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 811-04777
MFS SERIES TRUST I
(Exact name of registrant as specified in charter)
111 Huntington Avenue, Boston, Massachusetts 02199 (Address of principal executive offices) (Zip code)
Christopher R. Bohane
Massachusetts Financial Services Company
111Huntington 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: August 31
Date of reporting period: August 31, 2023
ITEM 1. REPORTS TO STOCKHOLDERS.
Item 1(a):
Annual Report
August 31, 2023
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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 • MAY LOSE VALUE • NO BANK GUARANTEE
Portfolio structure
Top ten holdings
| Microsoft Corp. | 6.7% |
| Apple, Inc. | 4.7% |
| Alphabet, Inc., “A” | 3.7% |
| Amazon.com, Inc. | 3.5% |
| Exxon Mobil Corp. | 1.8% |
| Visa, Inc., “A” | 1.8% |
| Meta Platforms, Inc., “A” | 1.7% |
| JPMorgan Chase & Co. | 1.5% |
| Broadcom, Inc. | 1.5% |
| Eli Lilly & Co. | 1.4% |
Global equity sectors (k)
| Technology | 32.8% |
| Capital Goods | 14.2% |
| Health Care | 13.7% |
| Financial Services | 13.1% |
| Consumer Cyclicals | 11.7% |
| Energy | 7.0% |
| Consumer Staples | 4.7% |
| Telecommunications/Cable Television (s) | 1.8% |
| (k) | The sectors set forth above and the associated portfolio composition are based on MFS’ own custom sector classification methodology. |
| (s) | Includes securities sold short. |
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Percentages are based on net assets as of August 31, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended August 31, 2023, Class A shares of the MFS Core Equity Fund (fund) provided a total return of 12.97%, at net asset value. This compares with a return of 14.76% for the fund’s benchmark, the Russell 3000® Index.
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Those shifts exposed an asset-liability mismatch that forced the closure of several institutions by regulators. Given the importance of small and mid-sized lenders to the provision of credit in the US, concerns were raised in the aftermath of the crisis that credit availability could become constrained, leading to slower economic growth, although those effects have been limited thus far. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as focus turned to the country’s highly-indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks remained focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates.
Against an environment of relatively tight labor markets, tighter global financial conditions and volatile materials prices, investor anxiety appeared to have increased over the potential that corporate profit margins may be past peak for this cycle. That said, signs that supply chains have generally normalized, coupled with low levels of unemployment across developed markets and hopes that inflation levels have peaked, were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the Russell 3000® Index, security selection within the technology sector detracted from performance led by the timing of the fund's ownership in shares of computer graphics processor maker NVIDIA, social networking service provider Meta Platforms and software development company Atlassian(h) (Australia). The share price of NVIDIA advanced as the company posted a substantial increase in revenue growth
Management Review - continued
and demand within its Data Center (DC) and Gaming segments. Additionally, AI (artificial intelligence) market leadership positioning allowed the company to fully take advantage of the broad advancements within the sector, following greater Generative AI demand.
Stock selection in the consumer cyclicals sector also dampened relative results. Within this sector, the fund’s overweight position in merchandise store operator Dollar General, and not owning shares of internet TV shows and movie subscription services provider Netflix, held back relative returns. The share price of Dollar General fell as the company’s financial results came in below market estimates due to weaker-than-expected comparable-store sales and higher expenses. Furthermore, a decrease in customer traffic, eroded market share and increased investment also appeared to have negatively affected investor sentiment.
Individual stocks in other sectors that were among the fund's top relative detractors included its overweight positions in life science company Maravai Lifesciences, real estate investment trust SBA Communications, pharmaceutical giant Pfizer and financial services firm M&T Bank. The share price of Maravai Lifesciences depreciated due to margin contraction related to the continued decline of margin-rich Covid-related revenue and changes to its cost structure. Additionally, management noted a broader deterioration of biotech spending due to stringent budgetary practices from their biotech customer base. Not owning shares of insurance and investment firm Berkshire Hathaway further weighed on relative returns.
Contributors to Performance
Stock selection within both the capital goods and health care sectors contributed to the fund’s relative performance. Within the capital goods sector, not owning shares of electric vehicle manufacturer Tesla, and the fund’s overweight positions in diversified industrial manufacturer Eaton and transportation company Saia bolstered relative returns. Despite a recent recovery in its stock price, the share price of Tesla fell sharply towards the end of the reporting period led by uncertainties surrounding production shutdowns at the company's Shanghai manufacturing plant, reduced vehicle deliveries, increased competitive concerns and questions regarding Tesla CEO Elon Musk’s acquisition of social media platform X (formerly Twitter). Within the health care sector, not owning shares of poor-performing health insurance and Medicare/Medicaid provider UnitedHealth Group, and the fund’s overweight position in pharmaceutical company Eli Lilly, supported relative results. The share price of UnitedHealth Group declined as the company posted subdued medical loss ratio figures and higher-than-anticipated investment costs in its Optum Insights segment. Additionally, tougher government Medicare reimbursement policies and increased costs related to elective surgery claims that were delayed due to COVID-19 negatively affected the company’s revenue growth.
Elsewhere, the fund’s overweight positions in broadband communications and networking services company Broadcom, semiconductor chips equipment, services and software provider Applied Materials, and semiconductor company Lam Research helped relative performance. Despite a challenging market environment, the share price of Broadcom advanced as the company reported better-than-expected financial results led by strength in networking, broadband and server storage connectivity. In addition,
Management Review - continued
management noted acceleration in the growth of its AI-related businesses, which further supported the stock. The fund’s short position in poor-performing real estate investment trust Crown Castle, and not owning shares of financial services firm Bank of America, further aided relative results.
Respectfully,
Portfolio Manager(s)
Joseph MacDougall
| (h) | Security was not held in the portfolio at period end. |
The views expressed in this report are those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market or other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS portfolio. References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio’s current or future investments.
Performance Summary THROUGH 8/31/23
The following chart illustrates a representative class of the fund’s historical performance in comparison to its benchmark(s). Performance results include the deduction of the maximum applicable sales charge and reflect the percentage change in net asset value, including reinvestment of dividends and capital gains distributions. The performance of other share classes will be greater than or less than that of the class depicted below. Benchmarks are unmanaged and may not be invested in directly. Benchmark returns do not reflect sales charges, commissions or expenses. (See Notes to Performance Summary.)
Performance data shown represents past performance and is no guarantee of future results. Investment return and principal value fluctuate so your shares, when sold, may be worth more or less than the original cost; current performance may be lower or higher than quoted. The performance shown does not reflect the deduction of taxes, if any, that a shareholder would pay on fund distributions or the redemption of fund shares.
Growth of a Hypothetical $10,000 Investment
Performance Summary - continued
Total Returns through 8/31/23
Average annual without sales charge
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| A | 1/02/96 | 12.97% | 10.22% | 12.08% |
| B | 1/02/97 | 12.14% | 9.39% | 11.24% |
| C | 1/02/97 | 12.17% | 9.39% | 11.24% |
| I | 1/02/97 | 13.27% | 10.49% | 12.36% |
| R1 | 4/01/05 | 12.15% | 9.39% | 11.24% |
| R2 | 10/31/03 | 12.73% | 9.95% | 11.81% |
| R3 | 4/01/05 | 12.99% | 10.21% | 12.08% |
| R4 | 4/01/05 | 13.28% | 10.49% | 12.36% |
| R6 | 1/02/13 | 13.36% | 10.59% | 12.46% |
Comparative benchmark(s)
| Russell 3000® Index (f) | 14.76% | 10.25% | 12.23% |
Average annual with sales charge
| | | | |
A
With Initial Sales Charge (5.75%) | 6.47% | 8.92% | 11.42% |
B
With CDSC (Declining over six years from 4% to 0%) (v) | 8.14% | 9.11% | 11.24% |
C
With CDSC (1% for 12 months) (v) | 11.17% | 9.39% | 11.24% |
CDSC – Contingent Deferred Sales Charge.
Class I, R1, R2, R3, R4, and R6 shares do not have a sales charge.
| (f) | Source: FactSet Research Systems Inc. |
| (v) | Assuming redemption at the end of the applicable period. |
Benchmark Definition(s)
Russell 3000® Index(h) – constructed to provide a comprehensive barometer for the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market.
It is not possible to invest directly in an index.
| (h) | Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this document. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor, or endorse the content of this document. |
Notes to Performance Summary
Average annual total return represents the average annual change in value for each share class for the periods presented.
Performance Summary - continued
Performance results reflect any applicable expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers the fund's performance results would be less favorable. Please see the prospectus and financial statements for complete details.
Performance results do not include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and may differ from amounts reported in the financial highlights.
From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
Expense Table
Fund expenses borne by the shareholders during the period,
March 1, 2023 through August 31, 2023
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 March 1, 2023 through August 31, 2023.
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.
Expense Table - continued
Share
Class | | Annualized
Expense
Ratio | Beginning
Account Value
3/01/23 | Ending
Account Value
8/31/23 | Expenses
Paid During
Period (p)
3/01/23-8/31/23 |
| A | Actual | 0.90% | $1,000.00 | $1,115.86 | $4.80 |
| Hypothetical (h) | 0.90% | $1,000.00 | $1,020.67 | $4.58 |
| B | Actual | 1.65% | $1,000.00 | $1,111.38 | $8.78 |
| Hypothetical (h) | 1.65% | $1,000.00 | $1,016.89 | $8.39 |
| C | Actual | 1.65% | $1,000.00 | $1,111.87 | $8.78 |
| Hypothetical (h) | 1.65% | $1,000.00 | $1,016.89 | $8.39 |
| I | Actual | 0.65% | $1,000.00 | $1,117.10 | $3.47 |
| Hypothetical (h) | 0.65% | $1,000.00 | $1,021.93 | $3.31 |
| R1 | Actual | 1.65% | $1,000.00 | $1,111.80 | $8.78 |
| Hypothetical (h) | 1.65% | $1,000.00 | $1,016.89 | $8.39 |
| R2 | Actual | 1.13% | $1,000.00 | $1,114.69 | $6.02 |
| Hypothetical (h) | 1.13% | $1,000.00 | $1,019.51 | $5.75 |
| R3 | Actual | 0.90% | $1,000.00 | $1,115.96 | $4.80 |
| Hypothetical (h) | 0.90% | $1,000.00 | $1,020.67 | $4.58 |
| R4 | Actual | 0.65% | $1,000.00 | $1,117.32 | $3.47 |
| Hypothetical (h) | 0.65% | $1,000.00 | $1,021.93 | $3.31 |
| R6 | Actual | 0.56% | $1,000.00 | $1,117.69 | $2.99 |
| Hypothetical (h) | 0.56% | $1,000.00 | $1,022.38 | $2.85 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Notes to Expense Table
Expense ratios include 0.01% of investment related expenses from short sales (See Note 2 of the Notes to Financial Statements).
Each class with a Rule 12b-1 service fee is subject to a rebate of a portion of such fee. Such rebates are included in the expense ratios above. For Class R2 shares, this rebate reduced the expense ratio above by 0.02%. See Note 3 in the Notes to Financial Statements for additional information.
Portfolio of Investments
8/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 99.1% |
| Aerospace & Defense – 2.5% | |
| Boeing Co. (a) | | 129,792 | $29,077,302 |
| General Dynamics Corp. | | 83,268 | 18,871,859 |
| Honeywell International, Inc. | | 187,729 | 35,281,788 |
| Howmet Aerospace, Inc. | | 287,026 | 14,199,176 |
| Leidos Holdings, Inc. | | 386,076 | 37,646,271 |
| RTX Corp. | | 214,892 | 18,489,308 |
| | | | | $153,565,704 |
| Alcoholic Beverages – 0.2% | |
| Constellation Brands, Inc., “A” | | 54,780 | $14,273,477 |
| Apparel Manufacturers – 0.5% | |
| Deckers Outdoor Corp. (a) | | 31,456 | $16,643,055 |
| VF Corp. | | 689,338 | 13,621,319 |
| | | | | $30,264,374 |
| Automotive – 0.5% | |
| Aptiv PLC (a) | | 164,863 | $16,725,351 |
| LKQ Corp. | | 271,350 | 14,254,016 |
| | | | | $30,979,367 |
| Broadcasting – 0.8% | |
| Omnicom Group, Inc. | | 129,508 | $10,491,443 |
| Walt Disney Co. (a) | | 434,747 | 36,379,629 |
| | | | | $46,871,072 |
| Brokerage & Asset Managers – 1.8% | |
| Cboe Global Markets, Inc. | | 41,626 | $6,231,829 |
| Charles Schwab Corp. | | 383,576 | 22,688,520 |
| CME Group, Inc. | | 115,631 | 23,436,091 |
| Invesco Ltd. | | 1,310,610 | 20,864,911 |
| KKR & Co., Inc. | | 430,173 | 27,019,166 |
| Raymond James Financial, Inc. | | 117,357 | 12,274,369 |
| | | | | $112,514,886 |
| Business Services – 2.9% | |
| Accenture PLC, “A” | | 36,909 | $11,950,027 |
| Fidelity National Information Services, Inc. | | 189,207 | 10,569,103 |
| Fiserv, Inc. (a) | | 140,376 | 17,040,243 |
| Insperity, Inc. | | 251,520 | 25,486,521 |
| Morningstar, Inc. | | 154,756 | 36,007,078 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Business Services – continued | |
| TriNet Group, Inc. (a) | | 263,647 | $29,246,362 |
| Tyler Technologies, Inc. (a) | | 37,272 | 14,850,283 |
| Verisk Analytics, Inc., “A” | | 91,312 | 22,117,593 |
| WNS (Holdings) Ltd., ADR (a) | | 201,525 | 13,169,659 |
| | | | | $180,436,869 |
| Cable TV – 0.5% | |
| Cable One, Inc. | | 44,510 | $28,956,871 |
| Chemicals – 0.4% | |
| Eastman Chemical Co. | | 227,458 | $19,336,205 |
| Element Solutions, Inc. | | 332,287 | 6,851,758 |
| | | | | $26,187,963 |
| Computer Software – 10.5% | |
| Autodesk, Inc. (a) | | 102,802 | $22,815,876 |
| Cadence Design Systems, Inc. (a) | | 191,886 | 46,137,070 |
| Check Point Software Technologies Ltd. (a) | | 65,757 | 8,850,234 |
| Datadog, Inc., “A” (a) | | 148,492 | 14,326,508 |
| Dun & Bradstreet Holdings, Inc. | | 5,035,611 | 54,888,160 |
| Flywire Corp. (a) | | 354,214 | 12,248,720 |
| Microsoft Corp. (s) | | 1,262,393 | 413,761,930 |
| NICE Systems Ltd., ADR (a) | | 78,493 | 15,290,436 |
| Salesforce, Inc. (a) | | 265,404 | 58,776,370 |
| | | | | $647,095,304 |
| Computer Software - Systems – 6.7% | |
| Apple, Inc. (s) | | 1,525,372 | $286,571,638 |
| Block, Inc., “A” (a) | | 165,772 | 9,556,756 |
| Rapid7, Inc. (a) | | 358,134 | 18,046,372 |
| Seagate Technology Holdings PLC | | 504,797 | 35,734,579 |
| ServiceNow, Inc. (a) | | 82,771 | 48,738,048 |
| Zebra Technologies Corp., “A” (a) | | 45,124 | 12,409,551 |
| | | | | $411,056,944 |
| Construction – 1.6% | |
| AvalonBay Communities, Inc., REIT | | 75,426 | $13,864,807 |
| AZEK Co., Inc. (a) | | 394,371 | 13,412,558 |
| Masco Corp. | | 319,003 | 18,824,367 |
| Sherwin-Williams Co. | | 70,037 | 19,030,454 |
| Summit Materials, Inc., “A” (a) | | 490,472 | 18,348,557 |
| Vulcan Materials Co. | | 58,075 | 12,674,869 |
| | | | | $96,155,612 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Consumer Products – 1.5% | |
| Colgate-Palmolive Co. | | 305,874 | $22,472,563 |
| International Flavors & Fragrances, Inc. | | 109,919 | 7,743,794 |
| Kenvue, Inc. | | 1,406,664 | 32,423,596 |
| Procter & Gamble Co. | | 184,145 | 28,420,939 |
| | | | | $91,060,892 |
| Consumer Services – 0.7% | |
| Booking Holdings, Inc. (a) | | 8,510 | $26,423,806 |
| Bright Horizons Family Solutions, Inc. (a) | | 63,336 | 5,980,185 |
| Grand Canyon Education, Inc. (a) | | 71,157 | 8,343,158 |
| | | | | $40,747,149 |
| Containers – 0.2% | |
| Crown Holdings, Inc. | | 114,529 | $10,612,257 |
| Electrical Equipment – 1.6% | |
| AMETEK, Inc. | | 176,072 | $28,085,245 |
| Amphenol Corp., “A” | | 187,412 | 16,563,473 |
| Johnson Controls International PLC | | 441,970 | 26,102,748 |
| nVent Electric PLC | | 202,060 | 11,424,472 |
| Sensata Technologies Holding PLC | | 312,327 | 11,749,742 |
| TE Connectivity Ltd. | | 37,083 | 4,909,418 |
| | | | | $98,835,098 |
| Electronics – 6.4% | |
| Advanced Micro Devices (a) | | 256,117 | $27,076,689 |
| Analog Devices, Inc. | | 206,610 | 37,557,566 |
| Applied Materials, Inc. | | 342,717 | 52,353,449 |
| Broadcom, Inc. | | 99,478 | 91,807,251 |
| Lam Research Corp. | | 67,215 | 47,211,816 |
| Marvell Technology, Inc. | | 664,599 | 38,712,892 |
| Monolithic Power Systems, Inc. | | 33,708 | 17,568,947 |
| NVIDIA Corp. | | 102,504 | 50,590,849 |
| NXP Semiconductors N.V. | | 161,979 | 33,322,320 |
| | | | | $396,201,779 |
| Energy - Independent – 1.8% | |
| ConocoPhillips | | 340,740 | $40,558,282 |
| Diamondback Energy, Inc. | | 178,558 | 27,101,533 |
| Hess Corp. | | 124,541 | 19,241,585 |
| Phillips 66 | | 122,907 | 14,031,063 |
| Valero Energy Corp. | | 96,792 | 12,573,281 |
| | | | | $113,505,744 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Energy - Integrated – 1.8% | |
| Exxon Mobil Corp. (s) | | 1,021,478 | $113,578,139 |
| Energy - Renewables – 0.1% | |
| Enphase Energy, Inc. (a) | | 51,255 | $6,485,295 |
| Engineering - Construction – 0.7% | |
| APi Group, Inc. (a) | | 650,165 | $18,302,145 |
| Jacobs Solutions, Inc. | | 183,887 | 24,791,645 |
| | | | | $43,093,790 |
| Entertainment – 0.4% | |
| Spotify Technology S.A. (a) | | 107,688 | $16,580,721 |
| Vivid Seats, Inc., “A” (a) | | 855,922 | 6,213,994 |
| | | | | $22,794,715 |
| Food & Beverages – 2.5% | |
| Archer Daniels Midland Co. | | 202,753 | $16,078,313 |
| Coca-Cola Co. | | 161,491 | 9,662,006 |
| Coca-Cola Europacific Partners PLC | | 217,673 | 13,955,016 |
| J.M. Smucker Co. | | 94,868 | 13,751,117 |
| Mondelez International, Inc. | | 569,756 | 40,600,813 |
| Oatly Group AB, ADR (a)(l) | | 2,333,995 | 2,870,814 |
| PepsiCo, Inc. | | 317,933 | 56,566,639 |
| | | | | $153,484,718 |
| Forest & Paper Products – 0.5% | |
| Rayonier, Inc., REIT | | 1,033,176 | $30,891,962 |
| Gaming & Lodging – 0.6% | |
| International Game Technology PLC | | 415,501 | $13,304,342 |
| Las Vegas Sands Corp. | | 81,653 | 4,479,483 |
| Marriott International, Inc., “A” | | 102,684 | 20,897,221 |
| | | | | $38,681,046 |
| General Merchandise – 0.7% | |
| Dollar General Corp. | | 172,157 | $23,843,745 |
| Dollar Tree, Inc. (a) | | 144,365 | 17,664,501 |
| | | | | $41,508,246 |
| Health Maintenance Organizations – 1.1% | |
| Cigna Group | | 255,656 | $70,627,527 |
| Insurance – 3.6% | |
| Aon PLC | | 176,708 | $58,912,680 |
| Arthur J. Gallagher & Co. | | 165,493 | 38,142,827 |
| Assurant, Inc. | | 67,589 | 9,417,175 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Insurance – continued | |
| Chubb Ltd. | | 176,438 | $35,441,101 |
| Hartford Financial Services Group, Inc. | | 239,273 | 17,184,587 |
| MetLife, Inc. | | 246,067 | 15,585,884 |
| Reinsurance Group of America, Inc. | | 75,024 | 10,399,827 |
| Voya Financial, Inc. | | 221,340 | 15,422,971 |
| Willis Towers Watson PLC | | 89,682 | 18,542,650 |
| | | | | $219,049,702 |
| Internet – 5.6% | |
| Alphabet, Inc., “A” (a)(s) | | 1,686,167 | $229,605,360 |
| Gartner, Inc. (a) | | 33,774 | 11,810,092 |
| Meta Platforms, Inc., “A” (a) | | 344,440 | 101,916,352 |
| | | | | $343,331,804 |
| Leisure & Toys – 0.8% | |
| Electronic Arts, Inc. | | 203,549 | $24,421,809 |
| Hasbro, Inc. | | 93,224 | 6,712,128 |
| Take-Two Interactive Software, Inc. (a) | | 111,082 | 15,795,860 |
| | | | | $46,929,797 |
| Machinery & Tools – 2.3% | |
| Dover Corp. | | 109,900 | $16,298,170 |
| Eaton Corp. PLC | | 227,173 | 52,333,844 |
| Flowserve Corp. | | 163,755 | 6,479,785 |
| Ingersoll Rand, Inc. | | 233,563 | 16,258,320 |
| PACCAR, Inc. | | 192,719 | 15,858,847 |
| Regal Rexnord Corp. | | 85,610 | 13,885,086 |
| Wabtec Corp. | | 186,450 | 20,979,354 |
| | | | | $142,093,406 |
| Major Banks – 3.2% | |
| JPMorgan Chase & Co. | | 648,041 | $94,827,840 |
| Morgan Stanley | | 414,129 | 35,263,084 |
| PNC Financial Services Group, Inc. | | 199,803 | 24,122,216 |
| Regions Financial Corp. | | 942,843 | 17,291,741 |
| Wells Fargo & Co. | | 568,821 | 23,486,619 |
| | | | | $194,991,500 |
| Medical & Health Technology & Services – 1.8% | |
| Encompass Health Corp. | | 302,380 | $21,481,075 |
| ICON PLC (a) | | 110,512 | 28,726,489 |
| McKesson Corp. | | 96,721 | 39,880,003 |
| Veeva Systems, Inc. (a) | | 90,982 | 18,987,944 |
| | | | | $109,075,511 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Medical Equipment – 4.7% | |
| Agilent Technologies, Inc. | | 181,437 | $21,966,578 |
| Becton, Dickinson and Co. | | 207,320 | 57,935,574 |
| Boston Scientific Corp. (a) | | 1,004,081 | 54,160,129 |
| Maravai Lifesciences Holdings, Inc., “A” (a) | | 1,864,499 | 19,278,920 |
| Masimo Corp. (a) | | 142,105 | 16,239,759 |
| Medtronic PLC | | 714,847 | 58,260,031 |
| Quidel Corp. (a) | | 202,176 | 16,651,215 |
| STERIS PLC | | 193,009 | 44,312,936 |
| | | | | $288,805,142 |
| Natural Gas - Distribution – 0.5% | |
| Southwest Gas Holdings, Inc. | | 473,017 | $29,293,943 |
| Natural Gas - Pipeline – 0.2% | |
| Cheniere Energy, Inc. | | 85,306 | $13,921,939 |
| Network & Telecom – 0.7% | |
| Equinix, Inc., REIT | | 27,810 | $21,730,178 |
| Motorola Solutions, Inc. | | 64,562 | 18,307,846 |
| | | | | $40,038,024 |
| Oil Services – 0.5% | |
| Schlumberger Ltd. | | 329,373 | $19,419,832 |
| TechnipFMC PLC | | 613,236 | 11,676,014 |
| | | | | $31,095,846 |
| Other Banks & Diversified Financials – 3.2% | |
| American Express Co. | | 145,435 | $22,977,276 |
| First Interstate BancSystem, Inc. | | 255,941 | 6,631,431 |
| M&T Bank Corp. | | 152,932 | 19,124,147 |
| Moody's Corp. | | 76,020 | 25,603,536 |
| Northern Trust Corp. | | 125,357 | 9,535,907 |
| United Community Bank, Inc. | | 240,249 | 6,486,723 |
| Visa, Inc., “A” | | 444,521 | 109,209,919 |
| | | | | $199,568,939 |
| Pharmaceuticals – 6.1% | |
| AbbVie, Inc. | | 451,387 | $66,335,834 |
| Eli Lilly & Co. | | 160,663 | 89,039,435 |
| Johnson & Johnson | | 364,007 | 58,852,652 |
| Pfizer, Inc. | | 1,637,506 | 57,934,962 |
| Vertex Pharmaceuticals, Inc. (a) | | 177,124 | 61,699,374 |
| Zoetis, Inc. | | 207,169 | 39,467,766 |
| | | | | $373,330,023 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Pollution Control – 0.5% | |
| GFL Environmental, Inc. | | 975,843 | $31,617,313 |
| Railroad & Shipping – 1.1% | |
| Canadian Pacific Kansas City Ltd. | | 391,317 | $31,062,743 |
| Union Pacific Corp. | | 162,117 | 35,758,147 |
| | | | | $66,820,890 |
| Real Estate – 1.3% | |
| Broadstone Net Lease, Inc., REIT | | 755,293 | $12,213,088 |
| Empire State Realty Trust, REIT, “A” | | 1,390,151 | 12,136,018 |
| Extra Space Storage, Inc., REIT | | 92,907 | 11,955,273 |
| Jones Lang LaSalle, Inc. (a) | | 47,344 | 8,181,043 |
| Prologis, Inc., REIT | | 52,211 | 6,484,606 |
| Spirit Realty Capital, Inc., REIT | | 370,301 | 14,297,322 |
| Sun Communities, Inc., REIT | | 97,160 | 11,894,327 |
| | | | | $77,161,677 |
| Restaurants – 1.4% | |
| Starbucks Corp. | | 669,778 | $65,263,168 |
| Wendy's Co. | | 1,027,766 | 20,339,489 |
| | | | | $85,602,657 |
| Specialty Chemicals – 1.9% | |
| Air Products & Chemicals, Inc. | | 77,289 | $22,838,127 |
| Chemours Co. | | 540,327 | 18,381,924 |
| Corteva, Inc. | | 267,532 | 13,513,041 |
| DuPont de Nemours, Inc. | | 258,615 | 19,884,907 |
| Linde PLC | | 72,643 | 28,115,747 |
| Tronox Holdings PLC | | 995,437 | 13,577,761 |
| | | | | $116,311,507 |
| Specialty Stores – 5.9% | |
| Amazon.com, Inc. (a)(s) | | 1,538,269 | $212,296,505 |
| Home Depot, Inc. | | 229,905 | 75,937,622 |
| Ross Stores, Inc. | | 337,783 | 41,145,347 |
| Target Corp. | | 269,502 | 34,105,478 |
| | | | | $363,484,952 |
| Telecommunications - Wireless – 1.3% | |
| Liberty Broadband Corp. (a) | | 337,969 | $31,620,380 |
| SBA Communications Corp., REIT | | 119,049 | 26,730,072 |
| T-Mobile US, Inc. (a) | | 178,294 | 24,292,557 |
| | | | | $82,643,009 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Telephone Services – 0.1% | |
| Altice USA, Inc., “A” (a) | | 1,653,428 | $5,076,024 |
| Tobacco – 0.5% | |
| Philip Morris International, Inc. | | 300,021 | $28,820,017 |
| Trucking – 0.4% | |
| Saia, Inc. (a) | | 53,092 | $22,627,810 |
| Utilities - Electric Power – 2.0% | |
| Constellation Energy | | 98,678 | $10,278,300 |
| Dominion Energy, Inc. | | 108,606 | 5,271,735 |
| Duke Energy Corp. | | 167,504 | 14,874,355 |
| Evergy, Inc. | | 88,273 | 4,852,367 |
| Exelon Corp. | | 296,031 | 11,876,764 |
| NextEra Energy, Inc. | | 424,915 | 28,384,322 |
| PG&E Corp. (a) | | 1,929,354 | 31,448,470 |
| Xcel Energy, Inc. | | 287,897 | 16,447,556 |
| | | | | $123,433,869 |
| Total Common Stocks (Identified Cost, $4,408,758,996) | | $6,085,592,101 |
| Investment Companies (h) – 0.9% |
| Money Market Funds – 0.9% | |
| MFS Institutional Money Market Portfolio, 5.3% (v) (Identified Cost, $55,182,710) | | | 55,184,171 | $55,189,690 |
| Collateral for Securities Loaned – 0.0% |
| State Street Navigator Securities Lending Government Money Market Portfolio, 5.34% (j) (Identified Cost, $1,509,039) | | | 1,509,039 | $1,509,039 |
| Securities Sold Short – (0.1)% |
| Telecommunications - Wireless – (0.1)% |
| Crown Castle, Inc., REIT (Proceeds Received, $3,678,192) | | | (44,300) | $(4,452,150) |
|
|
| Other Assets, Less Liabilities – 0.1% | | 6,229,392 |
| Net Assets – 100.0% | $6,144,068,072 |
| (a) | Non-income producing security. | | | |
| (h) | An affiliated issuer, which 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. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $55,189,690 and $6,087,101,140, respectively. | | | |
| (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. See Note 2 for additional information. | | | |
| (s) | Security or a portion of the security was pledged to cover collateral requirements for securities sold short. | | | |
Portfolio of Investments – continued
| (v) | Affiliated issuer 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 |
| REIT | Real Estate Investment Trust |
At August 31, 2023, the fund had cash collateral of $2,249 and other liquid securities with an aggregate value of $20,012,881 to cover any collateral or margin obligations for securities sold short. Restricted cash and/or deposits with brokers in the Statement of Assets and Liabilities are comprised of cash collateral.
See Notes to Financial Statements
Financial Statements
Statement of Assets and Liabilities
At 8/31/23
This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.
| Assets | |
| Investments in unaffiliated issuers, at value, including $1,399,455 of securities on loan (identified cost, $4,410,268,035) | $6,087,101,140 |
| Investments in affiliated issuers, at value (identified cost, $55,182,710) | 55,189,690 |
| Deposits with brokers for | |
| Securities sold short | 2,249 |
| Receivables for | |
| Fund shares sold | 7,548,621 |
| Interest and dividends | 9,977,362 |
| Other assets | 4,172 |
| Total assets | $6,159,823,234 |
| Liabilities | |
| Payables for | |
| Securities sold short, at value (proceeds received, $3,678,192) | $4,452,150 |
| Fund shares reacquired | 7,911,717 |
| Collateral for securities loaned, at value (c) | 1,509,039 |
| Payable to affiliates | |
| Investment adviser | 171,698 |
| Administrative services fee | 3,389 |
| Shareholder servicing costs | 1,406,380 |
| Distribution and service fees | 39,546 |
| Payable for independent Trustees' compensation | 1,400 |
| Accrued expenses and other liabilities | 259,843 |
| Total liabilities | $15,755,162 |
| Net assets | $6,144,068,072 |
| Net assets consist of | |
| Paid-in capital | $4,322,382,507 |
| Total distributable earnings (loss) | 1,821,685,565 |
| Net assets | $6,144,068,072 |
| Shares of beneficial interest outstanding | 135,680,431 |
| (c) | Non-cash collateral is not included. |
Statement of Assets and Liabilities – continued
| | Net assets | Shares
outstanding | Net asset value
per share (a) |
| Class A | $2,356,842,221 | 54,017,789 | $43.63 |
| Class B | 11,587,460 | 317,279 | 36.52 |
| Class C | 99,364,530 | 2,769,674 | 35.88 |
| Class I | 1,599,891,590 | 34,154,783 | 46.84 |
| Class R1 | 6,436,582 | 179,303 | 35.90 |
| Class R2 | 19,552,807 | 462,496 | 42.28 |
| Class R3 | 63,678,460 | 1,464,023 | 43.50 |
| Class R4 | 39,499,195 | 893,853 | 44.19 |
| Class R6 | 1,947,215,227 | 41,421,231 | 47.01 |
| (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 $46.29 [100 / 94.25 x $43.63]. 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 R6. |
See Notes to Financial Statements
Financial Statements
Statement of Operations
Year ended 8/31/23
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 (loss) | |
| Income | |
| Dividends | $85,088,765 |
| Dividends from affiliated issuers | 2,453,261 |
| Other | 183,264 |
| Income on securities loaned | 129,557 |
| Foreign taxes withheld | (137,156) |
| Total investment income | $87,717,691 |
| Expenses | |
| Management fee | $30,175,268 |
| Distribution and service fees | 6,952,617 |
| Shareholder servicing costs | 4,169,854 |
| Administrative services fee | 630,833 |
| Independent Trustees' compensation | 93,744 |
| Custodian fee | 170,448 |
| Shareholder communications | 312,144 |
| Audit and tax fees | 66,975 |
| Legal fees | 31,126 |
| Dividend and interest expense on securities sold short | 586,673 |
| Interest expense and fees | 29,299 |
| Miscellaneous | 303,690 |
| Total expenses | $43,522,671 |
| Reduction of expenses by investment adviser and distributor | (746,974) |
| Net expenses | $42,775,697 |
| Net investment income (loss) | $44,941,994 |
Statement of Operations – continued
| Realized and unrealized gain (loss) |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $96,058,368 |
| Affiliated issuers | (3,603) |
| Securities sold short | 14,588,426 |
| Foreign currency | 50 |
| Net realized gain (loss) | $110,643,241 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $581,875,844 |
| Affiliated issuers | 2,970 |
| Securities sold short | (9,781,620) |
| Net unrealized gain (loss) | $572,097,194 |
| Net realized and unrealized gain (loss) | $682,740,435 |
| Change in net assets from operations | $727,682,429 |
See Notes to Financial Statements
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.
| | Year ended |
| | 8/31/23 | 8/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $44,941,994 | $29,779,079 |
| Net realized gain (loss) | 110,643,241 | 204,862,215 |
| Net unrealized gain (loss) | 572,097,194 | (1,040,675,828) |
| Change in net assets from operations | $727,682,429 | $(806,034,534) |
| Total distributions to shareholders | $(203,307,193) | $(433,307,610) |
| Change in net assets from fund share transactions | $34,580,179 | $730,427,616 |
| Total change in net assets | $558,955,415 | $(508,914,528) |
| Net assets | | |
| At beginning of period | 5,585,112,657 | 6,094,027,185 |
| At end of period | $6,144,068,072 | $5,585,112,657 |
See Notes to Financial Statements
Financial Statements
Financial Highlights
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that 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.
| Class A | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $40.07 | $49.38 | $38.41 | $32.45 | $34.18 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.25 | $0.15 | $0.09 | $0.19 | $0.20 |
| Net realized and unrealized gain (loss) | 4.76 | (6.00) | 11.50 | 6.41 | 1.05 |
| Total from investment operations | $5.01 | $(5.85) | $11.59 | $6.60 | $1.25 |
| Less distributions declared to shareholders |
| From net investment income | $(0.15) | $(0.08) | $(0.15) | $(0.15) | $(0.16) |
| From net realized gain | (1.30) | (3.39) | (0.47) | (0.49) | (2.82) |
| Total distributions declared to shareholders | $(1.45) | $(3.46) | $(0.62) | $(0.64) | $(2.98) |
| Net asset value, end of period (x) | $43.63 | $40.07 | $49.38 | $38.41 | $32.45 |
| Total return (%) (r)(s)(t)(x) | 12.97 | (12.87) | 30.57 | 20.59 | 4.94 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.92 | 0.92 | 0.94 | 0.97 | 1.00 |
| Expenses after expense reductions | 0.90 | 0.91 | 0.92 | 0.96 | 0.98 |
| Net investment income (loss) | 0.63 | 0.35 | 0.22 | 0.56 | 0.65 |
| Portfolio turnover | 35 | 25 | 38 | 46 | 39 |
| Net assets at end of period (000 omitted) | $2,356,842 | $2,156,741 | $2,462,032 | $1,960,597 | $1,373,524 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | 0.89 | 0.89 | 0.90 | 0.93 | 0.96 |
See Notes to Financial Statements
Financial Highlights – continued
| Class B | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $33.87 | $42.49 | $33.24 | $28.23 | $30.19 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.04) | $(0.16) | $(0.19) | $(0.05) | $(0.03) |
| Net realized and unrealized gain (loss) | 3.99 | (5.07) | 9.91 | 5.55 | 0.89 |
| Total from investment operations | $3.95 | $(5.23) | $9.72 | $5.50 | $0.86 |
| Less distributions declared to shareholders |
| From net investment income | $— | $— | $— | $— | $— |
| From net realized gain | (1.30) | (3.39) | (0.47) | (0.49) | (2.82) |
| Total distributions declared to shareholders | $(1.30) | $(3.39) | $(0.47) | $(0.49) | $(2.82) |
| Net asset value, end of period (x) | $36.52 | $33.87 | $42.49 | $33.24 | $28.23 |
| Total return (%) (r)(s)(t)(x) | 12.14 | (13.52) | 29.58 | 19.69 | 4.16 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.67 | 1.67 | 1.69 | 1.72 | 1.75 |
| Expenses after expense reductions | 1.65 | 1.66 | 1.67 | 1.71 | 1.73 |
| Net investment income (loss) | (0.13) | (0.42) | (0.53) | (0.18) | (0.11) |
| Portfolio turnover | 35 | 25 | 38 | 46 | 39 |
| Net assets at end of period (000 omitted) | $11,587 | $15,456 | $24,861 | $25,018 | $22,759 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | 1.64 | 1.64 | 1.65 | 1.68 | 1.71 |
See Notes to Financial Statements
Financial Highlights – continued
| Class C | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $33.30 | $41.83 | $32.72 | $27.86 | $29.84 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.04) | $(0.15) | $(0.19) | $(0.05) | $(0.03) |
| Net realized and unrealized gain (loss) | 3.92 | (4.99) | 9.77 | 5.46 | 0.87 |
| Total from investment operations | $3.88 | $(5.14) | $9.58 | $5.41 | $0.84 |
| Less distributions declared to shareholders |
| From net investment income | $— | $— | $— | $(0.06) | $— |
| From net realized gain | (1.30) | (3.39) | (0.47) | (0.49) | (2.82) |
| Total distributions declared to shareholders | $(1.30) | $(3.39) | $(0.47) | $(0.55) | $(2.82) |
| Net asset value, end of period (x) | $35.88 | $33.30 | $41.83 | $32.72 | $27.86 |
| Total return (%) (r)(s)(t)(x) | 12.14 | (13.51) | 29.62 | 19.66 | 4.14 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.67 | 1.67 | 1.69 | 1.72 | 1.75 |
| Expenses after expense reductions | 1.65 | 1.66 | 1.67 | 1.71 | 1.74 |
| Net investment income (loss) | (0.12) | (0.41) | (0.53) | (0.18) | (0.10) |
| Portfolio turnover | 35 | 25 | 38 | 46 | 39 |
| Net assets at end of period (000 omitted) | $99,365 | $105,731 | $140,242 | $128,709 | $72,093 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | 1.64 | 1.64 | 1.65 | 1.69 | 1.71 |
See Notes to Financial Statements
Financial Highlights – continued
| Class I | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $42.90 | $52.62 | $40.87 | $34.47 | $36.12 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.38 | $0.29 | $0.22 | $0.29 | $0.30 |
| Net realized and unrealized gain (loss) | 5.11 | (6.44) | 12.24 | 6.82 | 1.11 |
| Total from investment operations | $5.49 | $(6.15) | $12.46 | $7.11 | $1.41 |
| Less distributions declared to shareholders |
| From net investment income | $(0.25) | $(0.18) | $(0.24) | $(0.22) | $(0.24) |
| From net realized gain | (1.30) | (3.39) | (0.47) | (0.49) | (2.82) |
| Total distributions declared to shareholders | $(1.55) | $(3.57) | $(0.71) | $(0.71) | $(3.06) |
| Net asset value, end of period (x) | $46.84 | $42.90 | $52.62 | $40.87 | $34.47 |
| Total return (%) (r)(s)(t)(x) | 13.27 | (12.67) | 30.91 | 20.89 | 5.17 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.67 | 0.68 | 0.68 | 0.72 | 0.75 |
| Expenses after expense reductions | 0.65 | 0.66 | 0.67 | 0.71 | 0.74 |
| Net investment income (loss) | 0.88 | 0.60 | 0.47 | 0.81 | 0.90 |
| Portfolio turnover | 35 | 25 | 38 | 46 | 39 |
| Net assets at end of period (000 omitted) | $1,599,892 | $1,405,183 | $1,416,134 | $841,296 | $467,860 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | 0.64 | 0.64 | 0.65 | 0.69 | 0.72 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R1 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $33.35 | $41.89 | $32.77 | $27.84 | $29.82 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.04) | $(0.15) | $(0.19) | $(0.06) | $(0.03) |
| Net realized and unrealized gain (loss) | 3.93 | (5.00) | 9.78 | 5.48 | 0.87 |
| Total from investment operations | $3.89 | $(5.15) | $9.59 | $5.42 | $0.84 |
| Less distributions declared to shareholders |
| From net investment income | $(0.04) | $— | $— | $— | $— |
| From net realized gain | (1.30) | (3.39) | (0.47) | (0.49) | (2.82) |
| Total distributions declared to shareholders | $(1.34) | $(3.39) | $(0.47) | $(0.49) | $(2.82) |
| Net asset value, end of period (x) | $35.90 | $33.35 | $41.89 | $32.77 | $27.84 |
| Total return (%) (r)(s)(t)(x) | 12.15 | (13.52) | 29.60 | 19.68 | 4.14 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.66 | 1.68 | 1.69 | 1.72 | 1.75 |
| Expenses after expense reductions | 1.65 | 1.66 | 1.67 | 1.71 | 1.74 |
| Net investment income (loss) | (0.12) | (0.41) | (0.53) | (0.20) | (0.11) |
| Portfolio turnover | 35 | 25 | 38 | 46 | 39 |
| Net assets at end of period (000 omitted) | $6,437 | $2,974 | $3,791 | $3,816 | $3,186 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | 1.64 | 1.64 | 1.65 | 1.69 | 1.71 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R2 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $38.87 | $48.04 | $37.40 | $31.61 | $33.33 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.15 | $0.05 | $(0.01) | $0.10 | $0.12 |
| Net realized and unrealized gain (loss) | 4.62 | (5.83) | 11.20 | 6.24 | 1.02 |
| Total from investment operations | $4.77 | $(5.78) | $11.19 | $6.34 | $1.14 |
| Less distributions declared to shareholders |
| From net investment income | $(0.06) | $— | $(0.08) | $(0.06) | $(0.04) |
| From net realized gain | (1.30) | (3.39) | (0.47) | (0.49) | (2.82) |
| Total distributions declared to shareholders | $(1.36) | $(3.39) | $(0.55) | $(0.55) | $(2.86) |
| Net asset value, end of period (x) | $42.28 | $38.87 | $48.04 | $37.40 | $31.61 |
| Total return (%) (r)(s)(t)(x) | 12.73 | (13.08) | 30.27 | 20.28 | 4.66 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.17 | 1.18 | 1.19 | 1.22 | 1.25 |
| Expenses after expense reductions | 1.14 | 1.15 | 1.16 | 1.20 | 1.23 |
| Net investment income (loss) | 0.39 | 0.11 | (0.02) | 0.31 | 0.39 |
| Portfolio turnover | 35 | 25 | 38 | 46 | 39 |
| Net assets at end of period (000 omitted) | $19,553 | $18,825 | $21,214 | $17,335 | $13,416 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | 1.13 | 1.13 | 1.14 | 1.17 | 1.20 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R3 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $39.94 | $49.22 | $38.29 | $32.36 | $34.11 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.25 | $0.15 | $0.09 | $0.19 | $0.20 |
| Net realized and unrealized gain (loss) | 4.75 | (5.98) | 11.47 | 6.38 | 1.04 |
| Total from investment operations | $5.00 | $(5.83) | $11.56 | $6.57 | $1.24 |
| Less distributions declared to shareholders |
| From net investment income | $(0.14) | $(0.06) | $(0.16) | $(0.15) | $(0.17) |
| From net realized gain | (1.30) | (3.39) | (0.47) | (0.49) | (2.82) |
| Total distributions declared to shareholders | $(1.44) | $(3.45) | $(0.63) | $(0.64) | $(2.99) |
| Net asset value, end of period (x) | $43.50 | $39.94 | $49.22 | $38.29 | $32.36 |
| Total return (%) (r)(s)(t)(x) | 12.99 | (12.87) | 30.59 | 20.56 | 4.91 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.92 | 0.92 | 0.94 | 0.97 | 1.00 |
| Expenses after expense reductions | 0.90 | 0.91 | 0.92 | 0.96 | 0.99 |
| Net investment income (loss) | 0.63 | 0.34 | 0.22 | 0.56 | 0.64 |
| Portfolio turnover | 35 | 25 | 38 | 46 | 39 |
| Net assets at end of period (000 omitted) | $63,678 | $60,662 | $77,453 | $63,347 | $42,199 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | 0.89 | 0.89 | 0.90 | 0.94 | 0.96 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R4 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $40.56 | $49.93 | $38.81 | $32.76 | $34.48 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.36 | $0.27 | $0.20 | $0.27 | $0.28 |
| Net realized and unrealized gain (loss) | 4.82 | (6.08) | 11.63 | 6.48 | 1.05 |
| Total from investment operations | $5.18 | $(5.81) | $11.83 | $6.75 | $1.33 |
| Less distributions declared to shareholders |
| From net investment income | $(0.25) | $(0.17) | $(0.24) | $(0.21) | $(0.23) |
| From net realized gain | (1.30) | (3.39) | (0.47) | (0.49) | (2.82) |
| Total distributions declared to shareholders | $(1.55) | $(3.56) | $(0.71) | $(0.70) | $(3.05) |
| Net asset value, end of period (x) | $44.19 | $40.56 | $49.93 | $38.81 | $32.76 |
| Total return (%) (r)(s)(t)(x) | 13.28 | (12.67) | 30.92 | 20.88 | 5.18 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.67 | 0.67 | 0.69 | 0.72 | 0.75 |
| Expenses after expense reductions | 0.65 | 0.66 | 0.67 | 0.71 | 0.74 |
| Net investment income (loss) | 0.88 | 0.60 | 0.47 | 0.80 | 0.89 |
| Portfolio turnover | 35 | 25 | 38 | 46 | 39 |
| Net assets at end of period (000 omitted) | $39,499 | $36,425 | $42,883 | $35,770 | $29,218 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | 0.64 | 0.64 | 0.65 | 0.69 | 0.71 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R6 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $43.06 | $52.78 | $40.98 | $34.55 | $36.18 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.42 | $0.33 | $0.25 | $0.32 | $0.32 |
| Net realized and unrealized gain (loss) | 5.12 | (6.45) | 12.29 | 6.83 | 1.13 |
| Total from investment operations | $5.54 | $(6.12) | $12.54 | $7.15 | $1.45 |
| Less distributions declared to shareholders |
| From net investment income | $(0.29) | $(0.22) | $(0.27) | $(0.23) | $(0.26) |
| From net realized gain | (1.30) | (3.39) | (0.47) | (0.49) | (2.82) |
| Total distributions declared to shareholders | $(1.59) | $(3.60) | $(0.74) | $(0.72) | $(3.08) |
| Net asset value, end of period (x) | $47.01 | $43.06 | $52.78 | $40.98 | $34.55 |
| Total return (%) (r)(s)(t)(x) | 13.36 | (12.57) | 31.03 | 20.98 | 5.28 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.58 | 0.59 | 0.60 | 0.64 | 0.67 |
| Expenses after expense reductions | 0.56 | 0.57 | 0.59 | 0.63 | 0.66 |
| Net investment income (loss) | 0.97 | 0.69 | 0.56 | 0.89 | 0.98 |
| Portfolio turnover | 35 | 25 | 38 | 46 | 39 |
| Net assets at end of period (000 omitted) | $1,947,215 | $1,783,116 | $1,905,417 | $1,303,858 | $783,340 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | 0.55 | 0.55 | 0.57 | 0.60 | 0.63 |
| (d) | Per share data is based on average shares outstanding. |
| (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 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
Notes to Financial Statements
(1) Business and Organization
MFS Core Equity Fund (the fund) is a diversified series of MFS Series Trust I (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 Standards 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.
