5,091 | $4,973 | $4,100 |
See Notes to Financial Statements
39
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Financial Highlights – continued
(a) | Annualized. |
(d) | Per share data is based on average shares outstanding. |
(f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
(g) | The per share amount varies from the net realized and unrealized gain/loss for the period because of the timing of sales of fund shares and the per share amount of realized and unrealized gains and losses at such time. |
(i) | For the period from the class inception, June 1, 2012, through the stated period end. |
(l) | Recognition of net investment income by the fund may be affected by the timing of the declaration of dividends by companies in which the fund invests and the actual annual net investment income ratio may differ. |
(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. |
(x) | The net asset values per share and total returns have been calculated on net assets which include adjustments made in accordance with U.S. generally accepted accounting principles required at period end for financial reporting purposes. |
See Notes to Financial Statements
40
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(unaudited)
(1) Business and Organization
MFS Total Return Fund (the fund) is a diversified 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.
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
(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 increases and decreases in net assets from operations 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. 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.
In this reporting period, the fund adopted the disclosure provisions of FASB Accounting Standards Update 2011-11 (“ASU 2011-11”), Balance Sheet (Topic 210) – Disclosures about Offsetting Assets and Liabilities along with the related scope clarification provisions of FASB Accounting Standards Update 2013-01 (“ASU 2013-01”) entitled Balance Sheet (Topic 210) – Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 is intended to enhance disclosures on the offsetting of financial assets and liabilities by requiring entities to disclose both gross and net information about financial instruments and transactions that are either offset in the statement of financial position or subject to an enforceable Master Netting Agreement or similar arrangement. ASU 2013-01 limits the scope of ASU 2011-11’s disclosure requirements on offsetting to financial assets and financial liabilities related to derivatives, repurchase and reverse repurchase agreements, and securities lending and securities borrowing transactions. The disclosures required by ASU 2011-11, to the
41
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Notes to Financial Statements (unaudited) – continued
extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’s in-scope financial instruments and transactions.
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. 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 affected 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
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Notes to Financial Statements (unaudited) – continued
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, 2014 in valuing the fund’s assets or liabilities:
Investments at Value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Equity Securities | $3,912,873,158 | $— | $— | $3,912,873,158 | ||||||||||||
U.S. Treasury Bonds & U.S. Government Agency & Equivalents | — | 984,381,914 | — | 984,381,914 | ||||||||||||
Non-U.S. Sovereign Debt | — | 64,362,646 | — | 64,362,646 | ||||||||||||
U.S. Corporate Bonds | — | 483,543,724 | — | 483,543,724 | ||||||||||||
Residential Mortgage-Backed Securities | — | 758,585,135 | — | 758,585,135 | ||||||||||||
Commercial Mortgage-Backed Securities | — | 114,660,601 | — | 114,660,601 | ||||||||||||
Asset-Backed Securities (including CDOs) | — | 8,575,140 | — | 8,575,140 | ||||||||||||
Foreign Bonds | — | 201,419,281 | — | 201,419,281 | ||||||||||||
Mutual Funds | 335,966,409 | — | — | 335,966,409 | ||||||||||||
Total Investments | $4,248,839,567 | $2,615,528,441 | $— | $6,864,368,008 |
For further information regarding security characteristics, see the Portfolio of Investments.
Of the level 1 investments presented above, equity investments amounting to $26,846,994 would have been considered level 2 investments at the beginning of the period. The primary reason for changes in the classifications between levels 1 and 2 occurs when foreign equity securities are fair valued using other observable market-based inputs in place of the closing exchange price due to events occurring after the close of the exchange or market on which the investment is principally traded. The fund’s foreign equity securities may often be valued at fair value. The fund’s policy is to recognize transfers between the levels as of the end of the period.
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Notes to Financial Statements (unaudited) – continued
Repurchase Agreements – The fund enters into repurchase agreements under the terms of Master 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. Upon an event of default under a Master Repurchase Agreement, the non-defaulting party may close out all transactions traded under such agreement and net amounts owed under each transaction to one net amount payable by one party to the other. Absent an event of default, the Master Repurchase 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.