Balance Sheet Offsetting — 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 International Swaps and Derivatives Association (ISDA) Master Agreement, or similar 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. 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 master netting agreement counterparty is subject. Balance sheet offsetting disclosures, 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 — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy and procedures, equity securities, including restricted equity securities and equity securities sold short, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Equity securities sold short, for
Notes to Financial Statements - continued
which there were no sales reported that day, are generally valued at the last quoted daily ask quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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. In determining values, third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the 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 halt 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 after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's assets or liabilities. These inputs are categorized into three broad levels. In certain cases, 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 significant
Notes to Financial Statements - continued
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 August 31, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities | $6,085,592,101 | $— | $— | $6,085,592,101 |
| Mutual Funds | 56,698,729 | — | — | 56,698,729 |
| Total | $6,142,290,830 | $— | $— | $6,142,290,830 |
| Securities Sold Short | $(4,452,150) | $— | $— | $(4,452,150) |
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.
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 year ended August 31, 2023, this expense amounted to $586,673.
Security Loans — Under its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. 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. On loans collateralized by cash, the cash collateral is invested in a money market fund. 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. The lending agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent 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, the lending agent assumes the fund's rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent is responsible for the shortfall, but only
Notes to Financial Statements - continued
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. At period end, the fund had investment securities on loan, all of which were classified as equity securities in the fund's Portfolio of Investments, with a fair value of $1,399,455. The fair value of the fund's investment securities on loan and a related liability of $1,509,039 for cash collateral received on securities loaned are both presented gross in the Statement of Assets and Liabilities. Additionally, these loans were collateralized by U.S. Treasury Obligations of $176,297 held by the lending agent. The collateral on securities loaned exceeded the value of securities on loan at period end. The liability for cash collateral for securities loaned is carried at fair value, which is categorized as level 2 within the fair value hierarchy. A portion of the income generated upon investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund and the lending agent. Income from securities lending is separately reported 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 — 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 payments received in additional securities are recorded on the ex-dividend 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.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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
Notes to Financial Statements - continued
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.
Book/tax differences primarily relate to wash sale loss deferrals and��treating a portion of the proceeds from redemptions as a distribution for tax purposes.
The tax character of distributions declared to shareholders for the last two fiscal years is as follows:
| | Year ended
8/31/23 | Year ended
8/31/22 |
| Ordinary income (including any short-term capital gains) | $28,501,504 | $183,307,105 |
| Long-term capital gains | 174,805,689 | 250,000,505 |
| Total distributions | $203,307,193 | $433,307,610 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 8/31/23 | |
| Cost of investments | $4,475,607,180 |
| Gross appreciation | 1,895,595,629 |
| Gross depreciation | (233,364,129) |
| Net unrealized appreciation (depreciation) | $1,662,231,500 |
| Undistributed ordinary income | 44,780,196 |
| Undistributed long-term capital gain | 114,675,255 |
| Other temporary differences | (1,386) |
| Total distributable earnings (loss) | $1,821,685,565 |
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 and Class C shares will convert to
Notes to Financial Statements - continued
Class A shares 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:
| | Year
ended
8/31/23 | | Year
ended
8/31/22 |
| Class A | $78,167,508 | | $172,852,603 |
| Class B | 539,902 | | 1,835,488 |
| Class C | 4,075,665 | | 11,222,207 |
| Class I | 50,980,529 | | 102,395,888 |
| Class R1 | 241,291 | | 303,682 |
| Class R2 | 669,798 | | 1,478,984 |
| Class R3 | 2,119,841 | | 5,462,151 |
| Class R4 | 1,377,761 | | 2,852,391 |
| Class R6 | 65,134,898 | | 134,904,216 |
| Total | $203,307,193 | | $433,307,610 |
(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 based on the fund's average daily net assets:
| Up to $500 million | 0.65% |
| In excess of $500 million and up to $2.5 billion | 0.55% |
| In excess of $2.5 billion and up to $5 billion | 0.50% |
| In excess of $5 billion and up to $10 billion | 0.47% |
| In excess of $10 billion | 0.45% |
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until December 31, 2023. For the year ended August 31, 2023, this management fee reduction amounted to $743,375, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.51% of the fund's average daily net assets.
Distributor — MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $278,837 for the year ended August 31, 2023, 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
Notes to Financial Statements - continued
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. The distribution and service fees are computed daily and paid monthly.
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% | $ 5,494,757 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 131,073 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 1,019,668 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 61,154 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.48% | 95,166 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 150,799 |
| Total Distribution and Service Fees | | | | | $6,952,617 |
| (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 year ended August 31, 2023 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 there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates' seed money. For the year ended August 31, 2023, this rebate amounted to $756, $10, $14, and $2,819 for Class A, Class B, Class C, and Class R2 shares, 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. Class B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. Class C shares are subject to a CDSC in the event of a shareholder redemption within 12 months of purchase. All contingent deferred sales charges are paid to MFD and during the year ended August 31, 2023, were as follows:
| | Amount |
| Class A | $52,677 |
| Class B | 5,421 |
| Class C | 11,461 |
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 year ended August 31, 2023, the fee was $488,922, which equated to 0.0085% annually of the fund's average daily net assets. MFSC also receives reimbursement from the fund for out-of-pocket expenses, sub-accounting and other shareholder servicing
Notes to Financial Statements - continued
costs which may be paid to affiliated and unaffiliated service providers. Class R6 shares do not incur sub-accounting fees. For the year ended August 31, 2023, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $3,680,932.
Administrator — MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund 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 is computed daily and paid monthly. The administrative services fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.0110% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. 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 from MFS for their services to the fund. 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. The DB plan resulted in a pension expense of $58 and is included in “Independent Trustees’ compensation” in the Statement of Operations for the year ended August 31, 2023. The liability for deferred retirement benefits payable to those former independent Trustees under the DB plan amounted to $1,386 at August 31, 2023, and is included in “Payable for independent Trustees’ compensation” in the Statement of Assets and Liabilities. The deferred retirement benefits compensation fee is accrued daily and paid monthly.
Other — 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. This money market fund does not pay a management fee to MFS but does incur investment and operating costs.
During the year ended August 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $10,162,094 and $9,294,343, respectively. The sales transactions resulted in net realized gains (losses) of $(6,949,332).
The adviser has voluntarily undertaken to reimburse the fund from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the year ended August 31, 2023, this reimbursement amounted to $181,654, which is included in “Other” income in the Statement of Operations.
Notes to Financial Statements - continued
(4) Portfolio Securities
For the year ended August 31, 2023, purchases and sales of investments, other than short sales and short-term obligations, aggregated $2,028,117,995 and $2,129,498,065, 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:
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Class A | 6,071,402 | $244,339,466 | | 7,081,371 | $313,593,228 |
| Class B | 3,134 | 109,426 | | 8,590 | 324,881 |
| Class C | 403,705 | 13,299,230 | | 446,130 | 16,898,958 |
| Class I | 12,008,652 | 512,907,421 | | 14,165,832 | 670,955,988 |
| Class R1 | 123,859 | 4,186,064 | | 33,104 | 1,229,815 |
| Class R2 | 90,998 | 3,582,159 | | 123,562 | 5,247,874 |
| Class R3 | 191,425 | 7,692,706 | | 274,974 | 12,197,273 |
| Class R4 | 131,121 | 5,318,461 | | 161,191 | 7,287,844 |
| Class R6 | 7,367,939 | 318,407,092 | | 10,609,102 | 508,104,101 |
| | 26,392,235 | $1,109,842,025 | | 32,903,856 | $1,535,839,962 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Class A | 1,954,844 | $75,672,028 | | 3,562,980 | $167,210,640 |
| Class B | 16,436 | 535,482 | | 45,078 | 1,798,152 |
| Class C | 118,418 | 3,790,562 | | 267,931 | 10,505,565 |
| Class I | 1,024,361 | 42,500,719 | | 1,818,846 | 91,233,293 |
| Class R1 | 7,533 | 241,291 | | 7,733 | 303,682 |
| Class R2 | 17,823 | 669,798 | | 32,394 | 1,477,502 |
| Class R3 | 54,932 | 2,119,841 | | 116,763 | 5,462,151 |
| Class R4 | 34,809 | 1,362,425 | | 59,453 | 2,819,255 |
| Class R6 | 1,540,429 | 64,097,237 | | 2,641,838 | 132,884,430 |
| | 4,769,585 | $190,989,383 | | 8,553,016 | $413,694,670 |
Notes to Financial Statements - continued
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares reacquired | | | | | |
| Class A | (7,838,379) | $(315,184,413) | | (6,675,894) | $(294,800,220) |
| Class B | (158,621) | (5,349,102) | | (182,384) | (6,872,702) |
| Class C | (928,021) | (31,030,448) | | (891,321) | (33,011,810) |
| Class I | (11,629,273) | (502,599,528) | | (10,147,556) | (474,213,363) |
| Class R1 | (41,260) | (1,393,725) | | (42,175) | (1,536,764) |
| Class R2 | (130,606) | (5,111,360) | | (113,258) | (4,915,479) |
| Class R3 | (301,209) | (12,242,337) | | (446,435) | (19,633,182) |
| Class R4 | (170,049) | (6,869,297) | | (181,591) | (8,309,164) |
| Class R6 | (8,901,208) | (386,471,019) | | (7,940,262) | (375,814,332) |
| | (30,098,626) | $(1,266,251,229) | | (26,620,876) | $(1,219,107,016) |
| Net change | | | | | |
| Class A | 187,867 | $4,827,081 | | 3,968,457 | $186,003,648 |
| Class B | (139,051) | (4,704,194) | | (128,716) | (4,749,669) |
| Class C | (405,898) | (13,940,656) | | (177,260) | (5,607,287) |
| Class I | 1,403,740 | 52,808,612 | | 5,837,122 | 287,975,918 |
| Class R1 | 90,132 | 3,033,630 | | (1,338) | (3,267) |
| Class R2 | (21,785) | (859,403) | | 42,698 | 1,809,897 |
| Class R3 | (54,852) | (2,429,790) | | (54,698) | (1,973,758) |
| Class R4 | (4,119) | (188,411) | | 39,053 | 1,797,935 |
| Class R6 | 7,160 | (3,966,690) | | 5,310,678 | 265,174,199 |
| | 1,063,194 | $34,580,179 | | 14,835,996 | $730,427,616 |
Effective June 1, 2019, purchases of the fund’s Class B shares were closed to new and existing investors subject to certain exceptions. On March 30, 2023, the fund announced that effective after the close of business on September 29, 2023, purchases of Class R1 and Class R2 shares will be closed to new eligible investors.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate 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 highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. 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 rates equal to customary reference rates plus an
Notes to Financial Statements - continued
agreed upon spread. For the year ended August 31, 2023, the fund’s commitment fee and interest expense were $29,201 and $0, respectively, and are included in “Interest expense and fees” in the Statement of Operations.
(7) Investments in 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 following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $86,682,431 | $814,995,477 | $846,487,585 | $(3,603) | $2,970 | $55,189,690 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $2,453,261 | $— |
Report of Independent Registered Public Accounting Firm
To the Shareholders of MFS Core Equity Fund and the Board of Trustees of MFS Series Trust I
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of MFS Core Equity Fund (the “Fund”) (one of the funds constituting MFS Series Trust I (the “Trust”)), including the portfolio of investments, as of August 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting MFS Series Trust I) at August 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Report of Independent Registered Public Accounting Firm – continued
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more MFS investment companies since 1993.
Boston, Massachusetts
October 16, 2023
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of October 1, 2023, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and Officer is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
| INTERESTED TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022); President (until December 2018); Chief Investment Officer (until December 2018) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 68) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
| OFFICERS | | | | | | | | |
Christopher R. Bohane (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022); Natixis Investment Managers (investment management), Funds Chief Compliance Officer, Deputy General Counsel & Senior Vice President (until 2018) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 52) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 52) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 48) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
| (h) | Date first appointed to serve as Trustee/Officer of an MFS Fund. Each Trustee has served continuously since appointment unless indicated otherwise. From January 2012 through December 2016, Messrs. DiLorenzo and Yost served as Treasurer and Deputy Treasurer of the Funds, respectively. |
| (j) | Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”). |
| (k) | “Interested person” of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of a position with MFS. The address of MFS is 111 Huntington Avenue, Boston, Massachusetts 02199-7618. |
Trustees and Officers - continued
Each Trustee (other than Messrs. Jones, Kilman and Roberge) has been elected by shareholders and each Trustee and Officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. The Trust does not hold annual meetings for the purpose of electing Trustees, and Trustees are not elected for fixed terms. Under the terms of the Board's retirement policy, an Independent Trustee shall retire at the end of the calendar year in which he or she reaches the earlier of 75 years of age or 15 years of service on the Board (or, in the case of any Independent Trustee who joined the Board prior to 2015, 20 years of service on the Board).
Messrs. Buller, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.
Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
| Joseph MacDougall | |
Board Review of Investment Advisory Agreement
MFS Core Equity Fund
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-interested (“independent”) Trustees, voting separately, annually approve the continuation of the Fund’s investment advisory agreement with MFS. The Trustees consider matters bearing on the Fund and its advisory arrangements at their meetings throughout the year, including a review of performance data at each regular meeting. In addition, the independent Trustees met several times over the course of three months beginning in May and ending in July, 2023 (“contract review meetings”) for the specific purpose of considering whether to approve the continuation of the investment advisory agreement for the Fund and the other investment companies that the Board oversees (the “MFS Funds”). The independent Trustees were assisted in their evaluation of the Fund’s investment advisory agreement by independent legal counsel, from whom they received separate legal advice and with whom they met separately from MFS during various contract review meetings. The independent Trustees were also assisted in this process by an independent consultant who was retained by and reported to the independent Trustees.
In connection with their deliberations regarding the continuation of the investment advisory agreement, the Trustees, including the independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. The investment advisory agreement for the Fund was considered separately, although the Trustees also took into account the common interests of all MFS Funds in their review. As described below, the Trustees considered the nature, quality, and extent of the various investment advisory, administrative, and shareholder services performed by MFS under the existing investment advisory agreement and other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance of the Fund for various time periods ended December 31, 2022 and the investment performance of a group of funds with substantially similar investment classifications/objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s advisory fees and other expenses and the advisory fees and other expenses of comparable funds identified by Broadridge as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (iii) information provided by MFS on the advisory fees of portfolios of other clients of MFS, including institutional separate accounts and other clients, (iv) information as to whether and to what extent applicable expense waivers, reimbursements or fee “breakpoints” are observed for the Fund, (v) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (vi) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vii) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (viii) information regarding the overall organization of MFS, including information about
Board Review of Investment Advisory Agreement - continued
MFS’ senior management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.
The Trustees’ conclusion as to the continuation of the investment advisory agreement was based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors. It is also important to recognize that the fee arrangements for the Fund and other MFS Funds are the result of years of review and discussion between the independent Trustees and MFS, that certain aspects of such arrangements may receive greater scrutiny in some years than in others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements during the course of the year and in prior years.
Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Class I shares in comparison to the performance of funds in its Broadridge performance universe over the five-year period ended December 31, 2022, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Class I shares was in the 1st quintile relative to the other funds in the universe for this five-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Class I shares was in the 2nd quintile for the one-year period and the 3rd quintile for the three-year period ended December 31, 2022 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account information provided by MFS in connection with the contract review meetings, as well as during investment review meetings conducted with portfolio management personnel during the course of the year regarding the Fund’s performance. After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that they were satisfied with MFS’ responses and efforts relating to investment performance.
In assessing the reasonableness of the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s Class I shares as a percentage of average daily net assets and the advisory fee and total expense ratios of the Broadridge expense group based on information provided by Broadridge. The Trustees considered that, according to the data provided by Broadridge (which takes into account any fee reductions or expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate was lower than the Broadridge expense group median and the Fund’s total expense ratio was approximately at the Broadridge expense group median.
Board Review of Investment Advisory Agreement - continued
The Trustees also considered the advisory fees charged by MFS to any institutional separate accounts advised by MFS (“separate accounts”) and unaffiliated investment companies for which MFS serves as subadviser (“subadvised funds”) that have comparable investment strategies to the Fund, if any. In comparing these fees, the Trustees considered information provided by MFS as to the generally broader scope of services provided by MFS to the Fund, as well as the more extensive regulatory burdens imposed on MFS in managing the Fund, in comparison to separate accounts and subadvised funds. The Trustees also considered the higher demands placed on MFS’ investment personnel and trading infrastructure as a result of the daily cash in-flows and out-flows of the Fund in comparison to separate accounts.
The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is subject to contractual breakpoints that reduce the Fund’s advisory fee rate on average daily net assets over $500 million, $2.5 billion, $5 billion and $10 billion. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the breakpoints and the group fee waiver were sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.
The Trustees also considered information prepared by MFS relating to MFS’ costs and profits with respect to the Fund, the MFS Funds considered as a group, and other investment companies and accounts advised by MFS, as well as MFS’ methodologies used to determine and allocate its costs to the MFS Funds, the Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that the advisory fees charged to the Fund represent reasonable compensation in light of the services being provided by MFS to the Fund.
In addition, the Trustees considered MFS’ resources and related efforts to continue to retain, attract and motivate capable personnel to serve the Fund. The Trustees also considered current and developing conditions in the financial services industry, including the presence of large and well-capitalized companies which are spending, and appear to be prepared to continue to spend, substantial sums to engage personnel and to provide services to competing investment companies. In this regard, the Trustees also considered the financial resources of MFS and its ultimate parent, Sun Life Financial Inc. The Trustees also considered the advantages and possible disadvantages to the Fund of having an adviser that also serves other investment companies as well as other accounts.
The Trustees also considered the nature, quality, cost, and extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the nature, extent and quality of certain other services
Board Review of Investment Advisory Agreement - continued
MFS performs or arranges for on the Fund’s behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’ interaction with third-party service providers, principally custodians and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-called “fall-out benefits” to MFS such as reputational value derived from serving as investment manager to the MFS Funds. The Trustees also considered that MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses a Fund, if applicable, for the costs of external research acquired through the use of the Fund’s portfolio brokerage commissions.
Based on their evaluation of factors that they deemed to be material, including those factors described above, the Board of Trustees, including the independent Trustees, concluded that the Fund’s investment advisory agreement with MFS should be continued for an additional one-year period, commencing August 1, 2023.
Statement Regarding Liquidity Risk Management Program
The fund has adopted and implemented a liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The fund’s Board of Trustees (the “Board”) has designated MFS as the administrator of the Program. The Program is reasonably designed to assess and manage the liquidity risk of the fund. Liquidity risk is the risk that the fund could not meet requests to redeem shares issued by the fund without significant dilution of remaining investors' interests.
MFS provided a written report to the Board for consideration at its March 2023 meeting that addressed the operation of the Program and provided an assessment of the adequacy and effectiveness of the Program during the period from January 1, 2022 to December 31, 2022 (the “Covered Period”). The report concluded that during the Covered Period the Program had operated effectively in all material respects and had adequately and effectively been implemented to assess and manage the fund’s liquidity risk. MFS also reported that there were no liquidity events that impacted the fund or its ability to timely meet redemptions without dilution to existing shareholders during the Covered Period.
There can be no assurance that the Program will achieve its objectives in the future. Further information on liquidity risk, and other principal risks to which an investment in the fund may be subject, can be found in the prospectus.
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 mfs.com/proxyvoting, 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 by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
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 at https://www.mfs.com/announcements or at mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.
Under the Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.
Federal Tax Information (unaudited)
The fund will notify shareholders of amounts for use in preparing 2023 income tax forms in January 2024. The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund designates the maximum amount allowable as qualified dividend income eligible to be taxed at the same rate as long-term capital gain.
The fund designates $194,210,000 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 100.00% of the ordinary income dividends paid during the prior calendar year qualify for the corporate dividends received deduction.
Federal Tax Information (unaudited) - continued
The fund designates the maximum amount allowable as Section 199A dividends as defined in Proposed Treasury Regulation §1.199A-3(d).
| FACTS | WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION? |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: |
| • Social Security number and account balances |
| • Account transactions and transaction history |
| • Checking account information and wire transfer instructions |
| When you are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| Who we are |
| Who is providing this notice? | MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., and MFS Heritage Trust Company. |
| What we do |
How does MFS
protect my personal
information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you. |
How does MFS
collect my personal
information? | We collect your personal information, for example, when you |
| • open an account or provide account information |
| • direct us to buy securities or direct us to sell your securities |
| • make a wire transfer |
| We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
| Why can't I limit all sharing? | Federal law gives you the right to limit only |
| • sharing for affiliates' everyday business purposes – information about your creditworthiness |
| • affiliates from using your information to market to you |
| • sharing for nonaffiliates to market to you |
| State laws and individual companies may give you additional rights to limit sharing. |
| Definitions |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice. |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share with nonaffiliates so they can market to you. |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. |
| • MFS doesn't jointly market. |
| Other important information |
| If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. |
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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 219341
Kansas City, MO 64121-9341
OVERNIGHT MAIL
MFS Service Center, Inc.
Suite 219341
430 W 7th Street
Kansas City, MO 64105-1407
Annual Report
August 31, 2023
MFS® Low Volatility
Equity Fund
MFS® Low Volatility
Equity Fund
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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 • MAY LOSE VALUE • NO BANK GUARANTEE
Portfolio structure
Top ten holdings
| Eli Lilly & Co. | 3.3% |
| Merck & Co., Inc. | 3.0% |
| Johnson & Johnson | 2.8% |
| Motorola Solutions, Inc. | 2.5% |
| Accenture PLC, “A” | 2.4% |
| Alphabet, Inc., “A” | 2.3% |
| Visa, Inc., “A” | 2.2% |
| Microsoft Corp. | 2.2% |
| Everest Group Ltd. | 2.1% |
| Republic Services, Inc. | 2.0% |
GICS equity sectors (g)
| Information Technology | 20.7% |
| Health Care | 17.7% |
| Industrials | 12.9% |
| Financials | 12.5% |
| Consumer Staples | 10.7% |
| Consumer Discretionary | 7.4% |
| Utilities | 6.3% |
| Communication Services | 5.8% |
| Real Estate | 3.9% |
| Materials | 1.5% |
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Percentages are based on net assets as of August 31, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended August 31, 2023, Class A shares of the MFS Low Volatility Equity Fund (fund) provided a total return of 8.02%, at net asset value. This compares with a return of 15.94% for the fund’s benchmark, the Standard & Poor's 500 Stock Index (S&P 500 Index).
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Those shifts exposed an asset-liability mismatch that forced the closure of several institutions by regulators. Given the importance of small and mid-sized lenders to the provision of credit in the US, concerns were raised in the aftermath of the crisis that credit availability could become constrained, leading to slower economic growth, although those effects have been limited thus far. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as focus turned to the country’s highly-indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks remained focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates.
Against an environment of relatively tight labor markets, tighter global financial conditions and volatile materials prices, investor anxiety appeared to have increased over the potential that corporate profit margins may be past peak for this cycle. That said, signs that supply chains have generally normalized, coupled with low levels of unemployment across developed markets and hopes that inflation levels have peaked, were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the S&P 500 Index, stock selection and, to a lesser extent, underweight positions in both the information technology and communication services sectors, detracted from the fund's performance. Within the information technology sector, not holding shares of computer graphics processor maker NVIDIA and semiconductor and infrastructure software solutions provider Broadcom, and the fund’s underweight position in software giant Microsoft, hindered relative returns. The stock price of
Management Review - continued
NVIDIA advanced as the company reported better-than-expected revenue results during the period, driven by strong performance in both its gaming and data center segments. Within the communication services sector, not holding shares of social networking service provider Meta Platforms, and the fund’s underweight position in technology company Alphabet, held back relative results. The stock price of Meta Platforms increased as the company reported better-than-expected earnings for the period, driven by solid revenue results and strong user engagement across its applications. Additionally, the fund’s overweight position in wireless communications services provider T-Mobile US weakened relative returns.
An overweight position and, to a lesser extent, stock selection in the utilities sector further detracted from relative performance, led by the fund’s overweight position in utility company Xcel Energy.
Elsewhere, the fund’s overweight positions in global banking and payment technologies provider Fidelity National Information Services(h), global food company General Mills and merchandise store operator Dollar General held back relative performance.
Contributors to Performance
Favorable stock selection within the health care sector contributed to relative performance, driven by the fund’s overweight positions in pharmaceutical companies, Eli Lilly and Merck & Co, and its underweight positions in pharmaceutical giant Pfizer(h) and health insurance and Medicare/Medicaid provider UnitedHealth Group. The stock price of Eli Lilly advanced as the company reported earnings above consensus estimates and released promising data from its GLP-1 obesity drug trials, which are anticipated to launch in 2026, a year earlier than its original plan.
An underweight position and stock selection in the consumer discretionary sector also supported relative results. Within this sector, not holding shares of electric vehicle manufacturer Tesla and internet retailer Amazon.com strengthened relative performance. Despite a recent recovery in its stock price, the share price of Tesla fell sharply towards the end of 2023 led by uncertainties surrounding production shutdowns at the company's Shanghai manufacturing plant, reduced vehicle deliveries, increased competitive concerns and questions regarding Tesla CEO Elon Musk’s acquisition of social media platform X (formerly Twitter).
Elsewhere, the fund’s overweight positions in diversified industrial manufacturer Eaton (Ireland) and insurance company Everest Reinsurance, and not holding shares of diversified entertainment company Walt Disney, aided relative performance. The stock price of Eaton appreciated as the company reported higher-than-expected operating
Management Review - continued
revenue in the Americas region, driven by a robust backlog of electrical orders and power grid improvement projects. Additionally, holding shares of integrated software solutions provider Black Knight(b)(h) further benefited relative returns.
Respectfully,
Portfolio Manager(s)
Jim Fallon, Matt Krummell, Jonathan Sage, and Jed Stocks
| (b) | Security is not a benchmark constituent. |
| (h) | Security was not held in the portfolio at period end. |
The views expressed in this report are those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market or other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS portfolio. References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio’s current or future investments.
Performance Summary THROUGH 8/31/23
The following chart illustrates a representative class of the fund’s historical performance in comparison to its benchmark(s). Performance results include the deduction of the maximum applicable sales charge and reflect the percentage change in net asset value, including reinvestment of dividends and capital gains distributions. The performance of other share classes will be greater than or less than that of the class depicted below. Benchmarks are unmanaged and may not be invested in directly. Benchmark returns do not reflect sales charges, commissions or expenses. (See Notes to Performance Summary.)
Performance data shown represents past performance and is no guarantee of future results. Investment return and principal value fluctuate so your shares, when sold, may be worth more or less than the original cost; current performance may be lower or higher than quoted. The performance shown does not reflect the deduction of taxes, if any, that a shareholder would pay on fund distributions or the redemption of fund shares.
Growth of a Hypothetical $10,000 Investment (t)
Performance Summary - continued
Total Returns through 8/31/23
Average annual without sales charge
| Share Class | Class Inception Date | 1-yr | 5-yr | Life (t) |
| A | 12/05/13 | 8.02% | 9.34% | 10.02% |
| B | 12/05/13 | 7.23% | 8.52% | 9.19% |
| C | 12/05/13 | 7.23% | 8.52% | 9.19% |
| I | 12/05/13 | 8.34% | 9.62% | 10.29% |
| R1 | 12/05/13 | 7.22% | 8.53% | 9.19% |
| R2 | 12/05/13 | 7.74% | 9.06% | 9.74% |
| R3 | 12/05/13 | 8.04% | 9.35% | 10.02% |
| R4 | 12/05/13 | 8.27% | 9.61% | 10.28% |
| R6 | 12/05/13 | 8.38% | 9.71% | 10.38% |
Comparative benchmark(s)
| | | | |
| Standard & Poor's 500 Stock Index (f) | 15.94% | 11.12% | 12.02% |
Average annual with sales charge
| | | | |
A
With Initial Sales Charge (5.75%) | 1.81% | 8.06% | 9.35% |
B
With CDSC (Declining over six years from 4% to 0%) (v) | 3.40% | 8.23% | 9.19% |
C
With CDSC (1% for 12 months) (v) | 6.27% | 8.52% | 9.19% |
CDSC – Contingent Deferred Sales Charge.
Class I, R1, R2, R3, R4, and R6 shares do not have a sales charge.
| (f) | Source: FactSet Research Systems Inc. |
| (t) | For the period from the class inception date through the stated period end. (See Notes to Performance Summary.) |
| (v) | Assuming redemption at the end of the applicable period. |
Benchmark Definition(s)
Standard & Poor's 500 Stock Index(g) – a market capitalization-weighted index of 500 widely held equity securities, designed to measure broad U.S. equity performance.
It is not possible to invest directly in an index.
| (g) | “Standard & Poor's®” and “S&P®” are registered trademarks of Standard & Poor's Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by MFS. The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS's product(s) is not sponsored, endorsed, sold, or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, nor their respective affiliates make any representation regarding the advisability of investing in such product(s). |
Performance Summary - continued
Notes to Performance Summary
Average annual total return represents the average annual change in value for each share class for the periods presented. Life returns are presented where the share class has less than 10 years of performance history and represent the average annual total return from the class inception date to the stated period end date.
Performance results reflect any applicable expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers the fund's performance results would be less favorable. Please see the prospectus and financial statements for complete details.
Performance results do not include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and may differ from amounts reported in the financial highlights.
From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
Expense Table
Fund expenses borne by the shareholders during the period,
March 1, 2023 through August 31, 2023
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 March 1, 2023 through August 31, 2023.
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.
Expense Table - continued
Share
Class | | Annualized
Expense
Ratio | Beginning
Account Value
3/01/23 | Ending
Account Value
8/31/23 | Expenses
Paid During
Period (p)
3/01/23-8/31/23 |
| A | Actual | 0.89% | $1,000.00 | $1,062.95 | $4.63 |
| Hypothetical (h) | 0.89% | $1,000.00 | $1,020.72 | $4.53 |
| B | Actual | 1.64% | $1,000.00 | $1,058.87 | $8.51 |
| Hypothetical (h) | 1.64% | $1,000.00 | $1,016.94 | $8.34 |
| C | Actual | 1.64% | $1,000.00 | $1,058.54 | $8.51 |
| Hypothetical (h) | 1.64% | $1,000.00 | $1,016.94 | $8.34 |
| I | Actual | 0.64% | $1,000.00 | $1,064.62 | $3.33 |
| Hypothetical (h) | 0.64% | $1,000.00 | $1,021.98 | $3.26 |
| R1 | Actual | 1.64% | $1,000.00 | $1,059.04 | $8.51 |
| Hypothetical (h) | 1.64% | $1,000.00 | $1,016.94 | $8.34 |
| R2 | Actual | 1.14% | $1,000.00 | $1,061.30 | $5.92 |
| Hypothetical (h) | 1.14% | $1,000.00 | $1,019.46 | $5.80 |
| R3 | Actual | 0.89% | $1,000.00 | $1,062.69 | $4.63 |
| Hypothetical (h) | 0.89% | $1,000.00 | $1,020.72 | $4.53 |
| R4 | Actual | 0.64% | $1,000.00 | $1,063.99 | $3.33 |
| Hypothetical (h) | 0.64% | $1,000.00 | $1,021.98 | $3.26 |
| R6 | Actual | 0.55% | $1,000.00 | $1,064.40 | $2.86 |
| Hypothetical (h) | 0.55% | $1,000.00 | $1,022.43 | $2.80 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Portfolio of Investments
8/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 99.4% |
| Aerospace & Defense – 4.1% | |
| CACI International, Inc., “A” (a) | | 14,093 | $4,622,645 |
| General Dynamics Corp. | | 8,944 | 2,027,068 |
| Honeywell International, Inc. | | 12,339 | 2,318,992 |
| Huntington Ingalls Industries, Inc. | | 8,533 | 1,879,991 |
| Teledyne Technologies, Inc. (a) | | 17,861 | 7,471,256 |
| | | | | $18,319,952 |
| Apparel Manufacturers – 0.4% | |
| Skechers USA, Inc., “A” (a) | | 35,319 | $1,776,899 |
| Broadcasting – 1.1% | |
| Omnicom Group, Inc. | | 62,075 | $5,028,696 |
| Brokerage & Asset Managers – 1.2% | |
| Bank of New York Mellon Corp. | | 71,510 | $3,208,654 |
| Raymond James Financial, Inc. | | 18,721 | 1,958,029 |
| | | | | $5,166,683 |
| Business Services – 5.9% | |
| Accenture PLC, “A” | | 32,831 | $10,629,693 |
| Amdocs Ltd. | | 26,183 | 2,335,523 |
| Cognizant Technology Solutions Corp., “A” | | 120,105 | 8,600,719 |
| Fiserv, Inc. (a) | | 22,844 | 2,773,033 |
| Verisk Analytics, Inc., “A” | | 8,213 | 1,989,353 |
| | | | | $26,328,321 |
| Cable TV – 0.7% | |
| Comcast Corp., “A” | | 70,664 | $3,304,249 |
| Chemicals – 0.4% | |
| PPG Industries, Inc. | | 12,859 | $1,822,892 |
| Computer Software – 2.2% | |
| Microsoft Corp. | | 29,259 | $9,589,930 |
| Computer Software - Systems – 2.7% | |
| Box, Inc., “A” (a) | | 244,067 | $6,462,894 |
| Juniper Networks, Inc. | | 185,929 | 5,414,253 |
| | | | | $11,877,147 |
| Construction – 0.5% | |
| AvalonBay Communities, Inc., REIT | | 11,196 | $2,058,049 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Consumer Products – 3.0% | |
| Colgate-Palmolive Co. | | 55,844 | $4,102,859 |
| Kimberly-Clark Corp. | | 18,495 | 2,382,711 |
| Procter & Gamble Co. | | 45,569 | 7,033,119 |
| | | | | $13,518,689 |
| Containers – 0.4% | |
| Graphic Packaging Holding Co. | | 85,256 | $1,896,093 |
| Electrical Equipment – 4.8% | |
| AMETEK, Inc. | | 17,355 | $2,768,296 |
| Amphenol Corp., “A” | | 61,573 | 5,441,822 |
| Hubbell, Inc. | | 6,655 | 2,169,863 |
| nVent Electric PLC | | 43,761 | 2,474,247 |
| TE Connectivity Ltd. | | 64,078 | 8,483,286 |
| | | | | $21,337,514 |
| Electronics – 1.8% | |
| Texas Instruments, Inc. | | 46,954 | $7,891,089 |
| Food & Beverages – 5.8% | |
| Archer Daniels Midland Co. | | 27,299 | $2,164,811 |
| General Mills, Inc. | | 106,582 | 7,211,338 |
| J.M. Smucker Co. | | 35,967 | 5,213,417 |
| Mondelez International, Inc. | | 37,802 | 2,693,770 |
| PepsiCo, Inc. | | 47,804 | 8,505,288 |
| | | | | $25,788,624 |
| Gaming & Lodging – 0.4% | |
| Hilton Worldwide Holdings, Inc. | | 13,580 | $2,018,667 |
| General Merchandise – 0.4% | |
| Dollar General Corp. | | 13,209 | $1,829,446 |
| Health Maintenance Organizations – 1.3% | |
| Cigna Group | | 9,626 | $2,659,279 |
| UnitedHealth Group, Inc. | | 6,342 | 3,022,470 |
| | | | | $5,681,749 |
| Insurance – 6.9% | |
| Aon PLC | | 6,361 | $2,120,694 |
| Assurant, Inc. | | 21,189 | 2,952,263 |
| Chubb Ltd. | | 25,473 | 5,116,761 |
| Everest Group Ltd. | | 25,927 | 9,351,350 |
| Hanover Insurance Group, Inc. | | 16,297 | 1,739,216 |
| Hartford Financial Services Group, Inc. | | 35,935 | 2,580,852 |
| MetLife, Inc. | | 41,074 | 2,601,627 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Insurance – continued | |
| Reinsurance Group of America, Inc. | | 17,288 | $2,396,463 |
| Voya Financial, Inc. | | 25,492 | 1,776,283 |
| | | | | $30,635,509 |
| Internet – 2.3% | |
| Alphabet, Inc., “A” (a) | | 74,718 | $10,174,350 |
| Machinery & Tools – 4.9% | |
| Eaton Corp. PLC | | 36,977 | $8,518,391 |
| PACCAR, Inc. | | 30,227 | 2,487,380 |
| Roper Technologies, Inc. | | 17,661 | 8,813,899 |
| Timken Co. | | 24,211 | 1,850,205 |
| | | | | $21,669,875 |
| Major Banks – 1.0% | |
| Goldman Sachs Group, Inc. | | 5,344 | $1,751,282 |
| JPMorgan Chase & Co. | | 18,184 | 2,660,865 |
| | | | | $4,412,147 |
| Medical & Health Technology & Services – 1.9% | |
| McKesson Corp. | | 20,973 | $8,647,587 |
| Medical Equipment – 3.7% | |
| Abbott Laboratories | | 20,845 | $2,144,951 |
| Hologic, Inc. (a) | | 31,160 | 2,328,898 |
| Medtronic PLC | | 63,587 | 5,182,340 |
| STERIS PLC | | 29,337 | 6,735,482 |
| | | | | $16,391,671 |
| Network & Telecom – 2.9% | |
| Equinix, Inc., REIT | | 2,428 | $1,897,191 |
| Motorola Solutions, Inc. | | 38,520 | 10,923,116 |
| | | | | $12,820,307 |
| Other Banks & Diversified Financials – 2.9% | |
| Mastercard, Inc., “A” | | 7,297 | $3,011,034 |
| Visa, Inc., “A” | | 39,966 | 9,818,847 |
| | | | | $12,829,881 |
| Pharmaceuticals – 10.8% | |
| Eli Lilly & Co. | | 26,535 | $14,705,697 |
| Johnson & Johnson | | 76,648 | 12,392,449 |
| Merck & Co., Inc. | | 123,036 | 13,408,463 |
| Vertex Pharmaceuticals, Inc. (a) | | 6,309 | 2,197,677 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Pharmaceuticals – continued | |
| Zoetis, Inc. | | 28,644 | $5,456,968 |
| | | | | $48,161,254 |
| Pollution Control – 3.7% | |
| Republic Services, Inc. | | 62,307 | $8,980,308 |
| Waste Connections, Inc. | | 32,735 | 4,484,368 |
| Waste Management, Inc. | | 20,212 | 3,168,837 |
| | | | | $16,633,513 |
| Railroad & Shipping – 0.5% | |
| CSX Corp. | | 70,319 | $2,123,634 |
| Real Estate – 3.0% | |
| Brixmor Property Group, Inc., REIT | | 83,601 | $1,837,550 |
| NNN REIT, Inc. | | 42,667 | 1,680,653 |
| Public Storage, Inc., REIT | | 13,997 | 3,868,491 |
| Spirit Realty Capital, Inc., REIT | | 49,437 | 1,908,763 |
| STAG Industrial, Inc., REIT | | 56,796 | 2,074,758 |
| W.P. Carey, Inc., REIT | | 33,629 | 2,187,566 |
| | | | | $13,557,781 |
| Restaurants – 2.7% | |
| McDonald's Corp. | | 19,977 | $5,616,533 |
| Starbucks Corp. | | 43,736 | 4,261,636 |
| Texas Roadhouse, Inc. | | 20,298 | 2,113,022 |
| | | | | $11,991,191 |
| Specialty Chemicals – 0.6% | |
| Ecolab, Inc. | | 15,470 | $2,843,541 |
| Specialty Stores – 5.3% | |
| AutoZone, Inc. (a) | | 3,018 | $7,639,554 |
| Home Depot, Inc. | | 10,899 | 3,599,939 |
| O'Reilly Automotive, Inc. (a) | | 3,397 | 3,192,161 |
| Ulta Beauty, Inc. (a) | | 6,531 | 2,710,561 |
| Walmart Stores, Inc. | | 40,267 | 6,547,817 |
| | | | | $23,690,032 |
| Telecommunications - Wireless – 1.7% | |
| T-Mobile US, Inc. (a) | | 54,038 | $7,362,677 |
| Trucking – 1.3% | |
| J.B. Hunt Transport Services, Inc. | | 12,579 | $2,363,343 |
| Landstar System, Inc. | | 17,193 | 3,263,403 |
| | | | | $5,626,746 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Utilities - Electric Power – 6.2% | |
| DTE Energy Co. | | 27,449 | $2,837,678 |
| Duke Energy Corp. | | 38,989 | 3,462,223 |
| Edison International | | 35,055 | 2,413,537 |
| Evergy, Inc. | | 40,715 | 2,238,104 |
| Exelon Corp. | | 154,113 | 6,183,014 |
| NextEra Energy, Inc. | | 39,234 | 2,620,831 |
| PG&E Corp. (a) | | 110,428 | 1,799,976 |
| Sempra Energy | | 28,706 | 2,015,735 |
| Xcel Energy, Inc. | | 74,371 | 4,248,815 |
| | | | | $27,819,913 |
| Total Common Stocks (Identified Cost, $336,314,820) | | $442,626,298 |
| Investment Companies (h) – 0.6% |
| Money Market Funds – 0.6% | |
| MFS Institutional Money Market Portfolio, 5.3% (v) (Identified Cost, $2,700,971) | | | 2,700,970 | $2,701,240 |
|
|
| Other Assets, Less Liabilities – (0.0)% | | (32,487) |
| Net Assets – 100.0% | $445,295,051 |
| (a) | Non-income producing security. | | | |
| (h) | An affiliated issuer, which 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. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $2,701,240 and $442,626,298, respectively. | | | |
| (v) | Affiliated issuer 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: |
| REIT | Real Estate Investment Trust |
See Notes to Financial Statements
Financial Statements
Statement of Assets and Liabilities
At 8/31/23
This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.
| Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $336,314,820) | $442,626,298 |
| Investments in affiliated issuers, at value (identified cost, $2,700,971) | 2,701,240 |
| Receivables for | |
| Fund shares sold | 442,381 |
| Dividends | 736,511 |
| Other assets | 425 |
| Total assets | $446,506,855 |
| Liabilities | |
| Payables for | |
| Fund shares reacquired | $980,817 |
| Payable to affiliates | |
| Investment adviser | 11,386 |
| Administrative services fee | 409 |
| Shareholder servicing costs | 122,740 |
| Distribution and service fees | 3,661 |
| Payable for independent Trustees' compensation | 10 |
| Accrued expenses and other liabilities | 92,781 |
| Total liabilities | $1,211,804 |
| Net assets | $445,295,051 |
| Net assets consist of | |
| Paid-in capital | $320,376,369 |
| Total distributable earnings (loss) | 124,918,682 |
| Net assets | $445,295,051 |
| Shares of beneficial interest outstanding | 23,980,647 |
Statement of Assets and Liabilities – continued
| | Net assets | Shares
outstanding | Net asset value
per share (a) |
| Class A | $166,624,429 | 8,981,703 | $18.55 |
| Class B | 1,492,241 | 80,739 | 18.48 |
| Class C | 22,223,550 | 1,208,379 | 18.39 |
| Class I | 141,857,828 | 7,632,356 | 18.59 |
| Class R1 | 608,490 | 32,878 | 18.51 |
| Class R2 | 479,850 | 25,723 | 18.65 |
| Class R3 | 717,485 | 38,518 | 18.63 |
| Class R4 | 104,686 | 5,628 | 18.60 |
| Class R6 | 111,186,492 | 5,974,723 | 18.61 |
| (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 $19.68 [100 / 94.25 x $18.55]. 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 R6. |
See Notes to Financial Statements
Financial Statements
Statement of Operations
Year ended 8/31/23
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 (loss) | |
| Income | |
| Dividends | $8,034,240 |
| Dividends from affiliated issuers | 74,734 |
| Other | 7,687 |
| Foreign taxes withheld | (6,173) |
| Total investment income | $8,110,488 |
| Expenses | |
| Management fee | $2,269,792 |
| Distribution and service fees | 678,267 |
| Shareholder servicing costs | 356,562 |
| Administrative services fee | 76,491 |
| Independent Trustees' compensation | 9,474 |
| Custodian fee | 30,127 |
| Shareholder communications | 33,144 |
| Audit and tax fees | 57,934 |
| Legal fees | 2,299 |
| Miscellaneous | 174,534 |
| Total expenses | $3,688,624 |
| Reduction of expenses by investment adviser and distributor | (194,786) |
| Net expenses | $3,493,838 |
| Net investment income (loss) | $4,616,650 |
| Realized and unrealized gain (loss) |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $23,922,019 |
| Affiliated issuers | 755 |
| Foreign currency | (19) |
| Net realized gain (loss) | $23,922,755 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $7,185,187 |
| Affiliated issuers | 269 |
| Translation of assets and liabilities in foreign currencies | 153 |
| Net unrealized gain (loss) | $7,185,609 |
| Net realized and unrealized gain (loss) | $31,108,364 |
| Change in net assets from operations | $35,725,014 |
See Notes to Financial Statements
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.
| | Year ended |
| | 8/31/23 | 8/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $4,616,650 | $3,869,466 |
| Net realized gain (loss) | 23,922,755 | 68,425,059 |
| Net unrealized gain (loss) | 7,185,609 | (124,232,463) |
| Change in net assets from operations | $35,725,014 | $(51,937,938) |
| Total distributions to shareholders | $(53,530,565) | $(31,271,225) |
| Change in net assets from fund share transactions | $31,136,077 | $(113,407,964) |
| Total change in net assets | $13,330,526 | $(196,617,127) |
| Net assets | | |
| At beginning of period | 431,964,525 | 628,581,652 |
| At end of period | $445,295,051 | $431,964,525 |
See Notes to Financial Statements
Financial Statements
Financial Highlights
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that 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.
| Class A | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $19.36 | $22.51 | $17.32 | $16.28 | $15.05 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.16 | $0.13 | $0.14 | $0.18 | $0.18 |
| Net realized and unrealized gain (loss) | 1.26 | (2.15) | 5.22 | 1.04 | 1.68 |
| Total from investment operations | $1.42 | $(2.02) | $5.36 | $1.22 | $1.86 |
| Less distributions declared to shareholders |
| From net investment income | $(0.16) | $(0.12) | $(0.17) | $(0.16) | $(0.17) |
| From net realized gain | (2.07) | (1.01) | — | (0.02) | (0.46) |
| Total distributions declared to shareholders | $(2.23) | $(1.13) | $(0.17) | $(0.18) | $(0.63) |
| Net asset value, end of period (x) | $18.55 | $19.36 | $22.51 | $17.32 | $16.28 |
| Total return (%) (r)(s)(t)(x) | 8.02 | (9.47) | 31.16 | 7.64 | 13.23 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.93 | 0.94 | 0.92 | 0.92 | 1.05 |
| Expenses after expense reductions | 0.89 | 0.89 | 0.89 | 0.89 | 0.89 |
| Net investment income (loss) | 0.89 | 0.63 | 0.71 | 1.11 | 1.22 |
| Portfolio turnover | 39 | 36 | 20 | 34 | 28 |
| Net assets at end of period (000 omitted) | $166,624 | $161,776 | $171,216 | $135,199 | $85,022 |
See Notes to Financial Statements
Financial Highlights – continued
| Class B | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $19.28 | $22.46 | $17.29 | $16.25 | $15.02 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.03 | $(0.03) | $(0.01) | $0.06 | $0.07 |
| Net realized and unrealized gain (loss) | 1.25 | (2.14) | 5.22 | 1.03 | 1.68 |
| Total from investment operations | $1.28 | $(2.17) | $5.21 | $1.09 | $1.75 |
| Less distributions declared to shareholders |
| From net investment income | $(0.01) | $(0.00)(w) | $(0.04) | $(0.03) | $(0.06) |
| From net realized gain | (2.07) | (1.01) | — | (0.02) | (0.46) |
| Total distributions declared to shareholders | $(2.08) | $(1.01) | $(0.04) | $(0.05) | $(0.52) |
| Net asset value, end of period (x) | $18.48 | $19.28 | $22.46 | $17.29 | $16.25 |
| Total return (%) (r)(s)(t)(x) | 7.23 | (10.15) | 30.19 | 6.77 | 12.41 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.68 | 1.69 | 1.67 | 1.67 | 1.81 |
| Expenses after expense reductions | 1.64 | 1.64 | 1.64 | 1.64 | 1.64 |
| Net investment income (loss) | 0.14 | (0.14) | (0.04) | 0.35 | 0.48 |
| Portfolio turnover | 39 | 36 | 20 | 34 | 28 |
| Net assets at end of period (000 omitted) | $1,492 | $1,712 | $2,511 | $2,198 | $2,558 |
| Class C | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $19.20 | $22.37 | $17.22 | $16.20 | $14.98 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.03 | $(0.03) | $(0.01) | $0.06 | $0.07 |
| Net realized and unrealized gain (loss) | 1.25 | (2.13) | 5.20 | 1.03 | 1.67 |
| Total from investment operations | $1.28 | $(2.16) | $5.19 | $1.09 | $1.74 |
| Less distributions declared to shareholders |
| From net investment income | $(0.02) | $— | $(0.04) | $(0.05) | $(0.06) |
| From net realized gain | (2.07) | (1.01) | — | (0.02) | (0.46) |
| Total distributions declared to shareholders | $(2.09) | $(1.01) | $(0.04) | $(0.07) | $(0.52) |
| Net asset value, end of period (x) | $18.39 | $19.20 | $22.37 | $17.22 | $16.20 |
| Total return (%) (r)(s)(t)(x) | 7.23 | (10.14) | 30.20 | 6.75 | 12.40 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.68 | 1.69 | 1.67 | 1.67 | 1.81 |
| Expenses after expense reductions | 1.64 | 1.64 | 1.64 | 1.64 | 1.64 |
| Net investment income (loss) | 0.14 | (0.14) | (0.03) | 0.35 | 0.47 |
| Portfolio turnover | 39 | 36 | 20 | 34 | 28 |
| Net assets at end of period (000 omitted) | $22,224 | $25,754 | $32,839 | $29,429 | $21,859 |
See Notes to Financial Statements
Financial Highlights – continued
| Class I | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $19.39 | $22.55 | $17.34 | $16.31 | $15.07 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.21 | $0.17 | $0.19 | $0.22 | $0.23 |
| Net realized and unrealized gain (loss) | 1.27 | (2.15) | 5.23 | 1.03 | 1.68 |
| Total from investment operations | $1.48 | $(1.98) | $5.42 | $1.25 | $1.91 |
| Less distributions declared to shareholders |
| From net investment income | $(0.21) | $(0.17) | $(0.21) | $(0.20) | $(0.21) |
| From net realized gain | (2.07) | (1.01) | — | (0.02) | (0.46) |
| Total distributions declared to shareholders | $(2.28) | $(1.18) | $(0.21) | $(0.22) | $(0.67) |
| Net asset value, end of period (x) | $18.59 | $19.39 | $22.55 | $17.34 | $16.31 |
| Total return (%) (r)(s)(t)(x) | 8.34 | (9.28) | 31.55 | 7.82 | 13.55 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.69 | 0.68 | 0.67 | 0.67 | 0.78 |
| Expenses after expense reductions | 0.64 | 0.64 | 0.64 | 0.64 | 0.64 |
| Net investment income (loss) | 1.14 | 0.82 | 0.99 | 1.35 | 1.46 |
| Portfolio turnover | 39 | 36 | 20 | 34 | 28 |
| Net assets at end of period (000 omitted) | $141,858 | $163,689 | $335,165 | $464,428 | $246,245 |
| Class R1 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $19.32 | $22.50 | $17.33 | $16.29 | $15.06 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.03 | $(0.03) | $(0.01) | $0.05 | $0.07 |
| Net realized and unrealized gain (loss) | 1.25 | (2.14) | 5.23 | 1.05 | 1.68 |
| Total from investment operations | $1.28 | $(2.17) | $5.22 | $1.10 | $1.75 |
| Less distributions declared to shareholders |
| From net investment income | $(0.02) | $(0.00)(w) | $(0.05) | $(0.04) | $(0.06) |
| From net realized gain | (2.07) | (1.01) | — | (0.02) | (0.46) |
| Total distributions declared to shareholders | $(2.09) | $(1.01) | $(0.05) | $(0.06) | $(0.52) |
| Net asset value, end of period (x) | $18.51 | $19.32 | $22.50 | $17.33 | $16.29 |
| Total return (%) (r)(s)(t)(x) | 7.22 | (10.12) | 30.18 | 6.79 | 12.37 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.68 | 1.69 | 1.67 | 1.67 | 1.81 |
| Expenses after expense reductions | 1.64 | 1.64 | 1.64 | 1.64 | 1.64 |
| Net investment income (loss) | 0.15 | (0.14) | (0.07) | 0.34 | 0.48 |
| Portfolio turnover | 39 | 36 | 20 | 34 | 28 |
| Net assets at end of period (000 omitted) | $608 | $522 | $683 | $340 | $164 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R2 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $19.45 | $22.61 | $17.39 | $16.36 | $15.12 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.12 | $0.07 | $0.09 | $0.14 | $0.15 |
| Net realized and unrealized gain (loss) | 1.26 | (2.16) | 5.25 | 1.04 | 1.68 |
| Total from investment operations | $1.38 | $(2.09) | $5.34 | $1.18 | $1.83 |
| Less distributions declared to shareholders |
| From net investment income | $(0.11) | $(0.06) | $(0.12) | $(0.13) | $(0.13) |
| From net realized gain | (2.07) | (1.01) | — | (0.02) | (0.46) |
| Total distributions declared to shareholders | $(2.18) | $(1.07) | $(0.12) | $(0.15) | $(0.59) |
| Net asset value, end of period (x) | $18.65 | $19.45 | $22.61 | $17.39 | $16.36 |
| Total return (%) (r)(s)(t)(x) | 7.74 | (9.72) | 30.88 | 7.29 | 12.94 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.19 | 1.19 | 1.17 | 1.17 | 1.30 |
| Expenses after expense reductions | 1.14 | 1.14 | 1.14 | 1.14 | 1.14 |
| Net investment income (loss) | 0.64 | 0.34 | 0.45 | 0.86 | 0.98 |
| Portfolio turnover | 39 | 36 | 20 | 34 | 28 |
| Net assets at end of period (000 omitted) | $480 | $511 | $742 | $531 | $368 |
| Class R3 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $19.43 | $22.59 | $17.38 | $16.34 | $15.10 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.16 | $0.13 | $0.14 | $0.18 | $0.19 |
| Net realized and unrealized gain (loss) | 1.27 | (2.16) | 5.24 | 1.05 | 1.68 |
| Total from investment operations | $1.43 | $(2.03) | $5.38 | $1.23 | $1.87 |
| Less distributions declared to shareholders |
| From net investment income | $(0.16) | $(0.12) | $(0.17) | $(0.17) | $(0.17) |
| From net realized gain | (2.07) | (1.01) | — | (0.02) | (0.46) |
| Total distributions declared to shareholders | $(2.23) | $(1.13) | $(0.17) | $(0.19) | $(0.63) |
| Net asset value, end of period (x) | $18.63 | $19.43 | $22.59 | $17.38 | $16.34 |
| Total return (%) (r)(s)(t)(x) | 8.04 | (9.49) | 31.17 | 7.65 | 13.24 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.93 | 0.94 | 0.92 | 0.93 | 1.05 |
| Expenses after expense reductions | 0.89 | 0.89 | 0.89 | 0.89 | 0.89 |
| Net investment income (loss) | 0.89 | 0.62 | 0.70 | 1.15 | 1.22 |
| Portfolio turnover | 39 | 36 | 20 | 34 | 28 |
| Net assets at end of period (000 omitted) | $717 | $644 | $786 | $573 | $100 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R4 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $19.41 | $22.56 | $17.36 | $16.32 | $15.08 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.21 | $0.18 | $0.18 | $0.22 | $0.22 |
| Net realized and unrealized gain (loss) | 1.26 | (2.15) | 5.23 | 1.04 | 1.69 |
| Total from investment operations | $1.47 | $(1.97) | $5.41 | $1.26 | $1.91 |
| Less distributions declared to shareholders |
| From net investment income | $(0.21) | $(0.17) | $(0.21) | $(0.20) | $(0.21) |
| From net realized gain | (2.07) | (1.01) | — | (0.02) | (0.46) |
| Total distributions declared to shareholders | $(2.28) | $(1.18) | $(0.21) | $(0.22) | $(0.67) |
| Net asset value, end of period (x) | $18.60 | $19.41 | $22.56 | $17.36 | $16.32 |
| Total return (%) (r)(s)(t)(x) | 8.27 | (9.22) | 31.47 | 7.87 | 13.53 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.68 | 0.69 | 0.66 | 0.67 | 0.81 |
| Expenses after expense reductions | 0.64 | 0.64 | 0.64 | 0.64 | 0.64 |
| Net investment income (loss) | 1.15 | 0.87 | 0.96 | 1.35 | 1.48 |
| Portfolio turnover | 39 | 36 | 20 | 34 | 28 |
| Net assets at end of period (000 omitted) | $105 | $97 | $107 | $81 | $75 |
| Class R6 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $19.42 | $22.57 | $17.37 | $16.32 | $15.09 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.23 | $0.20 | $0.20 | $0.23 | $0.23 |
| Net realized and unrealized gain (loss) | 1.25 | (2.15) | 5.23 | 1.05 | 1.68 |
| Total from investment operations | $1.48 | $(1.95) | $5.43 | $1.28 | $1.91 |
| Less distributions declared to shareholders |
| From net investment income | $(0.22) | $(0.19) | $(0.23) | $(0.21) | $(0.22) |
| From net realized gain | (2.07) | (1.01) | — | (0.02) | (0.46) |
| Total distributions declared to shareholders | $(2.29) | $(1.20) | $(0.23) | $(0.23) | $(0.68) |
| Net asset value, end of period (x) | $18.61 | $19.42 | $22.57 | $17.37 | $16.32 |
| Total return (%) (r)(s)(t)(x) | 8.38 | (9.13) | 31.57 | 8.02 | 13.56 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.59 | 0.59 | 0.58 | 0.59 | 0.71 |
| Expenses after expense reductions | 0.55 | 0.54 | 0.55 | 0.56 | 0.56 |
| Net investment income (loss) | 1.24 | 0.97 | 1.06 | 1.45 | 1.53 |
| Portfolio turnover | 39 | 36 | 20 | 34 | 28 |
| Net assets at end of period (000 omitted) | $111,186 | $77,259 | $84,532 | $78,929 | $31,283 |
See Notes to Financial Statements
Financial Highlights – continued
| (d) | Per share data is based on average shares outstanding. |
| (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 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
Notes to Financial Statements
(1) Business and Organization
MFS Low Volatility Equity Fund (the fund) is a diversified series of MFS Series Trust I (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 Standards 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.
Balance Sheet Offsetting — 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 International Swaps and Derivatives Association (ISDA) Master Agreement, or similar 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. 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 master netting agreement counterparty is subject. Balance sheet offsetting disclosures, 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 — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy and procedures, equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60
Notes to Financial Statements - continued
days or less may be valued at amortized cost, which approximates market value.
Open-end investment companies are generally valued at net asset value per share. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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. In determining values, third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the 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 halt 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 after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's assets or liabilities. These inputs are categorized into three broad levels. In certain cases, 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 significant 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 August 31, 2023 in valuing the fund's assets and liabilities:
Notes to Financial Statements - continued
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities | $442,626,298 | $— | $— | $442,626,298 |
| Mutual Funds | 2,701,240 | — | — | 2,701,240 |
| Total | $445,327,538 | $— | $— | $445,327,538 |
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.
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 — 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 payments received in additional securities are recorded on the ex-dividend 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.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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
Notes to Financial Statements - continued
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.
Book/tax differences primarily relate to wash sale loss deferrals and treating a portion of the proceeds from redemptions as a distribution for tax purposes.
The tax character of distributions declared to shareholders for the last two fiscal years is as follows:
| | Year ended
8/31/23 | Year ended
8/31/22 |
| Ordinary income (including any short-term capital gains) | $4,455,041 | $3,631,213 |
| Long-term capital gains | 49,075,524 | 27,640,012 |
| Total distributions | $53,530,565 | $31,271,225 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 8/31/23 | |
| Cost of investments | $342,060,495 |
| Gross appreciation | 110,973,235 |
| Gross depreciation | (7,706,192) |
| Net unrealized appreciation (depreciation) | $103,267,043 |
| Undistributed ordinary income | 818,373 |
| Undistributed long-term capital gain | 20,833,266 |
| Total distributable earnings (loss) | $124,918,682 |
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 and Class C shares will convert to
Notes to Financial Statements - continued
Class A shares 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:
| | Year
ended
8/31/23 | | Year
ended
8/31/22 |
| Class A | $18,813,377 | | $8,750,568 |
| Class B | 177,694 | | 112,448 |
| Class C | 2,701,740 | | 1,444,870 |
| Class I | 18,857,445 | | 16,367,684 |
| Class R1 | 59,153 | | 29,956 |
| Class R2 | 59,104 | | 36,843 |
| Class R3 | 74,687 | | 38,144 |
| Class R4 | 11,418 | | 5,631 |
| Class R6 | 12,775,947 | | 4,485,081 |
| Total | $53,530,565 | | $31,271,225 |
(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 based on the fund's average daily net assets:
| Up to $1 billion | 0.50% |
| In excess of $1 billion and up to $2.5 billion | 0.475% |
| In excess of $2.5 billion | 0.45% |
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until December 31, 2023. For the year ended August 31, 2023, this management fee reduction amounted to $58,933, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.49% of the fund's average daily net assets.
The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, certain tax reclaim recovery expenses (including contingency fees and closing agreement expenses), and investment-related expenses, such that total fund operating expenses do not exceed the following rates annually of each class’s average daily net assets:
| | | | | Classes | | | | |
| A | B | C | I | R1 | R2 | R3 | R4 | R6 |
| 0.89% | 1.64% | 1.64% | 0.64% | 1.64% | 1.14% | 0.89% | 0.64% | 0.57% |
Notes to Financial Statements - continued
This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until December 31, 2024. For the year ended August 31, 2023, this reduction amounted to $135,851, which is included in the reduction of total expenses in the Statement of Operations.
Distributor — MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $42,767 for the year ended August 31, 2023, 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. The distribution and service fees are computed daily and paid monthly.
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% | $ 409,565 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 15,800 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 243,084 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 5,687 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 2,452 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 1,679 |
| Total Distribution and Service Fees | | | | | $678,267 |
| (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 year ended August 31, 2023 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 there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates' seed money. For the year ended August 31, 2023, this rebate amounted to $2 for Class A shares 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. Class B shares are subject to a CDSC in the event of a shareholder redemption within six years of
Notes to Financial Statements - continued
purchase. Class C shares are subject to a CDSC in the event of a shareholder redemption within 12 months of purchase. All contingent deferred sales charges are paid to MFD and during the year ended August 31, 2023, were as follows:
| | Amount |
| Class A | $4,957 |
| Class B | 200 |
| Class C | 793 |
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 year ended August 31, 2023, the fee was $20,998, which equated to 0.0046% annually of the fund's average daily net assets. MFSC also receives reimbursement 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 R6 shares do not incur sub-accounting fees. For the year ended August 31, 2023, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $335,564.
Administrator — MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund 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 is computed daily and paid monthly. The administrative services fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.0168% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. 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 from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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. This money market fund does not pay a management fee to MFS but does incur investment and operating costs.
On August 3, 2022, MFS redeemed 19 shares of Class I for an aggregate amount of $380.
At August 31, 2023, MFS held 100% of the outstanding shares of Class R4.
During the year ended August 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in purchase transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $2,265,587.
Notes to Financial Statements - continued
The adviser has voluntarily undertaken to reimburse the fund from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the year ended August 31, 2023, this reimbursement amounted to $7,530, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended August 31, 2023, purchases and sales of investments, other than short-term obligations, aggregated $177,272,595 and $194,418,879, 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:
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Class A | 1,332,574 | $24,505,921 | | 1,622,679 | $33,715,405 |
| Class B | 606 | 11,045 | | 369 | 7,609 |
| Class C | 59,549 | 1,074,355 | | 93,061 | 1,949,533 |
| Class I | 2,054,548 | 37,776,114 | | 4,607,009 | 97,250,379 |
| Class R1 | 5,047 | 91,888 | | 4,130 | 83,856 |
| Class R2 | 1,742 | 32,427 | | 5,006 | 104,934 |
| Class R3 | 1,538 | 27,966 | | 4,711 | 100,551 |
| Class R6 | 2,721,212 | 51,989,024 | | 897,740 | 18,491,030 |
| | 6,176,816 | $115,508,740 | | 7,234,705 | $151,703,297 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Class A | 1,067,944 | $18,796,644 | | 404,541 | $8,744,240 |
| Class B | 10,125 | 177,694 | | 5,180 | 112,448 |
| Class C | 154,689 | 2,700,846 | | 66,811 | 1,444,445 |
| Class I | 958,144 | 16,889,423 | | 522,758 | 11,321,125 |
| Class R1 | 3,367 | 59,153 | | 1,377 | 29,956 |
| Class R2 | 3,338 | 59,104 | | 1,691 | 36,843 |
| Class R3 | 4,226 | 74,687 | | 1,758 | 38,144 |
| Class R4 | 647 | 11,417 | | 260 | 5,631 |
| Class R6 | 717,770 | 12,668,509 | | 204,031 | 4,406,979 |
| | 2,920,250 | $51,437,477 | | 1,208,407 | $26,139,811 |
Notes to Financial Statements - continued
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares reacquired | | | | | |
| Class A | (1,775,632) | $(32,379,458) | | (1,276,450) | $(26,619,299) |
| Class B | (18,756) | (337,524) | | (28,577) | (583,653) |
| Class C | (347,146) | (6,289,710) | | (286,388) | (5,911,288) |
| Class I | (3,821,184) | (70,231,608) | | (11,555,119) | (239,417,585) |
| Class R1 | (2,568) | (47,178) | | (8,835) | (178,784) |
| Class R2 | (5,654) | (101,309) | | (13,245) | (274,035) |
| Class R3 | (370) | (6,733) | | (8,139) | (176,230) |
| Class R4 | — | — | | (8) | (171) |
| Class R6 | (1,443,491) | (26,416,620) | | (867,602) | (18,090,027) |
| | (7,414,801) | $(135,810,140) | | (14,044,363) | $(291,251,072) |
| Net change | | | | | |
| Class A | 624,886 | $10,923,107 | | 750,770 | $15,840,346 |
| Class B | (8,025) | (148,785) | | (23,028) | (463,596) |
| Class C | (132,908) | (2,514,509) | | (126,516) | (2,517,310) |
| Class I | (808,492) | (15,566,071) | | (6,425,352) | (130,846,081) |
| Class R1 | 5,846 | 103,863 | | (3,328) | (64,972) |
| Class R2 | (574) | (9,778) | | (6,548) | (132,258) |
| Class R3 | 5,394 | 95,920 | | (1,670) | (37,535) |
| Class R4 | 647 | 11,417 | | 252 | 5,460 |
| Class R6 | 1,995,491 | 38,240,913 | | 234,169 | 4,807,982 |
| | 1,682,265 | $31,136,077 | | (5,601,251) | $(113,407,964) |
Effective June 1, 2019, purchases of the fund’s Class B shares were closed to new and existing investors subject to certain exceptions. On March 30, 2023, the fund announced that effective after the close of business on September 29, 2023, purchases of Class R1 and Class R2 shares will be closed to new eligible investors.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate 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 highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. 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 rates equal to customary reference rates plus an
Notes to Financial Statements - continued
agreed upon spread. For the year ended August 31, 2023, the fund’s commitment fee and interest expense were $2,306 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in 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 following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $2,259,582 | $90,674,265 | $90,233,631 | $755 | $269 | $2,701,240 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $74,734 | $— |
Report of Independent Registered Public Accounting Firm
To the Shareholders of MFS Low Volatility Equity Fund and the Board of Trustees of MFS Series Trust I
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of MFS Low Volatility Equity Fund (the “Fund”) (one of the funds constituting MFS Series Trust I (the “Trust”)), including the portfolio of investments, as of August 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting MFS Series Trust I) at August 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Report of Independent Registered Public Accounting Firm – continued
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more MFS investment companies since 1993.
Boston, Massachusetts
October 16, 2023
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of October 1, 2023, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and Officer is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
| INTERESTED TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022); President (until December 2018); Chief Investment Officer (until December 2018) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 68) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
| OFFICERS | | | | | | | | |
Christopher R. Bohane (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022); Natixis Investment Managers (investment management), Funds Chief Compliance Officer, Deputy General Counsel & Senior Vice President (until 2018) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 52) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 52) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 48) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
| (h) | Date first appointed to serve as Trustee/Officer of an MFS Fund. Each Trustee has served continuously since appointment unless indicated otherwise. From January 2012 through December 2016, Messrs. DiLorenzo and Yost served as Treasurer and Deputy Treasurer of the Funds, respectively. |
| (j) | Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”). |
| (k) | “Interested person” of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of a position with MFS. The address of MFS is 111 Huntington Avenue, Boston, Massachusetts 02199-7618. |
Trustees and Officers - continued
Each Trustee (other than Messrs. Jones, Kilman and Roberge) has been elected by shareholders and each Trustee and Officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. The Trust does not hold annual meetings for the purpose of electing Trustees, and Trustees are not elected for fixed terms. Under the terms of the Board's retirement policy, an Independent Trustee shall retire at the end of the calendar year in which he or she reaches the earlier of 75 years of age or 15 years of service on the Board (or, in the case of any Independent Trustee who joined the Board prior to 2015, 20 years of service on the Board).
Messrs. Buller, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.
Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
Jim Fallon
Matt Krummell
Jonathan Sage
Jed Stocks
| |
Board Review of Investment Advisory Agreement
MFS Low Volatility Equity Fund
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-interested (“independent”) Trustees, voting separately, annually approve the continuation of the Fund’s investment advisory agreement with MFS. The Trustees consider matters bearing on the Fund and its advisory arrangements at their meetings throughout the year, including a review of performance data at each regular meeting. In addition, the independent Trustees met several times over the course of three months beginning in May and ending in July, 2023 (“contract review meetings”) for the specific purpose of considering whether to approve the continuation of the investment advisory agreement for the Fund and the other investment companies that the Board oversees (the “MFS Funds”). The independent Trustees were assisted in their evaluation of the Fund’s investment advisory agreement by independent legal counsel, from whom they received separate legal advice and with whom they met separately from MFS during various contract review meetings. The independent Trustees were also assisted in this process by an independent consultant who was retained by and reported to the independent Trustees.
In connection with their deliberations regarding the continuation of the investment advisory agreement, the Trustees, including the independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. The investment advisory agreement for the Fund was considered separately, although the Trustees also took into account the common interests of all MFS Funds in their review. As described below, the Trustees considered the nature, quality, and extent of the various investment advisory, administrative, and shareholder services performed by MFS under the existing investment advisory agreement and other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance of the Fund for various time periods ended December 31, 2022 and the investment performance of a group of funds with substantially similar investment classifications/objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s advisory fees and other expenses and the advisory fees and other expenses of comparable funds identified by Broadridge as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (iii) information provided by MFS on the advisory fees of portfolios of other clients of MFS, including institutional separate accounts and other clients, (iv) information as to whether and to what extent applicable expense waivers, reimbursements or fee “breakpoints” are observed for the Fund, (v) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (vi) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vii) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (viii) information regarding the overall organization of MFS, including information about
Board Review of Investment Advisory Agreement - continued
MFS’ senior management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.
The Trustees’ conclusion as to the continuation of the investment advisory agreement was based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors. It is also important to recognize that the fee arrangements for the Fund and other MFS Funds are the result of years of review and discussion between the independent Trustees and MFS, that certain aspects of such arrangements may receive greater scrutiny in some years than in others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements during the course of the year and in prior years.
Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Class I shares in comparison to the performance of funds in its Broadridge performance universe over the five-year period ended December 31, 2022, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Class I shares was in the 1st quintile relative to the other funds in the universe for this five-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Class I shares was in the 1st quintile for the one-year period and the 2nd quintile for the three-year period ended December 31, 2022 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.
In addition to considering the performance information provided in connection with the contract review meetings, the Trustees noted that, in light of the Fund’s substandard relative performance at the time of their contact review meetings in 2022, they had met at each of their regular meetings since then with MFS’ senior investment management personnel to discuss the Fund’s performance and MFS’ efforts to improve the Fund’s performance. The Trustees further noted that the Fund’s five-year performance as compared to its Broadridge performance universe improved for the period ended December 31, 2022, as compared to the prior year. Taking this information into account, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that they were satisfied with MFS’ responses and efforts relating to investment performance.
In assessing the reasonableness of the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s Class I shares as a percentage of average daily net assets and the advisory fee and total expense ratios of the Broadridge expense group based on information provided by Broadridge. The Trustees considered that MFS currently observes an expense limitation for the Fund, which may not be changed without the Trustees’
Board Review of Investment Advisory Agreement - continued
approval. The Trustees also considered that, according to the data provided by Broadridge (which takes into account any fee reductions or expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate and total expense ratio were each approximately at the Broadridge expense group median.
The Trustees also considered the advisory fees charged by MFS to any institutional separate accounts advised by MFS (“separate accounts”) and unaffiliated investment companies for which MFS serves as subadviser (“subadvised funds”) that have comparable investment strategies to the Fund, if any. In comparing these fees, the Trustees considered information provided by MFS as to the generally broader scope of services provided by MFS to the Fund, as well as the more extensive regulatory burdens imposed on MFS in managing the Fund, in comparison to separate accounts and subadvised funds. The Trustees also considered the higher demands placed on MFS’ investment personnel and trading infrastructure as a result of the daily cash in-flows and out-flows of the Fund in comparison to separate accounts.
The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is subject to contractual breakpoints that reduce the Fund’s advisory fee rate on average daily net assets over $1 billion and $2.5 billion. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the breakpoints and the group fee waiver were sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.
The Trustees also considered information prepared by MFS relating to MFS’ costs and profits with respect to the Fund, the MFS Funds considered as a group, and other investment companies and accounts advised by MFS, as well as MFS’ methodologies used to determine and allocate its costs to the MFS Funds, the Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that the advisory fees charged to the Fund represent reasonable compensation in light of the services being provided by MFS to the Fund.
In addition, the Trustees considered MFS’ resources and related efforts to continue to retain, attract and motivate capable personnel to serve the Fund. The Trustees also considered current and developing conditions in the financial services industry, including the presence of large and well-capitalized companies which are spending, and appear to be prepared to continue to spend, substantial sums to engage personnel and to provide services to competing investment companies. In this regard, the Trustees also considered the financial resources of MFS and its ultimate parent, Sun Life Financial Inc. The Trustees also considered the advantages and possible disadvantages to the Fund of having an adviser that also serves other investment companies as well as other accounts.
Board Review of Investment Advisory Agreement - continued
The Trustees also considered the nature, quality, cost, and extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the nature, extent and quality of certain other services MFS performs or arranges for on the Fund’s behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’ interaction with third-party service providers, principally custodians and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-called “fall-out benefits” to MFS such as reputational value derived from serving as investment manager to the MFS Funds. The Trustees also considered that MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses a Fund, if applicable, for the costs of external research acquired through the use of the Fund’s portfolio brokerage commissions.
Based on their evaluation of factors that they deemed to be material, including those factors described above, the Board of Trustees, including the independent Trustees, concluded that the Fund’s investment advisory agreement with MFS should be continued for an additional one-year period, commencing August 1, 2023.
Statement Regarding Liquidity Risk Management Program
The fund has adopted and implemented a liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The fund’s Board of Trustees (the “Board”) has designated MFS as the administrator of the Program. The Program is reasonably designed to assess and manage the liquidity risk of the fund. Liquidity risk is the risk that the fund could not meet requests to redeem shares issued by the fund without significant dilution of remaining investors' interests.
MFS provided a written report to the Board for consideration at its March 2023 meeting that addressed the operation of the Program and provided an assessment of the adequacy and effectiveness of the Program during the period from January 1, 2022 to December 31, 2022 (the “Covered Period”). The report concluded that during the Covered Period the Program had operated effectively in all material respects and had adequately and effectively been implemented to assess and manage the fund’s liquidity risk. MFS also reported that there were no liquidity events that impacted the fund or its ability to timely meet redemptions without dilution to existing shareholders during the Covered Period.
There can be no assurance that the Program will achieve its objectives in the future. Further information on liquidity risk, and other principal risks to which an investment in the fund may be subject, can be found in the prospectus.
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 mfs.com/proxyvoting, 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 by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
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 at https://www.mfs.com/announcements or at mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.
Under the Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.
Federal Tax Information (unaudited)
The fund will notify shareholders of amounts for use in preparing 2023 income tax forms in January 2024. The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund designates the maximum amount allowable as qualified dividend income eligible to be taxed at the same rate as long-term capital gain.
The fund designates $55,752,000 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 100.00% of the ordinary income dividends paid during the prior calendar year qualify for the corporate dividends received deduction.
Federal Tax Information (unaudited) - continued
The fund designates the maximum amount allowable as Section 199A dividends as defined in Proposed Treasury Regulation §1.199A-3(d).
| FACTS | WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION? |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: |
| • Social Security number and account balances |
| • Account transactions and transaction history |
| • Checking account information and wire transfer instructions |
| When you are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| Who we are |
| Who is providing this notice? | MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., and MFS Heritage Trust Company. |
| What we do |
How does MFS
protect my personal
information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you. |
How does MFS
collect my personal
information? | We collect your personal information, for example, when you |
| • open an account or provide account information |
| • direct us to buy securities or direct us to sell your securities |
| • make a wire transfer |
| We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
| Why can't I limit all sharing? | Federal law gives you the right to limit only |
| • sharing for affiliates' everyday business purposes – information about your creditworthiness |
| • affiliates from using your information to market to you |
| • sharing for nonaffiliates to market to you |
| State laws and individual companies may give you additional rights to limit sharing. |
| Definitions |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice. |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share with nonaffiliates so they can market to you. |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. |
| • MFS doesn't jointly market. |
| Other important information |
| If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. |
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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 219341
Kansas City, MO 64121-9341
OVERNIGHT MAIL
MFS Service Center, Inc.
Suite 219341
430 W 7th Street
Kansas City, MO 64105-1407
Annual Report
August 31, 2023
MFS® Low Volatility Global
Equity Fund
MFS® Low Volatility Global
Equity Fund
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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 • MAY LOSE VALUE • NO BANK GUARANTEE
Portfolio structure
Top ten holdings
| DBS Group Holdings Ltd. | 2.8% |
| Johnson & Johnson | 2.6% |
| McKesson Corp. | 2.6% |
| Merck & Co., Inc. | 2.4% |
| Microsoft Corp. | 2.4% |
| Everest Re Group Ltd. | 2.3% |
| KDDI Corp. | 2.1% |
| Roche Holding AG | 2.1% |
| Franco-Nevada Corp. | 1.9% |
| Constellation Software, Inc. | 1.9% |
GICS equity sectors (g)
| Health Care | 17.2% |
| Financials | 16.7% |
| Information Technology | 16.4% |
| Consumer Staples | 11.3% |
| Communication Services | 9.5% |
| Industrials | 9.4% |
| Utilities | 7.2% |
| Consumer Discretionary | 6.6% |
| Materials | 1.9% |
| Real Estate | 1.7% |
| Energy | 0.5% |
| Equity Warrants (o) | 0.0% |
Issuer country weightings (x)
| United States | 53.9% |
| Japan | 10.7% |
| Canada | 6.7% |
| Singapore | 4.4% |
| Switzerland | 4.3% |
| South Korea | 3.2% |
| Israel | 2.2% |
| United Kingdom | 2.0% |
| Philippines | 1.7% |
| Other Countries | 10.9% |
Currency exposure weightings (y)
| United States Dollar | 55.5% |
| Japanese Yen | 10.7% |
| Canadian Dollar | 6.2% |
| Euro | 4.9% |
| Singapore Dollar | 4.4% |
| Swiss Franc | 4.3% |
| South Korean Won | 3.2% |
| British Pound Sterling | 2.0% |
| Philippine Peso | 1.7% |
| Other Currencies | 7.1% |
Portfolio Composition - continued
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
| (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 & Cash Equivalents. |
| (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 & Cash Equivalents. |
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions and may be negative.
Percentages are based on net assets as of August 31, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended August 31, 2023, Class A shares of the MFS Low Volatility Global Equity Fund (fund) provided a total return of 10.67%, at net asset value. This compares with a return of 13.95% for the fund’s benchmark, the MSCI All Country World Index (net div).
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Those shifts exposed an asset-liability mismatch that forced the closure of several institutions by regulators. Given the importance of small and mid-sized lenders to the provision of credit in the US, concerns were raised in the aftermath of the crisis that credit availability could become constrained, leading to slower economic growth, although those effects have been limited thus far. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as focus turned to the country’s highly-indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks remained focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates.
Against an environment of relatively tight labor markets, tighter global financial conditions and volatile materials prices, investor anxiety appeared to have increased over the potential that corporate profit margins may be past peak for this cycle. That said, signs that supply chains have generally normalized, coupled with low levels of unemployment across developed markets and hopes that inflation levels have peaked, were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the MSCI All Country World Index, stock selection and, to a lesser extent, an underweight allocation to the information technology sector detracted from the fund’s performance. Here, not owning shares of computer graphics processor maker NVIDIA and broadband communications and networking services company Broadcom held back relative returns. The stock price of NVIDIA climbed as the company significantly
Management Review - continued
beat expectations and posted a substantial increase in revenue growth within its Data Center (DC) segment. Increased revenue guidance further supported the stock, following expectations of greater DC demand across multiple customer segments.
Stock selection within the communication services sector also detracted from relative performance. Within this sector, not holding shares of social networking service provider Meta Platforms, and overweight positions in telecommunications company KDDI (Japan) and video game maker Electronic Arts, weakened relative returns. The stock price of Meta Platforms advanced after the company reported better-than-expected earnings, driven by solid revenue results and strong user engagement across its applications.
The combination of stock selection and an overweight position in the consumer staples sector held back relative performance, led by the fund’s overweight positions in merchandise store operator Dollar General and global food company General Mills. The stock price of Dollar General declined as the company’s financial results came in below consensus estimates due to weaker-than-expected comparable-store sales and higher expenses.
Stocks in other sectors that were among the top relative detractors included the fund’s overweight positions in power & natural gas distributor Xcel Energy, pharmaceutical and diagnostic company Roche Holding (Switzerland) and utility company American Electric Power(h).
Contributors to Performance
Over the reporting period, security selection within both the health care and financials sectors contributed to relative performance. Within the health care sector, the fund’s overweight positions in pharmaceutical companies, Novo Nordisk (Denmark) and Eli Lilly, aided relative returns. The stock price of Eli Lilly rose as the company released promising data from its GLP-1 obesity drug trials, which are anticipated to launch in 2026, a year earlier than its original plan. Within the financials sector, the fund’s overweight holdings of financial services company Fairfax Financial (Canada), reinsurer Everest Reinsurance and marine and casualty insurance services provider Samsung Fire & Marine Insurance (South Korea) benefited relative results.
Elsewhere, the fund's overweight holdings of diversified industrial manufacturer Eaton (Ireland), enterprise software solutions provider Constellation Software (Canada) and power and gas company E.ON (Germany) lifted relative returns. Not owning shares of electric vehicle manufacturer Tesla also contributed to relative results. Despite a recent recovery in its stock price, the share price of Tesla fell sharply towards the end of the reporting period led by uncertainties surrounding production shutdowns at the company's Shanghai manufacturing plant, reduced vehicle deliveries, increased
Management Review - continued
competitive concerns and questions regarding Tesla CEO Elon Musk’s acquisition of social media platform X (formerly Twitter). The fund’s holdings of pachinko and pachislot machines manufacturer Sankyo(b) further helped relative performance.
Respectfully,
Portfolio Manager(s)
Jim Fallon, Matt Krummell, Jonathan Sage, and Jed Stocks
| (b) | Security is not a benchmark constituent. |
| (h) | Security was not held in the portfolio at period end. |
The views expressed in this report are those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market or other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS portfolio. References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio’s current or future investments.
Performance Summary THROUGH 8/31/23
The following chart illustrates a representative class of the fund’s historical performance in comparison to its benchmark(s). Performance results include the deduction of the maximum applicable sales charge and reflect the percentage change in net asset value, including reinvestment of dividends and capital gains distributions. The performance of other share classes will be greater than or less than that of the class depicted below. Benchmarks are unmanaged and may not be invested in directly. Benchmark returns do not reflect sales charges, commissions or expenses. (See Notes to Performance Summary.)
Performance data shown represents past performance and is no guarantee of future results. Investment return and principal value fluctuate so your shares, when sold, may be worth more or less than the original cost; current performance may be lower or higher than quoted. The performance shown does not reflect the deduction of taxes, if any, that a shareholder would pay on fund distributions or the redemption of fund shares.
Growth of a Hypothetical $10,000 Investment (t)
Performance Summary - continued
Total Returns through 8/31/23
Average annual without sales charge
| Share Class | Class Inception Date | 1-yr | 5-yr | Life (t) |
| A | 12/05/13 | 10.67% | 6.34% | 7.36% |
| B | 12/05/13 | 9.90% | 5.55% | 6.53% |
| C | 12/05/13 | 9.89% | 5.56% | 6.53% |
| I | 12/05/13 | 11.02% | 6.61% | 7.60% |
| R1 | 12/05/13 | 9.82% | 5.55% | 6.53% |
| R2 | 12/05/13 | 10.46% | 6.08% | 7.06% |
| R3 | 12/05/13 | 10.72% | 6.35% | 7.34% |
| R4 | 12/05/13 | 10.94% | 6.61% | 7.60% |
| R6 | 12/05/13 | 11.04% | 6.69% | 7.66% |
Comparative benchmark(s)
| | | | |
| MSCI All Country World Index (net div) (f) | 13.95% | 7.46% | 7.81% |
Average annual with sales charge
| | | | |
A
With Initial Sales Charge (5.75%) | 4.31% | 5.09% | 6.71% |
B
With CDSC (Declining over six years from 4% to 0%) (v) | 5.90% | 5.23% | 6.53% |
C
With CDSC (1% for 12 months) (v) | 8.89% | 5.56% | 6.53% |
CDSC – Contingent Deferred Sales Charge.
Class I, R1, R2, R3, R4, and R6 shares do not have a sales charge.
| (f) | Source: FactSet Research Systems Inc. |
| (t) | For the period from the class inception date through the stated period end. (See Notes to Performance Summary.) |
| (v) | Assuming redemption at the end of the applicable period. |
Benchmark Definition(s)
MSCI All Country World Index(e) (net div) – a market capitalization-weighted index that is designed to measure equity market performance in the global developed and emerging markets.
It is not possible to invest directly in an index.
| (e) | Morgan Stanley Capital International (“MSCI”) makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. |
Performance Summary - continued
Notes to Performance Summary
Average annual total return represents the average annual change in value for each share class for the periods presented. Life returns are presented where the share class has less than 10 years of performance history and represent the average annual total return from the class inception date to the stated period end date.
Performance results reflect any applicable expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers the fund's performance results would be less favorable. Please see the prospectus and financial statements for complete details.
Performance results do not include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and may differ from amounts reported in the financial highlights.
From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
Expense Table
Fund expenses borne by the shareholders during the period,
March 1, 2023 through August 31, 2023
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 March 1, 2023 through August 31, 2023.
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.