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 – Under its Securities Lending Agency Agreement with the fund, 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. In the event of Borrower default, Chase will for the benefit of the fund either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the fund the market value of the loaned securities. In return, Chase assumes the fund’s rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, Chase is responsible for the shortfall, but only to the extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. On loans collateralized by cash, the cash collateral is invested in a money market fund or short-term securities. At period end, the fund had investment securities on loan with a fair value of $32,061,271 and a related liability of $32,576,528 for collateral received on securities loaned, both of which are presented gross on the Statement of Assets and Liabilities. The liability for collateral for securities loaned is carried at fair value, which is categorized as level 2 within the fair value hierarchy. The collateral received on securities loaned exceeded the value of securities on loan at period end. A portion of the income generated upon investment of the collateral is remitted to the Borrowers,
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Notes to Financial Statements (unaudited) – continued
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 in 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. Some securities may be purchased on a “when-issued” or “forward delivery” basis, which means that the securities will be delivered to the fund at a future date, usually beyond customary settlement time. 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.
The fund purchased or sold debt securities on a when-issued or delayed delivery basis, or in a “To Be Announced” (TBA) or “forward commitment” transaction with delivery or payment to occur at a later date beyond the normal settlement period. TBA securities resulting from these transactions are included in the Portfolio of Investments. At the time a fund enters into a commitment to purchase or sell a security, the transaction is recorded and the value of the security acquired is reflected in the fund’s net asset value. The price of such security and the date that the security will be delivered and paid for are fixed at the time the transaction is negotiated. The value of the security may vary with market fluctuations. TBA purchase commitments are held at carrying amount, which approximates fair value and are categorized as level 2 within the fair value hierarchy. No interest accrues to the fund until payment takes place. At the time that a fund enters into this type of transaction, the fund is required to have sufficient cash and/or liquid securities to cover its commitments. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not
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perform under the contract’s terms, or if the issuer does not issue the securities due to political, economic or other factors. Additionally, losses may arise due to declines in the value of the securities prior to settlement date.
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, 2014, is shown as a reduction of total expenses in 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, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be subject to capital gains tax imposed by those countries.
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.
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:
9/30/13 | ||||
Ordinary income (including any short-term capital gains) | $127,400,078 |
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Notes to Financial Statements (unaudited) – continued
The federal tax cost and the tax basis components of distributable earnings were as follows:
As of 3/31/14 | ||||
Cost of investments | $5,688,096,203 | |||
Gross appreciation | 1,221,468,543 | |||
Gross depreciation | (45,196,738 | ) | ||
Net unrealized appreciation (depreciation) | $1,176,271,805 | |||
As of 9/30/13 | ||||
Undistributed ordinary income | 7,588,526 | |||
Undistributed long-term capital gain | 44,310,880 | |||
Other temporary differences | (9,447,565 | ) | ||
Net unrealized appreciation (depreciation) | 823,199,344 |
The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.
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 in the Statements of Changes in Net Assets are presented by class as follows:
From net investment income | From net realized gain on investments | |||||||||||||||
Six months ended 3/31/14 | Year ended 9/30/13 | Six months ended 3/31/14 | Year ended 9/30/13 | |||||||||||||
Class A | $47,348,117 | $95,698,620 | $36,966,690 | $— | ||||||||||||
Class B | 1,763,525 | 4,526,965 | 2,228,939 | — | ||||||||||||
Class C | 5,807,112 | 11,789,351 | 7,074,755 | — | ||||||||||||
Class I | 2,055,347 | 3,453,649 | 1,448,279 | — | ||||||||||||
Class R1 | 111,732 | 251,731 | 135,153 | — | ||||||||||||
Class R2 | 1,499,550 | 3,108,354 | 1,331,831 | — | ||||||||||||
Class R3 | 2,241,722 | 4,236,128 | 1,757,452 | — | ||||||||||||
Class R4 | 2,331,283 | 3,837,284 | 1,624,013 | — | ||||||||||||
Class R5 | 246,953 | 46,974 | 92,808 | — | ||||||||||||
Class 529A | 168,391 | 317,509 | 133,546 | — | ||||||||||||
Class 529B | 15,260 | 37,884 | 19,872 | — | ||||||||||||
Class 529C | 47,135 | 95,629 | 59,516 | — | ||||||||||||
Total | $63,636,127 | $127,400,078 | $52,872,854 | $— |
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(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, 2014 was equivalent to an annual effective rate of 0.35% of the fund’s average daily net assets.
Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $642,202 and $5,075 for the six months ended March 31, 2014, 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 share classes 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% | 0.24% | $5,664,522 | |||||||||||||||
Class B | 0.75% | 0.25% | 1.00% | 1.00% | 1,354,963 | |||||||||||||||
Class C | 0.75% | 0.25% | 1.00% | 1.00% | 4,367,369 | |||||||||||||||
Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 83,377 | |||||||||||||||
Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 410,762 | |||||||||||||||
Class R3 | — | 0.25% | 0.25% | 0.25% | 264,082 | |||||||||||||||
Class 529A | — | 0.25% | 0.25% | 0.24% | 20,477 | |||||||||||||||
Class 529B | 0.75% | 0.25% | 1.00% | 1.00% | 12,049 | |||||||||||||||
Class 529C | 0.75% | 0.25% | 1.00% | 1.00% | 36,616 | |||||||||||||||
Total Distribution and Service Fees | $12,214,217 |
(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’s 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, 2014 based on each class’s average daily net assets. MFD has voluntarily agreed to rebate a portion of each class’s 0.25% service fee attributable to accounts for which MFD retains the 0.25% service fee except for accounts attributable to MFS or its affiliates’ seed money. For the six months ended March 31, 2014, this rebate amounted to $121,956, $1,235, $2,655, $1,425, $690, $14, and $116 for Class A, Class B, Class C, Class R3, Class 529A, Class 529B, and Class 529C, respectively, and is included in the reduction of total expenses in the Statement of Operations. |
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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 18 months of purchase for shares purchased on or after August 1, 2012, and within 24 months of purchase for shares purchased prior to August 1, 2012. 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, 2014, were as follows:
Amount | ||||
Class A | $9,165 | |||
Class B | 120,721 | |||
Class C | 22,345 | |||
Class 529B | 252 | |||
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. MFD has agreed to waive a portion of this fee in an amount equal to 0.05% of the average daily net assets for each 529 share class. This waiver agreement will expire on January 31, 2015, unless MFD elects to extend the waiver. For the six months ended March 31, 2014, this waiver amounted to $6,530 and is included in the reduction of total expenses in the Statement of Operations. The program manager fee incurred for the six months ended March 31, 2014 was equivalent to an annual effective rate of 0.05% 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 and waivers for the six months ended March 31, 2014, were as follows:
Fee | Waiver | |||||||
Class 529A | $8,191 | $4,096 | ||||||
Class 529B | 1,205 | 603 | ||||||
Class 529C | 3,662 | 1,831 | ||||||
Total Program Manager Fees and Waivers | $13,058 | $6,530 |
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, 2014, the fee was $769,047, which equated to 0.0237% 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. Class R5 shares do
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Notes to Financial Statements (unaudited) – continued
not incur sub-accounting fees. For the six months ended March 31, 2014, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $2,884,682.
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, 2014 was equivalent to an annual effective rate of 0.0073% 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 $2,209 and the Retirement Deferral plan resulted in an expense of $5,697. Both amounts are included in independent Trustees’ compensation for the six months ended March 31, 2014. The liability for deferred retirement benefits payable to certain independent Trustees under both plans amounted to $87,850 at March 31, 2014, and is included in “Payable for independent Trustees’ compensation” in 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” in the Statement of Assets and Liabilities is $45,563 of deferred Trustees’ compensation. There is no current year expense associated with the Plan.