Expense Table - continued
Share
Class | | Annualized
Expense
Ratio | Beginning
Account Value
3/01/23 | Ending
Account Value
8/31/23 | Expenses
Paid During
Period (p)
3/01/23-8/31/23 |
| A | Actual | 0.99% | $1,000.00 | $1,065.56 | $5.15 |
| Hypothetical (h) | 0.99% | $1,000.00 | $1,020.21 | $5.04 |
| B | Actual | 1.74% | $1,000.00 | $1,061.58 | $9.04 |
| Hypothetical (h) | 1.74% | $1,000.00 | $1,016.43 | $8.84 |
| C | Actual | 1.74% | $1,000.00 | $1,062.07 | $9.04 |
| Hypothetical (h) | 1.74% | $1,000.00 | $1,016.43 | $8.84 |
| I | Actual | 0.74% | $1,000.00 | $1,067.46 | $3.86 |
| Hypothetical (h) | 0.74% | $1,000.00 | $1,021.48 | $3.77 |
| R1 | Actual | 1.74% | $1,000.00 | $1,061.57 | $9.04 |
| Hypothetical (h) | 1.74% | $1,000.00 | $1,016.43 | $8.84 |
| R2 | Actual | 1.24% | $1,000.00 | $1,064.32 | $6.45 |
| Hypothetical (h) | 1.24% | $1,000.00 | $1,018.95 | $6.31 |
| R3 | Actual | 0.99% | $1,000.00 | $1,066.17 | $5.16 |
| Hypothetical (h) | 0.99% | $1,000.00 | $1,020.21 | $5.04 |
| R4 | Actual | 0.74% | $1,000.00 | $1,066.70 | $3.85 |
| Hypothetical (h) | 0.74% | $1,000.00 | $1,021.48 | $3.77 |
| R6 | Actual | 0.65% | $1,000.00 | $1,067.19 | $3.39 |
| Hypothetical (h) | 0.65% | $1,000.00 | $1,021.93 | $3.31 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Portfolio of Investments
8/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 97.2% |
| Aerospace & Defense – 1.8% | |
| General Dynamics Corp. | | 8,596 | $1,948,197 |
| Singapore Technologies Engineering Ltd. | | 1,358,000 | 3,828,466 |
| | | | | $5,776,663 |
| Automotive – 0.9% | |
| Bridgestone Corp. | | 31,100 | $1,210,056 |
| Toyota Motor Corp. | | 91,200 | 1,576,467 |
| | | | | $2,786,523 |
| Brokerage & Asset Managers – 0.4% | |
| IG Group Holdings PLC | | 159,758 | $1,369,110 |
| Business Services – 5.9% | |
| Accenture PLC, “A” | | 10,730 | $3,474,052 |
| Amdocs Ltd. | | 61,918 | 5,523,086 |
| Fiserv, Inc. (a) | | 11,807 | 1,433,252 |
| NS Solutions Corp. | | 116,100 | 3,151,964 |
| Secom Co. Ltd. | | 29,500 | 2,067,099 |
| Serco Group PLC | | 735,824 | 1,425,244 |
| Sohgo Security Services Co. Ltd. | | 255,000 | 1,627,674 |
| | | | | $18,702,371 |
| Cable TV – 0.9% | |
| Comcast Corp., “A” | | 58,718 | $2,745,654 |
| Computer Software – 5.5% | |
| ACI Worldwide, Inc. (a) | | 121,055 | $2,939,215 |
| Check Point Software Technologies Ltd. (a) | | 27,135 | 3,652,100 |
| Microsoft Corp. | | 23,082 | 7,565,356 |
| NICE Systems Ltd., ADR (a) | | 17,870 | 3,481,076 |
| | | | | $17,637,747 |
| Computer Software - Systems – 4.6% | |
| Constellation Software, Inc. | | 2,938 | $6,034,859 |
| Fujitsu Ltd. | | 24,200 | 3,028,015 |
| Hitachi Ltd. | | 37,300 | 2,485,214 |
| SS&C Technologies Holdings, Inc. | | 32,330 | 1,856,388 |
| Venture Corp. Ltd. | | 126,000 | 1,222,287 |
| | | | | $14,626,763 |
| Construction – 0.6% | |
| AvalonBay Communities, Inc., REIT | | 10,652 | $1,958,051 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Consumer Products – 2.5% | |
| Colgate-Palmolive Co. | | 41,358 | $3,038,572 |
| Kimberly-Clark Corp. | | 23,446 | 3,020,548 |
| Procter & Gamble Co. | | 12,775 | 1,971,694 |
| | | | | $8,030,814 |
| Electronics – 2.6% | |
| Kyocera Corp. | | 75,400 | $3,875,330 |
| Taiwan Semiconductor Manufacturing Co. Ltd., ADR | | 46,408 | 4,342,397 |
| | | | | $8,217,727 |
| Energy - Integrated – 0.5% | |
| TotalEnergies SE | | 26,338 | $1,658,457 |
| Food & Beverages – 5.5% | |
| General Mills, Inc. | | 71,709 | $4,851,831 |
| J.M. Smucker Co. | | 19,051 | 2,761,443 |
| Mondelez International, Inc. | | 37,682 | 2,685,219 |
| Nestle S.A. | | 24,182 | 2,912,735 |
| PepsiCo, Inc. | | 24,816 | 4,415,263 |
| | | | | $17,626,491 |
| Food & Drug Stores – 1.4% | |
| Sundrug Co. Ltd. | | 72,100 | $2,132,350 |
| Tesco PLC | | 653,094 | 2,198,240 |
| | | | | $4,330,590 |
| General Merchandise – 1.4% | |
| Dollar General Corp. | | 13,132 | $1,818,782 |
| Dollarama, Inc. | | 41,213 | 2,672,196 |
| | | | | $4,490,978 |
| Health Maintenance Organizations – 0.6% | |
| Cigna Group | | 7,369 | $2,035,760 |
| Insurance – 8.0% | |
| Chubb Ltd. | | 9,140 | $1,835,952 |
| Everest Group Ltd. | | 20,321 | 7,329,378 |
| Fairfax Financial Holdings Ltd. | | 5,875 | 4,844,831 |
| MetLife, Inc. | | 43,540 | 2,757,824 |
| Reinsurance Group of America, Inc. | | 18,708 | 2,593,303 |
| Samsung Fire & Marine Insurance Co. Ltd. | | 21,806 | 4,066,714 |
| Zurich Insurance Group AG | | 4,549 | 2,137,131 |
| | | | | $25,565,133 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Internet – 1.6% | |
| Alphabet, Inc., “A” (a) | | 36,584 | $4,981,643 |
| Leisure & Toys – 2.4% | |
| Electronic Arts, Inc. | | 41,830 | $5,018,763 |
| Sankyo Co. Ltd. | | 60,100 | 2,620,946 |
| | | | | $7,639,709 |
| Machinery & Tools – 1.5% | |
| Eaton Corp. PLC | | 20,012 | $4,610,164 |
| Major Banks – 5.3% | |
| DBS Group Holdings Ltd. | | 358,300 | $8,828,584 |
| JPMorgan Chase & Co. | | 34,712 | 5,079,407 |
| Royal Bank of Canada | | 16,556 | 1,491,695 |
| Wells Fargo & Co. | | 33,040 | 1,364,222 |
| | | | | $16,763,908 |
| Medical & Health Technology & Services – 2.6% | |
| McKesson Corp. | | 19,835 | $8,178,367 |
| Medical Equipment – 1.2% | |
| Becton, Dickinson and Co. | | 6,637 | $1,854,710 |
| Medtronic PLC | | 22,841 | 1,861,541 |
| | | | | $3,716,251 |
| Natural Gas - Distribution – 1.2% | |
| Italgas S.p.A. | | 665,709 | $3,789,775 |
| Other Banks & Diversified Financials – 2.5% | |
| Banco de Oro Unibank, Inc. | | 1,120,520 | $2,756,772 |
| KB Financial Group, Inc. | | 59,094 | 2,418,752 |
| Mastercard, Inc., “A” | | 3,655 | 1,508,199 |
| Visa, Inc., “A” | | 5,763 | 1,415,854 |
| | | | | $8,099,577 |
| Pharmaceuticals – 12.8% | |
| Bayer AG | | 29,772 | $1,631,597 |
| Eli Lilly & Co. | | 10,159 | 5,630,118 |
| Johnson & Johnson | | 50,657 | 8,190,224 |
| Merck & Co., Inc. | | 71,554 | 7,797,955 |
| Novartis AG | | 20,622 | 2,084,962 |
| Novo Nordisk A.S., “B” | | 19,325 | 3,582,088 |
| Roche Holding AG | | 22,697 | 6,688,209 |
| Sanofi | | 15,418 | 1,649,114 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Pharmaceuticals – continued | |
| Vertex Pharmaceuticals, Inc. (a) | | 10,054 | $3,502,210 |
| | | | | $40,756,477 |
| Pollution Control – 1.1% | |
| Republic Services, Inc. | | 24,981 | $3,600,511 |
| Precious Metals & Minerals – 1.9% | |
| Franco-Nevada Corp. | | 42,902 | $6,180,657 |
| Railroad & Shipping – 1.1% | |
| Sankyu, Inc. | | 61,700 | $2,155,970 |
| West Japan Railway Co. | | 34,100 | 1,477,483 |
| | | | | $3,633,453 |
| Real Estate – 1.1% | |
| Prologis, Inc., REIT | | 10,480 | $1,301,616 |
| Public Storage, Inc., REIT | | 8,114 | 2,242,547 |
| | | | | $3,544,163 |
| Restaurants – 3.2% | |
| Jollibee Foods Corp. | | 667,770 | $2,795,152 |
| McDonald's Corp. | | 12,151 | 3,416,254 |
| Starbucks Corp. | | 40,990 | 3,994,065 |
| | | | | $10,205,471 |
| Specialty Stores – 1.8% | |
| AutoZone, Inc. (a) | | 1,079 | $2,731,305 |
| Walmart Stores, Inc. | | 18,132 | 2,948,445 |
| | | | | $5,679,750 |
| Telecommunications - Wireless – 4.2% | |
| Advanced Info Service Public Co. Ltd. | | 850,300 | $5,244,943 |
| KDDI Corp. | | 225,500 | 6,703,237 |
| T-Mobile US, Inc. (a) | | 9,479 | 1,291,514 |
| | | | | $13,239,694 |
| Telephone Services – 1.3% | |
| Koninklijke KPN N.V. | | 683,715 | $2,392,455 |
| Orange S.A. | | 165,113 | 1,854,500 |
| | | | | $4,246,955 |
| Tobacco – 0.4% | |
| British American Tobacco PLC | | 37,004 | $1,229,340 |
| Trucking – 0.9% | |
| Knight-Swift Transportation Holdings, Inc. | | 53,962 | $2,958,197 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Utilities - Electric Power – 6.0% | |
| CLP Holdings Ltd. | | 578,500 | $4,536,619 |
| Duke Energy Corp. | | 19,073 | 1,693,682 |
| E.ON SE | | 206,513 | 2,548,352 |
| Edison International | | 21,767 | 1,498,658 |
| Equatorial Energia S.A. | | 222,000 | 1,419,315 |
| Evergy, Inc. | | 23,450 | 1,289,047 |
| PG&E Corp. (a) | | 174,731 | 2,848,115 |
| Xcel Energy, Inc. | | 55,831 | 3,189,625 |
| | | | | $19,023,413 |
| Total Common Stocks (Identified Cost, $256,847,162) | | $309,636,307 |
| Preferred Stocks – 1.2% |
| Computer Software - Systems – 1.2% | | | | |
| Samsung Electronics Co. Ltd. (Identified Cost, $4,624,954) | | 92,185 | $3,766,212 |
| | Strike
Price | First
Exercise | | |
| Rights – 0.0% |
| Computer Software - Systems – 0.0% |
| Constellation Software, Inc. (CAD 100 principal amount of Series 1 Debentures for 3.03 rights, Expiration 10/13/23) (a) (Identified Cost, $1,303) | CAD 133 | 8/31/23 | 2,938 | $1,631 |
| Warrants – 0.0% | | | | |
| Computer Software - Systems – 0.0% |
| Constellation Software, Inc. (CAD 100 principal amount of Series 2 Debentures for 1 warrant, Expiration 3/31/40) (a) (Identified Cost, $0) | CAD 11.5 | N/A | 2,938 | $0 |
| | | | | |
| Investment Companies (h) – 1.3% |
| Money Market Funds – 1.3% | |
| MFS Institutional Money Market Portfolio, 5.3% (v) (Identified Cost, $4,060,284) | | | 4,060,065 | $4,060,471 |
|
|
| Other Assets, Less Liabilities – 0.3% | | 1,107,692 |
| Net Assets – 100.0% | $318,572,313 |
| (a) | Non-income producing security. | | | |
| (h) | An affiliated issuer, which 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. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $4,060,471 and $313,404,150, respectively. | | | |
Portfolio of Investments – continued
| (v) | Affiliated issuer 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 |
| REIT | Real Estate Investment Trust |
| Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below: |
| CAD | Canadian Dollar |
See Notes to Financial Statements
Financial Statements
Statement of Assets and Liabilities
At 8/31/23
This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.
| Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $261,473,419) | $313,404,150 |
| Investments in affiliated issuers, at value (identified cost, $4,060,284) | 4,060,471 |
| Cash | 13,963 |
| Foreign currency, at value (identified cost, $40,246) | 40,194 |
| Receivables for | |
| Fund shares sold | 726,784 |
| Dividends | 898,246 |
| Receivable from investment adviser | 3,107 |
| Other assets | 339 |
| Total assets | $319,147,254 |
| Liabilities | |
| Payables for | |
| Investments purchased | $1,372 |
| Fund shares reacquired | 308,869 |
| Payable to affiliates | |
| Administrative services fee | 307 |
| Shareholder servicing costs | 64,742 |
| Distribution and service fees | 686 |
| Payable for independent Trustees' compensation | 14 |
| Deferred foreign capital gains tax expense payable | 88,916 |
| Payable for audit and tax fees | 66,256 |
| Accrued expenses and other liabilities | 43,779 |
| Total liabilities | $574,941 |
| Net assets | $318,572,313 |
| Net assets consist of | |
| Paid-in capital | $267,649,932 |
| Total distributable earnings (loss) | 50,922,381 |
| Net assets | $318,572,313 |
| Shares of beneficial interest outstanding | 21,124,872 |
Statement of Assets and Liabilities – continued
| | Net assets | Shares
outstanding | Net asset value
per share (a) |
| Class A | $33,745,159 | 2,237,600 | $15.08 |
| Class B | 361,245 | 24,180 | 14.94 |
| Class C | 3,404,534 | 228,356 | 14.91 |
| Class I | 179,777,067 | 11,915,435 | 15.09 |
| Class R1 | 139,883 | 9,324 | 15.00 |
| Class R2 | 166,113 | 11,011 | 15.09 |
| Class R3 | 103,582 | 6,857 | 15.11 |
| Class R4 | 92,695 | 6,142 | 15.09 |
| Class R6 | 100,782,035 | 6,685,967 | 15.07 |
| (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 $16.00 [100 / 94.25 x $15.08]. 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 R6. |
See Notes to Financial Statements
Financial Statements
Statement of Operations
Year ended 8/31/23
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 (loss) | |
| Income | |
| Dividends | $7,276,399 |
| Dividends from affiliated issuers | 111,067 |
| Other | 10,375 |
| Income on securities loaned | 2,935 |
| Interest | 386 |
| Foreign taxes withheld | (433,215) |
| Total investment income | $6,967,947 |
| Expenses | |
| Management fee | $1,532,504 |
| Distribution and service fees | 116,836 |
| Shareholder servicing costs | 173,607 |
| Administrative services fee | 50,835 |
| Independent Trustees' compensation | 6,759 |
| Custodian fee | 64,983 |
| Shareholder communications | 22,659 |
| Audit and tax fees | 65,508 |
| Legal fees | 1,635 |
| Registration fees | 131,329 |
| Miscellaneous | 35,053 |
| Total expenses | $2,201,708 |
| Reduction of expenses by investment adviser | (98,195) |
| Net expenses | $2,103,513 |
| Net investment income (loss) | $4,864,434 |
| Realized and unrealized gain (loss) |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers (net of $4,562 foreign capital gains tax) | $7,804 |
| Affiliated issuers | 269 |
| Foreign currency | (26,185) |
| Net realized gain (loss) | $(18,112) |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers (net of $77,472 increase in deferred foreign capital gains tax) | $23,321,094 |
| Affiliated issuers | 80 |
| Translation of assets and liabilities in foreign currencies | 38,236 |
| Net unrealized gain (loss) | $23,359,410 |
| Net realized and unrealized gain (loss) | $23,341,298 |
| Change in net assets from operations | $28,205,732 |
See Notes to Financial Statements
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.
| | Year ended |
| | 8/31/23 | 8/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $4,864,434 | $3,412,071 |
| Net realized gain (loss) | (18,112) | 13,805,006 |
| Net unrealized gain (loss) | 23,359,410 | (38,841,943) |
| Change in net assets from operations | $28,205,732 | $(21,624,866) |
| Total distributions to shareholders | $(10,214,151) | $(20,522,243) |
| Change in net assets from fund share transactions | $61,624,592 | $53,368,468 |
| Total change in net assets | $79,616,173 | $11,221,359 |
| Net assets | | |
| At beginning of period | 238,956,140 | 227,734,781 |
| At end of period | $318,572,313 | $238,956,140 |
See Notes to Financial Statements
Financial Statements
Financial Highlights
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that 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.
| Class A | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $14.14 | $17.04 | $14.18 | $13.92 | $13.73 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.22 | $0.19 | $0.17 | $0.23 | $0.25 |
| Net realized and unrealized gain (loss) | 1.25 | (1.64) | 2.90 | 0.39 | 0.56 |
| Total from investment operations | $1.47 | $(1.45) | $3.07 | $0.62 | $0.81 |
| Less distributions declared to shareholders |
| From net investment income | $(0.19) | $(0.16) | $(0.21) | $(0.27) | $(0.23) |
| From net realized gain | (0.34) | (1.29) | — | (0.09) | (0.39) |
| Total distributions declared to shareholders | $(0.53) | $(1.45) | $(0.21) | $(0.36) | $(0.62) |
| Net asset value, end of period (x) | $15.08 | $14.14 | $17.04 | $14.18 | $13.92 |
| Total return (%) (r)(s)(t)(x) | 10.67 | (9.35) | 21.83 | 4.60 | 6.38 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.03 | 1.05 | 1.04 | 1.05 | 1.05 |
| Expenses after expense reductions | 0.99 | 0.99 | 0.99 | 0.99 | 0.98 |
| Net investment income (loss) | 1.50 | 1.23 | 1.14 | 1.68 | 1.86 |
| Portfolio turnover | 25 | 46 | 36 | 43 | 65 |
| Net assets at end of period (000 omitted) | $33,745 | $25,531 | $25,815 | $23,494 | $19,981 |
See Notes to Financial Statements
Financial Highlights – continued
| Class B | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $14.00 | $16.90 | $14.08 | $13.82 | $13.63 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.11 | $0.07 | $0.06 | $0.12 | $0.14 |
| Net realized and unrealized gain (loss) | 1.24 | (1.62) | 2.86 | 0.40 | 0.57 |
| Total from investment operations | $1.35 | $(1.55) | $2.92 | $0.52 | $0.71 |
| Less distributions declared to shareholders |
| From net investment income | $(0.07) | $(0.06) | $(0.10) | $(0.17) | $(0.13) |
| From net realized gain | (0.34) | (1.29) | — | (0.09) | (0.39) |
| Total distributions declared to shareholders | $(0.41) | $(1.35) | $(0.10) | $(0.26) | $(0.52) |
| Net asset value, end of period (x) | $14.94 | $14.00 | $16.90 | $14.08 | $13.82 |
| Total return (%) (r)(s)(t)(x) | 9.90 | (10.03) | 20.88 | 3.81 | 5.60 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.78 | 1.80 | 1.78 | 1.80 | 1.79 |
| Expenses after expense reductions | 1.74 | 1.74 | 1.74 | 1.75 | 1.74 |
| Net investment income (loss) | 0.75 | 0.48 | 0.40 | 0.88 | 1.03 |
| Portfolio turnover | 25 | 46 | 36 | 43 | 65 |
| Net assets at end of period (000 omitted) | $361 | $438 | $475 | $410 | $410 |
| Class C | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $13.98 | $16.88 | $14.05 | $13.80 | $13.62 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.11 | $0.07 | $0.06 | $0.12 | $0.14 |
| Net realized and unrealized gain (loss) | 1.24 | (1.62) | 2.88 | 0.39 | 0.57 |
| Total from investment operations | $1.35 | $(1.55) | $2.94 | $0.51 | $0.71 |
| Less distributions declared to shareholders |
| From net investment income | $(0.08) | $(0.06) | $(0.11) | $(0.17) | $(0.14) |
| From net realized gain | (0.34) | (1.29) | — | (0.09) | (0.39) |
| Total distributions declared to shareholders | $(0.42) | $(1.35) | $(0.11) | $(0.26) | $(0.53) |
| Net asset value, end of period (x) | $14.91 | $13.98 | $16.88 | $14.05 | $13.80 |
| Total return (%) (r)(s)(t)(x) | 9.89 | (10.04) | 21.00 | 3.77 | 5.57 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.78 | 1.80 | 1.79 | 1.80 | 1.80 |
| Expenses after expense reductions | 1.74 | 1.74 | 1.74 | 1.75 | 1.74 |
| Net investment income (loss) | 0.74 | 0.49 | 0.39 | 0.90 | 1.02 |
| Portfolio turnover | 25 | 46 | 36 | 43 | 65 |
| Net assets at end of period (000 omitted) | $3,405 | $3,001 | $3,133 | $3,261 | $2,876 |
See Notes to Financial Statements
Financial Highlights – continued
| Class I | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $14.14 | $17.05 | $14.18 | $13.92 | $13.73 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.26 | $0.24 | $0.21 | $0.26 | $0.28 |
| Net realized and unrealized gain (loss) | 1.25 | (1.66) | 2.90 | 0.39 | 0.56 |
| Total from investment operations | $1.51 | $(1.42) | $3.11 | $0.65 | $0.84 |
| Less distributions declared to shareholders |
| From net investment income | $(0.22) | $(0.20) | $(0.24) | $(0.30) | $(0.26) |
| From net realized gain | (0.34) | (1.29) | — | (0.09) | (0.39) |
| Total distributions declared to shareholders | $(0.56) | $(1.49) | $(0.24) | $(0.39) | $(0.65) |
| Net asset value, end of period (x) | $15.09 | $14.14 | $17.05 | $14.18 | $13.92 |
| Total return (%) (r)(s)(t)(x) | 11.02 | (9.18) | 22.21 | 4.85 | 6.61 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.78 | 0.80 | 0.79 | 0.80 | 0.79 |
| Expenses after expense reductions | 0.74 | 0.74 | 0.74 | 0.75 | 0.74 |
| Net investment income (loss) | 1.77 | 1.53 | 1.38 | 1.88 | 2.09 |
| Portfolio turnover | 25 | 46 | 36 | 43 | 65 |
| Net assets at end of period (000 omitted) | $179,777 | $124,266 | $102,723 | $106,849 | $118,907 |
| Class R1 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $14.07 | $16.97 | $14.13 | $13.88 | $13.69 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.11 | $0.07 | $0.06 | $0.12 | $0.14 |
| Net realized and unrealized gain (loss) | 1.24 | (1.63) | 2.89 | 0.39 | 0.58 |
| Total from investment operations | $1.35 | $(1.56) | $2.95 | $0.51 | $0.72 |
| Less distributions declared to shareholders |
| From net investment income | $(0.08) | $(0.05) | $(0.11) | $(0.17) | $(0.14) |
| From net realized gain | (0.34) | (1.29) | — | (0.09) | (0.39) |
| Total distributions declared to shareholders | $(0.42) | $(1.34) | $(0.11) | $(0.26) | $(0.53) |
| Net asset value, end of period (x) | $15.00 | $14.07 | $16.97 | $14.13 | $13.88 |
| Total return (%) (r)(s)(t)(x) | 9.82 | (10.00) | 20.96 | 3.74 | 5.61 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.78 | 1.80 | 1.78 | 1.80 | 1.79 |
| Expenses after expense reductions | 1.74 | 1.74 | 1.74 | 1.75 | 1.74 |
| Net investment income (loss) | 0.74 | 0.48 | 0.40 | 0.90 | 1.03 |
| Portfolio turnover | 25 | 46 | 36 | 43 | 65 |
| Net assets at end of period (000 omitted) | $140 | $130 | $149 | $109 | $96 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R2 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $14.14 | $17.04 | $14.18 | $13.92 | $13.73 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.18 | $0.15 | $0.15 | $0.19 | $0.21 |
| Net realized and unrealized gain (loss) | 1.26 | (1.65) | 2.88 | 0.40 | 0.57 |
| Total from investment operations | $1.44 | $(1.50) | $3.03 | $0.59 | $0.78 |
| Less distributions declared to shareholders |
| From net investment income | $(0.15) | $(0.11) | $(0.17) | $(0.24) | $(0.20) |
| From net realized gain | (0.34) | (1.29) | — | (0.09) | (0.39) |
| Total distributions declared to shareholders | $(0.49) | $(1.40) | $(0.17) | $(0.33) | $(0.59) |
| Net asset value, end of period (x) | $15.09 | $14.14 | $17.04 | $14.18 | $13.92 |
| Total return (%) (r)(s)(t)(x) | 10.46 | (9.63) | 21.56 | 4.33 | 6.09 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.28 | 1.30 | 1.28 | 1.30 | 1.29 |
| Expenses after expense reductions | 1.24 | 1.24 | 1.24 | 1.25 | 1.24 |
| Net investment income (loss) | 1.25 | 0.98 | 0.94 | 1.37 | 1.53 |
| Portfolio turnover | 25 | 46 | 36 | 43 | 65 |
| Net assets at end of period (000 omitted) | $166 | $137 | $263 | $170 | $75 |
| Class R3 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $14.16 | $17.06 | $14.20 | $13.94 | $13.74 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.22 | $0.19 | $0.18 | $0.23 | $0.24 |
| Net realized and unrealized gain (loss) | 1.26 | (1.64) | 2.89 | 0.39 | 0.58 |
| Total from investment operations | $1.48 | $(1.45) | $3.07 | $0.62 | $0.82 |
| Less distributions declared to shareholders |
| From net investment income | $(0.19) | $(0.16) | $(0.21) | $(0.27) | $(0.23) |
| From net realized gain | (0.34) | (1.29) | — | (0.09) | (0.39) |
| Total distributions declared to shareholders | $(0.53) | $(1.45) | $(0.21) | $(0.36) | $(0.62) |
| Net asset value, end of period (x) | $15.11 | $14.16 | $17.06 | $14.20 | $13.94 |
| Total return (%) (r)(s)(t)(x) | 10.72 | (9.34) | 21.81 | 4.58 | 6.42 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.03 | 1.05 | 1.04 | 1.05 | 1.04 |
| Expenses after expense reductions | 0.99 | 0.99 | 0.99 | 1.00 | 0.99 |
| Net investment income (loss) | 1.50 | 1.23 | 1.15 | 1.65 | 1.78 |
| Portfolio turnover | 25 | 46 | 36 | 43 | 65 |
| Net assets at end of period (000 omitted) | $104 | $92 | $98 | $79 | $71 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R4 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $14.15 | $17.05 | $14.18 | $13.92 | $13.73 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.25 | $0.23 | $0.21 | $0.26 | $0.27 |
| Net realized and unrealized gain (loss) | 1.25 | (1.64) | 2.90 | 0.39 | 0.57 |
| Total from investment operations | $1.50 | $(1.41) | $3.11 | $0.65 | $0.84 |
| Less distributions declared to shareholders |
| From net investment income | $(0.22) | $(0.20) | $(0.24) | $(0.30) | $(0.26) |
| From net realized gain | (0.34) | (1.29) | — | (0.09) | (0.39) |
| Total distributions declared to shareholders | $(0.56) | $(1.49) | $(0.24) | $(0.39) | $(0.65) |
| Net asset value, end of period (x) | $15.09 | $14.15 | $17.05 | $14.18 | $13.92 |
| Total return (%) (r)(s)(t)(x) | 10.94 | (9.12) | 22.21 | 4.85 | 6.61 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.78 | 0.80 | 0.79 | 0.81 | 0.79 |
| Expenses after expense reductions | 0.74 | 0.74 | 0.74 | 0.75 | 0.74 |
| Net investment income (loss) | 1.75 | 1.47 | 1.40 | 1.89 | 2.03 |
| Portfolio turnover | 25 | 46 | 36 | 43 | 65 |
| Net assets at end of period (000 omitted) | $93 | $84 | $92 | $75 | $72 |
| Class R6 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $14.13 | $17.03 | $14.17 | $13.91 | $13.72 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.27 | $0.24 | $0.22 | $0.27 | $0.28 |
| Net realized and unrealized gain (loss) | 1.24 | (1.64) | 2.90 | 0.40 | 0.57 |
| Total from investment operations | $1.51 | $(1.40) | $3.12 | $0.67 | $0.85 |
| Less distributions declared to shareholders |
| From net investment income | $(0.23) | $(0.21) | $(0.26) | $(0.32) | $(0.27) |
| From net realized gain | (0.34) | (1.29) | — | (0.09) | (0.39) |
| Total distributions declared to shareholders | $(0.57) | $(1.50) | $(0.26) | $(0.41) | $(0.66) |
| Net asset value, end of period (x) | $15.07 | $14.13 | $17.03 | $14.17 | $13.91 |
| Total return (%) (r)(s)(t)(x) | 11.04 | (9.06) | 22.25 | 4.94 | 6.68 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.69 | 0.72 | 0.71 | 0.73 | 0.72 |
| Expenses after expense reductions | 0.66 | 0.66 | 0.67 | 0.67 | 0.67 |
| Net investment income (loss) | 1.83 | 1.54 | 1.44 | 2.01 | 2.11 |
| Portfolio turnover | 25 | 46 | 36 | 43 | 65 |
| Net assets at end of period (000 omitted) | $100,782 | $85,277 | $94,987 | $84,631 | $76,901 |
See Notes to Financial Statements
Financial Highlights – continued
| (d) | Per share data is based on average shares outstanding. |
| (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 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
Notes to Financial Statements
(1) Business and Organization
MFS Low Volatility Global Equity Fund (the fund) is a diversified series of MFS Series Trust I (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 Standards 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. 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 market, economic, industrial, political, regulatory, geopolitical, environmental, public health, and other conditions.
Balance Sheet Offsetting — 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 International Swaps and Derivatives Association (ISDA) Master Agreement, or similar 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. 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 master netting agreement counterparty is subject. Balance sheet offsetting disclosures, 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 — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Notes to Financial Statements - continued
Under the fund's valuation policy and procedures, equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value.
Open-end investment companies are generally valued at net asset value per share. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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. In determining values, third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the 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 halt 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 after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's assets or liabilities. These inputs are categorized into three broad levels. In certain cases, 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
Notes to Financial Statements - continued
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 significant 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 August 31, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | | | | |
| United States | $166,555,778 | $— | $— | $166,555,778 |
| Japan | 34,111,805 | — | — | 34,111,805 |
| Canada | 21,225,869 | — | — | 21,225,869 |
| Singapore | 13,879,337 | — | — | 13,879,337 |
| Switzerland | 13,823,037 | — | — | 13,823,037 |
| South Korea | 10,251,678 | — | — | 10,251,678 |
| Israel | 7,133,176 | — | — | 7,133,176 |
| United Kingdom | 6,221,934 | — | — | 6,221,934 |
| Philippines | 5,551,924 | — | — | 5,551,924 |
| Other Countries | 29,404,669 | 5,244,943 | — | 34,649,612 |
| Mutual Funds | 4,060,471 | — | — | 4,060,471 |
| Total | $312,219,678 | $5,244,943 | $— | $317,464,621 |
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.
Security Loans — Under its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. 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. On loans collateralized by cash, the cash collateral is invested in a money market fund. 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. The lending agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent will, for the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the
Notes to Financial Statements - continued
fund the market value of the loaned securities. In return, the lending agent assumes the fund's rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent 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. A portion of the income generated upon investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund and the lending agent. Income from securities lending is separately reported 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. At August 31, 2023, there were no securities on loan or collateral outstanding.
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 — 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.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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.
Notes to Financial Statements - continued
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.
Book/tax differences primarily relate to passive foreign investment companies and wash sale loss deferrals.
The tax character of distributions declared to shareholders for the last two fiscal years is as follows:
| | Year ended
8/31/23 | Year ended
8/31/22 |
| Ordinary income (including any short-term capital gains) | $4,151,143 | $2,983,213 |
| Long-term capital gains | 6,063,008 | 17,539,030 |
| Total distributions | $10,214,151 | $20,522,243 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 8/31/23 | |
| Cost of investments | $268,401,580 |
| Gross appreciation | 57,297,229 |
| Gross depreciation | (8,234,188) |
| Net unrealized appreciation (depreciation) | $49,063,041 |
| Undistributed ordinary income | 882,991 |
| Undistributed long-term capital gain | 1,058,108 |
| Other temporary differences | (81,759) |
| Total distributable earnings (loss) | $50,922,381 |
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 and Class C shares will convert to
Notes to Financial Statements - continued
Class A shares 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:
| | Year
ended
8/31/23 | | Year
ended
8/31/22 |
| Class A | $1,112,251 | | $2,192,527 |
| Class B | 12,527 | | 37,962 |
| Class C | 89,340 | | 259,632 |
| Class I | 5,415,928 | | 9,515,931 |
| Class R1 | 4,004 | | 11,884 |
| Class R2 | 5,190 | | 12,733 |
| Class R3 | 3,520 | | 8,364 |
| Class R4 | 3,378 | | 8,073 |
| Class R6 | 3,568,013 | | 8,475,137 |
| Total | $10,214,151 | | $20,522,243 |
(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 based on the fund's average daily net assets:
| Up to $1 billion | 0.55% |
| In excess of $1 billion and up to $2.5 billion | 0.525% |
| In excess of $2.5 billion | 0.50% |
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until December 31, 2023. For the year ended August 31, 2023, this management fee reduction amounted to $36,058, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.54% of the fund's average daily net assets.
The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, certain tax reclaim recovery expenses (including contingency fees and closing agreement expenses), and investment-related expenses, such that total fund operating expenses do not exceed the following rates annually of each class’s average daily net assets:
| | | | | Classes | | | | |
| A | B | C | I | R1 | R2 | R3 | R4 | R6 |
| 0.99% | 1.74% | 1.74% | 0.74% | 1.74% | 1.24% | 0.99% | 0.74% | 0.68% |
Notes to Financial Statements - continued
This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until December 31, 2024. For the year ended August 31, 2023, this reduction amounted to $62,137, which is included in the reduction of total expenses in the Statement of Operations.
Distributor — MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $10,779 for the year ended August 31, 2023, 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. The distribution and service fees are computed daily and paid monthly.
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% | $ 78,882 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 4,190 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 31,399 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 1,340 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 778 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 247 |
| Total Distribution and Service Fees | | | | | $116,836 |
| (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 year ended August 31, 2023 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 there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates' seed money. There were no service fee rebates for the year ended August 31, 2023. |
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. Class B shares are subject to a CDSC in the event of a shareholder redemption within six years of
Notes to Financial Statements - continued
purchase. Class C shares are subject to a CDSC in the event of a shareholder redemption within 12 months of purchase. All contingent deferred sales charges are paid to MFD and during the year ended August 31, 2023, were as follows:
| | Amount |
| Class A | $88 |
| Class B | — |
| Class C | 29 |
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 year ended August 31, 2023, the fee was $6,033, which equated to 0.0022% annually of the fund's average daily net assets. MFSC also receives reimbursement 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 R6 shares do not incur sub-accounting fees. For the year ended August 31, 2023, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $167,574.
Administrator — MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund 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 is computed daily and paid monthly. The administrative services fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.0182% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. 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 from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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. This money market fund does not pay a management fee to MFS but does incur investment and operating costs.
At August 31, 2023, MFS held approximately 61%, 54%, and 88% of the outstanding shares of Class R1, Class R2, and Class R3, respectively, and 100% of the outstanding shares of Class R4.
The adviser has voluntarily undertaken to reimburse the fund from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the year ended August 31, 2023, this reimbursement amounted to $10,269, which is included in “Other” income in the Statement of Operations.
Notes to Financial Statements - continued
(4) Portfolio Securities
For the year ended August 31, 2023, purchases and sales of investments, other than short-term obligations, aggregated $119,966,325 and $67,651,708, 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:
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Class A | 763,945 | $10,796,108 | | 393,606 | $5,901,232 |
| Class B | 203 | 2,836 | | 1,562 | 23,879 |
| Class C | 58,865 | 857,045 | | 55,397 | 836,119 |
| Class I | 5,998,445 | 86,974,089 | | 5,000,573 | 75,676,454 |
| Class R1 | 597 | 8,588 | | 992 | 14,960 |
| Class R2 | 1,835 | 25,644 | | 396 | 6,510 |
| Class R3 | 358 | 5,146 | | 251 | 3,756 |
| Class R4 | (1) | — | | — | — |
| Class R6 | 1,444,761 | 21,340,030 | | 1,276,664 | 19,149,326 |
| | 8,269,008 | $120,009,486 | | 6,729,441 | $101,612,236 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Class A | 78,207 | $1,112,206 | | 139,204 | $2,192,527 |
| Class B | 889 | 12,527 | | 2,423 | 37,962 |
| Class C | 6,347 | 89,340 | | 16,608 | 259,632 |
| Class I | 297,414 | 4,233,954 | | 503,719 | 7,925,672 |
| Class R1 | 283 | 4,004 | | 755 | 11,884 |
| Class R2 | 365 | 5,190 | | 806 | 12,733 |
| Class R3 | 247 | 3,520 | | 530 | 8,364 |
| Class R4 | 238 | 3,378 | | 513 | 8,073 |
| Class R6 | 246,294 | 3,498,889 | | 526,753 | 8,290,337 |
| | 630,284 | $8,963,008 | | 1,191,311 | $18,747,184 |
Notes to Financial Statements - continued
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares reacquired | | | | | |
| Class A | (410,326) | $(5,952,978) | | (242,209) | $(3,746,358) |
| Class B | (8,182) | (119,906) | | (840) | (12,019) |
| Class C | (51,489) | (743,328) | | (43,003) | (637,467) |
| Class I | (3,165,950) | (45,242,152) | | (2,745,265) | (41,851,906) |
| Class R1 | (803) | (11,566) | | (1,268) | (18,770) |
| Class R2 | (906) | (13,075) | | (6,902) | (117,133) |
| Class R3 | (230) | (3,504) | | (37) | (522) |
| Class R6 | (1,039,716) | (15,261,393) | | (1,346,988) | (20,606,777) |
| | (4,677,602) | $(67,347,902) | | (4,386,512) | $(66,990,952) |
| Net change | | | | | |
| Class A | 431,826 | $5,955,336 | | 290,601 | $4,347,401 |
| Class B | (7,090) | (104,543) | | 3,145 | 49,822 |
| Class C | 13,723 | 203,057 | | 29,002 | 458,284 |
| Class I | 3,129,909 | 45,965,891 | | 2,759,027 | 41,750,220 |
| Class R1 | 77 | 1,026 | | 479 | 8,074 |
| Class R2 | 1,294 | 17,759 | | (5,700) | (97,890) |
| Class R3 | 375 | 5,162 | | 744 | 11,598 |
| Class R4 | 237 | 3,378 | | 513 | 8,073 |
| Class R6 | 651,339 | 9,577,526 | | 456,429 | 6,832,886 |
| | 4,221,690 | $61,624,592 | | 3,534,240 | $53,368,468 |
Effective June 1, 2019, purchases of the fund’s Class B shares were closed to new and existing investors subject to certain exceptions. On March 30, 2023, the fund announced that effective after the close of business on September 29, 2023, purchases of Class R1 and Class R2 shares will be closed to new eligible investors.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate 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 highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. 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 rates equal to customary reference rates plus an
Notes to Financial Statements - continued
agreed upon spread. For the year ended August 31, 2023, the fund’s commitment fee and interest expense were $1,371 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in 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 following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $3,133,480 | $74,658,862 | $73,732,220 | $269 | $80 | $4,060,471 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $111,067 | $— |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of MFS Series Trust I and the Shareholders of
MFS Low Volatility Global Equity Fund:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of MFS Low Volatility Global Equity Fund (the “Fund”), including the portfolio of investments, as of August 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of August 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund's financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights.
Report of Independent Registered Public Accounting Firm – continued
Our procedures included confirmation of securities owned as of August 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 16, 2023
We have served as the auditor of one or more of the MFS investment companies since 1924.
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of October 1, 2023, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and Officer is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
| INTERESTED TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022); President (until December 2018); Chief Investment Officer (until December 2018) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 68) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
| OFFICERS | | | | | | | | |
Christopher R. Bohane (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022); Natixis Investment Managers (investment management), Funds Chief Compliance Officer, Deputy General Counsel & Senior Vice President (until 2018) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 52) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 52) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 48) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
| (h) | Date first appointed to serve as Trustee/Officer of an MFS Fund. Each Trustee has served continuously since appointment unless indicated otherwise. From January 2012 through December 2016, Messrs. DiLorenzo and Yost served as Treasurer and Deputy Treasurer of the Funds, respectively. |
| (j) | Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”). |
| (k) | “Interested person” of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of a position with MFS. The address of MFS is 111 Huntington Avenue, Boston, Massachusetts 02199-7618. |
Trustees and Officers - continued
Each Trustee (other than Messrs. Jones, Kilman and Roberge) has been elected by shareholders and each Trustee and Officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. The Trust does not hold annual meetings for the purpose of electing Trustees, and Trustees are not elected for fixed terms. Under the terms of the Board's retirement policy, an Independent Trustee shall retire at the end of the calendar year in which he or she reaches the earlier of 75 years of age or 15 years of service on the Board (or, in the case of any Independent Trustee who joined the Board prior to 2015, 20 years of service on the Board).
Messrs. Buller, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.
Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
Jim Fallon
Matt Krummell
Jonathan Sage
Jed Stocks | |
Board Review of Investment Advisory Agreement
MFS Low Volatility Global Equity Fund
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-interested (“independent”) Trustees, voting separately, annually approve the continuation of the Fund’s investment advisory agreement with MFS. The Trustees consider matters bearing on the Fund and its advisory arrangements at their meetings throughout the year, including a review of performance data at each regular meeting. In addition, the independent Trustees met several times over the course of three months beginning in May and ending in July, 2023 (“contract review meetings”) for the specific purpose of considering whether to approve the continuation of the investment advisory agreement for the Fund and the other investment companies that the Board oversees (the “MFS Funds”). The independent Trustees were assisted in their evaluation of the Fund’s investment advisory agreement by independent legal counsel, from whom they received separate legal advice and with whom they met separately from MFS during various contract review meetings. The independent Trustees were also assisted in this process by an independent consultant who was retained by and reported to the independent Trustees.
In connection with their deliberations regarding the continuation of the investment advisory agreement, the Trustees, including the independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. The investment advisory agreement for the Fund was considered separately, although the Trustees also took into account the common interests of all MFS Funds in their review. As described below, the Trustees considered the nature, quality, and extent of the various investment advisory, administrative, and shareholder services performed by MFS under the existing investment advisory agreement and other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance of the Fund for various time periods ended December 31, 2022 and the investment performance of a group of funds with substantially similar investment classifications/objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s advisory fees and other expenses and the advisory fees and other expenses of comparable funds identified by Broadridge as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (iii) information provided by MFS on the advisory fees of portfolios of other clients of MFS, including institutional separate accounts and other clients, (iv) information as to whether and to what extent applicable expense waivers, reimbursements or fee “breakpoints” are observed for the Fund, (v) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (vi) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vii) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (viii) information regarding the overall organization of MFS, including information about
Board Review of Investment Advisory Agreement - continued
MFS’ senior management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.
The Trustees’ conclusion as to the continuation of the investment advisory agreement was based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors. It is also important to recognize that the fee arrangements for the Fund and other MFS Funds are the result of years of review and discussion between the independent Trustees and MFS, that certain aspects of such arrangements may receive greater scrutiny in some years than in others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements during the course of the year and in prior years.
Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Class I shares in comparison to the performance of funds in its Broadridge performance universe over the five-year period ended December 31, 2022, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Class I shares was in the 2nd quintile relative to the other funds in the universe for this five-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Class I shares was in the 1st quintile for the one-year period and the 3rd quintile for the three-year period ended December 31, 2022 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.
In addition to considering the performance information provided in connection with the contract review meetings, the Trustees noted that, in light of the Fund’s substandard relative performance at the time of their contract review meetings in 2022, they had met at each of their regular meetings since then with MFS’ senior investment management personnel to discuss the Fund’s performance and MFS’ efforts to improve the Fund’s performance. The Trustees further noted that the Fund’s five-year performance as compared to its Broadridge performance universe improved for the period ended December 31, 2022, as compared to the prior year. Taking this information into account, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that they were satisfied with MFS’ responses and efforts relating to investment performance.
In assessing the reasonableness of the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s Class I shares as a percentage of average daily net assets and the advisory fee and total expense ratios of the Broadridge expense group based on information provided by Broadridge. The Trustees considered that MFS currently observes an expense limitation for the Fund, which may not be changed without the Trustees’
Board Review of Investment Advisory Agreement - continued
approval. The Trustees also considered that, according to the data provided by Broadridge (which takes into account any fee reductions or expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate and total expense ratio were each approximately at the Broadridge expense group median.
The Trustees also considered the advisory fees charged by MFS to any institutional separate accounts advised by MFS (“separate accounts”) and unaffiliated investment companies for which MFS serves as subadviser (“subadvised funds”) that have comparable investment strategies to the Fund, if any. In comparing these fees, the Trustees considered information provided by MFS as to the generally broader scope of services provided by MFS to the Fund, as well as the more extensive regulatory burdens imposed on MFS in managing the Fund, in comparison to separate accounts and subadvised funds. The Trustees also considered the higher demands placed on MFS’ investment personnel and trading infrastructure as a result of the daily cash in-flows and out-flows of the Fund in comparison to separate accounts.
The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is subject to contractual breakpoints that reduce the Fund’s advisory fee rate on average daily net assets over $1 billion and $2.5 billion. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the breakpoints and the group fee waiver were sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.
The Trustees also considered information prepared by MFS relating to MFS’ costs and profits with respect to the Fund, the MFS Funds considered as a group, and other investment companies and accounts advised by MFS, as well as MFS’ methodologies used to determine and allocate its costs to the MFS Funds, the Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that the advisory fees charged to the Fund represent reasonable compensation in light of the services being provided by MFS to the Fund.
In addition, the Trustees considered MFS’ resources and related efforts to continue to retain, attract and motivate capable personnel to serve the Fund. The Trustees also considered current and developing conditions in the financial services industry, including the presence of large and well-capitalized companies which are spending, and appear to be prepared to continue to spend, substantial sums to engage personnel and to provide services to competing investment companies. In this regard, the Trustees also considered the financial resources of MFS and its ultimate parent, Sun Life Financial Inc. The Trustees also considered the advantages and possible disadvantages to the Fund of having an adviser that also serves other investment companies as well as other accounts.
Board Review of Investment Advisory Agreement - continued
The Trustees also considered the nature, quality, cost, and extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the nature, extent and quality of certain other services MFS performs or arranges for on the Fund’s behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’ interaction with third-party service providers, principally custodians and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-called “fall-out benefits” to MFS such as reputational value derived from serving as investment manager to the MFS Funds. The Trustees also considered that MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses a Fund, if applicable, for the costs of external research acquired through the use of the Fund’s portfolio brokerage commissions.
Based on their evaluation of factors that they deemed to be material, including those factors described above, the Board of Trustees, including the independent Trustees, concluded that the Fund’s investment advisory agreement with MFS should be continued for an additional one-year period, commencing August 1, 2023.
Statement Regarding Liquidity Risk Management Program
The fund has adopted and implemented a liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The fund’s Board of Trustees (the “Board”) has designated MFS as the administrator of the Program. The Program is reasonably designed to assess and manage the liquidity risk of the fund. Liquidity risk is the risk that the fund could not meet requests to redeem shares issued by the fund without significant dilution of remaining investors' interests.
MFS provided a written report to the Board for consideration at its March 2023 meeting that addressed the operation of the Program and provided an assessment of the adequacy and effectiveness of the Program during the period from January 1, 2022 to December 31, 2022 (the “Covered Period”). The report concluded that during the Covered Period the Program had operated effectively in all material respects and had adequately and effectively been implemented to assess and manage the fund’s liquidity risk. MFS also reported that there were no liquidity events that impacted the fund or its ability to timely meet redemptions without dilution to existing shareholders during the Covered Period.
There can be no assurance that the Program will achieve its objectives in the future. Further information on liquidity risk, and other principal risks to which an investment in the fund may be subject, can be found in the prospectus.
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 mfs.com/proxyvoting, 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 by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
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 at https://www.mfs.com/announcements or at mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.
Under the Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.
Federal Tax Information (unaudited)
The fund will notify shareholders of amounts for use in preparing 2023 income tax forms in January 2024. The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund designates the maximum amount allowable as qualified dividend income eligible to be taxed at the same rate as long-term capital gain.
The fund designates $6,683,000 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 33.37% of the ordinary income dividends paid during the prior calendar year qualify for the corporate dividends received deduction.
Federal Tax Information (unaudited) - continued
Income derived from foreign sources was $4,846,847. The fund intends to pass through foreign tax credits of $470,007 for the fiscal year.
The fund designates the maximum amount allowable as Section 199A dividends as defined in Proposed Treasury Regulation §1.199A-3(d).
| FACTS | WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION? |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: |
| • Social Security number and account balances |
| • Account transactions and transaction history |
| • Checking account information and wire transfer instructions |
| When you are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| Who we are |
| Who is providing this notice? | MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., and MFS Heritage Trust Company. |
| What we do |
How does MFS
protect my personal
information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you. |
How does MFS
collect my personal
information? | We collect your personal information, for example, when you |
| • open an account or provide account information |
| • direct us to buy securities or direct us to sell your securities |
| • make a wire transfer |
| We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
| Why can't I limit all sharing? | Federal law gives you the right to limit only |
| • sharing for affiliates' everyday business purposes – information about your creditworthiness |
| • affiliates from using your information to market to you |
| • sharing for nonaffiliates to market to you |
| State laws and individual companies may give you additional rights to limit sharing. |
| Definitions |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice. |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share with nonaffiliates so they can market to you. |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. |
| • MFS doesn't jointly market. |
| Other important information |
| If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. |
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1. Go to mfs.com.
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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 219341
Kansas City, MO 64121-9341
OVERNIGHT MAIL
MFS Service Center, Inc.
Suite 219341
430 W 7th Street
Kansas City, MO 64105-1407
Annual Report
August 31, 2023
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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 • MAY LOSE VALUE • NO BANK GUARANTEE
Portfolio structure
Top ten holdings
| GFL Environmental, Inc. | 2.2% |
| RB Global, Inc. | 2.1% |
| Sensata Technologies Holding PLC | 1.9% |
| Jacobs Solutions, Inc. | 1.9% |
| Matador Resources Co. | 1.9% |
| ChampionX Corp. | 1.9% |
| Advanced Energy Industries, Inc. | 1.8% |
| ExlService Holdings, Inc. | 1.8% |
| STAG Industrial, Inc., REIT | 1.7% |
| nVent Electric PLC | 1.7% |
GICS equity sectors (g)
| Industrials | 25.9% |
| Information Technology | 17.9% |
| Health Care | 16.3% |
| Consumer Discretionary | 12.5% |
| Energy | 7.8% |
| Financials | 4.4% |
| Materials | 4.3% |
| Consumer Staples | 3.0% |
| Real Estate | 2.4% |
| Communication Services | 0.7% |
| Equity Warrants (o) | 0.0% |
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions and may be negative.
Percentages are based on net assets as of August 31, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended August 31, 2023, Class A shares of the MFS New Discovery Fund (fund) provided a total return of 6.05%, at net asset value. This compares with a return of 6.78% for the fund’s benchmark, the Russell 2000® Growth Index.
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Those shifts exposed an asset-liability mismatch that forced the closure of several institutions by regulators. Given the importance of small and mid-sized lenders to the provision of credit in the US, concerns were raised in the aftermath of the crisis that credit availability could become constrained, leading to slower economic growth, although those effects have been limited thus far. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as focus turned to the country’s highly-indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks remained focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates.
Against an environment of relatively tight labor markets, tighter global financial conditions and volatile materials prices, investor anxiety appeared to have increased over the potential that corporate profit margins may be past peak for this cycle. That said, signs that supply chains have generally normalized, coupled with low levels of unemployment across developed markets and hopes that inflation levels have peaked, were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the Russell 2000® Growth Index, stock selection within both the information technology and consumer staples sectors detracted from the fund's performance. Within the information technology sector, an overweight position in global consultancy services provider Thoughtworks Holding, and not owning shares of server and storage systems company Super Micro Computer, held back relative returns. The share price of Thoughtworks Holding fell as the company announced a decline in
Management Review - continued
revenue in both its retail and consumer segments and depressed margins due to higher employee costs. Additionally, management reduced its outlook given ongoing industry pressures. Within the consumer staples sector, the fund’s overweight position in luxury wines producer Duckhorn Portfolio further weighed on relative results.
Stocks in other sectors that hindered relative performance included the fund’s positions in pet health and wellness services provider Petco Health & Wellness(b), clinical development company Syneos Health(b)(h), business process management solutions provider WNS Holdings(b) (India), gaming and racing facilities operator Penn Entertainment(b) and global payment solutions provider Nuvei(b). The share price of Petco Health & Wellness detracted due to ongoing discretionary demand headwinds and higher-than-anticipated variable rate costs of the firm’s outstanding debt. Management also cut its profit guidance owing to inflationary pressures and promotional activities, such as price reductions targeting improved competitiveness against its peers. Additionally, an overweight position in life science logistics solutions provider CryoPort, and the timing of the fund’s ownership in shares of healthcare data and analytics services provider Definitive Healthcare, further weakened relative returns. The share price of CryoPort declined on the back of increased caution in capital investments by customers paired with the adverse macroeconomic environment. The company’s production was also affected by the closure of its Chengdu facility from Zero-COVID restrictions.
Contributors to Performance
Favorable stock selection within both the energy and communication services sectors contributed to the fund’s relative performance. Within the energy sector, an overweight position in chemistry solutions, engineered equipment and technologies provider ChampionX supported relative results. The share price of ChampionX advanced after the company posted earnings results above market expectations, driven by higher-than-anticipated revenues in its production chemical technologies segment. The company also announced an increase in its share buyback program, which appeared to have further supported investors’ sentiment. Within the communication services sector, the fund’s position in professional football club operator Manchester United(b)(h) (United Kingdom) aided relative returns. The share price of Manchester United soared earlier in the year after it became clear that the team's owners were considering strategic options including the sale of the company which many believe has been undervalued relative to other sports franchises.
Stocks in other sectors that boosted relative performance included the fund’s holdings of purpose-made drug and medication packaging manufacturer Gerresheimer(b) (Germany), building products manufacturer AZEK(b), global life science company Abcam(b) (United Kingdom), footwear retailer Skechers USA(b) and freight transportation services provider XPO Logistics(b). The share price of Gerresheimer advanced on higher-than-expected revenue growth, driven by an improved product mix paired with a healthy order intake and robust demand. Additionally, the fund’s overweight positions in cross-border payments platform Remitly Global, digital automotive wholesale retailer ACV Auctions and asset management company WisdomTree Investments further benefited relative returns.
Management Review - continued
Respectfully,
Portfolio Manager(s)
Michael Grossman
| (b) | Security is not a benchmark constituent. |
| (h) | Security was not held in the portfolio at period end. |
The views expressed in this report are those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market or other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS portfolio. References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio’s current or future investments.
Performance Summary THROUGH 8/31/23
The following chart illustrates a representative class of the fund’s historical performance in comparison to its benchmark(s). Performance results include the deduction of the maximum applicable sales charge and reflect the percentage change in net asset value, including reinvestment of dividends and capital gains distributions. The performance of other share classes will be greater than or less than that of the class depicted below. Benchmarks are unmanaged and may not be invested in directly. Benchmark returns do not reflect sales charges, commissions or expenses. (See Notes to Performance Summary.)
Performance data shown represents past performance and is no guarantee of future results. Investment return and principal value fluctuate so your shares, when sold, may be worth more or less than the original cost; current performance may be lower or higher than quoted. The performance shown does not reflect the deduction of taxes, if any, that a shareholder would pay on fund distributions or the redemption of fund shares.
Growth of a Hypothetical $10,000 Investment
Performance Summary - continued
Total Returns through 8/31/23
Average annual without sales charge
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| A | 1/02/97 | 6.05% | 5.10% | 8.27% |
| B | 11/03/97 | 5.27% | 4.31% | 7.46% |
| C | 11/03/97 | 5.32% | 4.31% | 7.46% |
| I | 1/02/97 | 6.37% | 5.36% | 8.54% |
| R1 | 4/01/05 | 5.29% | 4.31% | 7.46% |
| R2 | 10/31/03 | 5.85% | 4.84% | 8.00% |
| R3 | 4/01/05 | 6.07% | 5.09% | 8.27% |
| R4 | 4/01/05 | 6.36% | 5.36% | 8.55% |
| R6 | 6/01/12 | 6.47% | 5.47% | 8.66% |
Comparative benchmark(s)
| Russell 2000® Growth Index (f) | 6.78% | 2.46% | 8.17% |
Average annual with sales charge
| | | | |
A
With Initial Sales Charge (5.75%) | (0.05)% | 3.86% | 7.63% |
B
With CDSC (Declining over six years from 4% to 0%) (v) | 1.27% | 4.13% | 7.46% |
C
With CDSC (1% for 12 months) (v) | 4.32% | 4.31% | 7.46% |
CDSC – Contingent Deferred Sales Charge.
Class I, R1, R2, R3, R4, and R6 shares do not have a sales charge.
| (f) | Source: FactSet Research Systems Inc. |
| (v) | Assuming redemption at the end of the applicable period. |
Benchmark Definition(s)
Russell 2000® Growth Index(h) - constructed to provide a comprehensive barometer for growth securities in the small-cap segment of the U.S. equity universe. Companies in this index generally have higher price-to-book ratios and higher forecasted growth values.
It is not possible to invest directly in an index.
| (h) | Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this document. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor, or endorse the content of this document. |
Notes to Performance Summary
Average annual total return represents the average annual change in value for each share class for the periods presented.
Performance Summary - continued
Performance results reflect any applicable expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers the fund's performance results would be less favorable. Please see the prospectus and financial statements for complete details.
Performance results do not include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and may differ from amounts reported in the financial highlights.
From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
Expense Table
Fund expenses borne by the shareholders during the period,
March 1, 2023 through August 31, 2023
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 March 1, 2023 through August 31, 2023.
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.
Expense Table - continued
Share
Class | | Annualized
Expense
Ratio | Beginning
Account Value
3/01/23 | Ending
Account Value
8/31/23 | Expenses
Paid During
Period (p)
3/01/23-8/31/23 |
| A | Actual | 1.28% | $1,000.00 | $1,018.42 | $6.51 |
| Hypothetical (h) | 1.28% | $1,000.00 | $1,018.75 | $6.51 |
| B | Actual | 2.03% | $1,000.00 | $1,014.87 | $10.31 |
| Hypothetical (h) | 2.03% | $1,000.00 | $1,014.97 | $10.31 |
| C | Actual | 2.03% | $1,000.00 | $1,014.79 | $10.31 |
| Hypothetical (h) | 2.03% | $1,000.00 | $1,014.97 | $10.31 |
| I | Actual | 1.03% | $1,000.00 | $1,019.95 | $5.24 |
| Hypothetical (h) | 1.03% | $1,000.00 | $1,020.01 | $5.24 |
| R1 | Actual | 2.03% | $1,000.00 | $1,014.38 | $10.31 |
| Hypothetical (h) | 2.03% | $1,000.00 | $1,014.97 | $10.31 |
| R2 | Actual | 1.53% | $1,000.00 | $1,017.48 | $7.78 |
| Hypothetical (h) | 1.53% | $1,000.00 | $1,017.49 | $7.78 |
| R3 | Actual | 1.28% | $1,000.00 | $1,018.47 | $6.51 |
| Hypothetical (h) | 1.28% | $1,000.00 | $1,018.75 | $6.51 |
| R4 | Actual | 1.03% | $1,000.00 | $1,019.75 | $5.24 |
| Hypothetical (h) | 1.03% | $1,000.00 | $1,020.01 | $5.24 |
| R6 | Actual | 0.89% | $1,000.00 | $1,020.27 | $4.53 |
| Hypothetical (h) | 0.89% | $1,000.00 | $1,020.72 | $4.53 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Portfolio of Investments
8/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 95.2% |
| Aerospace & Defense – 3.5% | |
| AeroVironment, Inc. (a) | | 112,066 | $10,873,764 |
| CACI International, Inc., “A” (a) | | 102,585 | 33,648,906 |
| KBR, Inc. | | 628,702 | 38,677,747 |
| | | | | $83,200,417 |
| Apparel Manufacturers – 2.4% | |
| Deckers Outdoor Corp. (a) | | 46,500 | $24,602,685 |
| On Holding AG (a) | | 318,953 | 9,195,415 |
| Skechers USA, Inc., “A” (a) | | 464,937 | 23,390,981 |
| | | | | $57,189,081 |
| Automotive – 1.2% | |
| Visteon Corp. (a) | | 208,736 | $29,070,663 |
| Biotechnology – 2.6% | |
| Abcam PLC, ADR (a) | | 953,085 | $21,558,760 |
| Adaptive Biotechnologies Corp. (a) | | 996,350 | 6,745,289 |
| AlloVir, Inc. (a) | | 533,582 | 1,670,112 |
| BioAtla, Inc. (a) | | 339,507 | 852,163 |
| Immunocore Holdings PLC, ADR (a) | | 233,584 | 13,143,772 |
| Lyell Immunopharma, Inc. (a) | | 676,627 | 1,617,138 |
| MaxCyte, Inc. (a) | | 1,271,360 | 4,653,178 |
| Oxford Nanopore Technologies PLC (a) | | 2,232,941 | 6,732,278 |
| Prelude Therapeutics, Inc. (a) | | 327,699 | 1,222,317 |
| Sana Biotechnology, Inc. (a)(l) | | 522,248 | 2,794,027 |
| | | | | $60,989,034 |
| Brokerage & Asset Managers – 2.5% | |
| GCM Grosvenor, Inc., “A” (h) | | 2,116,336 | $16,168,807 |
| Hamilton Lane, Inc., “A” | | 220,944 | 20,501,394 |
| WisdomTree Investments, Inc. | | 3,260,558 | 23,802,073 |
| | | | | $60,472,274 |
| Business Services – 6.3% | |
| ExlService Holdings, Inc. (a) | | 1,464,374 | $42,803,652 |
| Keywords Studios PLC | | 960,676 | 18,559,002 |
| Remitly Global, Inc. (a) | | 834,802 | 20,995,270 |
| Thoughtworks Holding, Inc. (a) | | 3,526,607 | 17,527,237 |
| TriNet Group, Inc. (a) | | 144,148 | 15,990,338 |
| WNS (Holdings) Ltd., ADR (a) | | 500,961 | 32,737,801 |
| | | | | $148,613,300 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Chemicals – 0.9% | |
| Element Solutions, Inc. | | 977,533 | $20,156,730 |
| Computer Software – 9.1% | |
| Alkami Technology, Inc. (a) | | 1,476,602 | $25,722,407 |
| AvidXchange Holdings, Inc. (a) | | 941,144 | 9,674,960 |
| Definitive Healthcare Corp. (a) | | 1,283,153 | 12,061,638 |
| DoubleVerify Holdings, Inc. (a) | | 1,121,094 | 37,904,188 |
| Kinaxis, Inc. (a) | | 179,547 | 22,133,765 |
| Pagerduty, Inc. (a) | | 864,480 | 22,269,005 |
| Paycor HCM, Inc. (a) | | 1,178,113 | 27,650,312 |
| Paylocity Holding Corp. (a) | | 74,840 | 15,005,420 |
| Procore Technologies, Inc. (a) | | 383,872 | 25,930,554 |
| Sabre Corp. (a) | | 3,483,404 | 17,417,020 |
| | | | | $215,769,269 |
| Computer Software - Systems – 4.0% | |
| Five9, Inc. (a) | | 488,283 | $35,337,041 |
| Nuvei Corp. | | 783,267 | 14,153,634 |
| Q2 Holdings, Inc. (a) | | 753,273 | 25,920,124 |
| Rapid7, Inc. (a) | | 388,084 | 19,555,553 |
| | | | | $94,966,352 |
| Construction – 2.3% | |
| AZEK Co., Inc. (a) | | 639,834 | $21,760,754 |
| Summit Materials, Inc., “A” (a) | | 892,644 | 33,393,812 |
| | | | | $55,154,566 |
| Consumer Products – 0.4% | |
| e.l.f. Beauty, Inc. (a) | | 76,164 | $10,564,708 |
| Consumer Services – 2.4% | |
| Boyd Group Services, Inc. | | 126,953 | $22,896,075 |
| Bright Horizons Family Solutions, Inc. (a) | | 122,174 | 11,535,669 |
| European Wax Center, Inc., “A” (a) | | 1,338,326 | 23,233,340 |
| | | | | $57,665,084 |
| Electrical Equipment – 4.8% | |
| Littlefuse, Inc. | | 110,324 | $29,465,334 |
| nVent Electric PLC | | 696,384 | 39,373,551 |
| Sensata Technologies Holding PLC | | 1,225,748 | 46,112,640 |
| | | | | $114,951,525 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Electronics – 5.8% | |
| Advanced Energy Industries, Inc. | | 364,568 | $43,044,544 |
| Allegro MicroSystems, Inc. (a) | | 601,721 | 23,015,828 |
| Formfactor, Inc. (a) | | 685,181 | 24,200,593 |
| Nova Ltd. (a) | | 181,497 | 23,402,223 |
| Onto Innovation, Inc. (a) | | 178,879 | 24,860,604 |
| | | | | $138,523,792 |
| Energy - Independent – 3.2% | |
| Matador Resources Co. | | 695,059 | $44,136,246 |
| Permian Resources Corp. | | 2,333,665 | 33,091,370 |
| | | | | $77,227,616 |
| Energy - Renewables – 0.3% | |
| Nextracker, Inc. “A” (a) | | 149,603 | $6,301,278 |
| Engineering - Construction – 3.9% | |
| Corporacion Inmobiliaria Vesta S.A.B. de C.V., ADR | | 435,734 | $16,183,161 |
| Jacobs Solutions, Inc. | | 328,160 | 44,242,531 |
| TopBuild Corp. (a) | | 110,242 | 31,978,999 |
| | | | | $92,404,691 |
| Entertainment – 0.7% | |
| Vivid Seats, Inc., “A” (a) | | 2,144,528 | $15,569,273 |
| Food & Beverages – 1.3% | |
| Duckhorn Portfolio, Inc. (a) | | 2,002,913 | $24,916,238 |
| Oatly Group AB, ADR (a)(l) | | 4,713,107 | 5,797,121 |
| | | | | $30,713,359 |
| Gaming & Lodging – 1.8% | |
| Genius Sports Ltd. (a) | | 2,548,725 | $16,923,534 |
| Penn Entertainment, Inc. (a) | | 1,135,055 | 26,889,453 |
| | | | | $43,812,987 |
| General Merchandise – 1.8% | |
| Five Below, Inc. (a) | | 109,230 | $18,783,191 |
| Ollie's Bargain Outlet Holdings, Inc. (a) | | 325,326 | 25,076,128 |
| | | | | $43,859,319 |
| Leisure & Toys – 1.5% | |
| Brunswick Corp. | | 293,812 | $23,246,405 |
| Corsair Gaming, Inc. (a) | | 384,187 | 6,039,420 |
| Funko, Inc., “A” (a) | | 813,640 | 5,671,071 |
| | | | | $34,956,896 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Machinery & Tools – 3.7% | |
| Crane Co. | | 398,263 | $36,289,725 |
| RB Global, Inc. | | 826,838 | 51,032,441 |
| | | | | $87,322,166 |
| Medical & Health Technology & Services – 1.9% | |
| Certara, Inc. (a) | | 1,037,850 | $16,771,656 |
| HealthEquity, Inc. (a) | | 429,630 | 29,021,507 |
| | | | | $45,793,163 |
| Medical Equipment – 7.8% | |
| Bruker BioSciences Corp. | | 297,535 | $19,518,296 |
| CryoPort, Inc. (a) | | 890,476 | 12,555,712 |
| Envista Holdings Corp. (a) | | 823,494 | 26,368,278 |
| Gerresheimer AG | | 234,582 | 30,498,857 |
| Inari Medical, Inc. (a) | | 275,714 | 18,368,067 |
| Maravai Lifesciences Holdings, Inc., “A” (a) | | 701,825 | 7,256,870 |
| Masimo Corp. (a) | | 156,692 | 17,906,762 |
| OptiNose, Inc. (a) | | 1,816,449 | 2,161,574 |
| Outset Medical, Inc. (a) | | 332,810 | 4,529,544 |
| PROCEPT BioRobotics Corp. (a) | | 445,288 | 15,188,774 |
| Shockwave Medical, Inc. (a) | | 106,501 | 23,471,755 |
| Silk Road Medical, Inc. (a) | | 397,655 | 7,682,695 |
| | | | | $185,507,184 |
| Oil Services – 4.6% | |
| Cactus, Inc., “A” | | 595,879 | $31,784,186 |
| ChampionX Corp. | | 1,219,717 | 44,019,587 |
| TechnipFMC PLC | | 1,751,213 | 33,343,095 |
| | | | | $109,146,868 |
| Pharmaceuticals – 3.5% | |
| ACELYRIN, Inc. (a) | | 421,932 | $10,687,537 |
| Amicus Therapeutics, Inc. (a) | | 974,171 | 12,488,872 |
| Annexon, Inc. (a) | | 495,468 | 1,362,537 |
| Collegium Pharmaceutical, Inc. (a) | | 432,733 | 10,134,607 |
| Harmony Biosciences Holdings (a) | | 333,527 | 12,090,354 |
| Kymera Therapeutics, Inc. (a) | | 278,525 | 5,314,257 |
| Legend Biotech Corp., ADR (a) | | 171,060 | 11,864,722 |
| Neurocrine Biosciences, Inc. (a) | | 108,893 | 11,857,359 |
| SpringWorks Therapeutics, Inc. (a) | | 268,019 | 7,552,775 |
| | | | | $83,353,020 |
| Pollution Control – 2.2% | |
| GFL Environmental, Inc. | | 1,646,274 | $53,339,278 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Real Estate – 1.7% | |
| STAG Industrial, Inc., REIT | | 1,115,651 | $40,754,731 |
| Restaurants – 1.3% | |
| U.S. Foods Holding Corp. (a) | | 750,085 | $30,325,937 |
| Specialty Chemicals – 2.1% | |
| Ashland, Inc. | | 261,069 | $22,616,407 |
| Axalta Coating Systems Ltd. (a) | | 922,446 | 26,105,222 |
| | | | | $48,721,629 |
| Specialty Stores – 1.3% | |
| ACV Auctions, Inc. (a) | | 1,121,094 | $18,845,590 |
| Petco Health & Wellness Co., Inc. (a) | | 2,138,925 | 10,887,128 |
| | | | | $29,732,718 |
| Trucking – 2.4% | |
| Knight-Swift Transportation Holdings, Inc. | | 578,299 | $31,702,351 |
| XPO Logistics, Inc. (a) | | 350,011 | 26,121,321 |
| | | | | $57,823,672 |
| Total Common Stocks (Identified Cost, $2,186,091,330) | | $2,263,952,580 |
| | Strike
Price | First
Exercise | | |
| Warrants – 0.0% | | | | |
| Medical Equipment – 0.0% |
| OptiNose, Inc. (1 share for 1 warrant, Expiration 11/23/27) (a) (Identified Cost, $6,275) | $ 2.57 | 11/23/22 | 627,544 | $0 |
| | | | | |
| Investment Companies (h) – 4.6% |
| Money Market Funds – 4.6% | |
| MFS Institutional Money Market Portfolio, 5.3% (v) (Identified Cost, $109,450,951) | | | 109,459,681 | $109,470,627 |
| Collateral for Securities Loaned – 0.1% |
| State Street Navigator Securities Lending Government Money Market Portfolio, 5.34% (j) (Identified Cost, $3,738,224) | | | 3,738,224 | $3,738,224 |
|
|
| Other Assets, Less Liabilities – 0.1% | | 1,549,776 |
| Net Assets – 100.0% | $2,378,711,207 |
| (a) | Non-income producing security. | | | |
Portfolio of Investments – continued
| (h) | An affiliated issuer, which 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. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $125,639,434 and $2,251,521,997, respectively. | | | |
| (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. See Note 2 for additional information. | | | |
| (v) | Affiliated issuer 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 |
| REIT | Real Estate Investment Trust |
See Notes to Financial Statements
Financial Statements
Statement of Assets and Liabilities
At 8/31/23
This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.
| Assets | |
| Investments in unaffiliated issuers, at value, including $3,200,876 of securities on loan (identified cost, $2,166,450,851) | $2,251,521,997 |
| Investments in affiliated issuers, at value (identified cost, $132,835,929) | 125,639,434 |
| Receivables for | |
| Investments sold | 18,203,284 |
| Fund shares sold | 1,991,495 |
| Interest and dividends | 1,796,206 |
| Other assets | 1,692 |
| Total assets | $2,399,154,108 |
| Liabilities | |
| Payables for | |
| Investments purchased | $11,685,190 |
| Fund shares reacquired | 4,031,476 |
| Collateral for securities loaned, at value (c) | 3,738,224 |
| Payable to affiliates | |
| Investment adviser | 107,985 |
| Administrative services fee | 1,920 |
| Shareholder servicing costs | 626,557 |
| Distribution and service fees | 13,830 |
| Payable for independent Trustees' compensation | 11 |
| Accrued expenses and other liabilities | 237,708 |
| Total liabilities | $20,442,901 |
| Net assets | $2,378,711,207 |
| Net assets consist of | |
| Paid-in capital | $2,762,286,077 |
| Total distributable earnings (loss) | (383,574,870) |
| Net assets | $2,378,711,207 |
| Shares of beneficial interest outstanding | 93,592,153 |
| (c) | Non-cash collateral is not included. |
Statement of Assets and Liabilities – continued
| | Net assets | Shares
outstanding | Net asset value
per share (a) |
| Class A | $745,451,518 | 32,883,784 | $22.67 |
| Class B | 4,479,211 | 328,153 | 13.65 |
| Class C | 24,732,164 | 1,802,762 | 13.72 |
| Class I | 298,826,903 | 10,824,880 | 27.61 |
| Class R1 | 2,305,366 | 172,015 | 13.40 |
| Class R2 | 17,721,939 | 895,795 | 19.78 |
| Class R3 | 106,615,038 | 4,714,817 | 22.61 |
| Class R4 | 40,708,943 | 1,609,221 | 25.30 |
| Class R6 | 1,137,870,125 | 40,360,726 | 28.19 |
| (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 $24.05 [100 / 94.25 x $22.67]. 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 R6. |
See Notes to Financial Statements
Financial Statements
Statement of Operations
Year ended 8/31/23
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 (loss) | |
| Income | |
| Dividends | $12,110,257 |
| Dividends from affiliated issuers | 6,182,183 |
| Other | 224,226 |
| Income on securities loaned | 118,475 |
| Foreign taxes withheld | (287,041) |
| Total investment income | $18,348,100 |
| Expenses | |
| Management fee | $19,630,983 |
| Distribution and service fees | 2,530,844 |
| Shareholder servicing costs | 2,048,301 |
| Administrative services fee | 350,419 |
| Independent Trustees' compensation | 39,199 |
| Custodian fee | 158,030 |
| Shareholder communications | 267,997 |
| Audit and tax fees | 70,435 |
| Legal fees | 11,991 |
| Miscellaneous | 240,430 |
| Total expenses | $25,348,629 |
| Reduction of expenses by investment adviser and distributor | (302,854) |
| Net expenses | $25,045,775 |
| Net investment income (loss) | $(6,697,675) |
| Realized and unrealized gain (loss) |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $(345,150,915) |
| Affiliated issuers | 23,300 |
| Foreign currency | (26,484) |
| Net realized gain (loss) | $(345,154,099) |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $494,911,680 |
| Affiliated issuers | (434,185) |
| Translation of assets and liabilities in foreign currencies | 26,316 |
| Net unrealized gain (loss) | $494,503,811 |
| Net realized and unrealized gain (loss) | $149,349,712 |
| Change in net assets from operations | $142,652,037 |
See Notes to Financial Statements
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.
| | Year ended |
| | 8/31/23 | 8/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $(6,697,675) | $(16,390,152) |
| Net realized gain (loss) | (345,154,099) | (9,691,683) |
| Net unrealized gain (loss) | 494,503,811 | (1,178,150,037) |
| Change in net assets from operations | $142,652,037 | $(1,204,231,872) |
| Total distributions to shareholders | $(2,232,789) | $(586,440,707) |
| Change in net assets from fund share transactions | $(109,838,012) | $777,734,354 |
| Total change in net assets | $30,581,236 | $(1,012,938,225) |
| Net assets | | |
| At beginning of period | 2,348,129,971 | 3,361,068,196 |
| At end of period | $2,378,711,207 | $2,348,129,971 |
See Notes to Financial Statements
Financial Statements
Financial Highlights
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that 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.
| Class A | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $21.40 | $40.53 | $32.45 | $27.56 | $33.30 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.11) | $(0.21) | $(0.23) | $(0.18) | $(0.19) |
| Net realized and unrealized gain (loss) | 1.40 | (11.52) | 12.20 | 7.31 | 0.06(g) |
| Total from investment operations | $1.29 | $(11.73) | $11.97 | $7.13 | $(0.13) |
| Less distributions declared to shareholders |
| From net realized gain | $(0.02) | $(7.40) | $(3.89) | $(2.24) | $(5.61) |
| Net asset value, end of period (x) | $22.67 | $21.40 | $40.53 | $32.45 | $27.56 |
| Total return (%) (r)(s)(t)(x) | 6.05 | (34.20) | 39.23 | 27.51 | 3.49 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.29 | 1.25 | 1.23 | 1.29 | 1.30 |
| Expenses after expense reductions | 1.28 | 1.24 | 1.22 | 1.27 | 1.29 |
| Net investment income (loss) | (0.49) | (0.78) | (0.63) | (0.66) | (0.70) |
| Portfolio turnover | 60 | 58 | 71 | 64 | 69 |
| Net assets at end of period (000 omitted) | $745,452 | $746,682 | $1,171,166 | $755,202 | $549,660 |
See Notes to Financial Statements
Financial Highlights – continued
| Class B | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $12.99 | $27.92 | $23.55 | $20.72 | $26.86 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.16) | $(0.28) | $(0.36) | $(0.28) | $(0.30) |
| Net realized and unrealized gain (loss) | 0.84 | (7.25) | 8.62 | 5.35 | (0.23)(g) |
| Total from investment operations | $0.68 | $(7.53) | $8.26 | $5.07 | $(0.53) |
| Less distributions declared to shareholders |
| From net realized gain | $(0.02) | $(7.40) | $(3.89) | $(2.24) | $(5.61) |
| Net asset value, end of period (x) | $13.65 | $12.99 | $27.92 | $23.55 | $20.72 |
| Total return (%) (r)(s)(t)(x) | 5.27 | (34.71) | 38.19 | 26.58 | 2.69 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 2.04 | 2.00 | 1.99 | 2.04 | 2.06 |
| Expenses after expense reductions | 2.03 | 1.98 | 1.98 | 2.02 | 2.04 |
| Net investment income (loss) | (1.26) | (1.58) | (1.40) | (1.40) | (1.45) |
| Portfolio turnover | 60 | 58 | 71 | 64 | 69 |
| Net assets at end of period (000 omitted) | $4,479 | $6,854 | $16,701 | $16,502 | $18,708 |
| Class C | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $13.05 | $28.02 | $23.62 | $20.78 | $26.91 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.16) | $(0.27) | $(0.36) | $(0.28) | $(0.30) |
| Net realized and unrealized gain (loss) | 0.85 | (7.30) | 8.65 | 5.36 | (0.22)(g) |
| Total from investment operations | $0.69 | $(7.57) | $8.29 | $5.08 | $(0.52) |
| Less distributions declared to shareholders |
| From net realized gain | $(0.02) | $(7.40) | $(3.89) | $(2.24) | $(5.61) |
| Net asset value, end of period (x) | $13.72 | $13.05 | $28.02 | $23.62 | $20.78 |
| Total return (%) (r)(s)(t)(x) | 5.32 | (34.73) | 38.21 | 26.55 | 2.72 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 2.04 | 2.00 | 1.99 | 2.04 | 2.05 |
| Expenses after expense reductions | 2.03 | 1.98 | 1.98 | 2.03 | 2.04 |
| Net investment income (loss) | (1.25) | (1.56) | (1.40) | (1.41) | (1.45) |
| Portfolio turnover | 60 | 58 | 71 | 64 | 69 |
| Net assets at end of period (000 omitted) | $24,732 | $29,033 | $56,833 | $58,057 | $59,253 |
See Notes to Financial Statements
Financial Highlights – continued
| Class I | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $25.98 | $47.41 | $37.30 | $31.29 | $36.82 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.06) | $(0.19) | $(0.16) | $(0.14) | $(0.14) |
| Net realized and unrealized gain (loss) | 1.71 | (13.84) | 14.16 | 8.39 | 0.22(g) |
| Total from investment operations | $1.65 | $(14.03) | $14.00 | $8.25 | $0.08 |
| Less distributions declared to shareholders |
| From net realized gain | $(0.02) | $(7.40) | $(3.89) | $(2.24) | $(5.61) |
| Net asset value, end of period (x) | $27.61 | $25.98 | $47.41 | $37.30 | $31.29 |
| Total return (%) (r)(s)(t)(x) | 6.37 | (34.07) | 39.60 | 27.83 | 3.76 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.04 | 1.00 | 0.98 | 1.04 | 1.05 |
| Expenses after expense reductions | 1.03 | 0.98 | 0.97 | 1.03 | 1.05 |
| Net investment income (loss) | (0.25) | (0.56) | (0.37) | (0.43) | (0.45) |
| Portfolio turnover | 60 | 58 | 71 | 64 | 69 |
| Net assets at end of period (000 omitted) | $298,827 | $328,438 | $621,379 | $331,177 | $164,593 |
| Class R1 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $12.75 | $27.56 | $23.29 | $20.51 | $26.66 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.16) | $(0.26) | $(0.35) | $(0.28) | $(0.30) |
| Net realized and unrealized gain (loss) | 0.83 | (7.15) | 8.51 | 5.30 | (0.24)(g) |
| Total from investment operations | $0.67 | $(7.41) | $8.16 | $5.02 | $(0.54) |
| Less distributions declared to shareholders |
| From net realized gain | $(0.02) | $(7.40) | $(3.89) | $(2.24) | $(5.61) |
| Net asset value, end of period (x) | $13.40 | $12.75 | $27.56 | $23.29 | $20.51 |
| Total return (%) (r)(s)(t)(x) | 5.29 | (34.73) | 38.20 | 26.61 | 2.67 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 2.04 | 2.00 | 1.99 | 2.04 | 2.05 |
| Expenses after expense reductions | 2.03 | 1.99 | 1.97 | 2.03 | 2.05 |
| Net investment income (loss) | (1.26) | (1.54) | (1.39) | (1.41) | (1.45) |
| Portfolio turnover | 60 | 58 | 71 | 64 | 69 |
| Net assets at end of period (000 omitted) | $2,305 | $3,296 | $5,923 | $4,946 | $4,652 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R2 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $18.72 | $36.54 | $29.65 | $25.42 | $31.31 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.14) | $(0.26) | $(0.30) | $(0.23) | $(0.24) |
| Net realized and unrealized gain (loss) | 1.22 | (10.16) | 11.08 | 6.70 | (0.04)(g) |
| Total from investment operations | $1.08 | $(10.42) | $10.78 | $6.47 | $(0.28) |
| Less distributions declared to shareholders |
| From net realized gain | $(0.02) | $(7.40) | $(3.89) | $(2.24) | $(5.61) |
| Net asset value, end of period (x) | $19.78 | $18.72 | $36.54 | $29.65 | $25.42 |
| Total return (%) (r)(s)(t)(x) | 5.79 | (34.38) | 38.89 | 27.21 | 3.19 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.54 | 1.50 | 1.49 | 1.54 | 1.56 |
| Expenses after expense reductions | 1.53 | 1.48 | 1.47 | 1.53 | 1.54 |
| Net investment income (loss) | (0.74) | (1.05) | (0.89) | (0.90) | (0.95) |
| Portfolio turnover | 60 | 58 | 71 | 64 | 69 |
| Net assets at end of period (000 omitted) | $17,722 | $18,975 | $34,688 | $30,149 | $32,381 |
| Class R3 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $21.34 | $40.45 | $32.39 | $27.51 | $33.26 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.11) | $(0.21) | $(0.22) | $(0.18) | $(0.19) |
| Net realized and unrealized gain (loss) | 1.40 | (11.50) | 12.17 | 7.30 | 0.05(g) |
| Total from investment operations | $1.29 | $(11.71) | $11.95 | $7.12 | $(0.14) |
| Less distributions declared to shareholders |
| From net realized gain | $(0.02) | $(7.40) | $(3.89) | $(2.24) | $(5.61) |
| Net asset value, end of period (x) | $22.61 | $21.34 | $40.45 | $32.39 | $27.51 |
| Total return (%) (r)(s)(t)(x) | 6.07 | (34.22) | 39.24 | 27.52 | 3.45 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.29 | 1.25 | 1.23 | 1.29 | 1.30 |
| Expenses after expense reductions | 1.28 | 1.24 | 1.22 | 1.28 | 1.30 |
| Net investment income (loss) | (0.49) | (0.78) | (0.61) | (0.67) | (0.70) |
| Portfolio turnover | 60 | 58 | 71 | 64 | 69 |
| Net assets at end of period (000 omitted) | $106,615 | $109,206 | $178,005 | $71,489 | $52,559 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R4 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $23.81 | $44.11 | $34.94 | $29.44 | $35.05 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.05) | $(0.16) | $(0.15) | $(0.13) | $(0.13) |
| Net realized and unrealized gain (loss) | 1.56 | (12.74) | 13.21 | 7.87 | 0.13(g) |
| Total from investment operations | $1.51 | $(12.90) | $13.06 | $7.74 | $0.00(w) |
| Less distributions declared to shareholders |
| From net realized gain | $(0.02) | $(7.40) | $(3.89) | $(2.24) | $(5.61) |
| Net asset value, end of period (x) | $25.30 | $23.81 | $44.11 | $34.94 | $29.44 |
| Total return (%) (r)(s)(t)(x) | 6.36 | (34.06) | 39.58 | 27.84 | 3.72 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.04 | 1.00 | 0.99 | 1.04 | 1.05 |
| Expenses after expense reductions | 1.03 | 0.99 | 0.97 | 1.03 | 1.05 |
| Net investment income (loss) | (0.22) | (0.52) | (0.37) | (0.43) | (0.45) |
| Portfolio turnover | 60 | 58 | 71 | 64 | 69 |
| Net assets at end of period (000 omitted) | $40,709 | $17,820 | $27,863 | $16,509 | $8,384 |
| Class R6 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $26.50 | $48.14 | $37.79 | $31.64 | $37.13 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.03) | $(0.12) | $(0.12) | $(0.10) | $(0.11) |
| Net realized and unrealized gain (loss) | 1.74 | (14.12) | 14.36 | 8.49 | 0.23(g) |
| Total from investment operations | $1.71 | $(14.24) | $14.24 | $8.39 | $0.12 |
| Less distributions declared to shareholders |
| From net realized gain | $(0.02) | $(7.40) | $(3.89) | $(2.24) | $(5.61) |
| Net asset value, end of period (x) | $28.19 | $26.50 | $48.14 | $37.79 | $31.64 |
| Total return (%) (r)(s)(t)(x) | 6.47 | (33.98) | 39.73 | 27.97 | 3.85 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.91 | 0.89 | 0.89 | 0.94 | 0.96 |
| Expenses after expense reductions | 0.89 | 0.88 | 0.88 | 0.92 | 0.95 |
| Net investment income (loss) | (0.11) | (0.36) | (0.28) | (0.32) | (0.35) |
| Portfolio turnover | 60 | 58 | 71 | 64 | 69 |
| Net assets at end of period (000 omitted) | $1,137,870 | $1,087,826 | $1,248,511 | $795,613 | $541,266 |
See Notes to Financial Statements
Financial Highlights – continued
| (d) | Per share data is based on average shares outstanding. |
| (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. |
| (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 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
Notes to Financial Statements
(1) Business and Organization
MFS New Discovery Fund (the fund) is a diversified series of MFS Series Trust I (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 Standards 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 will generally focus on securities of small size companies which may be more volatile than those of larger companies. 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 market, economic, industrial, political, regulatory, geopolitical, environmental, public health, and other conditions.
Balance Sheet Offsetting — 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 International Swaps and Derivatives Association (ISDA) Master Agreement, or similar 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. 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 master netting agreement counterparty is subject. Balance sheet offsetting disclosures, 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 — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Notes to Financial Statements - continued
Under the fund's valuation policy and procedures, equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value.
Open-end investment companies are generally valued at net asset value per share. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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. In determining values, third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the 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 halt 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 after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's assets or liabilities. These inputs are categorized into three broad levels. In certain cases, 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
Notes to Financial Statements - continued
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 significant 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 August 31, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | | | | |
| United States | $1,899,597,862 | $0 | $— | $1,899,597,862 |
| Canada | 163,555,193 | — | — | 163,555,193 |
| United Kingdom | 76,917,346 | — | — | 76,917,346 |
| India | 32,737,801 | — | — | 32,737,801 |
| Germany | 30,498,857 | — | — | 30,498,857 |
| Israel | 23,402,223 | — | — | 23,402,223 |
| Mexico | 16,183,161 | — | — | 16,183,161 |
| China | 11,864,722 | — | — | 11,864,722 |
| Switzerland | 9,195,415 | — | — | 9,195,415 |
| Mutual Funds | 113,208,851 | — | — | 113,208,851 |
| Total | $2,377,161,431 | $0 | $— | $2,377,161,431 |
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.
Security Loans — Under its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. 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. On loans collateralized by cash, the cash collateral is invested in a money market fund. 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. The lending agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent 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, the lending agent assumes
Notes to Financial Statements - continued
the fund's rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent 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. At period end, the fund had investment securities on loan, all of which were classified as equity securities in the fund's Portfolio of Investments, with a fair value of $3,200,876. The fair value of the fund's investment securities on loan and a related liability of $3,738,224 for cash collateral received on securities loaned are both presented gross in the Statement of Assets and Liabilities. Additionally, these loans were collateralized by U.S. Treasury Obligations of $8,079 held by the lending agent. The collateral on securities loaned exceeded the value of securities on loan at period end. The liability for cash collateral for securities loaned is carried at fair value, which is categorized as level 2 within the fair value hierarchy. A portion of the income generated upon investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund and the lending agent. Income from securities lending is separately reported 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 — 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 payments received in additional securities are recorded on the ex-dividend date in an amount equal to the value of the security on such date. DO NOT USE In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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.
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
Notes to Financial Statements - continued
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.
Book/tax differences primarily relate to net operating losses, passive foreign investment companies, 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:
| | Year ended
8/31/23 | Year ended
8/31/22 |
| Ordinary income (including any short-term capital gains) | $2,232,789 | $260,950,590 |
| Long-term capital gains | — | 325,490,117 |
| Total distributions | $2,232,789 | $586,440,707 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 8/31/23 | |
| Cost of investments | $2,336,301,705 |
| Gross appreciation | 411,451,018 |
| Gross depreciation | (370,591,292) |
| Net unrealized appreciation (depreciation) | $40,859,726 |
| Capital loss carryforwards | (420,534,294) |
| Late year ordinary loss deferral | (3,889,518) |
| Other temporary differences | (10,784) |
| Total distributable earnings (loss) | $(383,574,870) |
| Short-Term | $(176,261,839) |
| Long-Term | (244,272,455) |
| Total | $(420,534,294) |
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 and Class C shares will convert to
Notes to Financial Statements - continued
Class A shares 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:
| | Year
ended
8/31/23 | | Year
ended
8/31/22 |
| Class A | $785,743 | | $215,358,617 |
| Class B | 10,704 | | 3,997,534 |
| Class C | 47,203 | | 14,579,563 |
| Class I | 267,720 | | 100,195,846 |
| Class R1 | 5,839 | | 1,463,235 |
| Class R2 | 23,291 | | 6,788,083 |
| Class R3 | 116,633 | | 31,919,712 |
| Class R4 | 19,232 | | 4,708,685 |
| Class R6 | 956,424 | | 207,429,432 |
| Total | $2,232,789 | | $586,440,707 |
(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 based on the fund's average daily net assets:
| Up to $1 billion | 0.90% |
| In excess of $1 billion and up to $2.5 billion | 0.80% |
| In excess of $2.5 billion and up to $5 billion | 0.75% |
| In excess of $5 billion | 0.70% |
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until December 31, 2023. For the year ended August 31, 2023, this management fee reduction amounted to $302,354, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.83% of the fund's average daily net assets.
Distributor — MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $127,029 for the year ended August 31, 2023, 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
Notes to Financial Statements - continued
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. The distribution and service fees are computed daily and paid monthly.
Distribution Plan Fee Table:
| | Distribution
Fee Rate (d) | Service
Fee Rate (d) | Total
Distribution
Plan (d) | Annual
Effective
Rate (e) | Distribution
and Service
Fee |
| Class A | — | 0.25% | 0.25% | 0.25% | $ 1,820,888 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 54,661 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 263,276 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 30,756 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 92,100 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 269,163 |
| Total Distribution and Service Fees | | | | | $2,530,844 |
| (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 year ended August 31, 2023 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 there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates' seed money. For the year ended August 31, 2023, this rebate amounted to $145, $1, and $354 for Class A, Class B, and Class R2 shares, 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. Class B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. Class C shares are subject to a CDSC in the event of a shareholder redemption within 12 months of purchase. All contingent deferred sales charges are paid to MFD and during the year ended August 31, 2023, were as follows:
| | Amount |
| Class A | $17,603 |
| Class B | 2,614 |
| Class C | 1,975 |
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 year ended August 31, 2023, the fee was $254,786, which equated to 0.0109% annually of the fund's average daily net assets. MFSC also receives reimbursement 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 R6 shares do not incur sub-accounting fees. For the year ended August 31, 2023, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $1,793,515.
Notes to Financial Statements - continued
Administrator — MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund 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 is computed daily and paid monthly. The administrative services fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.0150% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. 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 from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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. This money market fund does not pay a management fee to MFS but does incur investment and operating costs.
DO NOT USE - link to “j - Funds with cross-trade transactions 17a-7 - ALL FUNDS”
The fund is permitted to engage in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) pursuant to a policy adopted by the Board of Trustees. This policy has been designed to ensure that cross-trades conducted by the fund comply with Rule 17a-7 under the Investment Company Act of 1940. During the year ended August 31, 2023, the fund engaged in purchase and sales transactions pursuant to this policy, which amounted to $1,967,659 and $5,299,088, respectively. The sales transactions resulted in net realized gains (losses) of $(4,266,673).
The adviser has voluntarily undertaken to reimburse the fund from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the year ended August 31, 2023, this reimbursement amounted to $223,579, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended August 31, 2023, purchases and sales of investments, other than short-term obligations, aggregated $1,323,341,475 and $1,452,454,072, respectively.
Notes to Financial Statements - 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:
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Class A | 4,181,188 | $90,304,103 | | 6,061,622 | $167,070,754 |
| Class B | 2,080 | 26,838 | | 7,284 | 140,632 |
| Class C | 239,583 | 3,092,719 | | 365,739 | 6,837,715 |
| Class I | 3,384,490 | 88,520,607 | | 6,223,697 | 212,001,901 |
| Class R1 | 22,672 | 289,603 | | 32,779 | 525,922 |
| Class R2 | 134,916 | 2,552,975 | | 208,194 | 4,980,138 |
| Class R3 | 601,628 | 13,026,903 | | 1,114,023 | 29,392,216 |
| Class R4 | 1,308,230 | 31,437,821 | | 311,466 | 9,300,825 |
| Class R6 | 7,466,242 | 199,595,452 | | 16,632,647 | 555,189,897 |
| | 17,341,029 | $428,847,021 | | 30,957,451 | $985,440,000 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Class A | 36,527 | $769,262 | | 6,998,076 | $210,222,217 |
| Class B | 833 | 10,625 | | 214,568 | 3,935,178 |
| Class C | 3,543 | 45,383 | | 762,461 | 14,052,153 |
| Class I | 9,682 | 247,862 | | 2,543,591 | 92,612,157 |
| Class R1 | 466 | 5,839 | | 81,291 | 1,463,235 |
| Class R2 | 1,257 | 23,133 | | 251,763 | 6,628,908 |
| Class R3 | 5,554 | 116,633 | | 1,065,411 | 31,919,712 |
| Class R4 | 799 | 18,746 | | 135,485 | 4,521,134 |
| Class R6 | 36,046 | 941,152 | | 5,467,893 | 202,858,835 |
| | 94,707 | $2,178,635 | | 17,520,539 | $568,213,529 |
| Shares reacquired | | | | | |
| Class A | (6,232,317) | $(133,802,757) | | (7,055,459) | $(186,240,817) |
| Class B | (202,423) | (2,635,556) | | (292,349) | (5,027,537) |
| Class C | (664,293) | (8,694,038) | | (932,651) | (15,940,843) |
| Class I | (5,208,998) | (135,359,445) | | (9,235,323) | (289,403,506) |
| Class R1 | (109,586) | (1,475,550) | | (70,537) | (1,304,358) |
| Class R2 | (253,912) | (4,816,461) | | (395,603) | (9,650,859) |
| Class R3 | (1,009,146) | (21,857,084) | | (1,462,883) | (39,494,202) |
| Class R4 | (448,114) | (11,064,933) | | (330,269) | (9,696,905) |
| Class R6 | (8,190,114) | (221,157,844) | | (6,986,289) | (219,160,148) |
| | (22,318,903) | $(540,863,668) | | (26,761,363) | $(775,919,175) |
Notes to Financial Statements - continued
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Net change | | | | | |
| Class A | (2,014,602) | $(42,729,392) | | 6,004,239 | $191,052,154 |
| Class B | (199,510) | (2,598,093) | | (70,497) | (951,727) |
| Class C | (421,167) | (5,555,936) | | 195,549 | 4,949,025 |
| Class I | (1,814,826) | (46,590,976) | | (468,035) | 15,210,552 |
| Class R1 | (86,448) | (1,180,108) | | 43,533 | 684,799 |
| Class R2 | (117,739) | (2,240,353) | | 64,354 | 1,958,187 |
| Class R3 | (401,964) | (8,713,548) | | 716,551 | 21,817,726 |
| Class R4 | 860,915 | 20,391,634 | | 116,682 | 4,125,054 |
| Class R6 | (687,826) | (20,621,240) | | 15,114,251 | 538,888,584 |
| | (4,883,167) | $(109,838,012) | | 21,716,627 | $777,734,354 |
The fund is one of several mutual funds in which certain MFS funds may invest. The MFS funds do not invest in the underlying funds for the purpose of exercising management or control. At the end of the period, the MFS Growth Allocation Fund, the MFS Moderate Allocation Fund, the MFS Aggressive Growth Allocation Fund, and the MFS Conservative Allocation Fund were the owners of record of approximately 5%, 4%, 3%, and 2%, respectively, of the value of outstanding voting shares of the fund. In addition, 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, the MFS Lifetime 2055 Fund, the MFS Lifetime 2060 Fund, the MFS Lifetime 2065 Fund, and the MFS Lifetime Income Fund were each the owners of record of less than 1% of the value of outstanding voting shares of the fund. In addition, the MFS XXX Fund, the MFS XXX Fund, and the MFS XXX Fund were each the owners of record of less than 1% of the value of outstanding voting shares of the fund.
Effective June 1, 2019, purchases of the fund’s Class B shares were closed to new and existing investors subject to certain exceptions.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate 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 highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. 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 rates equal to customary reference rates plus an
Notes to Financial Statements - continued
agreed upon spread. For the year ended August 31, 2023, the fund’s commitment fee and interest expense were $11,955 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in 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 following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| GCM Grosvenor, Inc., “A” | $16,613,237 | $— | $— | $— | $(444,430) | $16,168,807 |
| MFS Institutional Money Market Portfolio | 104,169,558 | 600,557,333 | 595,289,809 | 23,300 | 10,245 | 109,470,627 |
| | $120,782,795 | $600,557,333 | $595,289,809 | $23,300 | $(434,185) | $125,639,434 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| GCM Grosvenor, Inc., “A” | $910,024 | $— |
| MFS Institutional Money Market Portfolio | 5,272,159 | — |
| | $6,182,183 | $— |
(8) LIBOR Transition
The London Interbank Offered Rate (LIBOR) was intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. Certain of the fund's investments, payment obligations, and financing terms were historically based on LIBOR. In 2017, the United Kingdom Financial Conduct Authority (FCA) announced plans to transition away from LIBOR by the end of 2021. LIBOR's administrator, ICE Benchmark Administration (IBA), ceased publication (on a representative basis) of many of its LIBOR settings as of December 31, 2021 and ceased publication (on a representative basis) of the remaining U.S. dollar LIBOR settings as of June 30, 2023. In addition, global regulators announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. Although the FCA has announced that it will require the IBA to continue to publish certain select LIBOR rates on a synthetic basis after the relevant cessation dates, such synthetic rates are not considered to be representative of the underlying market and economic reality they are intended to measure, are expected to be published for a limited time period, and are intended solely for use on a limited basis for legacy transactions.