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Notes to Financial Statements (unaudited) – continued
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, 2014, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $21,191 and are included in “Miscellaneous” expense in 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 $3,551, which is included in the 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 current income consistent with preservation of capital and liquidity. Income earned on this investment is included in “Dividends from underlying affiliated funds” in 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 short-term obligations, were as follows:
Purchases | Sales | |||||||
U.S. Government securities | $774,620,551 | $ | 661,994,221 | |||||
Investments (non-U.S. Government securities) | $501,221,939 | $ | 590,020,417 |
(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 3/31/14 | Year ended 9/30/13 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares sold | ||||||||||||||||
Class A | 14,077,977 | $245,235,640 | 28,587,194 | $462,225,296 | ||||||||||||
Class B | 887,451 | 15,457,617 | 1,817,829 | 29,363,962 | ||||||||||||
Class C | 4,118,543 | 72,054,653 | 6,734,514 | 109,724,622 | ||||||||||||
Class I | 1,788,220 | 31,138,983 | 3,292,430 | 53,482,173 | ||||||||||||
Class R1 | 64,816 | 1,126,436 | 142,348 | 2,272,583 | ||||||||||||
Class R2 | 840,185 | 14,649,688 | 2,000,520 | 32,319,484 | ||||||||||||
Class R3 | 3,641,192 | 63,523,614 | 2,622,978 | 42,281,654 | ||||||||||||
Class R4 | 2,654,360 | 45,914,120 | 3,892,116 | 62,372,951 | ||||||||||||
Class R5 | 907,662 | 15,775,817 | 654,694 | 10,906,838 | ||||||||||||
Class 529A | 82,608 | 1,440,879 | 176,141 | 2,814,514 | ||||||||||||
Class 529B | 10,486 | 182,953 | 15,927 | 255,439 | ||||||||||||
Class 529C | 33,864 | 593,886 | 70,818 | 1,131,300 | ||||||||||||
29,107,364 | $507,094,286 | 50,007,509 | $809,150,816 |
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Notes to Financial Statements (unaudited) – continued
Six months ended 3/31/14 | Year ended 9/30/13 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares issued to shareholders in reinvestment of distributions | ||||||||||||||||
Class A | 4,506,421 | $78,610,549 | 5,477,174 | $87,322,887 | ||||||||||||
Class B | 211,026 | 3,679,586 | 262,015 | 4,154,060 | ||||||||||||
Class C | 574,618 | 10,063,248 | 551,090 | 8,809,130 | ||||||||||||
Class I | 175,826 | 3,067,153 | 174,926 | 2,801,697 | ||||||||||||
Class R1 | 14,186 | 246,885 | 15,860 | 251,523 | ||||||||||||
Class R2 | 143,735 | 2,512,833 | 173,195 | 2,765,582 | ||||||||||||
Class R3 | 229,055 | 3,998,959 | 265,893 | 4,235,639 | ||||||||||||
Class R4 | 198,989 | 3,474,840 | 216,627 | 3,467,673 | ||||||||||||
Class R5 | 19,424 | 339,761 | 2,846 | 46,974 | ||||||||||||
Class 529A | 17,334 | 301,765 | 19,914 | 317,269 | ||||||||||||
Class 529B | 2,016 | 35,132 | 2,392 | 37,884 | ||||||||||||
Class 529C | 6,085 | 106,543 | 5,984 | 95,618 | ||||||||||||
6,098,715 | $106,437,254 | 7,167,916 | $114,305,936 | |||||||||||||
Shares reacquired | ||||||||||||||||
Class A | (20,248,536 | ) | $(352,372,731 | ) | (45,049,721 | ) | $(718,786,408 | ) | ||||||||
Class B | (2,655,461 | ) | (46,438,835 | ) | (8,060,850 | ) | (129,303,032 | ) | ||||||||
Class C | (3,819,313 | ) | (66,769,522 | ) | (8,057,529 | ) | (129,289,867 | ) | ||||||||
Class I | (1,206,750 | ) | (21,039,011 | ) | (1,920,550 | ) | (30,998,768 | ) | ||||||||
Class R1 | (69,081 | ) | (1,198,300 | ) | (374,542 | ) | (5,925,846 | ) | ||||||||
Class R2 | (1,264,757 | ) | (22,005,576 | ) | (2,704,051 | ) | (43,158,089 | ) | ||||||||
Class R3 | (1,648,809 | ) | (28,754,142 | ) | (4,897,623 | ) | (78,578,597 | ) | ||||||||
Class R4 | (1,833,943 | ) | (31,877,585 | ) | (1,493,102 | ) | (23,911,214 | ) | ||||||||
Class R5 | (84,893 | ) | (1,480,592 | ) | (20,495 | ) | (339,003 | ) | ||||||||
Class 529A | (67,246 | ) | (1,169,859 | ) | (126,666 | ) | (2,020,297 | ) | ||||||||
Class 529B | (19,046 | ) | (333,391 | ) | (80,740 | ) | (1,286,883 | ) | ||||||||
Class 529C | (27,305 | ) | (480,053 | ) | (56,914 | ) | (919,064 | ) | ||||||||
(32,945,140 | ) | $(573,919,597 | ) | (72,842,783 | ) | $(1,164,517,068 | ) | |||||||||