Regulators and industry groups have implemented measures to facilitate the transition away from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR). SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. SOFR is published in various forms including as a daily, compounded, and forward-looking term rate. The transition to alternative reference rates may affect the liquidity and valuation of investments that were tied to LIBOR or
Notes to Financial Statements - continued
other interbank offered rates and may lead to other consequences affecting securities and credit markets more broadly. For example, while some investments that were tied to LIBOR provided for an alternative or “fallback” rate-setting methodology in the event LIBOR is not available, there is uncertainty regarding the effectiveness of any such alternative methodologies to replace LIBOR and certain investments tied to LIBOR may not have fallback provisions. While legislation passed in the United States facilitates by operation of law the replacement of U.S. dollar LIBOR settings in certain legacy instruments with a specified replacement rate, such as SOFR, there is uncertainty regarding the effectiveness of such legislation. There also remains uncertainty regarding the willingness and ability of parties to add or amend fallback provisions in certain other legacy instruments maturing after the cessation of the applicable LIBOR rates, which could create market and litigation risk.
It is difficult to quantify or predict the impact on the fund resulting from the transition from LIBOR to alternative reference rates and the potential effects of the transition from LIBOR on the fund, or on certain instruments in which the fund invests, are not known. The transition process may involve, among other things, increased volatility or illiquidity in markets for instruments that relied on LIBOR to determine interest rates. The transition may also result in a reduction in value of certain LIBOR-related investments held by the fund or reduce the effectiveness of related transactions such as hedges. Any such effects of the transition away from LIBOR and the adoption of alternative reference rates, as well as other unforeseen effects, could have an adverse impact on the fund's performance.
With respect to the fund’s accounting for investments, including investments in certain debt instruments and derivatives, as well as borrowings by the fund and any other contractual arrangements of the fund that undergo reference rate-related modifications as a result of the transition, management has and will continue to rely upon the relief provided by FASB Codification Topic 848 – Reference Rate Reform (Topic 848). The guidance in Topic 848 permits the fund to account for such contract modifications made on or before December 31, 2024 as a continuation of the existing contracts. The situation remains fluid, and management believes, based on best available information, that the impact of the transition will not be material to the fund.
(9) Subsequent Event On March 30, 2023, the fund announced that effective after the close of business on September 29, 2023, purchases of Class R1 and Class R2 shares will be closed to new eligible investors.
Report of Independent Registered Public Accounting Firm
To the Shareholders of MFS New Discovery Fund and the Board of Trustees of MFS Series Trust I
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of MFS New Discovery Fund (the “Fund”) (one of the funds constituting MFS Series Trust I (the “Trust”)), including the portfolio of investments, as of August 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting MFS Series Trust I) at August 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Report of Independent Registered Public Accounting Firm – continued
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more MFS investment companies since 1993.
Boston, Massachusetts
October 16, 2023
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of October 1, 2023, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and Officer is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
| INTERESTED TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022); President (until December 2018); Chief Investment Officer (until December 2018) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 68) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
| OFFICERS | | | | | | | | |
Christopher R. Bohane (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022); Natixis Investment Managers (investment management), Funds Chief Compliance Officer, Deputy General Counsel & Senior Vice President (until 2018) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 52) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 52) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 48) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
| (h) | Date first appointed to serve as Trustee/Officer of an MFS Fund. Each Trustee has served continuously since appointment unless indicated otherwise. From January 2012 through December 2016, Messrs. DiLorenzo and Yost served as Treasurer and Deputy Treasurer of the Funds, respectively. |
| (j) | Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”). |
| (k) | “Interested person” of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of a position with MFS. The address of MFS is 111 Huntington Avenue, Boston, Massachusetts 02199-7618. |
Trustees and Officers - continued
Each Trustee (other than Messrs. Jones, Kilman and Roberge) has been elected by shareholders and each Trustee and Officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. The Trust does not hold annual meetings for the purpose of electing Trustees, and Trustees are not elected for fixed terms. Under the terms of the Board's retirement policy, an Independent Trustee shall retire at the end of the calendar year in which he or she reaches the earlier of 75 years of age or 15 years of service on the Board (or, in the case of any Independent Trustee who joined the Board prior to 2015, 20 years of service on the Board).
Messrs. Buller, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.
Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
| Michael Grossman | |
Board Review of Investment Advisory Agreement
MFS New Discovery Fund
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-interested (“independent”) Trustees, voting separately, annually approve the continuation of the Fund’s investment advisory agreement with MFS. The Trustees consider matters bearing on the Fund and its advisory arrangements at their meetings throughout the year, including a review of performance data at each regular meeting. In addition, the independent Trustees met several times over the course of three months beginning in May and ending in July, 2023 (“contract review meetings”) for the specific purpose of considering whether to approve the continuation of the investment advisory agreement for the Fund and the other investment companies that the Board oversees (the “MFS Funds”). The independent Trustees were assisted in their evaluation of the Fund’s investment advisory agreement by independent legal counsel, from whom they received separate legal advice and with whom they met separately from MFS during various contract review meetings. The independent Trustees were also assisted in this process by an independent consultant who was retained by and reported to the independent Trustees.
In connection with their deliberations regarding the continuation of the investment advisory agreement, the Trustees, including the independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. The investment advisory agreement for the Fund was considered separately, although the Trustees also took into account the common interests of all MFS Funds in their review. As described below, the Trustees considered the nature, quality, and extent of the various investment advisory, administrative, and shareholder services performed by MFS under the existing investment advisory agreement and other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance of the Fund for various time periods ended December 31, 2022 and the investment performance of a group of funds with substantially similar investment classifications/objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s advisory fees and other expenses and the advisory fees and other expenses of comparable funds identified by Broadridge as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (iii) information provided by MFS on the advisory fees of portfolios of other clients of MFS, including institutional separate accounts and other clients, (iv) information as to whether and to what extent applicable expense waivers, reimbursements or fee “breakpoints” are observed for the Fund, (v) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (vi) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vii) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (viii) information regarding the overall organization of MFS, including information about
Board Review of Investment Advisory Agreement - continued
MFS’ senior management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.
The Trustees’ conclusion as to the continuation of the investment advisory agreement was based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors. It is also important to recognize that the fee arrangements for the Fund and other MFS Funds are the result of years of review and discussion between the independent Trustees and MFS, that certain aspects of such arrangements may receive greater scrutiny in some years than in others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements during the course of the year and in prior years.
Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Class I shares in comparison to the performance of funds in its Broadridge performance universe over the five-year period ended December 31, 2022, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Class I shares was in the 2nd quintile relative to the other funds in the universe for this five-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Class I shares was in the 4th quintile for each of the one- and three-year periods ended December 31, 2022 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account information provided by MFS in connection with the contract review meetings, as well as during investment review meetings conducted with portfolio management personnel during the course of the year regarding the Fund’s performance. After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that they were satisfied with MFS’ responses and efforts relating to investment performance.
In assessing the reasonableness of the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s Class I shares as a percentage of average daily net assets and the advisory fee and total expense ratios of the Broadridge expense group based on information provided by Broadridge. The Trustees considered that, according to the data provided by Broadridge (which takes into account any fee reductions or expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate was approximately at the Broadridge expense group median and total expense ratio was higher than the Broadridge expense group median.
Board Review of Investment Advisory Agreement - continued
The Trustees also considered the advisory fees charged by MFS to any institutional separate accounts advised by MFS (“separate accounts”) and unaffiliated investment companies for which MFS serves as subadviser (“subadvised funds”) that have comparable investment strategies to the Fund, if any. In comparing these fees, the Trustees considered information provided by MFS as to the generally broader scope of services provided by MFS to the Fund, as well as the more extensive regulatory burdens imposed on MFS in managing the Fund, in comparison to separate accounts and subadvised funds. The Trustees also considered the higher demands placed on MFS’ investment personnel and trading infrastructure as a result of the daily cash in-flows and out-flows of the Fund in comparison to separate accounts.
The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is subject to contractual breakpoints that reduce the Fund’s advisory fee rate on average daily net assets over $1 billion, $2.5 billion, and $5 billion. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the breakpoints and the group fee waiver were sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.
The Trustees also considered information prepared by MFS relating to MFS’ costs and profits with respect to the Fund, the MFS Funds considered as a group, and other investment companies and accounts advised by MFS, as well as MFS’ methodologies used to determine and allocate its costs to the MFS Funds, the Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that the advisory fees charged to the Fund represent reasonable compensation in light of the services being provided by MFS to the Fund.
In addition, the Trustees considered MFS’ resources and related efforts to continue to retain, attract and motivate capable personnel to serve the Fund. The Trustees also considered current and developing conditions in the financial services industry, including the presence of large and well-capitalized companies which are spending, and appear to be prepared to continue to spend, substantial sums to engage personnel and to provide services to competing investment companies. In this regard, the Trustees also considered the financial resources of MFS and its ultimate parent, Sun Life Financial Inc. The Trustees also considered the advantages and possible disadvantages to the Fund of having an adviser that also serves other investment companies as well as other accounts.
The Trustees also considered the nature, quality, cost, and extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the nature, extent and quality of certain other services
Board Review of Investment Advisory Agreement - continued
MFS performs or arranges for on the Fund’s behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’ interaction with third-party service providers, principally custodians and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-called “fall-out benefits” to MFS such as reputational value derived from serving as investment manager to the MFS Funds. The Trustees also considered that MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses a Fund, if applicable, for the costs of external research acquired through the use of the Fund’s portfolio brokerage commissions.
Based on their evaluation of factors that they deemed to be material, including those factors described above, the Board of Trustees, including the independent Trustees, concluded that the Fund’s investment advisory agreement with MFS should be continued for an additional one-year period, commencing August 1, 2023.
Statement Regarding Liquidity Risk Management Program
The fund has adopted and implemented a liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The fund’s Board of Trustees (the “Board”) has designated MFS as the administrator of the Program. The Program is reasonably designed to assess and manage the liquidity risk of the fund. Liquidity risk is the risk that the fund could not meet requests to redeem shares issued by the fund without significant dilution of remaining investors' interests.
MFS provided a written report to the Board for consideration at its March 2023 meeting that addressed the operation of the Program and provided an assessment of the adequacy and effectiveness of the Program during the period from January 1, 2022 to December 31, 2022 (the “Covered Period”). The report concluded that during the Covered Period the Program had operated effectively in all material respects and had adequately and effectively been implemented to assess and manage the fund’s liquidity risk. MFS also reported that there were no liquidity events that impacted the fund or its ability to timely meet redemptions without dilution to existing shareholders during the Covered Period.
There can be no assurance that the Program will achieve its objectives in the future. Further information on liquidity risk, and other principal risks to which an investment in the fund may be subject, can be found in the prospectus.
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 mfs.com/proxyvoting, 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 by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
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 at https://www.mfs.com/announcements or at mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.
Under the Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.
Federal Tax Information (unaudited)
The fund will notify shareholders of amounts for use in preparing 2023 income tax forms in January 2024. The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund designates the maximum amount allowable as qualified dividend income eligible to be taxed at the same rate as long-term capital gain.
The fund designates $0 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 100.00% of the ordinary income dividends paid during the prior calendar year qualify for the corporate dividends received deduction.
Federal Tax Information (unaudited) - continued
The fund designates the maximum amount allowable as Section 199A dividends as defined in Proposed Treasury Regulation §1.199A-3(d).
| FACTS | WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION? |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: |
| • Social Security number and account balances |
| • Account transactions and transaction history |
| • Checking account information and wire transfer instructions |
| When you are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| Who we are |
| Who is providing this notice? | MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., and MFS Heritage Trust Company. |
| What we do |
How does MFS
protect my personal
information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you. |
How does MFS
collect my personal
information? | We collect your personal information, for example, when you |
| • open an account or provide account information |
| • direct us to buy securities or direct us to sell your securities |
| • make a wire transfer |
| We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
| Why can't I limit all sharing? | Federal law gives you the right to limit only |
| • sharing for affiliates' everyday business purposes – information about your creditworthiness |
| • affiliates from using your information to market to you |
| • sharing for nonaffiliates to market to you |
| State laws and individual companies may give you additional rights to limit sharing. |
| Definitions |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice. |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share with nonaffiliates so they can market to you. |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. |
| • MFS doesn't jointly market. |
| Other important information |
| If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. |
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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 219341
Kansas City, MO 64121-9341
OVERNIGHT MAIL
MFS Service Center, Inc.
Suite 219341
430 W 7th Street
Kansas City, MO 64105-1407
Annual Report
August 31, 2023
MFS® Research
International Fund
MFS® Research
International Fund
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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 • MAY LOSE VALUE • NO BANK GUARANTEE
Portfolio structure
Top ten holdings
| Linde PLC | 3.2% |
| Nestle S.A. | 3.0% |
| Novo Nordisk A.S., “B” | 2.9% |
| Roche Holding AG | 2.9% |
| Schneider Electric SE | 2.9% |
| LVMH Moet Hennessy Louis Vuitton SE | 2.8% |
| Hitachi Ltd. | 2.3% |
| Diageo PLC | 1.8% |
| TotalEnergies SE | 1.8% |
| BNP Paribas | 1.6% |
Global equity sectors (k)
| Capital Goods | 22.8% |
| Financial Services | 20.3% |
| Health Care | 13.1% |
| Technology | 12.7% |
| Consumer Cyclicals | 9.6% |
| Energy | 9.2% |
| Consumer Staples | 8.7% |
| Telecommunications/Cable Television | 2.7% |
Issuer country weightings (x)
| Japan | 19.6% |
| France | 14.1% |
| Switzerland | 11.7% |
| United Kingdom | 11.1% |
| United States | 9.1% |
| Germany | 7.2% |
| Australia | 4.2% |
| Hong Kong | 3.7% |
| Denmark | 3.2% |
| Other Countries | 16.1% |
Currency exposure weightings (y)
| Euro | 29.9% |
| Japanese Yen | 19.6% |
| Swiss Franc | 11.7% |
| British Pound Sterling | 11.4% |
| United States Dollar | 9.6% |
| Australian Dollar | 4.2% |
| Hong Kong Dollar | 4.0% |
| Danish Krone | 3.2% |
| Canadian Dollar | 1.9% |
| Other Currencies | 4.5% |
Portfolio Composition - continued
| (k) | The sectors set forth above and the associated portfolio composition are based on MFS’ own custom sector classification methodology. |
| (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 & Cash Equivalents and 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 & Cash Equivalents. |
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions and may be negative.
Percentages are based on net assets as of August 31, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended August 31, 2023, Class A shares of the MFS Research International Fund (fund) provided a total return of 13.71%, at net asset value. This compares with a return of 17.92% for the fund’s benchmark, the MSCI EAFE Index (net div).
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Those shifts exposed an asset-liability mismatch that forced the closure of several institutions by regulators. Given the importance of small and mid-sized lenders to the provision of credit in the US, concerns were raised in the aftermath of the crisis that credit availability could become constrained, leading to slower economic growth, although those effects have been limited thus far. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as focus turned to the country’s highly-indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks remained focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates.
Against an environment of relatively tight labor markets, tighter global financial conditions and volatile materials prices, investor anxiety appeared to have increased over the potential that corporate profit margins may be past peak for this cycle. That said, signs that supply chains have generally normalized, coupled with low levels of unemployment across developed markets and hopes that inflation levels have peaked, were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the MSCI EAFE Index, stock selection within the financial services sector detracted from performance, led by the fund’s overweight positions in industrial and logistics property manager ESR Group(h) (Hong Kong) and stock exchange Euronext (Netherlands). The stock price of Euronext declined as the company reported earnings that missed consensus estimates, driven by lower revenue and volume results and higher costs.
Management Review - continued
Security selection within the capital goods sector also held back relative returns. Here, the fund’s overweight positions in electronic power tools manufacturer Techtronic Industries (Hong Kong), specialty chemical products maker Croda International (United Kingdom) and air conditioning system manufacturer Daikin Industries (Japan) weakened relative performance. The stock price of Croda International came under pressure as the company issued a profit warning, led by destocking trends and weaker sales volumes in its consumer care segment. The timing of the fund’s ownership in shares of machinery and industrial products manufacturer Kubota(h) (Japan) also weighed on relative performance.
Individual stocks in other sectors that were among the top relative detractors included the fund’s overweight holdings of pharmaceutical and diagnostic company Roche Holding (Switzerland), medical and pharmaceutical products manufacturer Kyowa Kirin (Japan) and tobacco distributor British American Tobacco (United Kingdom). The stock price of Kyowa Kirin declined after the company’s operating profit results missed expectations due to lower-than-expected sales of its prescription medicine CRYSVITA in Europe and an increase in selling, general and administrative expenses. Furthermore, not owning shares of enterprise applications company SAP (Germany) hurt relative performance. The stock price of SAP rose as the company reported revenue and earnings above consensus estimates, driven by strong revenue growth in its Cloud business.
Contributors to Performance
Stock selection within the telecommunications/cable television sector benefited relative performance over the reporting period. However, there were no individual stocks within this sector, either in the fund or in the benchmark, that were among the fund's top relative contributors over the reporting period.
Elsewhere, the fund's overweight positions in pharmaceutical company Novo Nordisk (Denmark), electrical distribution equipment manufacturer Schneider Electric (France), investment management and banking firm UBS Group (Switzerland), electronics company Hitachi (Japan), global banking group BNP Paribas (France), wealth management firm Julius Baer Group (Switzerland), luxury goods company LVMH Moet Hennessy Louis Vuitton (France) and wiring devices and cable systems manufacturer Legrand (France) aided relative performance. The fund’s holdings of industrial gas supplier Linde(b) (United Kingdom) and enterprise software solutions provider Constellation Software(b) (Canada) also helped relative returns. The stock price of Linde
Management Review - continued
advanced as the company posted earnings above consensus estimates due to improved margins and comparable gas sales growth, which outpaced its peers. The share price also benefited from strong price increases in the EMEA region that more than offset volume declines.
Respectfully,
Portfolio Manager(s)
Camille Humphries Lee and Nicholas Paul
Note to Shareholders: Effective December 31, 2022, Victoria Higley is no longer a Portfolio Manager of the fund and Nicholas Paul was added as a Portfolio Manager of the fund. Effective May 1, 2024, Camille Humphries Lee will no longer be a Portfolio Manager of the fund.
| (b) | Security is not a benchmark constituent. |
| (h) | Security was not held in the portfolio at period end. |
The views expressed in this report are those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market or other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS portfolio. References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio’s current or future investments.
Performance Summary THROUGH 8/31/23
The following chart illustrates a representative class of the fund’s historical performance in comparison to its benchmark(s). Performance results include the deduction of the maximum applicable sales charge and reflect the percentage change in net asset value, including reinvestment of dividends and capital gains distributions. The performance of other share classes will be greater than or less than that of the class depicted below. Benchmarks are unmanaged and may not be invested in directly. Benchmark returns do not reflect sales charges, commissions or expenses. (See Notes to Performance Summary.)
Performance data shown represents past performance and is no guarantee of future results. Investment return and principal value fluctuate so your shares, when sold, may be worth more or less than the original cost; current performance may be lower or higher than quoted. The performance shown does not reflect the deduction of taxes, if any, that a shareholder would pay on fund distributions or the redemption of fund shares.
Growth of a Hypothetical $10,000 Investment
Performance Summary - continued
Total Returns through 8/31/23
Average annual without sales charge
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| A | 1/02/97 | 13.71% | 4.50% | 4.77% |
| B | 1/02/98 | 12.86% | 3.71% | 3.99% |
| C | 1/02/98 | 12.84% | 3.71% | 3.98% |
| I | 1/02/97 | 13.98% | 4.75% | 5.03% |
| R1 | 4/01/05 | 12.88% | 3.71% | 3.98% |
| R2 | 10/31/03 | 13.46% | 4.24% | 4.51% |
| R3 | 4/01/05 | 13.72% | 4.50% | 4.77% |
| R4 | 4/01/05 | 14.02% | 4.75% | 5.02% |
| R6 | 5/01/06 | 14.16% | 4.87% | 5.14% |
Comparative benchmark(s)
| MSCI EAFE Index (net div) (f) | 17.92% | 4.14% | 4.93% |
Average annual with sales charge
| | | | |
A
With Initial Sales Charge (5.75%) | 7.17% | 3.27% | 4.15% |
B
With CDSC (Declining over six years from 4% to 0%) (v) | 8.86% | 3.36% | 3.99% |
C
With CDSC (1% for 12 months) (v) | 11.84% | 3.71% | 3.98% |
CDSC – Contingent Deferred Sales Charge.
Class I, R1, R2, R3, R4, and R6 shares do not have a sales charge.
| (f) | Source: FactSet Research Systems Inc. |
| (v) | Assuming redemption at the end of the applicable period. |
Benchmark Definition(s)
MSCI EAFE (Europe, Australasia, Far East) Index(e) (net div) – a market capitalization-weighted index that is designed to measure equity market performance in the developed markets, excluding the U.S. and Canada.
It is not possible to invest directly in an index.
| (e) | Morgan Stanley Capital International (“MSCI”) makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. |
Notes to Performance Summary
Average annual total return represents the average annual change in value for each share class for the periods presented.
Performance Summary - continued
Performance results reflect any applicable expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers the fund's performance results would be less favorable. Please see the prospectus and financial statements for complete details.
Performance results do not include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and may differ from amounts reported in the financial highlights.
From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
Expense Table
Fund expenses borne by the shareholders during the period,
March 1, 2023 through August 31, 2023
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 March 1, 2023 through August 31, 2023.
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.
Expense Table - continued
Share
Class | | Annualized
Expense
Ratio | Beginning
Account Value
3/01/23 | Ending
Account Value
8/31/23 | Expenses
Paid During
Period (p)
3/01/23-8/31/23 |
| A | Actual | 1.05% | $1,000.00 | $1,046.42 | $5.42 |
| Hypothetical (h) | 1.05% | $1,000.00 | $1,019.91 | $5.35 |
| B | Actual | 1.79% | $1,000.00 | $1,042.35 | $9.21 |
| Hypothetical (h) | 1.79% | $1,000.00 | $1,016.18 | $9.10 |
| C | Actual | 1.79% | $1,000.00 | $1,042.20 | $9.21 |
| Hypothetical (h) | 1.79% | $1,000.00 | $1,016.18 | $9.10 |
| I | Actual | 0.80% | $1,000.00 | $1,047.53 | $4.13 |
| Hypothetical (h) | 0.80% | $1,000.00 | $1,021.17 | $4.08 |
| R1 | Actual | 1.80% | $1,000.00 | $1,042.46 | $9.27 |
| Hypothetical (h) | 1.80% | $1,000.00 | $1,016.13 | $9.15 |
| R2 | Actual | 1.29% | $1,000.00 | $1,045.14 | $6.65 |
| Hypothetical (h) | 1.29% | $1,000.00 | $1,018.70 | $6.56 |
| R3 | Actual | 1.05% | $1,000.00 | $1,046.46 | $5.42 |
| Hypothetical (h) | 1.05% | $1,000.00 | $1,019.91 | $5.35 |
| R4 | Actual | 0.80% | $1,000.00 | $1,047.80 | $4.13 |
| Hypothetical (h) | 0.80% | $1,000.00 | $1,021.17 | $4.08 |
| R6 | Actual | 0.70% | $1,000.00 | $1,048.20 | $3.61 |
| Hypothetical (h) | 0.70% | $1,000.00 | $1,021.68 | $3.57 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Notes to Expense Table
Expense ratios include 0.06% of tax reclaim recovery expenses.
Portfolio of Investments
8/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 99.1% |
| Aerospace & Defense – 1.4% | |
| MTU Aero Engines Holding AG | | 582,373 | $136,276,940 |
| Thales S.A. | | 624,626 | 91,301,866 |
| | | | | $227,578,806 |
| Airlines – 0.5% | |
| Ryanair Holdings PLC, ADR (a) | | 764,088 | $75,835,734 |
| Alcoholic Beverages – 3.1% | |
| Diageo PLC | | 6,917,017 | $284,210,799 |
| Heineken N.V. | | 1,160,986 | 113,075,817 |
| Kirin Holdings Co. Ltd. | | 6,645,000 | 93,444,242 |
| | | | | $490,730,858 |
| Apparel Manufacturers – 4.6% | |
| Burberry Group PLC | | 2,003,277 | $55,424,460 |
| Compagnie Financiere Richemont S.A. | | 1,226,241 | 174,354,298 |
| LVMH Moet Hennessy Louis Vuitton SE | | 526,145 | 446,265,138 |
| NIKE, Inc., “B” | | 601,903 | 61,219,554 |
| | | | | $737,263,450 |
| Automotive – 2.5% | |
| Bridgestone Corp. | | 2,201,100 | $85,641,617 |
| Compagnie Generale des Etablissements Michelin | | 3,127,759 | 98,050,785 |
| DENSO Corp. | | 1,809,800 | 123,879,159 |
| Koito Manufacturing Co. Ltd. | | 5,533,900 | 94,155,603 |
| | | | | $401,727,164 |
| Biotechnology – 0.9% | |
| CSL Ltd. | | 833,027 | $147,640,507 |
| Brokerage & Asset Managers – 3.5% | |
| Euronext N.V. | | 2,708,713 | $195,764,008 |
| Hong Kong Exchanges & Clearing Ltd. | | 3,450,400 | 133,750,929 |
| London Stock Exchange Group PLC | | 2,315,092 | 239,840,870 |
| | | | | $569,355,807 |
| Business Services – 1.3% | |
| Nomura Research Institute Ltd. | | 5,855,700 | $168,432,623 |
| Secom Co. Ltd. | | 668,400 | 46,835,548 |
| | | | | $215,268,171 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Computer Software – 0.9% | |
| Cadence Design Systems, Inc. (a) | | 629,265 | $151,300,477 |
| Computer Software - Systems – 7.1% | |
| Amadeus IT Group S.A. | | 2,886,803 | $198,148,396 |
| Constellation Software, Inc. | | 105,955 | 217,639,035 |
| Fujitsu Ltd. | | 1,556,900 | 194,806,450 |
| Hitachi Ltd. | | 5,499,600 | 366,425,804 |
| Samsung Electronics Co. Ltd. | | 3,362,872 | 170,210,809 |
| | | | | $1,147,230,494 |
| Construction – 0.8% | |
| Techtronic Industries Co. Ltd. | | 12,402,500 | $122,564,506 |
| Consumer Products – 0.8% | |
| Kao Corp. | | 3,193,600 | $123,775,459 |
| Consumer Services – 1.0% | |
| Carsales.com Ltd. | | 3,751,202 | $69,855,193 |
| Persol Holdings Co. Ltd. | | 2,742,100 | 47,022,506 |
| SEEK Ltd. | | 2,496,145 | 37,377,585 |
| | | | | $154,255,284 |
| Electrical Equipment – 5.0% | |
| Legrand S.A. | | 2,012,025 | $198,756,551 |
| Mitsubishi Electric Corp. | | 10,518,000 | 137,280,883 |
| Schneider Electric SE | | 2,678,665 | 460,613,347 |
| | | | | $796,650,781 |
| Electronics – 3.3% | |
| ASML Holding N.V. | | 140,011 | $92,291,988 |
| Kyocera Corp. | | 1,999,000 | 102,742,514 |
| NXP Semiconductors N.V. | | 559,488 | 115,097,871 |
| ROHM Co. Ltd. | | 855,300 | 71,541,984 |
| Taiwan Semiconductor Manufacturing Co. Ltd. | | 8,154,326 | 140,571,962 |
| | | | | $522,246,319 |
| Energy - Independent – 1.4% | |
| Reliance Industries Ltd. | | 2,683,023 | $78,008,562 |
| Woodside Energy Group Ltd. | | 5,870,503 | 140,816,392 |
| | | | | $218,824,954 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Energy - Integrated – 3.7% | |
| Eni S.p.A. | | 10,096,516 | $156,383,555 |
| Galp Energia SGPS S.A., “B” | | 11,560,071 | 159,259,326 |
| TotalEnergies SE | | 4,489,829 | 282,716,612 |
| | | | | $598,359,493 |
| Energy - Renewables – 0.2% | |
| Orsted A/S | | 573,398 | $36,916,183 |
| Food & Beverages – 3.6% | |
| Danone S.A. | | 1,764,219 | $102,978,504 |
| Nestle S.A. | | 3,987,050 | 480,242,395 |
| | | | | $583,220,899 |
| Food & Drug Stores – 0.2% | |
| Seven & I Holdings Co. Ltd. | | 760,200 | $31,250,257 |
| Gaming & Lodging – 1.8% | |
| Aristocrat Leisure Ltd. | | 3,749,656 | $99,370,212 |
| Flutter Entertainment PLC (a) | | 258,016 | 47,099,734 |
| Sands China Ltd. (a) | | 19,724,400 | 66,776,262 |
| Whitbread PLC | | 1,645,562 | 71,710,132 |
| | | | | $284,956,340 |
| Insurance – 5.5% | |
| AIA Group Ltd. | | 22,418,200 | $203,532,849 |
| Aon PLC | | 710,579 | 236,899,933 |
| Beazley PLC | | 18,161,687 | 125,619,384 |
| Hiscox Ltd. | | 6,034,688 | 76,256,269 |
| Willis Towers Watson PLC | | 329,432 | 68,113,360 |
| Zurich Insurance Group AG | | 383,183 | 180,020,315 |
| | | | | $890,442,110 |
| Leisure & Toys – 0.3% | |
| Yamaha Corp. | | 1,653,300 | $51,123,384 |
| Machinery & Tools – 5.2% | |
| Daikin Industries Ltd. | | 1,212,000 | $210,128,870 |
| GEA Group AG | | 3,412,391 | 134,688,301 |
| RB Global, Inc. | | 1,439,853 | 89,042,419 |
| SMC Corp. | | 403,100 | 195,600,261 |
| Toyota Industries Corp. | | 1,625,500 | 115,073,714 |
| Weir Group PLC | | 3,928,992 | 91,307,550 |
| | | | | $835,841,115 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Major Banks – 5.9% | |
| Bank of Ireland Group PLC | | 3,882,394 | $38,722,440 |
| BNP Paribas | | 3,952,614 | 255,918,203 |
| DBS Group Holdings Ltd. | | 4,682,700 | 115,382,670 |
| Mitsubishi UFJ Financial Group, Inc. | | 19,149,700 | 153,137,056 |
| NatWest Group PLC | | 71,434,902 | 208,497,455 |
| UBS Group AG | | 6,880,818 | 183,052,270 |
| | | | | $954,710,094 |
| Medical Equipment – 2.2% | |
| ConvaTec Group PLC | | 31,783,096 | $93,570,759 |
| QIAGEN N.V. (a) | | 3,886,563 | 177,805,397 |
| Terumo Corp. | | 2,933,300 | 88,969,744 |
| | | | | $360,345,900 |
| Metals & Mining – 1.2% | |
| Glencore PLC | | 35,778,027 | $191,016,232 |
| Natural Gas - Distribution – 0.3% | |
| China Resources Gas Group Ltd. | | 15,262,200 | $42,912,075 |
| Natural Gas - Pipeline – 0.3% | |
| APA Group | | 8,646,325 | $50,365,451 |
| Other Banks & Diversified Financials – 4.1% | |
| HDFC Bank Ltd. | | 6,527,346 | $123,902,192 |
| Jio Financial Services Ltd. (a) | | 2,650,037 | 7,474,474 |
| Julius Baer Group Ltd. | | 3,213,063 | 223,552,218 |
| Macquarie Group Ltd. | | 1,152,737 | 132,599,983 |
| Visa, Inc., “A” | | 707,920 | 173,921,786 |
| | | | | $661,450,653 |
| Pharmaceuticals – 9.9% | |
| Bayer AG | | 2,018,345 | $110,611,516 |
| Kyowa Kirin Co. Ltd. | | 7,240,800 | 132,901,862 |
| Merck KGaA | | 997,637 | 179,576,845 |
| Novo Nordisk A.S., “B” | | 2,549,608 | 472,596,149 |
| Roche Holding AG | | 1,595,260 | 470,081,143 |
| Sanofi | | 1,197,575 | 128,093,026 |
| Santen Pharmaceutical Co. Ltd. | | 10,213,900 | 95,087,306 |
| | | | | $1,588,947,847 |
| Printing & Publishing – 0.6% | |
| Wolters Kluwer N.V. | | 774,983 | $93,447,280 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Real Estate – 1.1% | |
| Grand City Properties S.A. (a) | | 1,278,379 | $11,429,309 |
| LEG Immobilien SE (a) | | 2,381,308 | 171,972,697 |
| | | | | $183,402,006 |
| Restaurants – 0.5% | |
| Yum China Holdings, Inc. | | 1,370,584 | $73,586,655 |
| Specialty Chemicals – 7.9% | |
| Akzo Nobel N.V. | | 1,511,344 | $122,977,555 |
| Croda International PLC | | 1,964,496 | 137,421,720 |
| Kansai Paint Co. Ltd. | | 3,459,100 | 56,797,758 |
| Linde PLC | | 1,345,745 | 520,857,145 |
| Nitto Denko Corp. | | 1,951,700 | 133,457,942 |
| Sika AG | | 577,937 | 163,825,692 |
| Symrise AG | | 1,346,208 | 140,370,654 |
| | | | | $1,275,708,466 |
| Specialty Stores – 0.3% | |
| ZOZO, Inc. | | 2,126,100 | $42,516,155 |
| Telecommunications - Wireless – 2.4% | |
| Advanced Info Service Public Co. Ltd. | | 14,980,000 | $92,401,799 |
| Cellnex Telecom S.A. | | 2,557,095 | 97,879,394 |
| KDDI Corp. | | 3,781,500 | 112,409,275 |
| SoftBank Group Corp. | | 1,646,700 | 74,075,752 |
| | | | | $376,766,220 |
| Telephone Services – 0.4% | |
| Hellenic Telecommunications Organization S.A. | | 3,870,249 | $57,914,551 |
| Tobacco – 1.3% | |
| British American Tobacco PLC | | 6,125,503 | $203,500,314 |
| Utilities - Electric Power – 2.1% | |
| CLP Holdings Ltd. | | 9,068,500 | $71,115,514 |
| E.ON SE | | 7,479,852 | 92,300,694 |
| Iberdrola S.A. | | 14,938,857 | 177,540,577 |
| | | | | $340,956,785 |
| Total Common Stocks (Identified Cost, $12,929,930,087) | | $15,911,905,236 |
Portfolio of Investments – continued
| Issuer | Strike
Price | First
Exercise | Shares/Par | Value ($) |
| Rights – 0.0% |
| Computer Software - Systems – 0.0% |
| Constellation Software, Inc. (CAD 100 principal amount of Series 1 Debentures for 3.03 rights, Expiration 10/13/23) (a) (Identified Cost, $46,988) | CAD 133 | 8/31/23 | 105,955 | $58,812 |
| Warrants – 0.0% | | | | |
| Apparel Manufacturers – 0.0% |
| Compagnie Financiere Richemont S.A. (1 share for 2 warrants, Expiration 12/04/23) (a) | CHF 67 | 11/20/23 | 2,052,106 | $1,963,015 |
| Computer Software - Systems – 0.0% |
| Constellation Software, Inc. (CAD 100 principal amount of Series 2 Debentures for 1 warrant, Expiration 3/31/40) (a) | CAD 11.5 | N/A | 105,955 | $0 |
| Total Warrants (Identified Cost, $18,000) | | $1,963,015 |
| | | | | |
| Investment Companies (h) – 0.3% |
| Money Market Funds – 0.3% | |
| MFS Institutional Money Market Portfolio, 5.3% (v) (Identified Cost, $48,404,530) | | | 48,404,534 | $48,409,375 |
|
|
| Other Assets, Less Liabilities – 0.6% | | 91,817,048 |
| Net Assets – 100.0% | $16,054,153,486 |
| (a) | Non-income producing security. | | | |
| (h) | An affiliated issuer, which 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. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $48,409,375 and $15,913,927,063, respectively. | | | |
| (v) | Affiliated issuer 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 |
| Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below: |
| CAD | Canadian Dollar |
| CHF | Swiss Franc |
See Notes to Financial Statements
Financial Statements
Statement of Assets and Liabilities
At 8/31/23
This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.
| Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $12,929,995,075) | $15,913,927,063 |
| Investments in affiliated issuers, at value (identified cost, $48,404,530) | 48,409,375 |
| Receivables for | |
| Investments sold | 8,169,589 |
| Fund shares sold | 4,866,835 |
| Dividends | 108,915,020 |
| Other assets | 9,076 |
| Total assets | $16,084,296,958 |
| Liabilities | |
| Payables for | |
| Investments purchased | $5,292,057 |
| Fund shares reacquired | 13,160,310 |
| Payable to affiliates | |
| Investment adviser | 545,247 |
| Administrative services fee | 3,389 |
| Shareholder servicing costs | 1,067,229 |
| Distribution and service fees | 13,901 |
| Payable for independent Trustees' compensation | 649 |
| Deferred foreign capital gains tax expense payable | 5,170,140 |
| Payable for tax reclaim recovery expense | 3,816,272 |
| Accrued expenses and other liabilities | 1,074,278 |
| Total liabilities | $30,143,472 |
| Net assets | $16,054,153,486 |
| Net assets consist of | |
| Paid-in capital | $13,452,459,294 |
| Total distributable earnings (loss) | 2,601,694,192 |
| Net assets | $16,054,153,486 |
| Shares of beneficial interest outstanding | 742,602,658 |
Statement of Assets and Liabilities – continued
| | Net assets | Shares
outstanding | Net asset value
per share (a) |
| Class A | $694,592,147 | 32,099,243 | $21.64 |
| Class B | 748,032 | 35,753 | 20.92 |
| Class C | 12,732,318 | 628,611 | 20.25 |
| Class I | 1,619,634,859 | 72,032,341 | 22.48 |
| Class R1 | 10,960,926 | 558,067 | 19.64 |
| Class R2 | 77,132,486 | 3,701,631 | 20.84 |
| Class R3 | 68,315,120 | 3,192,676 | 21.40 |
| Class R4 | 74,092,613 | 3,414,402 | 21.70 |
| Class R6 | 13,495,944,985 | 626,939,934 | 21.53 |
| (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 $22.96 [100 / 94.25 x $21.64]. 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 R6. |
See Notes to Financial Statements
Financial Statements
Statement of Operations
Year ended 8/31/23
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 (loss) | |
| Income | |
| Dividends | $426,771,235 |
| Dividends from affiliated issuers | 7,460,169 |
| Interest | 1,141,893 |
| Income on securities loaned | 163,239 |
| Other | 4,560 |
| Foreign taxes withheld (net of tax reclaims recovered of $29,663,236) (See Note 2) | (6,683,982) |
| Total investment income | $428,857,114 |
| Expenses | |
| Management fee | $95,654,046 |
| Distribution and service fees | 2,474,663 |
| Shareholder servicing costs | 2,826,652 |
| Administrative services fee | 630,833 |
| Independent Trustees' compensation | 128,510 |
| Custodian fee | 1,357,848 |
| Shareholder communications | 220,411 |
| Audit and tax fees | 77,116 |
| Legal fees | 81,892 |
| Tax reclaim recovery expense | 5,734,887 |
| Miscellaneous | 538,273 |
| Total expenses | $109,725,131 |
| Reduction of expenses by investment adviser and distributor | (1,946,720) |
| Net expenses | $107,778,411 |
| Net investment income (loss) | $321,078,703 |
Statement of Operations – continued
| Realized and unrealized gain (loss) |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers (net of $95,068 foreign capital gains tax) | $(449,599,391) |
| Affiliated issuers | 32,038 |
| Foreign currency | (2,045,951) |
| Net realized gain (loss) | $(451,613,304) |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers (net of $3,259,379 increase in deferred foreign capital gains tax) | $2,062,049,754 |
| Affiliated issuers | 2,222 |
| Translation of assets and liabilities in foreign currencies | 3,817,441 |
| Net unrealized gain (loss) | $2,065,869,417 |
| Net realized and unrealized gain (loss) | $1,614,256,113 |
| Change in net assets from operations | $1,935,334,816 |
See Notes to Financial Statements
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.
| | Year ended |
| | 8/31/23 | 8/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $321,078,703 | $251,448,594 |
| Net realized gain (loss) | (451,613,304) | (39,205,562) |
| Net unrealized gain (loss) | 2,065,869,417 | (3,962,879,823) |
| Change in net assets from operations | $1,935,334,816 | $(3,750,636,791) |
| Total distributions to shareholders | $(245,003,054) | $(237,804,624) |
| Change in net assets from fund share transactions | $321,410,164 | $784,984,932 |
| Total change in net assets | $2,011,741,926 | $(3,203,456,483) |
| Net assets | | |
| At beginning of period | 14,042,411,560 | 17,245,868,043 |
| At end of period | $16,054,153,486 | $14,042,411,560 |
See Notes to Financial Statements
Financial Statements
Financial Highlights
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that 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.
| Class A | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $19.29 | $24.78 | $20.09 | $17.89 | $19.19 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.37 | $0.28 | $0.21 | $0.19 | $0.32 |
| Net realized and unrealized gain (loss) | 2.25 | (5.52) | 4.64 | 2.33 | (0.77) |
| Total from investment operations | $2.62 | $(5.24) | $4.85 | $2.52 | $(0.45) |
| Less distributions declared to shareholders |
| From net investment income | $(0.27) | $(0.25) | $(0.16) | $(0.32) | $(0.72) |
| From net realized gain | — | — | — | — | (0.13) |
| Total distributions declared to shareholders | $(0.27) | $(0.25) | $(0.16) | $(0.32) | $(0.85) |
| Net asset value, end of period (x) | $21.64 | $19.29 | $24.78 | $20.09 | $17.89 |
| Total return (%) (r)(s)(t)(x) | 13.71 | (21.34) | 24.28 | 14.19 | (1.82) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.05 | 1.02 | 1.02 | 1.07 | 1.10 |
| Expenses after expense reductions | 1.03 | 1.00 | 1.00 | 1.06 | 1.09 |
| Net investment income (loss) | 1.81 | 1.24 | 0.93 | 1.02 | 1.79 |
| Portfolio turnover | 16 | 15 | 19 | 22 | 22 |
| Net assets at end of period (000 omitted) | $694,592 | $651,907 | $963,468 | $772,695 | $622,639 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions and excluding tax reclaim recovery expenses | 1.00 | N/A | N/A | N/A | N/A |
See Notes to Financial Statements
Financial Highlights – continued
| Class B | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $18.60 | $23.88 | $19.36 | $17.23 | $18.48 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.19 | $0.08 | $0.04 | $0.04 | $0.16 |
| Net realized and unrealized gain (loss) | 2.20 | (5.31) | 4.48 | 2.26 | (0.72) |
| Total from investment operations | $2.39 | $(5.23) | $4.52 | $2.30 | $(0.56) |
| Less distributions declared to shareholders |
| From net investment income | $(0.07) | $(0.05) | $— | $(0.17) | $(0.56) |
| From net realized gain | — | — | — | — | (0.13) |
| Total distributions declared to shareholders | $(0.07) | $(0.05) | $— | $(0.17) | $(0.69) |
| Net asset value, end of period (x) | $20.92 | $18.60 | $23.88 | $19.36 | $17.23 |
| Total return (%) (r)(s)(t)(x) | 12.86 | (21.95) | 23.35 | 13.38 | (2.63) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.79 | 1.77 | 1.77 | 1.82 | 1.85 |
| Expenses after expense reductions | 1.78 | 1.75 | 1.76 | 1.81 | 1.84 |
| Net investment income (loss) | 0.98 | 0.39 | 0.17 | 0.21 | 0.97 |
| Portfolio turnover | 16 | 15 | 19 | 22 | 22 |
| Net assets at end of period (000 omitted) | $748 | $1,101 | $2,211 | $2,631 | $3,347 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions and excluding tax reclaim recovery expenses | 1.75 | N/A | N/A | N/A | N/A |
See Notes to Financial Statements
Financial Highlights – continued
| Class C | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $18.08 | $23.25 | $18.85 | $16.79 | $17.99 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.20 | $0.10 | $0.03 | $0.04 | $0.17 |
| Net realized and unrealized gain (loss) | 2.11 | (5.18) | 4.37 | 2.19 | (0.70) |
| Total from investment operations | $2.31 | $(5.08) | $4.40 | $2.23 | $(0.53) |
| Less distributions declared to shareholders |
| From net investment income | $(0.14) | $(0.09) | $— | $(0.17) | $(0.54) |
| From net realized gain | — | — | — | — | (0.13) |
| Total distributions declared to shareholders | $(0.14) | $(0.09) | $— | $(0.17) | $(0.67) |
| Net asset value, end of period (x) | $20.25 | $18.08 | $23.25 | $18.85 | $16.79 |
| Total return (%) (r)(s)(t)(x) | 12.84 | (21.95) | 23.34 | 13.36 | (2.56) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.80 | 1.77 | 1.77 | 1.82 | 1.85 |
| Expenses after expense reductions | 1.78 | 1.75 | 1.75 | 1.81 | 1.84 |
| Net investment income (loss) | 1.05 | 0.46 | 0.16 | 0.23 | 1.05 |
| Portfolio turnover | 16 | 15 | 19 | 22 | 22 |
| Net assets at end of period (000 omitted) | $12,732 | $11,050 | $15,664 | $17,620 | $22,825 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions and excluding tax reclaim recovery expenses | 1.75 | N/A | N/A | N/A | N/A |
See Notes to Financial Statements
Financial Highlights – continued
| Class I | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $20.03 | $25.74 | $20.85 | $18.55 | $19.87 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.44 | $0.35 | $0.28 | $0.24 | $0.37 |
| Net realized and unrealized gain (loss) | 2.33 | (5.73) | 4.82 | 2.43 | (0.80) |
| Total from investment operations | $2.77 | $(5.38) | $5.10 | $2.67 | $(0.43) |
| Less distributions declared to shareholders |
| From net investment income | $(0.32) | $(0.33) | $(0.21) | $(0.37) | $(0.76) |
| From net realized gain | — | — | — | — | (0.13) |
| Total distributions declared to shareholders | $(0.32) | $(0.33) | $(0.21) | $(0.37) | $(0.89) |
| Net asset value, end of period (x) | $22.48 | $20.03 | $25.74 | $20.85 | $18.55 |
| Total return (%) (r)(s)(t)(x) | 13.98 | (21.18) | 24.62 | 14.48 | (1.61) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.80 | 0.77 | 0.76 | 0.82 | 0.85 |
| Expenses after expense reductions | 0.78 | 0.75 | 0.75 | 0.81 | 0.84 |
| Net investment income (loss) | 2.07 | 1.52 | 1.21 | 1.25 | 2.03 |
| Portfolio turnover | 16 | 15 | 19 | 22 | 22 |
| Net assets at end of period (000 omitted) | $1,619,635 | $1,533,541 | $1,530,130 | $898,821 | $593,064 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions and excluding tax reclaim recovery expenses | 0.75 | N/A | N/A | N/A | N/A |
See Notes to Financial Statements
Financial Highlights – continued
| Class R1 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $17.65 | $22.75 | $18.45 | $16.46 | $17.72 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.22 | $0.14 | $0.05 | $0.03 | $0.15 |
| Net realized and unrealized gain (loss) | 2.03 | (5.12) | 4.26 | 2.17 | (0.69) |
| Total from investment operations | $2.25 | $(4.98) | $4.31 | $2.20 | $(0.54) |
| Less distributions declared to shareholders |
| From net investment income | $(0.26) | $(0.12) | $(0.01) | $(0.21) | $(0.59) |
| From net realized gain | — | — | — | — | (0.13) |
| Total distributions declared to shareholders | $(0.26) | $(0.12) | $(0.01) | $(0.21) | $(0.72) |
| Net asset value, end of period (x) | $19.64 | $17.65 | $22.75 | $18.45 | $16.46 |
| Total return (%) (r)(s)(t)(x) | 12.88 | (21.99) | 23.39 | 13.40 | (2.62) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.80 | 1.77 | 1.76 | 1.82 | 1.85 |
| Expenses after expense reductions | 1.79 | 1.76 | 1.75 | 1.81 | 1.84 |
| Net investment income (loss) | 1.17 | 0.71 | 0.24 | 0.19 | 0.95 |
| Portfolio turnover | 16 | 15 | 19 | 22 | 22 |
| Net assets at end of period (000 omitted) | $10,961 | $3,600 | $3,042 | $1,628 | $1,751 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions and excluding tax reclaim recovery expenses | 1.74 | N/A | N/A | N/A | N/A |
See Notes to Financial Statements
Financial Highlights – continued
| Class R2 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $18.58 | $23.90 | $19.37 | $17.25 | $18.53 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.31 | $0.21 | $0.15 | $0.13 | $0.26 |
| Net realized and unrealized gain (loss) | 2.17 | (5.33) | 4.49 | 2.26 | (0.75) |
| Total from investment operations | $2.48 | $(5.12) | $4.64 | $2.39 | $(0.49) |
| Less distributions declared to shareholders |
| From net investment income | $(0.22) | $(0.20) | $(0.11) | $(0.27) | $(0.66) |
| From net realized gain | — | — | — | — | (0.13) |
| Total distributions declared to shareholders | $(0.22) | $(0.20) | $(0.11) | $(0.27) | $(0.79) |
| Net asset value, end of period (x) | $20.84 | $18.58 | $23.90 | $19.37 | $17.25 |
| Total return (%) (r)(s)(t)(x) | 13.46 | (21.58) | 24.02 | 13.95 | (2.14) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.30 | 1.27 | 1.27 | 1.32 | 1.35 |
| Expenses after expense reductions | 1.28 | 1.25 | 1.25 | 1.31 | 1.34 |
| Net investment income (loss) | 1.54 | 0.97 | 0.70 | 0.73 | 1.51 |
| Portfolio turnover | 16 | 15 | 19 | 22 | 22 |
| Net assets at end of period (000 omitted) | $77,132 | $75,398 | $104,975 | $89,943 | $98,935 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions and excluding tax reclaim recovery expenses | 1.25 | N/A | N/A | N/A | N/A |
See Notes to Financial Statements
Financial Highlights – continued
| Class R3 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $19.08 | $24.53 | $19.88 | $17.70 | $18.99 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.37 | $0.27 | $0.21 | $0.18 | $0.30 |
| Net realized and unrealized gain (loss) | 2.22 | (5.46) | 4.60 | 2.32 | (0.75) |
| Total from investment operations | $2.59 | $(5.19) | $4.81 | $2.50 | $(0.45) |
| Less distributions declared to shareholders |
| From net investment income | $(0.27) | $(0.26) | $(0.16) | $(0.32) | $(0.71) |
| From net realized gain | — | — | — | — | (0.13) |
| Total distributions declared to shareholders | $(0.27) | $(0.26) | $(0.16) | $(0.32) | $(0.84) |
| Net asset value, end of period (x) | $21.40 | $19.08 | $24.53 | $19.88 | $17.70 |
| Total return (%) (r)(s)(t)(x) | 13.72 | (21.37) | 24.30 | 14.21 | (1.83) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.05 | 1.02 | 1.02 | 1.07 | 1.10 |
| Expenses after expense reductions | 1.03 | 1.00 | 1.00 | 1.06 | 1.09 |
| Net investment income (loss) | 1.83 | 1.22 | 0.96 | 0.99 | 1.73 |
| Portfolio turnover | 16 | 15 | 19 | 22 | 22 |
| Net assets at end of period (000 omitted) | $68,315 | $58,785 | $76,512 | $63,920 | $61,214 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions and excluding tax reclaim recovery expenses | 1.00 | N/A | N/A | N/A | N/A |
See Notes to Financial Statements
Financial Highlights – continued
| Class R4 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $19.34 | $24.86 | $20.15 | $17.93 | $19.25 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.42 | $0.33 | $0.29 | $0.23 | $0.36 |
| Net realized and unrealized gain (loss) | 2.26 | (5.53) | 4.63 | 2.35 | (0.78) |
| Total from investment operations | $2.68 | $(5.20) | $4.92 | $2.58 | $(0.42) |
| Less distributions declared to shareholders |
| From net investment income | $(0.32) | $(0.32) | $(0.21) | $(0.36) | $(0.77) |
| From net realized gain | — | — | — | — | (0.13) |
| Total distributions declared to shareholders | $(0.32) | $(0.32) | $(0.21) | $(0.36) | $(0.90) |
| Net asset value, end of period (x) | $21.70 | $19.34 | $24.86 | $20.15 | $17.93 |
| Total return (%) (r)(s)(t)(x) | 14.02 | (21.17) | 24.58 | 14.49 | (1.65) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.80 | 0.77 | 0.76 | 0.82 | 0.85 |
| Expenses after expense reductions | 0.78 | 0.75 | 0.75 | 0.81 | 0.84 |
| Net investment income (loss) | 2.05 | 1.45 | 1.26 | 1.24 | 2.04 |
| Portfolio turnover | 16 | 15 | 19 | 22 | 22 |
| Net assets at end of period (000 omitted) | $74,093 | $68,971 | $96,499 | $41,619 | $54,352 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions and excluding tax reclaim recovery expenses | 0.75 | N/A | N/A | N/A | N/A |
See Notes to Financial Statements
Financial Highlights – continued
| Class R6 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $19.19 | $24.67 | $19.99 | $17.80 | $19.11 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.44 | $0.36 | $0.29 | $0.25 | $0.38 |
| Net realized and unrealized gain (loss) | 2.25 | (5.49) | 4.62 | 2.33 | (0.77) |
| Total from investment operations | $2.69 | $(5.13) | $4.91 | $2.58 | $(0.39) |
| Less distributions declared to shareholders |
| From net investment income | $(0.35) | $(0.35) | $(0.23) | $(0.39) | $(0.79) |
| From net realized gain | — | — | — | — | (0.13) |
| Total distributions declared to shareholders | $(0.35) | $(0.35) | $(0.23) | $(0.39) | $(0.92) |
| Net asset value, end of period (x) | $21.53 | $19.19 | $24.67 | $19.99 | $17.80 |
| Total return (%) (r)(s)(t)(x) | 14.16 | (21.09) | 24.74 | 14.61 | (1.48) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.70 | 0.65 | 0.67 | 0.71 | 0.74 |
| Expenses after expense reductions | 0.68 | 0.64 | 0.65 | 0.70 | 0.73 |
| Net investment income (loss) | 2.17 | 1.60 | 1.30 | 1.37 | 2.18 |
| Portfolio turnover | 16 | 15 | 19 | 22 | 22 |
| Net assets at end of period (000 omitted) | $13,495,945 | $11,638,059 | $14,433,482 | $9,787,763 | $7,350,641 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions and excluding tax reclaim recovery expenses | 0.65 | N/A | N/A | N/A | N/A |
| (d) | Per share data is based on average shares outstanding. |
| (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 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
Notes to Financial Statements
(1) Business and Organization
MFS Research International Fund (the fund) is a diversified series of MFS Series Trust I (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 Standards 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. 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 market, economic, industrial, political, regulatory, geopolitical, environmental, public health, and other conditions.
Balance Sheet Offsetting — 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 International Swaps and Derivatives Association (ISDA) Master Agreement, or similar 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. 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 master netting agreement counterparty is subject. Balance sheet offsetting disclosures, 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 — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Notes to Financial Statements - continued
Under the fund's valuation policy and procedures, equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value.
Open-end investment companies are generally valued at net asset value per share. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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. In determining values, third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the 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 halt 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 after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's assets or liabilities. These inputs are categorized into three broad levels. In certain cases, 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
Notes to Financial Statements - continued
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 significant 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 August 31, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | | | | |
| Japan | $3,148,513,728 | $— | $— | $3,148,513,728 |
| France | 2,260,458,040 | — | — | 2,260,458,040 |
| Switzerland | 1,877,091,346 | — | — | 1,877,091,346 |
| United Kingdom | 1,778,375,944 | — | — | 1,778,375,944 |
| United States | 1,327,410,126 | — | — | 1,327,410,126 |
| Germany | 1,155,032,353 | — | — | 1,155,032,353 |
| Australia | 678,025,323 | — | — | 678,025,323 |
| Hong Kong | 597,740,060 | — | — | 597,740,060 |
| Denmark | 509,512,332 | — | — | 509,512,332 |
| Other Countries | 2,489,366,012 | 92,401,799 | — | 2,581,767,811 |
| Mutual Funds | 48,409,375 | — | — | 48,409,375 |
| Total | $15,869,934,639 | $92,401,799 | $— | $15,962,336,438 |
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.
Security Loans — Under its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. 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. On loans collateralized by cash, the cash collateral is invested in a money market fund. 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. The lending agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent will, for the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the
Notes to Financial Statements - continued
fund the market value of the loaned securities. In return, the lending agent assumes the fund's rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent 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. A portion of the income generated upon investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund and the lending agent. Income from securities lending is separately reported 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. At August 31, 2023, there were no securities on loan or collateral outstanding.
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 — 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.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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.
Notes to Financial Statements - continued
The fund has filed tax reclaims for previously withheld taxes on dividends earned in certain European Union (EU) countries. These additional filings are subject to various administrative proceedings by the local jurisdictions' tax authorities within the EU, as well as a number of related judicial proceedings. These reclaims are recorded only when certainty exists as to the likelihood of receipt and the potential timing of payment. For the year ended August 31, 2023, the fund recorded reclaims for previously withheld foreign taxes from France and Sweden of $29,663,236 and related interest of $1,074,666, which are reflected as a reduction of Foreign taxes withheld and Interest income, respectively, in the Statement of Operations. Professional fees associated with recovering these foreign taxes amounted to $5,734,887 and are reflected as Tax reclaim recovery expense in the Statement of Operations.
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.
Book/tax differences primarily relate to passive foreign investment companies and wash sale loss deferrals.
The tax character of distributions declared to shareholders for the last two fiscal years is as follows:
| | Year ended
8/31/23 | Year ended
8/31/22 |
| Ordinary income (including any short-term capital gains) | $245,003,054 | $237,804,624 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 8/31/23 | |
| Cost of investments | $13,061,452,365 |
| Gross appreciation | 3,795,911,951 |
| Gross depreciation | (895,027,878) |
| Net unrealized appreciation (depreciation) | $2,900,884,073 |
| Undistributed ordinary income | 248,921,512 |
| Capital loss carryforwards | (543,188,953) |
| Other temporary differences | (4,922,440) |
| Total distributable earnings (loss) | $2,601,694,192 |
Notes to Financial Statements - continued
As of August 31, 2023, the fund had capital loss carryforwards available to offset future realized gains. These net capital losses may be carried forward indefinitely and their character is retained as short-term and/or long-term losses. Such losses are characterized as follows:
| Short-Term | $(173,110,668) |
| Long-Term | (370,078,285) |
| Total | $(543,188,953) |
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 and Class C shares will convert to Class A shares approximately eight years after purchase. Effective March 21, 2022, all Class 529B and Class 529C shares were converted into Class 529A shares. Effective May 20, 2022, all Class 529A shares were redeemed. The fund’s distributions declared to shareholders as reported in the Statements of Changes in Net Assets are presented by class as follows:
| | Year
ended
8/31/23 | | Year
ended
8/31/22 |
| Class A | $8,922,184 | | $8,307,737 |
| Class B | 3,328 | | 4,207 |
| Class C | 90,661 | | 55,254 |
| Class I | 23,723,332 | | 22,580,996 |
| Class R1 | 150,058 | | 15,980 |
| Class R2 | 899,295 | | 851,018 |
| Class R3 | 858,081 | | 809,844 |
| Class R4 | 1,154,502 | | 1,243,811 |
| Class R6 | 209,201,613 | | 203,740,590 |
| Class 529A | — | | 186,947 |
| Class 529B | — | | 376 |
| Class 529C | — | | 7,864 |
| Total | $245,003,054 | | $237,804,624 |
(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 based on the fund's average daily net assets:
| Up to $1 billion | 0.90% |
| In excess of $1 billion and up to $2 billion | 0.80% |
| In excess of $2 billion and up to $5 billion | 0.70% |
| In excess of $5 billion and up to $10 billion | 0.60% |
| In excess of $10 billion and up to $20 billion | 0.55% |
| In excess of $20 billion | 0.50% |
Notes to Financial Statements - continued
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until December 31, 2023. For the year ended August 31, 2023, this management fee reduction amounted to $1,946,699, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.62% of the fund's average daily net assets.
Distributor — MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $52,068 for the year ended August 31, 2023, 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. The distribution and service fees are computed daily and paid monthly.
Distribution Plan Fee Table:
| | Distribution
Fee Rate (d) | Service
Fee Rate (d) | Total
Distribution
Plan (d) | Annual
Effective
Rate (e) | Distribution
and Service
Fee |
| Class A | — | 0.25% | 0.25% | 0.25% | $ 1,697,702 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 9,271 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 126,245 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 91,439 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 387,946 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 162,060 |
| Total Distribution and Service Fees | | | | | $2,474,663 |
| (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 year ended August 31, 2023 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 there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates' seed money. For the year ended August 31, 2023, this rebate amounted to $20 and $1 for Class A and Class B shares, 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. Class B shares are subject to a CDSC in the event of a shareholder redemption within six years of
Notes to Financial Statements - continued
purchase. Class C shares are subject to a CDSC in the event of a shareholder redemption within 12 months of purchase. All contingent deferred sales charges are paid to MFD and during the year ended August 31, 2023, were as follows:
| | Amount |
| Class A | $9,748 |
| Class B | 216 |
| Class C | 295 |
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 year ended August 31, 2023, the fee was $143,674, which equated to 0.0010% annually of the fund's average daily net assets. MFSC also receives reimbursement 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 R6 shares do not incur sub-accounting fees. For the year ended August 31, 2023, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $2,682,978.
Administrator — MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund 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 is computed daily and paid monthly. The administrative services fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.0042% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. 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 from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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. This money market fund does not pay a management fee to MFS but does incur investment and operating costs.
During the year ended August 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $11,435,433. The sales transactions resulted in net realized gains (losses) of $(1,485,654).
Notes to Financial Statements - continued
(4) Portfolio Securities
For the year ended August 31, 2023, purchases and sales of investments, other than short-term obligations, aggregated $2,836,679,306 and $2,350,291,454, 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:
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Class A | 6,396,801 | $124,478,448 | | 10,553,698 | $225,924,005 |
| Class B | 3 | 76 | | 1,119 | 24,376 |
| Class C | 183,267 | 3,338,382 | | 120,033 | 2,440,571 |
| Class I | 25,573,130 | 541,158,028 | | 41,161,498 | 966,958,198 |
| Class R1 | 479,069 | 8,839,234 | | 119,482 | 2,420,401 |
| Class R2 | 647,573 | 12,884,738 | | 835,415 | 18,078,755 |
| Class R3 | 892,196 | 18,213,518 | | 866,170 | 19,276,792 |
| Class R4 | 675,065 | 13,929,872 | | 616,499 | 13,541,480 |
| Class R6 | 56,730,878 | 1,172,648,568 | | 46,195,626 | 1,036,050,594 |
| Class 529A | — | — | | 135,894 | 3,000,678 |
| Class 529B | — | — | | 741 | 16,396 |
| Class 529C | — | — | | 9,562 | 207,671 |
| | 91,577,982 | $1,895,490,864 | | 100,615,737 | $2,287,939,917 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Class A | 410,746 | $8,223,125 | | 313,946 | $7,619,463 |
| Class B | 162 | 3,155 | | 143 | 3,364 |
| Class C | 4,338 | 81,769 | | 2,268 | 51,886 |
| Class I | 1,056,819 | 21,950,138 | | 795,596 | 20,017,192 |
| Class R1 | 8,209 | 150,058 | | 715 | 15,980 |
| Class R2 | 46,525 | 898,869 | | 36,242 | 849,152 |
| Class R3 | 43,330 | 857,936 | | 33,729 | 809,844 |
| Class R4 | 56,594 | 1,134,152 | | 49,603 | 1,205,350 |
| Class R6 | 9,869,794 | 196,112,812 | | 7,918,001 | 190,744,636 |
| Class 529A | — | — | | 7,774 | 184,710 |
| Class 529B | — | — | | 17 | 376 |
| Class 529C | — | — | | 356 | 7,817 |
| | 11,496,517 | $229,412,014 | | 9,158,390 | $221,509,770 |
Notes to Financial Statements - continued
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares reacquired | | | | | |
| Class A | (8,511,065) | $(166,951,527) | | (15,939,834) | $(364,600,013) |
| Class B | (23,605) | (459,289) | | (34,664) | (754,476) |
| Class C | (170,249) | (3,241,266) | | (184,714) | (3,842,213) |
| Class I | (31,164,073) | (655,756,261) | | (24,842,490) | (557,285,533) |
| Class R1 | (133,125) | (2,544,322) | | (50,005) | (988,953) |
| Class R2 | (1,050,213) | (21,017,261) | | (1,206,840) | (26,339,521) |
| Class R3 | (824,446) | (16,935,591) | | (938,020) | (20,911,186) |
| Class R4 | (883,191) | (18,191,865) | | (981,315) | (22,668,338) |
| Class R6 | (46,034,729) | (918,395,332) | | (32,800,974) | (707,295,374) |
| Class 529A | — | — | | (870,095) | (17,524,590) |
| Class 529B | — | — | | (8,857) | (184,299) |
| Class 529C | — | — | | (102,803) | (2,070,259) |
| | (88,794,696) | $(1,803,492,714) | | (77,960,611) | $(1,724,464,755) |
| Net change | | | | | |
| Class A | (1,703,518) | $(34,249,954) | | (5,072,190) | $(131,056,545) |
| Class B | (23,440) | (456,058) | | (33,402) | (726,736) |
| Class C | 17,356 | 178,885 | | (62,413) | (1,349,756) |
| Class I | (4,534,124) | (92,648,095) | | 17,114,604 | 429,689,857 |
| Class R1 | 354,153 | 6,444,970 | | 70,192 | 1,447,428 |
| Class R2 | (356,115) | (7,233,654) | | (335,183) | (7,411,614) |
| Class R3 | 111,080 | 2,135,863 | | (38,121) | (824,550) |
| Class R4 | (151,532) | (3,127,841) | | (315,213) | (7,921,508) |
| Class R6 | 20,565,943 | 450,366,048 | | 21,312,653 | 519,499,856 |
| Class 529A | — | — | | (726,427) | (14,339,202) |
| Class 529B | — | — | | (8,099) | (167,527) |
| Class 529C | — | — | | (92,885) | (1,854,771) |
| | 14,279,803 | $321,410,164 | | 31,813,516 | $784,984,932 |
The fund is one of several mutual funds in which certain MFS funds may invest. The MFS 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 Moderate Allocation Fund, and the MFS Aggressive Growth Allocation Fund were the owners of record of approximately 64%, 3%, 2%, and 1%, respectively, of the value of outstanding voting shares of the fund. In addition, the MFS Conservative Allocation 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, the MFS Lifetime 2055 Fund, the MFS Lifetime 2060 Fund, the MFS Lifetime 2065 Fund, and the MFS Lifetime Income Fund were each the owners of record of less than 1% of the value of outstanding voting shares of the fund.
Notes to Financial Statements - continued
Effective June 1, 2019, purchases of the fund’s Class B and Class 529B shares were closed to new and existing investors subject to certain exceptions. Effective after the close of business on March 18, 2022, all sales of Class 529B and Class 529C shares were suspended, and Class 529B and Class 529C shares were converted into Class 529A shares of the fund effective March 21, 2022. Effective after the close of business on May 13, 2022, all sales and redemptions of Class 529A shares were suspended, and all Class 529A shares were redeemed on May 20, 2022. On March 30, 2023, the fund announced that effective after the close of business on September 29, 2023, purchases of Class R1 and Class R2 shares will be closed to new eligible investors.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate 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 highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. 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 rates equal to customary reference rates plus an agreed upon spread. For the year ended August 31, 2023, the fund’s commitment fee and interest expense were $76,310 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in 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 following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $151,622,392 | $1,516,327,353 | $1,619,574,630 | $32,038 | $2,222 | $48,409,375 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $7,460,169 | $— |
Report of Independent Registered Public Accounting Firm
To the Shareholders of MFS Research International Fund and the Board of Trustees of MFS Series Trust I
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of MFS Research International Fund (the “Fund”) (one of the funds constituting MFS Series Trust I (the “Trust”)), including the portfolio of investments, as of August 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting MFS Series Trust I) at August 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Report of Independent Registered Public Accounting Firm – continued
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more MFS investment companies since 1993.
Boston, Massachusetts
October 16, 2023
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of October 1, 2023, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and Officer is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
| INTERESTED TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022); President (until December 2018); Chief Investment Officer (until December 2018) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 68) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
| OFFICERS | | | | | | | | |
Christopher R. Bohane (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022); Natixis Investment Managers (investment management), Funds Chief Compliance Officer, Deputy General Counsel & Senior Vice President (until 2018) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 52) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 52) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 48) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
| (h) | Date first appointed to serve as Trustee/Officer of an MFS Fund. Each Trustee has served continuously since appointment unless indicated otherwise. From January 2012 through December 2016, Messrs. DiLorenzo and Yost served as Treasurer and Deputy Treasurer of the Funds, respectively. |
| (j) | Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”). |
| (k) | “Interested person” of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of a position with MFS. The address of MFS is 111 Huntington Avenue, Boston, Massachusetts 02199-7618. |
Trustees and Officers - continued
Each Trustee (other than Messrs. Jones, Kilman and Roberge) has been elected by shareholders and each Trustee and Officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. The Trust does not hold annual meetings for the purpose of electing Trustees, and Trustees are not elected for fixed terms. Under the terms of the Board's retirement policy, an Independent Trustee shall retire at the end of the calendar year in which he or she reaches the earlier of 75 years of age or 15 years of service on the Board (or, in the case of any Independent Trustee who joined the Board prior to 2015, 20 years of service on the Board).
Messrs. Buller, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.
Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
Camille Humphries Lee
Nicholas Paul | |
Board Review of Investment Advisory Agreement
MFS Research International Fund
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-interested (“independent”) Trustees, voting separately, annually approve the continuation of the Fund’s investment advisory agreement with MFS. The Trustees consider matters bearing on the Fund and its advisory arrangements at their meetings throughout the year, including a review of performance data at each regular meeting. In addition, the independent Trustees met several times over the course of three months beginning in May and ending in July, 2023 (“contract review meetings”) for the specific purpose of considering whether to approve the continuation of the investment advisory agreement for the Fund and the other investment companies that the Board oversees (the “MFS Funds”). The independent Trustees were assisted in their evaluation of the Fund’s investment advisory agreement by independent legal counsel, from whom they received separate legal advice and with whom they met separately from MFS during various contract review meetings. The independent Trustees were also assisted in this process by an independent consultant who was retained by and reported to the independent Trustees.
In connection with their deliberations regarding the continuation of the investment advisory agreement, the Trustees, including the independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. The investment advisory agreement for the Fund was considered separately, although the Trustees also took into account the common interests of all MFS Funds in their review. As described below, the Trustees considered the nature, quality, and extent of the various investment advisory, administrative, and shareholder services performed by MFS under the existing investment advisory agreement and other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance of the Fund for various time periods ended December 31, 2022 and the investment performance of a group of funds with substantially similar investment classifications/objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s advisory fees and other expenses and the advisory fees and other expenses of comparable funds identified by Broadridge as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (iii) information provided by MFS on the advisory fees of portfolios of other clients of MFS, including institutional separate accounts and other clients, (iv) information as to whether and to what extent applicable expense waivers, reimbursements or fee “breakpoints” are observed for the Fund, (v) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (vi) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vii) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (viii) information regarding the overall organization of MFS, including information about
Board Review of Investment Advisory Agreement - continued
MFS’ senior management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.
The Trustees’ conclusion as to the continuation of the investment advisory agreement was based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors. It is also important to recognize that the fee arrangements for the Fund and other MFS Funds are the result of years of review and discussion between the independent Trustees and MFS, that certain aspects of such arrangements may receive greater scrutiny in some years than in others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements during the course of the year and in prior years.
Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Class I shares in comparison to the performance of funds in its Broadridge performance universe over the five-year period ended December 31, 2022, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Class I shares was in the 1st quintile relative to the other funds in the universe for this five-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Class I shares was in the 4th quintile for the one-year period and the 2nd quintile for the three-year period ended December 31, 2022 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account information provided by MFS in connection with the contract review meetings, as well as during investment review meetings conducted with portfolio management personnel during the course of the year regarding the Fund’s performance. After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that they were satisfied with MFS’ responses and efforts relating to investment performance.
In assessing the reasonableness of the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s Class I shares as a percentage of average daily net assets and the advisory fee and total expense ratios of the Broadridge expense group based on information provided by Broadridge. The Trustees considered that, according to the data provided by Broadridge (which takes into account any fee reductions or expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate and total expense ratio were each approximately at the Broadridge expense group median.
Board Review of Investment Advisory Agreement - continued
The Trustees also considered the advisory fees charged by MFS to any institutional separate accounts advised by MFS (“separate accounts”) and unaffiliated investment companies for which MFS serves as subadviser (“subadvised funds”) that have comparable investment strategies to the Fund, if any. In comparing these fees, the Trustees considered information provided by MFS as to the generally broader scope of services provided by MFS to the Fund, as well as the more extensive regulatory burdens imposed on MFS in managing the Fund, in comparison to separate accounts and subadvised funds. The Trustees also considered the higher demands placed on MFS’ investment personnel and trading infrastructure as a result of the daily cash in-flows and out-flows of the Fund in comparison to separate accounts.
The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is subject to contractual breakpoints that reduce the Fund’s advisory fee rate on average daily net assets over $1 billion, $2 billion, $5 billion, $10 billion, and $20 billion. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the breakpoints and the group fee waiver were sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.
The Trustees also considered information prepared by MFS relating to MFS’ costs and profits with respect to the Fund, the MFS Funds considered as a group, and other investment companies and accounts advised by MFS, as well as MFS’ methodologies used to determine and allocate its costs to the MFS Funds, the Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that the advisory fees charged to the Fund represent reasonable compensation in light of the services being provided by MFS to the Fund.
In addition, the Trustees considered MFS’ resources and related efforts to continue to retain, attract and motivate capable personnel to serve the Fund. The Trustees also considered current and developing conditions in the financial services industry, including the presence of large and well-capitalized companies which are spending, and appear to be prepared to continue to spend, substantial sums to engage personnel and to provide services to competing investment companies. In this regard, the Trustees also considered the financial resources of MFS and its ultimate parent, Sun Life Financial Inc. The Trustees also considered the advantages and possible disadvantages to the Fund of having an adviser that also serves other investment companies as well as other accounts.
The Trustees also considered the nature, quality, cost, and extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund Distributors, Inc., an affiliate of MFS. The
Board Review of Investment Advisory Agreement - continued
Trustees also considered the nature, extent and quality of certain other services MFS performs or arranges for on the Fund’s behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’ interaction with third-party service providers, principally custodians and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-called “fall-out benefits” to MFS such as reputational value derived from serving as investment manager to the MFS Funds. The Trustees also considered that MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses a Fund, if applicable, for the costs of external research acquired through the use of the Fund’s portfolio brokerage commissions.
Based on their evaluation of factors that they deemed to be material, including those factors described above, the Board of Trustees, including the independent Trustees, concluded that the Fund’s investment advisory agreement with MFS should be continued for an additional one-year period, commencing August 1, 2023.
Statement Regarding Liquidity Risk Management Program
The fund has adopted and implemented a liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The fund’s Board of Trustees (the “Board”) has designated MFS as the administrator of the Program. The Program is reasonably designed to assess and manage the liquidity risk of the fund. Liquidity risk is the risk that the fund could not meet requests to redeem shares issued by the fund without significant dilution of remaining investors' interests.
MFS provided a written report to the Board for consideration at its March 2023 meeting that addressed the operation of the Program and provided an assessment of the adequacy and effectiveness of the Program during the period from January 1, 2022 to December 31, 2022 (the “Covered Period”). The report concluded that during the Covered Period the Program had operated effectively in all material respects and had adequately and effectively been implemented to assess and manage the fund’s liquidity risk. MFS also reported that there were no liquidity events that impacted the fund or its ability to timely meet redemptions without dilution to existing shareholders during the Covered Period.
There can be no assurance that the Program will achieve its objectives in the future. Further information on liquidity risk, and other principal risks to which an investment in the fund may be subject, can be found in the prospectus.
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 mfs.com/proxyvoting, 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 by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
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 at https://www.mfs.com/announcements or at mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.
Under the Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.
Federal Tax Information (unaudited)
The fund will notify shareholders of amounts for use in preparing 2023 income tax forms in January 2024. The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund designates the maximum amount allowable as qualified dividend income eligible to be taxed at the same rate as long-term capital gain.
Income derived from foreign sources was $424,305,568. The fund intends to pass through foreign tax credits of $11,693,540 for the fiscal year.
| FACTS | WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION? |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: |
| • Social Security number and account balances |
| • Account transactions and transaction history |
| • Checking account information and wire transfer instructions |
| When you are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| Who we are |
| Who is providing this notice? | MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., and MFS Heritage Trust Company. |
| What we do |
How does MFS
protect my personal
information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you. |
How does MFS
collect my personal
information? | We collect your personal information, for example, when you |
| • open an account or provide account information |
| • direct us to buy securities or direct us to sell your securities |
| • make a wire transfer |
| We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
| Why can't I limit all sharing? | Federal law gives you the right to limit only |
| • sharing for affiliates' everyday business purposes – information about your creditworthiness |
| • affiliates from using your information to market to you |
| • sharing for nonaffiliates to market to you |
| State laws and individual companies may give you additional rights to limit sharing. |
| Definitions |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice. |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share with nonaffiliates so they can market to you. |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. |
| • MFS doesn't jointly market. |
| Other important information |
| If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. |
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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 219341
Kansas City, MO 64121-9341
OVERNIGHT MAIL
MFS Service Center, Inc.
Suite 219341
430 W 7th Street
Kansas City, MO 64105-1407
Annual Report
August 31, 2023
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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 • MAY LOSE VALUE • NO BANK GUARANTEE
Portfolio structure
Top ten holdings
| Microsoft Corp. | 12.2% |
| NVIDIA Corp. | 10.7% |
| Alphabet, Inc., “A” | 10.0% |
| Meta Platforms, Inc., “A” | 5.7% |
| Broadcom, Inc. | 4.3% |
| ServiceNow, Inc. | 3.4% |
| Accenture PLC, “A” | 3.0% |
| Salesforce, Inc. | 2.9% |
| Intuit, Inc. | 2.6% |
| Oracle Corp. | 2.3% |
Top five industries
| Computer Software | 29.3% |
| Electronics | 21.2% |
| Internet | 18.0% |
| Computer Software - Systems | 11.6% |
| Business Services | 8.3% |
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions and may be negative.
Percentages are based on net assets as of August 31, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended August 31, 2023, Class A shares of the MFS Technology Fund (fund) provided a total return of 23.49%, at net asset value. This compares with a return of 15.94% for the fund’s benchmark, the Standard & Poor’s 500 Stock Index and a return of 30.62% for the fund’s other benchmark, the Standard & Poor's North American Technology Sector Index.
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Those shifts exposed an asset-liability mismatch that forced the closure of several institutions by regulators. Given the importance of small and mid-sized lenders to the provision of credit in the US, concerns were raised in the aftermath of the crisis that credit availability could become constrained, leading to slower economic growth, although those effects have been limited thus far. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as focus turned to the country’s highly-indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks remained focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates.
Against an environment of relatively tight labor markets, tighter global financial conditions and volatile materials prices, investor anxiety appeared to have increased over the potential that corporate profit margins may be past peak for this cycle. That said, signs that supply chains have generally normalized, coupled with low levels of unemployment across developed markets and hopes that inflation levels have peaked, were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the Standard & Poor's North American Technology Sector Index, the fund’s overweight position and, to a lesser extent, stock selection in the business services industry weakened performance. Within this industry, the fund’s holdings of technology services provider Endava(b)(h), and its overweight positions in electronic
Management Review - continued
payment services company Global Payments(h), global banking and payments technology provider Fidelity National Information Services(h) and global technology consultant Thoughtworks Holding(h), detracted from relative returns.
The fund’s underweight position in the electronics industry also hindered relative performance. Here, an underweight position in computer graphics processor maker NVIDIA, and the timing of the fund’s ownership in shares of broadband communications and networking services company Broadcom, detracted from relative returns. The stock price of NVIDIA advanced as the company reported better-than-expected revenue results during the period, driven by strong performance in both its gaming and data center segments. In addition, demand for the company's GPU chips that power Artificial Intelligence technology accelerated as many technology platforms rushed to build out their capabilities, sending the stock price higher.
Elsewhere, an underweight position in social networking service provider Meta Platforms, and the timing of the fund’s ownership in shares of enterprise software products maker Oracle and integrated software solutions provider Black Knight(h), dampened relative results. The stock price of Meta Platforms increased as the company reported better-than-expected earnings for the period, driven by solid revenue results and strong user engagement across its applications.
The fund’s cash and/or cash equivalents position during the period was another detractor from relative performance. Under normal market conditions, the fund strives to be fully invested and generally holds cash to buy new holdings and to provide liquidity. In a period when equity markets rose, as measured by the fund’s benchmark, holding cash detracted from performance versus the benchmark, which has no cash position.
Contributors to Performance
Stock selection and, to a lesser extent, an underweight position in the computer systems industry benefited relative returns, led by the fund’s underweight position in computer and personal electronics maker Apple(h) and not holding shares of weak-performing software engineering solutions and technology services provider EPAM Systems.
Stock selection in the consumer services industry also contributed to relative results, driven by the fund’s holdings of online travel company Booking Holdings(b). The stock price of Booking Holdings appreciated as the company reported continued demand for travel sales and gained market share in hotel room bookings through its payment platform.
The fund’s avoidance of the network & telecom industry supported relative performance. Within this industry, not holding shares of poor-performing wireless communications software company QUALCOMM aided relative returns. The stock price of QUALCOMM declined as its outlook fell short of expectations due to weak smartphone demand.
Stocks in other industries that were among the top relative contributors included the fund’s holdings of integrated payment and frictionless commerce solutions provider Paya(b)(h), and not holding shares of semiconductor company Texas Instruments, human capital management services provider Automatic Data Processing, cloud
Management Review - continued
computing company Snowflake and cybersecurity products and services provider Crowdstrike Holdings. Additionally, the fund’s underweight position in semiconductor company Intel further benefited relative performance.
Respectfully,
Portfolio Manager(s)
Reinier Dobbelmann and Matthew Sabel
Note to Shareholders: Effective September 29, 2023, Matthew Sabel will no longer be a Portfolio Manager of the fund.
| (b) | Security is not a benchmark constituent. |
| (h) | Security was not held in the portfolio at period end. |
The views expressed in this report are those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market or other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS portfolio. References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio’s current or future investments.
Performance Summary THROUGH 8/31/23
The following chart illustrates a representative class of the fund’s historical performance in comparison to its benchmark(s). Performance results include the deduction of the maximum applicable sales charge and reflect the percentage change in net asset value, including reinvestment of dividends and capital gains distributions. The performance of other share classes will be greater than or less than that of the class depicted below. Benchmarks are unmanaged and may not be invested in directly. Benchmark returns do not reflect sales charges, commissions or expenses. (See Notes to Performance Summary.)
Performance data shown represents past performance and is no guarantee of future results. Investment return and principal value fluctuate so your shares, when sold, may be worth more or less than the original cost; current performance may be lower or higher than quoted. The performance shown does not reflect the deduction of taxes, if any, that a shareholder would pay on fund distributions or the redemption of fund shares.
Growth of a Hypothetical $10,000 Investment
Performance Summary - continued
Total Returns through 8/31/23
Average annual without sales charge
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| A | 1/02/97 | 23.49% | 10.10% | 15.77% |
| B | 4/14/00 | 22.60% | 9.28% | 14.90% |
| C | 4/14/00 | 22.58% | 9.27% | 14.90% |
| I | 1/02/97 | 23.79% | 10.37% | 16.05% |
| R1 | 4/01/05 | 22.56% | 9.27% | 14.90% |
| R2 | 10/31/03 | 23.19% | 9.82% | 15.47% |
| R3 | 4/01/05 | 23.51% | 10.10% | 15.76% |
| R4 | 4/01/05 | 23.81% | 10.37% | 16.05% |
| R6 | 1/02/13 | 23.92% | 10.48% | 16.17% |
Comparative benchmark(s)
| Standard & Poor's 500 Stock Index (f) | 15.94% | 11.12% | 12.81% |
| Standard & Poor's North American Technology Sector Index (f) | 30.62% | 15.15% | 19.46% |
Average annual with sales charge
| | | | |
A
With Initial Sales Charge (5.75%) | 16.39% | 8.80% | 15.08% |
B
With CDSC (Declining over six years from 4% to 0%) (v) | 18.60% | 8.99% | 14.90% |
C
With CDSC (1% for 12 months) (v) | 21.58% | 9.27% | 14.90% |
CDSC – Contingent Deferred Sales Charge.
Class I, R1, R2, R3, R4, and R6 shares do not have a sales charge.
| (f) | Source: FactSet Research Systems Inc. |
| (v) | Assuming redemption at the end of the applicable period. |
Benchmark Definition(s)
Standard & Poor's 500 Stock Index(g) – a market capitalization-weighted index of 500 widely held equity securities, designed to measure broad U.S. equity performance.
Standard & Poor's North American Technology Sector Index(g) - a modified market capitalization-weighted index that measures the performance of selected technology stocks.
It is not possible to invest directly in an index.
| (g) | “Standard & Poor's®” and “S&P®” are registered trademarks of Standard & Poor's Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by MFS. The S&P 500® is a product of S&P Dow Jones |
Performance Summary - continued
Indices LLC, and has been licensed for use by MFS. MFS's product(s) is not sponsored, endorsed, sold, or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, nor their respective affiliates make any representation regarding the advisability of investing in such product(s).
Notes to Performance Summary
Average annual total return represents the average annual change in value for each share class for the periods presented.
Performance results reflect any applicable expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers the fund's performance results would be less favorable. Please see the prospectus and financial statements for complete details.
Performance results do not include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and may differ from amounts reported in the financial highlights.
From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
Expense Table
Fund expenses borne by the shareholders during the period,
March 1, 2023 through August 31, 2023
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 March 1, 2023 through August 31, 2023.
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.
Expense Table - continued
Share
Class | | Annualized
Expense
Ratio | Beginning
Account Value
3/01/23 | Ending
Account Value
8/31/23 | Expenses
Paid During
Period (p)
3/01/23-8/31/23 |
| A | Actual | 1.13% | $1,000.00 | $1,280.73 | $6.50 |
| Hypothetical (h) | 1.13% | $1,000.00 | $1,019.51 | $5.75 |
| B | Actual | 1.88% | $1,000.00 | $1,276.25 | $10.79 |
| Hypothetical (h) | 1.88% | $1,000.00 | $1,015.73 | $9.55 |
| C | Actual | 1.88% | $1,000.00 | $1,276.17 | $10.79 |
| Hypothetical (h) | 1.88% | $1,000.00 | $1,015.73 | $9.55 |
| I | Actual | 0.88% | $1,000.00 | $1,282.43 | $5.06 |
| Hypothetical (h) | 0.88% | $1,000.00 | $1,020.77 | $4.48 |
| R1 | Actual | 1.88% | $1,000.00 | $1,276.09 | $10.79 |
| Hypothetical (h) | 1.88% | $1,000.00 | $1,015.73 | $9.55 |
| R2 | Actual | 1.38% | $1,000.00 | $1,279.16 | $7.93 |
| Hypothetical (h) | 1.38% | $1,000.00 | $1,018.25 | $7.02 |
| R3 | Actual | 1.13% | $1,000.00 | $1,281.00 | $6.50 |
| Hypothetical (h) | 1.13% | $1,000.00 | $1,019.51 | $5.75 |
| R4 | Actual | 0.88% | $1,000.00 | $1,282.53 | $5.06 |
| Hypothetical (h) | 0.88% | $1,000.00 | $1,020.77 | $4.48 |
| R6 | Actual | 0.79% | $1,000.00 | $1,283.19 | $4.55 |
| Hypothetical (h) | 0.79% | $1,000.00 | $1,021.22 | $4.02 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Portfolio of Investments
8/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 97.6% |
| Business Services – 8.3% | |
| Accenture PLC, “A” | | 138,037 | $44,692,240 |
| Equifax, Inc. | | 31,943 | 6,602,618 |
| Factset Research Systems, Inc. | | 24,213 | 10,566,795 |
| FleetCor Technologies, Inc. (a) | | 30,039 | 8,162,497 |
| MSCI, Inc. | | 18,324 | 9,961,293 |
| PayPal Holdings, Inc. (a) | | 81,872 | 5,117,819 |
| Tyler Technologies, Inc. (a) | | 29,398 | 11,713,045 |
| Verisk Analytics, Inc., “A” | | 72,291 | 17,510,326 |
| WEX, Inc. (a) | | 56,407 | 11,065,925 |
| | | | | $125,392,558 |
| Computer Software – 29.3% | |
| Adobe Systems, Inc. (a) | | 49,686 | $27,791,367 |
| Cadence Design Systems, Inc. (a) | | 122,226 | 29,388,019 |
| Dun & Bradstreet Holdings, Inc. | | 576,919 | 6,288,417 |
| Intuit, Inc. | | 71,820 | 38,912,794 |
| Microsoft Corp. (s) | | 557,972 | 182,880,903 |
| Mobileye Global, Inc., “A” (a) | | 233,468 | 8,290,449 |
| Oracle Corp. | | 291,275 | 35,066,597 |
| Palo Alto Networks, Inc. (a) | | 127,653 | 31,057,975 |
| Salesforce, Inc. (a) | | 199,618 | 44,207,402 |
| Synopsys, Inc. (a) | | 32,536 | 14,930,445 |
| Topicus.com, Inc. (a) | | 100,246 | 7,634,187 |
| VMware, Inc., “A” (a) | | 79,774 | 13,464,256 |
| | | | | $439,912,811 |
| Computer Software - Systems – 11.6% | |
| Arista Networks, Inc. (a) | | 66,685 | $13,018,912 |
| Constellation Software, Inc. | | 9,895 | 20,325,027 |
| Descartes Systems Group, Inc. (a) | | 169,486 | 12,707,687 |
| Hitachi Ltd. | | 419,300 | 27,937,003 |
| HubSpot, Inc. (a) | | 36,156 | 19,759,977 |
| ServiceNow, Inc. (a) | | 87,963 | 51,795,253 |
| Shopify, Inc. (a) | | 436,579 | 29,028,138 |
| | | | | $174,571,997 |
| Consumer Services – 2.0% | |
| Booking Holdings, Inc. (a)(s) | | 9,485 | $29,451,210 |
| Electrical Equipment – 1.3% | |
| Amphenol Corp., “A” | | 228,099 | $20,159,390 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Electronics – 21.2% | |
| Advanced Micro Devices (a) | | 254,864 | $26,944,222 |
| Broadcom, Inc. | | 70,415 | 64,985,299 |
| Intel Corp. | | 226,356 | 7,954,150 |
| KLA Corp. | | 39,621 | 19,884,591 |
| Lam Research Corp. | | 21,250 | 14,926,000 |
| Marvell Technology, Inc. | | 411,670 | 23,979,778 |
| NVIDIA Corp. | | 324,891 | 160,349,953 |
| | | | | $319,023,993 |
| Insurance – 2.8% | |
| Aon PLC | | 48,956 | $16,321,441 |
| Arthur J. Gallagher & Co. | | 114,694 | 26,434,673 |
| | | | | $42,756,114 |
| Internet – 18.0% | |
| Alphabet, Inc., “A” (a)(s) | | 1,107,660 | $150,830,062 |
| Gartner, Inc. (a) | | 56,518 | 19,763,214 |
| Meta Platforms, Inc., “A” (a) | | 287,532 | 85,077,844 |
| Pinterest, Inc. (a) | | 527,071 | 14,489,182 |
| | | | | $270,160,302 |
| Leisure & Toys – 1.0% | |
| Take-Two Interactive Software, Inc. (a) | | 104,575 | $14,870,565 |
| Other Banks & Diversified Financials – 1.1% | |
| Mastercard, Inc., “A” (s) | | 17,068 | $7,042,940 |
| S&P Global, Inc. | | 24,528 | 9,587,014 |
| | | | | $16,629,954 |
| Specialty Stores – 1.0% | |
| Amazon.com, Inc. (a)(s) | | 106,699 | $14,725,529 |
| Total Common Stocks (Identified Cost, $867,597,221) | | $1,467,654,423 |
Portfolio of Investments – continued
| Issuer | Strike
Price | First
Exercise | Shares/Par | Value ($) |
| Rights – 0.0% |
| Computer Software - Systems – 0.0% |
| Constellation Software, Inc. (CAD 100 principal amount of Series 1 Debentures for 3.03 rights, Expiration 10/13/23) (a) (Identified Cost, $4,388) | CAD 133 | 8/31/23 | 9,895 | $5,493 |
| Warrants – 0.0% | | | | |
| Computer Software - Systems – 0.0% |
| Constellation Software, Inc. (CAD 100 principal amount of Series 2 Debentures for 1 warrant, Expiration 3/31/40) (a) (Identified Cost, $0) | CAD 11.5 | N/A | 9,895 | $0 |
| | | | | |
| Investment Companies (h) – 2.4% |
| Money Market Funds – 2.4% | |
| MFS Institutional Money Market Portfolio, 5.3% (v) (Identified Cost, $35,192,383) | | | 35,194,109 | $35,197,628 |
|
|
| Other Assets, Less Liabilities – 0.0% | | 443,977 |
| Net Assets – 100.0% | $1,503,301,521 |
| (a) | Non-income producing security. | | | |
| (h) | An affiliated issuer, which 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. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $35,197,628 and $1,467,659,916, respectively. | | | |
| (s) | Security or a portion of the security was pledged to cover collateral requirements for securities sold short and/or certain derivative transactions. | | | |
| (v) | Affiliated issuer 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. | | | |
| Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below: |
| CAD | Canadian Dollar |
At August 31, 2023, the fund had cash collateral of $49,292 and other liquid securities with an aggregate value of $548,931 to cover any collateral or margin obligations for securities sold short and certain derivative contracts. Restricted cash and/or deposits with brokers in the Statement of Assets and Liabilities are comprised of cash collateral.