Net change | ||||||||||||||||
Class A | (1,664,138 | ) | $(28,526,542 | ) | (10,985,353 | ) | $(169,238,225 | ) | ||||||||
Class B | (1,556,984 | ) | (27,301,632 | ) | (5,981,006 | ) | (95,785,010 | ) | ||||||||
Class C | 873,848 | 15,348,379 | (771,925 | ) | (10,756,115 | ) | ||||||||||
Class I | 757,296 | 13,167,125 | 1,546,806 | 25,285,102 | ||||||||||||
Class R1 | 9,921 | 175,021 | (216,334 | ) | (3,401,740 | ) | ||||||||||
Class R2 | (280,837 | ) | (4,843,055 | ) | (530,336 | ) | (8,073,023 | ) | ||||||||
Class R3 | 2,221,438 | 38,768,431 | (2,008,752 | ) | (32,061,304 | ) | ||||||||||
Class R4 | 1,019,406 | 17,511,375 | 2,615,641 | 41,929,410 | ||||||||||||
Class R5 | 842,193 | 14,634,986 | 637,045 | 10,614,809 | ||||||||||||
Class 529A | 32,696 | 572,785 | 69,389 | 1,111,486 | ||||||||||||
Class 529B | (6,544 | ) | (115,306 | ) | (62,421 | ) | (993,560 | ) | ||||||||
Class 529C | 12,644 | 220,376 | 19,888 | 307,854 | ||||||||||||
2,260,939 | $39,611,943 | (15,667,358 | ) | $(241,060,316 | ) |
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(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, 2014, the fund’s commitment fee and interest expense were $13,986 and $0, respectively, and are included in “Miscellaneous” expense in 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 an affiliated issuer:
Underlying Affiliated Fund | Beginning Shares/Par Amount | Acquisitions Shares/Par Amount | Dispositions Shares/Par Amount | Ending Shares/Par Amount | ||||||||||||
MFS Institutional Money Market Portfolio | 216,107,428 | 402,358,474 | (315,076,021 | ) | 303,389,881 | |||||||||||
Underlying Affiliated Fund | Realized Gain (Loss) | Capital Gain Distributions | Dividend Income | Ending Value | ||||||||||||
MFS Institutional Money Market Portfolio | $— | $— | $241,004 | $303,389,881 |
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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” section of the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
MFS votes proxies on behalf of the fund pursuant to proxy voting policies and procedures that are 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. A shareholder can obtain the quarterly portfolio holdings report at mfs.com. The fund’s Form N-Q is also available on the EDGAR database on the Commission’s Internet Web site at http://www.sec.gov, and 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. Copies of the fund’s Form N-Q also 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.
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 “Commentary & Announcements” and “Market Outlooks” sections of mfs.com or by clicking on the fund’s name under “Mutual Funds” in the “Products” section of mfs.com.
PROVISION OF FINANCIAL REPORTS AND SUMMARY PROSPECTUSES
The fund produces financial reports every six months and updates its summary prospectus and prospectus annually. To avoid sending duplicate copies of materials to households, only one copy of the fund’s annual and semiannual report and summary prospectus may be mailed to shareholders having the same last name and residential address on the fund’s records. However, any shareholder may contact MFSC (please see back cover for address and telephone number) to request that copies of these reports and summary prospectuses be sent personally to that shareholder.
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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.
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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.
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ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
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)* | JOHN M. CORCORAN | |
John M. Corcoran, President |
Date: May 13, 2014
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)* | JOHN M. CORCORAN | |
John M. Corcoran, President (Principal Executive Officer) |
Date: May 13, 2014
By (Signature and Title)* | DAVID L. DILORENZO | |
David L. DiLorenzo, Treasurer | ||
(Principal Financial Officer and Accounting Officer) |
Date: May 13, 2014
* | Print name and title of each signing officer under his or her signature. |