See Notes to Financial Statements
Financial Statements
Statement of Assets and Liabilities
At 8/31/23
This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.
| Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $867,601,609) | $1,467,659,916 |
| Investments in affiliated issuers, at value (identified cost, $35,192,383) | 35,197,628 |
| Deposits with brokers for | |
| Securities sold short | 49,292 |
| Receivables for | |
| Investments sold | 30,573,696 |
| Fund shares sold | 1,005,855 |
| Dividends | 572,502 |
| Other assets | 1,904 |
| Total assets | $1,535,060,793 |
| Liabilities | |
| Payables for | |
| Investments purchased | $28,931,577 |
| Fund shares reacquired | 2,196,670 |
| Payable to affiliates | |
| Investment adviser | 58,845 |
| Administrative services fee | 1,224 |
| Shareholder servicing costs | 420,367 |
| Distribution and service fees | 17,770 |
| Payable for independent Trustees' compensation | 14 |
| Accrued expenses and other liabilities | 132,805 |
| Total liabilities | $31,759,272 |
| Net assets | $1,503,301,521 |
| Net assets consist of | |
| Paid-in capital | $751,986,016 |
| Total distributable earnings (loss) | 751,315,505 |
| Net assets | $1,503,301,521 |
| Shares of beneficial interest outstanding | 28,416,574 |
Statement of Assets and Liabilities – continued
| | Net assets | Shares
outstanding | Net asset value
per share (a) |
| Class A | $669,259,978 | 12,844,790 | $52.10 |
| Class B | 18,986,821 | 471,890 | 40.24 |
| Class C | 105,653,477 | 2,634,245 | 40.11 |
| Class I | 356,050,114 | 6,144,890 | 57.94 |
| Class R1 | 10,365,531 | 259,239 | 39.98 |
| Class R2 | 22,942,031 | 478,663 | 47.93 |
| Class R3 | 55,706,795 | 1,070,113 | 52.06 |
| Class R4 | 17,097,294 | 305,988 | 55.88 |
| Class R6 | 247,239,480 | 4,206,756 | 58.77 |
| (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 $55.28 [100 / 94.25 x $52.10]. On sales of $50,000 or more, the maximum offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed on redemptions of Class A, Class B, and Class C shares. Redemption price per share was equal to the net asset value per share for Classes I, R1, R2, R3, R4, and R6. |
See Notes to Financial Statements
Financial Statements
Statement of Operations
Year ended 8/31/23
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 (loss) | |
| Income | |
| Dividends | $6,969,484 |
| Dividends from affiliated issuers | 1,653,479 |
| Other | 21,167 |
| Income on securities loaned | 1,879 |
| Foreign taxes withheld | (73,641) |
| Total investment income | $8,572,368 |
| Expenses | |
| Management fee | $9,693,554 |
| Distribution and service fees | 2,887,127 |
| Shareholder servicing costs | 1,379,330 |
| Administrative services fee | 201,968 |
| Independent Trustees' compensation | 22,822 |
| Custodian fee | 59,428 |
| Shareholder communications | 64,107 |
| Audit and tax fees | 70,530 |
| Legal fees | 6,783 |
| Miscellaneous | 190,480 |
| Total expenses | $14,576,129 |
| Reduction of expenses by investment adviser and distributor | (170,558) |
| Net expenses | $14,405,571 |
| Net investment income (loss) | $(5,833,203) |
| Realized and unrealized gain (loss) |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $166,031,820 |
| Affiliated issuers | 3,747 |
| Foreign currency | (59,183) |
| Net realized gain (loss) | $165,976,384 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $121,665,101 |
| Affiliated issuers | 2,328 |
| Net unrealized gain (loss) | $121,667,429 |
| Net realized and unrealized gain (loss) | $287,643,813 |
| Change in net assets from operations | $281,810,610 |
See Notes to Financial Statements
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.
| | Year ended |
| | 8/31/23 | 8/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $(5,833,203) | $(13,328,443) |
| Net realized gain (loss) | 165,976,384 | 193,446,749 |
| Net unrealized gain (loss) | 121,667,429 | (835,363,661) |
| Change in net assets from operations | $281,810,610 | $(655,245,355) |
| Total distributions to shareholders | $(122,255,927) | $(249,750,373) |
| Change in net assets from fund share transactions | $(61,980,502) | $(22,067,935) |
| Total change in net assets | $97,574,181 | $(927,063,663) |
| Net assets | | |
| At beginning of period | 1,405,727,340 | 2,332,791,003 |
| At end of period | $1,503,301,521 | $1,405,727,340 |
See Notes to Financial Statements
Financial Statements
Financial Highlights
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that 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.
| Class A | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $46.91 | $75.65 | $64.90 | $44.73 | $45.65 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.22) | $(0.45) | $(0.57) | $(0.35) | $(0.27) |
| Net realized and unrealized gain (loss) | 9.75 | (19.94) | 14.83 | 21.50 | 1.24 |
| Total from investment operations | $9.53 | $(20.39) | $14.26 | $21.15 | $0.97 |
| Less distributions declared to shareholders |
| From net realized gain | $(4.34) | $(8.35) | $(3.51) | $(0.98) | $(1.89) |
| Net asset value, end of period (x) | $52.10 | $46.91 | $75.65 | $64.90 | $44.73 |
| Total return (%) (r)(s)(t)(x) | 23.49 | (30.20) | 22.97 | 48.23 | 2.97 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.15 | 1.14 | 1.12 | 1.18 | 1.19 |
| Expenses after expense reductions | 1.14 | 1.13 | 1.11 | 1.16 | 1.18 |
| Net investment income (loss) | (0.49) | (0.76) | (0.85) | (0.71) | (0.64) |
| Portfolio turnover | 44 | 30 | 36 | 46 | 32 |
| Net assets at end of period (000 omitted) | $669,260 | $572,702 | $888,416 | $745,157 | $471,468 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | N/A | N/A | 1.11 | 1.13 | 1.15 |
See Notes to Financial Statements
Financial Highlights – continued
| Class B | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $37.55 | $62.67 | $54.73 | $38.16 | $39.55 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.43) | $(0.73) | $(0.89) | $(0.61) | $(0.50) |
| Net realized and unrealized gain (loss) | 7.46 | (16.04) | 12.34 | 18.16 | 1.00 |
| Total from investment operations | $7.03 | $(16.77) | $11.45 | $17.55 | $0.50 |
| Less distributions declared to shareholders |
| From net realized gain | $(4.34) | $(8.35) | $(3.51) | $(0.98) | $(1.89) |
| Net asset value, end of period (x) | $40.24 | $37.55 | $62.67 | $54.73 | $38.16 |
| Total return (%) (r)(s)(t)(x) | 22.60 | (30.73) | 22.06 | 47.07 | 2.21 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.91 | 1.89 | 1.87 | 1.93 | 1.94 |
| Expenses after expense reductions | 1.89 | 1.88 | 1.86 | 1.92 | 1.93 |
| Net investment income (loss) | (1.24) | (1.52) | (1.59) | (1.46) | (1.39) |
| Portfolio turnover | 44 | 30 | 36 | 46 | 32 |
| Net assets at end of period (000 omitted) | $18,987 | $23,115 | $44,390 | $46,224 | $41,017 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | N/A | N/A | 1.86 | 1.88 | 1.90 |
See Notes to Financial Statements
Financial Highlights – continued
| Class C | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $37.45 | $62.52 | $54.61 | $38.07 | $39.47 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.43) | $(0.73) | $(0.88) | $(0.61) | $(0.50) |
| Net realized and unrealized gain (loss) | 7.43 | (15.99) | 12.30 | 18.13 | 0.99 |
| Total from investment operations | $7.00 | $(16.72) | $11.42 | $17.52 | $0.49 |
| Less distributions declared to shareholders |
| From net realized gain | $(4.34) | $(8.35) | $(3.51) | $(0.98) | $(1.89) |
| Net asset value, end of period (x) | $40.11 | $37.45 | $62.52 | $54.61 | $38.07 |
| Total return (%) (r)(s)(t)(x) | 22.58 | (30.72) | 22.06 | 47.11 | 2.19 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.90 | 1.89 | 1.87 | 1.93 | 1.94 |
| Expenses after expense reductions | 1.89 | 1.88 | 1.86 | 1.92 | 1.93 |
| Net investment income (loss) | (1.24) | (1.52) | (1.59) | (1.46) | (1.40) |
| Portfolio turnover | 44 | 30 | 36 | 46 | 32 |
| Net assets at end of period (000 omitted) | $105,653 | $112,241 | $194,857 | $183,286 | $128,817 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | N/A | N/A | 1.86 | 1.88 | 1.91 |
See Notes to Financial Statements
Financial Highlights – continued
| Class I | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $51.52 | $82.06 | $69.94 | $48.02 | $48.74 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.12) | $(0.34) | $(0.43) | $(0.25) | $(0.18) |
| Net realized and unrealized gain (loss) | 10.88 | (21.85) | 16.06 | 23.15 | 1.35 |
| Total from investment operations | $10.76 | $(22.19) | $15.63 | $22.90 | $1.17 |
| Less distributions declared to shareholders |
| From net realized gain | $(4.34) | $(8.35) | $(3.51) | $(0.98) | $(1.89) |
| Net asset value, end of period (x) | $57.94 | $51.52 | $82.06 | $69.94 | $48.02 |
| Total return (%) (r)(s)(t)(x) | 23.79 | (30.02) | 23.28 | 48.57 | 3.20 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.91 | 0.89 | 0.87 | 0.93 | 0.94 |
| Expenses after expense reductions | 0.89 | 0.88 | 0.86 | 0.92 | 0.93 |
| Net investment income (loss) | (0.24) | (0.52) | (0.59) | (0.46) | (0.40) |
| Portfolio turnover | 44 | 30 | 36 | 46 | 32 |
| Net assets at end of period (000 omitted) | $356,050 | $356,867 | $608,833 | $561,531 | $315,655 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | N/A | N/A | 0.86 | 0.88 | 0.91 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R1 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $37.35 | $62.37 | $54.49 | $37.99 | $39.39 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.43) | $(0.72) | $(0.89) | $(0.62) | $(0.50) |
| Net realized and unrealized gain (loss) | 7.40 | (15.95) | 12.28 | 18.10 | 0.99 |
| Total from investment operations | $6.97 | $(16.67) | $11.39 | $17.48 | $0.49 |
| Less distributions declared to shareholders |
| From net realized gain | $(4.34) | $(8.35) | $(3.51) | $(0.98) | $(1.89) |
| Net asset value, end of period (x) | $39.98 | $37.35 | $62.37 | $54.49 | $37.99 |
| Total return (%) (r)(s)(t)(x) | 22.56 | (30.72) | 22.05 | 47.10 | 2.19 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.90 | 1.89 | 1.87 | 1.93 | 1.94 |
| Expenses after expense reductions | 1.89 | 1.88 | 1.86 | 1.91 | 1.93 |
| Net investment income (loss) | (1.24) | (1.51) | (1.59) | (1.47) | (1.40) |
| Portfolio turnover | 44 | 30 | 36 | 46 | 32 |
| Net assets at end of period (000 omitted) | $10,366 | $7,558 | $10,498 | $9,882 | $5,715 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | N/A | N/A | 1.86 | 1.88 | 1.91 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R2 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $43.63 | $71.12 | $61.36 | $42.45 | $43.55 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.30) | $(0.56) | $(0.68) | $(0.45) | $(0.36) |
| Net realized and unrealized gain (loss) | 8.94 | (18.58) | 13.95 | 20.34 | 1.15 |
| Total from investment operations | $8.64 | $(19.14) | $13.27 | $19.89 | $0.79 |
| Less distributions declared to shareholders |
| From net realized gain | $(4.34) | $(8.35) | $(3.51) | $(0.98) | $(1.89) |
| Net asset value, end of period (x) | $47.93 | $43.63 | $71.12 | $61.36 | $42.45 |
| Total return (%) (r)(s)(t)(x) | 23.19 | (30.38) | 22.67 | 47.84 | 2.69 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.40 | 1.39 | 1.37 | 1.43 | 1.44 |
| Expenses after expense reductions | 1.39 | 1.38 | 1.36 | 1.42 | 1.43 |
| Net investment income (loss) | (0.74) | (1.02) | (1.09) | (0.97) | (0.90) |
| Portfolio turnover | 44 | 30 | 36 | 46 | 32 |
| Net assets at end of period (000 omitted) | $22,942 | $22,287 | $37,797 | $38,511 | $29,339 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | N/A | N/A | 1.36 | 1.38 | 1.41 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R3 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $46.87 | $75.60 | $64.85 | $44.71 | $45.63 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.22) | $(0.46) | $(0.56) | $(0.35) | $(0.27) |
| Net realized and unrealized gain (loss) | 9.75 | (19.92) | 14.82 | 21.47 | 1.24 |
| Total from investment operations | $9.53 | $(20.38) | $14.26 | $21.12 | $0.97 |
| Less distributions declared to shareholders |
| From net realized gain | $(4.34) | $(8.35) | $(3.51) | $(0.98) | $(1.89) |
| Net asset value, end of period (x) | $52.06 | $46.87 | $75.60 | $64.85 | $44.71 |
| Total return (%) (r)(s)(t)(x) | 23.51 | (30.21) | 22.99 | 48.18 | 2.97 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.15 | 1.14 | 1.13 | 1.18 | 1.19 |
| Expenses after expense reductions | 1.14 | 1.13 | 1.11 | 1.17 | 1.18 |
| Net investment income (loss) | (0.49) | (0.77) | (0.84) | (0.71) | (0.65) |
| Portfolio turnover | 44 | 30 | 36 | 46 | 32 |
| Net assets at end of period (000 omitted) | $55,707 | $49,755 | $96,784 | $109,884 | $80,242 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | N/A | N/A | 1.11 | 1.13 | 1.16 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R4 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $49.85 | $79.68 | $68.01 | $46.72 | $47.47 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.11) | $(0.33) | $(0.42) | $(0.24) | $(0.17) |
| Net realized and unrealized gain (loss) | 10.48 | (21.15) | 15.60 | 22.51 | 1.31 |
| Total from investment operations | $10.37 | $(21.48) | $15.18 | $22.27 | $1.14 |
| Less distributions declared to shareholders |
| From net realized gain | $(4.34) | $(8.35) | $(3.51) | $(0.98) | $(1.89) |
| Net asset value, end of period (x) | $55.88 | $49.85 | $79.68 | $68.01 | $46.72 |
| Total return (%) (r)(s)(t)(x) | 23.81 | (30.03) | 23.28 | 48.57 | 3.22 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.91 | 0.89 | 0.87 | 0.93 | 0.94 |
| Expenses after expense reductions | 0.89 | 0.88 | 0.86 | 0.92 | 0.93 |
| Net investment income (loss) | (0.23) | (0.52) | (0.59) | (0.47) | (0.40) |
| Portfolio turnover | 44 | 30 | 36 | 46 | 32 |
| Net assets at end of period (000 omitted) | $17,097 | $25,674 | $47,324 | $32,530 | $25,310 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | N/A | N/A | 0.85 | 0.89 | 0.91 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R6 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $52.14 | $82.87 | $70.54 | $48.38 | $49.03 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.07) | $(0.27) | $(0.37) | $(0.20) | $(0.13) |
| Net realized and unrealized gain (loss) | 11.04 | (22.11) | 16.21 | 23.34 | 1.37 |
| Total from investment operations | $10.97 | $(22.38) | $15.84 | $23.14 | $1.24 |
| Less distributions declared to shareholders |
| From net realized gain | $(4.34) | $(8.35) | $(3.51) | $(0.98) | $(1.89) |
| Net asset value, end of period (x) | $58.77 | $52.14 | $82.87 | $70.54 | $48.38 |
| Total return (%) (r)(s)(t)(x) | 23.92 | (29.95) | 23.39 | 48.71 | 3.33 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.81 | 0.79 | 0.78 | 0.84 | 0.84 |
| Expenses after expense reductions | 0.80 | 0.77 | 0.77 | 0.82 | 0.83 |
| Net investment income (loss) | (0.14) | (0.41) | (0.50) | (0.37) | (0.30) |
| Portfolio turnover | 44 | 30 | 36 | 46 | 32 |
| Net assets at end of period (000 omitted) | $247,239 | $235,529 | $403,893 | $316,404 | $168,352 |
| Supplemental Ratios (%): |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | N/A | N/A | 0.77 | 0.79 | 0.81 |
| (d) | Per share data is based on average shares outstanding. |
| (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 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
Notes to Financial Statements
(1) Business and Organization
MFS Technology Fund (the fund) is a non-diversified series of MFS Series Trust I (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 Standards 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 primarily in securities of issuers in the technology industry. Issuers in a single industry can react similarly to market, currency, political, economic, regulatory, geopolitical, environmental, public health, and other conditions. The value of stocks in the technology sector can be very volatile due to the rapid pace of product change, technological developments, and other factors.
Balance Sheet Offsetting — 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 International Swaps and Derivatives Association (ISDA) Master Agreement, or similar 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. 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 master netting agreement counterparty is subject. Balance sheet offsetting disclosures, 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 — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Notes to Financial Statements - continued
Under the fund's valuation policy and procedures, equity securities, including restricted equity securities and equity securities sold short, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Equity securities sold short, for which there were no sales reported that day, are generally valued at the last quoted daily ask quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value. Exchange-traded options are generally valued at the last sale or official closing price on their primary exchange as provided by a third-party pricing service. Exchange-traded options for which there were no sales reported that day are generally valued at the last daily bid quotation on their primary exchange as provided by a third-party pricing service. For put options, the position may be valued at the last daily ask quotation if there are no trades reported during the day. 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. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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. In determining values, third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the 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 halt 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 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
Notes to Financial Statements - continued
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 significant 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 August 31, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | | | | |
| United States | $1,361,731,932 | $— | $— | $1,361,731,932 |
| Canada | 69,700,532 | 0 | — | 69,700,532 |
| Japan | 27,937,003 | — | — | 27,937,003 |
| Israel | 8,290,449 | — | — | 8,290,449 |
| Mutual Funds | 35,197,628 | — | — | 35,197,628 |
| Total | $1,502,857,544 | $0 | $— | $1,502,857,544 |
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 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.
Notes to Financial Statements - continued
The derivative instruments used by the fund during the period were purchased options. Depending on the type of derivative, a fund may exit a derivative position by entering into an offsetting transaction with a counterparty or exchange, negotiating an agreement with the derivative counterparty, or novating the position to a third party. At August 31, 2023, the fund did not have any outstanding derivative instruments.
The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the year ended August 31, 2023 as reported in the Statement of Operations:
| Risk | Unaffiliated Issuers
(Purchased
Options) |
| Equity | $(2,301,572) |
The following table presents, by major type of derivative contract, the change in unrealized appreciation or depreciation on derivatives held by the fund for the year ended August 31, 2023 as reported in the Statement of Operations:
| Risk | Unaffiliated Issuers
(Purchased
Options) |
| Equity | $(290,588) |
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 recorded as unrealized appreciation or depreciation. Premiums paid for purchased call and put options which have expired are treated as realized losses on investments in the Statement of Operations. Upon the exercise or closing of a purchased put option, the premium paid is offset against the proceeds on the sale of the underlying security or financial instrument in order to determine the realized gain or loss on investments.
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 uncleared 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, where applicable, by the 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 may enter into short sales whereby it sells a security it does not own in anticipation of a decline in the value of that security. The fund will realize a gain if the security price decreases and a loss if the security price increases between the date of the short sale and the date on which the fund replaces the borrowed security. Losses from short sales can exceed the proceeds of the security sold; and they can also exceed the potential loss from an ordinary buy and sell transaction. The amount of any
Notes to Financial Statements - continued
premium, dividends, or interest the fund may be required to pay in connection with a short sale will be recognized as a fund expense. For the year ended August 31, 2023, the fund did not enter into short sale transactions.
Security Loans — Under its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. 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. On loans collateralized by cash, the cash collateral is invested in a money market fund. 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. The lending agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent 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, the lending agent assumes the fund's rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent 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. A portion of the income generated upon investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund and the lending agent. Income from securities lending is separately reported 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. At August 31, 2023, there were no securities on loan or collateral outstanding.
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 — 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 payments received in additional securities are recorded on the ex-dividend 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.
Notes to Financial Statements - continued
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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.
Book/tax differences primarily relate to net operating losses, wash sale loss deferrals, straddle loss deferrals, and treating a portion of the proceeds from redemptions as a distribution for tax purposes.
The tax character of distributions declared to shareholders for the last two fiscal years is as follows:
| | Year ended
8/31/23 | Year ended
8/31/22 |
| Ordinary income (including any short-term capital gains) | $— | $64,444,592 |
| Long-term capital gains | 122,255,927 | 185,305,781 |
| Total distributions | $122,255,927 | $249,750,373 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 8/31/23 | |
| Cost of investments | $906,725,865 |
| Gross appreciation | 613,183,506 |
| Gross depreciation | (17,051,827) |
| Net unrealized appreciation (depreciation) | $596,131,679 |
| Undistributed long-term capital gain | 158,876,828 |
| Late year ordinary loss deferral | (3,693,002) |
| Total distributable earnings (loss) | $751,315,505 |
Notes to Financial Statements - continued
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 and Class C shares will convert to Class A shares 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:
| | Year ended
8/31/23 | Year ended
8/31/22 |
| Class A | $51,623,165 | $97,004,773 |
| Class B | 2,466,860 | 5,633,192 |
| Class C | 12,088,461 | 25,137,122 |
| Class I | 27,364,310 | 62,813,302 |
| Class R1 | 882,693 | 1,457,279 |
| Class R2 | 2,055,032 | 4,354,112 |
| Class R3 | 4,485,667 | 9,789,520 |
| Class R4 | 2,209,428 | 4,407,863 |
| Class R6 | 19,080,311 | 39,153,210 |
| Total | $122,255,927 | $249,750,373 |
(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 based on the fund's average daily net assets:
| Up to $1 billion | 0.75% |
| In excess of $1 billion and up to $2.5 billion | 0.70% |
| In excess of $2.5 billion | 0.65% |
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until December 31, 2023. For the year ended August 31, 2023, this management fee reduction amounted to $170,441, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.72% of the fund's average daily net assets.
Distributor — MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $83,120 for the year ended August 31, 2023, 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.
Notes to Financial Statements - continued
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. The distribution and service fees are computed daily and paid monthly.
Distribution Plan Fee Table:
| | Distribution
Fee Rate (d) | Service
Fee Rate (d) | Total
Distribution
Plan (d) | Annual
Effective
Rate (e) | Distribution
and Service
Fee |
| Class A | — | 0.25% | 0.25% | 0.25% | $ 1,400,961 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 192,505 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 991,374 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 79,491 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 103,424 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 119,372 |
| Total Distribution and Service Fees | | | | | $2,887,127 |
| (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 year ended August 31, 2023 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 there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates' seed money. For the year ended August 31, 2023, this rebate amounted to $95, $4, and $18 for Class A, Class B, and Class C shares, 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. Class B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. Class C shares are subject to a CDSC in the event of a shareholder redemption within 12 months of purchase. All contingent deferred sales charges are paid to MFD and during the year ended August 31, 2023, were as follows:
| | Amount |
| Class A | $7,461 |
| Class B | 12,709 |
| Class C | 3,198 |
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 year ended August 31, 2023, the fee was $228,329, which equated to 0.0174% annually of the fund's average daily net assets. MFSC also receives reimbursement from the fund for out-of-pocket expenses, sub-accounting and other shareholder servicing
Notes to Financial Statements - continued
costs which may be paid to affiliated and unaffiliated service providers. Class R6 shares do not incur sub-accounting fees. For the year ended August 31, 2023, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $1,151,001.
Administrator — MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund 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 is computed daily and paid monthly. The administrative services fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.0154% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. 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 from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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. This money market fund does not pay a management fee to MFS but does incur investment and operating costs.
During the year ended August 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $2,389,418. The sales transactions resulted in net realized gains (losses) of $(775,062).
The adviser has voluntarily undertaken to reimburse the fund from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the year ended August 31, 2023, this reimbursement amounted to $17,659, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended August 31, 2023, purchases and sales of investments, other than short-term obligations, aggregated $571,274,289 and $742,079,490, respectively.
Notes to Financial Statements - 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:
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Class A | 1,564,162 | $70,141,503 | | 1,539,626 | $90,958,488 |
| Class B | 8,653 | 309,910 | | 4,748 | 218,700 |
| Class C | 219,176 | 7,556,099 | | 217,987 | 10,422,115 |
| Class I | 1,091,293 | 53,676,264 | | 1,490,162 | 98,558,908 |
| Class R1 | 65,744 | 2,319,126 | | 66,023 | 3,082,736 |
| Class R2 | 93,281 | 3,803,408 | | 122,061 | 6,763,303 |
| Class R3 | 283,342 | 12,971,380 | | 248,869 | 14,433,290 |
| Class R4 | 100,231 | 4,630,926 | | 110,131 | 6,923,927 |
| Class R6 | 1,011,824 | 50,667,739 | | 945,092 | 61,311,730 |
| | 4,437,706 | $206,076,355 | | 4,744,699 | $292,673,197 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Class A | 1,291,127 | $50,057,003 | | 1,420,260 | $94,362,044 |
| Class B | 81,038 | 2,440,061 | | 103,866 | 5,554,746 |
| Class C | 386,365 | 11,594,810 | | 451,349 | 24,074,933 |
| Class I | 577,895 | 24,872,602 | | 788,615 | 57,442,721 |
| Class R1 | 29,422 | 880,297 | | 27,311 | 1,452,667 |
| Class R2 | 57,431 | 2,052,015 | | 69,869 | 4,325,571 |
| Class R3 | 115,789 | 4,485,667 | | 147,455 | 9,789,520 |
| Class R4 | 45,901 | 1,904,879 | | 54,585 | 3,847,149 |
| Class R6 | 391,841 | 17,096,020 | | 477,615 | 35,181,103 |
| | 2,976,809 | $115,383,354 | | 3,540,925 | $236,030,454 |
| Shares reacquired | | | | | |
| Class A | (2,218,748) | $(96,058,383) | | (2,494,973) | $(146,539,685) |
| Class B | (233,320) | (7,912,516) | | (201,409) | (9,484,025) |
| Class C | (968,359) | (33,016,314) | | (788,992) | (36,808,403) |
| Class I | (2,451,258) | (117,366,434) | | (2,770,879) | (171,977,632) |
| Class R1 | (38,274) | (1,328,502) | | (59,294) | (2,698,719) |
| Class R2 | (182,851) | (7,446,689) | | (212,605) | (11,586,171) |
| Class R3 | (390,506) | (17,425,123) | | (615,081) | (37,075,724) |
| Class R4 | (355,178) | (16,595,237) | | (243,626) | (15,880,342) |
| Class R6 | (1,713,995) | (86,291,013) | | (1,779,282) | (118,720,885) |
| | (8,552,489) | $(383,440,211) | | (9,166,141) | $(550,771,586) |
Notes to Financial Statements - continued
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Net change | | | | | |
| Class A | 636,541 | $24,140,123 | | 464,913 | $38,780,847 |
| Class B | (143,629) | (5,162,545) | | (92,795) | (3,710,579) |
| Class C | (362,818) | (13,865,405) | | (119,656) | (2,311,355) |
| Class I | (782,070) | (38,817,568) | | (492,102) | (15,976,003) |
| Class R1 | 56,892 | 1,870,921 | | 34,040 | 1,836,684 |
| Class R2 | (32,139) | (1,591,266) | | (20,675) | (497,297) |
| Class R3 | 8,625 | 31,924 | | (218,757) | (12,852,914) |
| Class R4 | (209,046) | (10,059,432) | | (78,910) | (5,109,266) |
| Class R6 | (310,330) | (18,527,254) | | (356,575) | (22,228,052) |
| | (1,137,974) | $(61,980,502) | | (880,517) | $(22,067,935) |
Effective June 1, 2019, purchases of the fund’s Class B shares were closed to new and existing investors subject to certain exceptions. On March 30, 2023, the fund announced that effective after the close of business on September 29, 2023, purchases of Class R1 and Class R2 shares will be closed to new eligible investors.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate 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 highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. 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 rates equal to customary reference rates plus an agreed upon spread. For the year ended August 31, 2023, the fund’s commitment fee and interest expense were $6,424 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
Notes to Financial Statements - continued
(7) Investments in 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 following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $55,247,779 | $229,204,774 | $249,261,000 | $3,747 | $2,328 | $35,197,628 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $1,653,479 | $— |
Report of Independent Registered Public Accounting Firm
To the Shareholders of MFS Technology Fund and the Board of Trustees of MFS Series Trust I
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of MFS Technology Fund (the “Fund”) (one of the funds constituting MFS Series Trust I (the “Trust”)), including the portfolio of investments, as of August 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting MFS Series Trust I) at August 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Report of Independent Registered Public Accounting Firm – continued
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more MFS investment companies since 1993.
Boston, Massachusetts
October 16, 2023
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of October 1, 2023, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and Officer is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
| INTERESTED TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022); President (until December 2018); Chief Investment Officer (until December 2018) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 68) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
| OFFICERS | | | | | | | | |
Christopher R. Bohane (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022); Natixis Investment Managers (investment management), Funds Chief Compliance Officer, Deputy General Counsel & Senior Vice President (until 2018) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 52) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 52) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 48) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
| (h) | Date first appointed to serve as Trustee/Officer of an MFS Fund. Each Trustee has served continuously since appointment unless indicated otherwise. From January 2012 through December 2016, Messrs. DiLorenzo and Yost served as Treasurer and Deputy Treasurer of the Funds, respectively. |
| (j) | Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”). |
| (k) | “Interested person” of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of a position with MFS. The address of MFS is 111 Huntington Avenue, Boston, Massachusetts 02199-7618. |
Trustees and Officers - continued
Each Trustee (other than Messrs. Jones, Kilman and Roberge) has been elected by shareholders and each Trustee and Officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. The Trust does not hold annual meetings for the purpose of electing Trustees, and Trustees are not elected for fixed terms. Under the terms of the Board's retirement policy, an Independent Trustee shall retire at the end of the calendar year in which he or she reaches the earlier of 75 years of age or 15 years of service on the Board (or, in the case of any Independent Trustee who joined the Board prior to 2015, 20 years of service on the Board).
Messrs. Buller, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.
Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
Reinier Dobbelmann
Matthew Sabel | |
Board Review of Investment Advisory Agreement
MFS Technology Fund
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-interested (“independent”) Trustees, voting separately, annually approve the continuation of the Fund’s investment advisory agreement with MFS. The Trustees consider matters bearing on the Fund and its advisory arrangements at their meetings throughout the year, including a review of performance data at each regular meeting. In addition, the independent Trustees met several times over the course of three months beginning in May and ending in July, 2023 (“contract review meetings”) for the specific purpose of considering whether to approve the continuation of the investment advisory agreement for the Fund and the other investment companies that the Board oversees (the “MFS Funds”). The independent Trustees were assisted in their evaluation of the Fund’s investment advisory agreement by independent legal counsel, from whom they received separate legal advice and with whom they met separately from MFS during various contract review meetings. The independent Trustees were also assisted in this process by an independent consultant who was retained by and reported to the independent Trustees.
In connection with their deliberations regarding the continuation of the investment advisory agreement, the Trustees, including the independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. The investment advisory agreement for the Fund was considered separately, although the Trustees also took into account the common interests of all MFS Funds in their review. As described below, the Trustees considered the nature, quality, and extent of the various investment advisory, administrative, and shareholder services performed by MFS under the existing investment advisory agreement and other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance of the Fund for various time periods ended December 31, 2022 and the investment performance of a group of funds with substantially similar investment classifications/objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s advisory fees and other expenses and the advisory fees and other expenses of comparable funds identified by Broadridge as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (iii) information provided by MFS on the advisory fees of portfolios of other clients of MFS, including institutional separate accounts and other clients, (iv) information as to whether and to what extent applicable expense waivers, reimbursements or fee “breakpoints” are observed for the Fund, (v) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (vi) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vii) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (viii) information regarding the overall organization of MFS, including information about
Board Review of Investment Advisory Agreement - continued
MFS’ senior management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.
The Trustees’ conclusion as to the continuation of the investment advisory agreement was based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors. It is also important to recognize that the fee arrangements for the Fund and other MFS Funds are the result of years of review and discussion between the independent Trustees and MFS, that certain aspects of such arrangements may receive greater scrutiny in some years than in others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements during the course of the year and in prior years.
Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Class I shares in comparison to the performance of funds in its Broadridge performance universe over the five-year period ended December 31, 2022, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Class I shares was in the 4th quintile relative to the other funds in the universe for this five-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Class I shares was in the 3rd quintile for the one-year period and the 4th quintile for the three-year period ended December 31, 2022 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.
The Trustees expressed concern to MFS about the substandard investment performance of the Fund. In the course of their deliberations, the Trustees took into account information provided by MFS in connection with the contract review meetings, as well as during investment review meetings conducted with portfolio management personnel during the course of the year, as to MFS’ efforts to improve the Fund’s performance. In addition, the Trustees requested that they receive a separate update on the Fund’s performance at each of their regular meetings. After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that MFS’ responses and efforts and plans to improve investment performance were sufficient to support approval of the continuance of the investment advisory agreement for an additional one-year period, but that they would continue to closely monitor the performance of the Fund.
In assessing the reasonableness of the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s Class I shares as a percentage of average daily net assets and the advisory fee and total expense ratios of the Broadridge expense group based on information provided by Broadridge. The Trustees considered that, according to the data provided
Board Review of Investment Advisory Agreement - continued
by Broadridge (which takes into account any fee reductions or expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate was approximately at the Broadridge expense group median and the Fund’s total expense ratio was lower than the Broadridge expense group median.
The Trustees also considered the advisory fees charged by MFS to any institutional separate accounts advised by MFS (“separate accounts”) and unaffiliated investment companies for which MFS serves as subadviser (“subadvised funds”) that have comparable investment strategies to the Fund, if any. In comparing these fees, the Trustees considered information provided by MFS as to the generally broader scope of services provided by MFS to the Fund, as well as the more extensive regulatory burdens imposed on MFS in managing the Fund, in comparison to separate accounts and subadvised funds. The Trustees also considered the higher demands placed on MFS’ investment personnel and trading infrastructure as a result of the daily cash in-flows and out-flows of the Fund in comparison to separate accounts.
The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is subject to contractual breakpoints that reduce the Fund’s advisory fee rate on average daily net assets over $1 billion and $2.5 billion. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the breakpoints and the group fee waiver were sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.
The Trustees also considered information prepared by MFS relating to MFS’ costs and profits with respect to the Fund, the MFS Funds considered as a group, and other investment companies and accounts advised by MFS, as well as MFS’ methodologies used to determine and allocate its costs to the MFS Funds, the Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that the advisory fees charged to the Fund represent reasonable compensation in light of the services being provided by MFS to the Fund.
In addition, the Trustees considered MFS’ resources and related efforts to continue to retain, attract and motivate capable personnel to serve the Fund. The Trustees also considered current and developing conditions in the financial services industry, including the presence of large and well-capitalized companies which are spending, and appear to be prepared to continue to spend, substantial sums to engage personnel and to provide services to competing investment companies. In this regard, the Trustees also considered the financial resources of MFS and its ultimate parent, Sun Life Financial Inc. The Trustees also considered the advantages and possible disadvantages to the Fund of having an adviser that also serves other investment companies as well as other accounts.
Board Review of Investment Advisory Agreement - continued
The Trustees also considered the nature, quality, cost, and extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the nature, extent and quality of certain other services MFS performs or arranges for on the Fund’s behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’ interaction with third-party service providers, principally custodians and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-called “fall-out benefits” to MFS such as reputational value derived from serving as investment manager to the MFS Funds. The Trustees also considered that MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses a Fund, if applicable, for the costs of external research acquired through the use of the Fund’s portfolio brokerage commissions.
Based on their evaluation of factors that they deemed to be material, including those factors described above, the Board of Trustees, including the independent Trustees, concluded that the Fund’s investment advisory agreement with MFS should be continued for an additional one-year period, commencing August 1, 2023.
Statement Regarding Liquidity Risk Management Program
The fund has adopted and implemented a liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The fund’s Board of Trustees (the “Board”) has designated MFS as the administrator of the Program. The Program is reasonably designed to assess and manage the liquidity risk of the fund. Liquidity risk is the risk that the fund could not meet requests to redeem shares issued by the fund without significant dilution of remaining investors' interests.
MFS provided a written report to the Board for consideration at its March 2023 meeting that addressed the operation of the Program and provided an assessment of the adequacy and effectiveness of the Program during the period from January 1, 2022 to December 31, 2022 (the “Covered Period”). The report concluded that during the Covered Period the Program had operated effectively in all material respects and had adequately and effectively been implemented to assess and manage the fund’s liquidity risk. MFS also reported that there were no liquidity events that impacted the fund or its ability to timely meet redemptions without dilution to existing shareholders during the Covered Period.
There can be no assurance that the Program will achieve its objectives in the future. Further information on liquidity risk, and other principal risks to which an investment in the fund may be subject, can be found in the prospectus.
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 mfs.com/proxyvoting, 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 by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
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 at https://www.mfs.com/announcements or at mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.
Under the Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.
Federal Tax Information (unaudited)
The fund will notify shareholders of amounts for use in preparing 2023 income tax forms in January 2024. The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund designates $139,969,000 as capital gain dividends paid during the fiscal year.
| FACTS | WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION? |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: |
| • Social Security number and account balances |
| • Account transactions and transaction history |
| • Checking account information and wire transfer instructions |
| When you are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| Who we are |
| Who is providing this notice? | MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., and MFS Heritage Trust Company. |
| What we do |
How does MFS
protect my personal
information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you. |
How does MFS
collect my personal
information? | We collect your personal information, for example, when you |
| • open an account or provide account information |
| • direct us to buy securities or direct us to sell your securities |
| • make a wire transfer |
| We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
| Why can't I limit all sharing? | Federal law gives you the right to limit only |
| • sharing for affiliates' everyday business purposes – information about your creditworthiness |
| • affiliates from using your information to market to you |
| • sharing for nonaffiliates to market to you |
| State laws and individual companies may give you additional rights to limit sharing. |
| Definitions |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice. |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share with nonaffiliates so they can market to you. |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. |
| • MFS doesn't jointly market. |
| Other important information |
| If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. |
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MFS® will send you prospectuses, reports, and proxies directly via e-mail so you will get information faster with less mailbox clutter.
To sign up:
1. Go to mfs.com.
2. Log in via MFS® Access.
3. Select eDelivery.
If you own your MFS fund shares through a financial institution or a retirement plan, MFS® TALK, MFS® Access, or eDelivery may not be available to you.
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 219341
Kansas City, MO 64121-9341
OVERNIGHT MAIL
MFS Service Center, Inc.
Suite 219341
430 W 7th Street
Kansas City, MO 64105-1407
Annual Report
August 31, 2023
MFS® U.S. Government Cash Reserve Fund
MFS® U.S. Government Cash Reserve Fund
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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 • MAY LOSE VALUE • NO BANK GUARANTEE
Composition including fixed income credit quality (a)(u)
| A-1+ | 53.7% |
| A-1 | 46.4% |
| Other Assets Less Liabilities | (0.1)% |
Maturity breakdown (u)
| 0 - 7 days | 42.3% |
| 8 - 29 days | 26.6% |
| 30 - 59 days | 21.0% |
| 60 - 89 days | 10.2% |
| Other Assets Less Liabilities | (0.1)% |
| (a) | Ratings are assigned to portfolio 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 scale. All ratings are subject to change. The fund did not hold unrated securities. The fund is not rated by these agencies. |
| (u) | For purposes of this presentation, accrued interest, where applicable, is included. |
From time to time Other Assets Less Liabilities may be negative due to the timing of cash receipts and disbursements.
Percentages are based on net assets as of August 31, 2023.
The portfolio is actively managed and current holdings may be different.
Performance Summary THROUGH 8/31/23
Total returns as well as the current 7-day yield have been provided for the applicable time periods. Performance results reflect the percentage change in net asset value, including the reinvestment of any dividends and capital gains distributions. (See Notes to Performance Summary.)
Performance data shown represents past performance and is no guarantee of future results. You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect the sponsor will provide financial support to the fund at any time. The performance shown does not reflect the deduction of taxes, if any, that a shareholder would pay on fund distributions or the redemption of fund shares.
| Share Class | Inception | 1-Year Total Return (without sales charge) | Current 7-day yield |
| A | 9/07/93 | 3.83% | 4.78% |
| B | 12/29/86 | 3.83% | 4.78% |
| C | 4/01/96 | 3.83% | 4.78% |
| I | 9/18/18 | 3.83% | 4.78% |
| R1 | 4/01/05 | 3.82% | 4.78% |
| R2 | 4/01/05 | 3.82% | 4.78% |
| R3 | 4/01/05 | 3.82% | 4.78% |
| R4 | 4/01/05 | 3.83% | 4.78% |
| R6 | 9/18/18 | 3.89% | 4.94% |
| | 1-Year
Total Return |
B
With CDSC (Declining over six years from 4% to 0%) (v) | (0.17)% |
C
With CDSC (1% for 12 months) (v) | 2.83% |
CDSC – Contingent Deferred Sales Charge.
Class I, R1, R2, R3, R4, and R6 shares do not have a sales charge. Certain Class A shares acquired through an exchange may be subject to a CDSC upon redemption depending on when the shares exchanged were originally purchased.
| (v) | Assuming redemption at the end of the applicable period. |
Yields quoted are based on the latest seven days ended as of August 31, 2023, with dividends annualized. The yield quotations more closely reflect the current earnings of the fund than the total return quotations. Shares of the fund can be purchased at net asset value without a sales charge.
Performance Summary - continued
Notes to Performance Summary
Performance results reflect any applicable expense subsidies, waivers and adjustments in effect during the periods shown. Without such subsidies and waivers the fund’s performance results would be less favorable. Please see the prospectus and financial statements for complete details. All results are historical and assume the reinvestment of any dividends and capital gain distributions.
Expense Table
Fund expenses borne by the shareholders during the period,
March 1, 2023 through August 31, 2023
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 March 1, 2023 through August 31, 2023.
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.
Expense Table - continued
Share
Class | | Annualized
Expense
Ratio | Beginning
Account Value
3/01/23 | Ending
Account Value
8/31/23 | Expenses
Paid During
Period (p)
3/01/23-8/31/23 |
| A | Actual | 0.43% | $1,000.00 | $1,022.35 | $2.19 |
| Hypothetical (h) | 0.43% | $1,000.00 | $1,023.04 | $2.19 |
| B | Actual | 0.43% | $1,000.00 | $1,022.34 | $2.19 |
| Hypothetical (h) | 0.43% | $1,000.00 | $1,023.04 | $2.19 |
| C | Actual | 0.43% | $1,000.00 | $1,022.34 | $2.19 |
| Hypothetical (h) | 0.43% | $1,000.00 | $1,023.04 | $2.19 |
| I | Actual | 0.44% | $1,000.00 | $1,022.36 | $2.24 |
| Hypothetical (h) | 0.44% | $1,000.00 | $1,022.99 | $2.24 |
| R1 | Actual | 0.43% | $1,000.00 | $1,022.30 | $2.19 |
| Hypothetical (h) | 0.43% | $1,000.00 | $1,023.04 | $2.19 |
| R2 | Actual | 0.43% | $1,000.00 | $1,022.32 | $2.19 |
| Hypothetical (h) | 0.43% | $1,000.00 | $1,023.04 | $2.19 |
| R3 | Actual | 0.44% | $1,000.00 | $1,022.33 | $2.24 |
| Hypothetical (h) | 0.44% | $1,000.00 | $1,022.99 | $2.24 |
| R4 | Actual | 0.43% | $1,000.00 | $1,022.35 | $2.19 |
| Hypothetical (h) | 0.43% | $1,000.00 | $1,023.04 | $2.19 |
| R6 | Actual | 0.37% | $1,000.00 | $1,022.68 | $1.89 |
| Hypothetical (h) | 0.37% | $1,000.00 | $1,023.34 | $1.89 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Portfolio of Investments
8/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| U.S. Government Agencies and Equivalents (y) – 85.1% |
| Fannie Mae, 5.25%, due 9/05/2023 | | $57,800,000 | $57,766,733 |
| Federal Farm Credit Bank, 5.32%, due 9/13/2023 | | 21,700,000 | 21,662,025 |
| Federal Home Loan Bank, 5.23%, due 9/19/2023 | | 21,000,000 | 20,945,820 |
| Federal Home Loan Bank, 5.31%, due 10/10/2023 | | 28,500,000 | 28,338,215 |
| Freddie Mac, 5.25%, due 9/05/2023 | | 21,250,000 | 21,237,769 |
| U.S. Treasury Bill, 5.33%, due 9/07/2023 | | 51,500,000 | 51,454,895 |
| U.S. Treasury Bill, 5.05%, due 9/12/2023 | | 25,000,000 | 24,961,962 |
| U.S. Treasury Bill, 4.82%, due 9/14/2023 | | 22,250,000 | 22,211,839 |
| U.S. Treasury Bill, 5.33%, due 9/26/2023 | | 37,600,000 | 37,462,669 |
| U.S. Treasury Bill, 5.29%, due 10/10/2023 | | 72,700,000 | 72,288,921 |
| U.S. Treasury Bill, 5.34%, due 11/09/2023 | | 26,120,000 | 25,856,442 |
| U.S. Treasury Bill, 5.36%, due 11/16/2023 | | 23,200,000 | 22,941,054 |
| Total U.S. Government Agencies and Equivalents, at Amortized Cost and Value | | | $407,128,344 |
| Repurchase Agreements – 15.0% | |
BofA Securities, Inc. Repurchase Agreement, 5.27%,
dated 8/31/2023, due 9/01/2023, total to be received $23,947,505
(secured by U.S. Treasury and/or U.S. Government Agency Securities valued at $24,431,104) | | $23,944,000 | $23,944,000 |
Fixed Income Clearing Corp-State Street Bank & Trust Co. Repurchase Agreement, 5.28%,
dated 8/31/2023, due 9/01/2023, total to be received $23,947,512
(secured by U.S. Treasury and/or U.S. Government Agency Securities valued at $24,422,898) | | 23,944,000 | 23,944,000 |
JPMorgan Chase & Co. Repurchase Agreement, 5.28%,
dated 8/31/2023, due 9/01/2023, total to be received $23,947,512
(secured by U.S. Treasury and/or U.S. Government Agency Securities valued at $24,426,537) | | 23,944,000 | 23,944,000 |
| Total Repurchase Agreements, at Cost and Value | | | | $71,832,000 |
|
|
| Other Assets, Less Liabilities – (0.1)% | | | (252,688) |
| Net Assets – 100.0% | | | $478,707,656 |
| (y) | The rate shown represents an annualized yield at time of purchase. |
See Notes to Financial Statements
Financial Statements
Statement of Assets and Liabilities
At 8/31/23
This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.
| Assets | |
| Investments in unaffiliated issuers, at cost and value | $407,128,344 |
| Investments in unaffiliated repurchase agreements, at cost and value | 71,832,000 |
| Cash | 758 |
| Receivables for | |
| Fund shares sold | 498,207 |
| Interest | 10,529 |
| Receivable from investment adviser and distributor | 60,336 |
| Other assets | 528 |
| Total assets | $479,530,702 |
| Liabilities | |
| Payables for | |
| Distributions | $12,119 |
| Fund shares reacquired | 669,274 |
| Payable to affiliates | |
| Administrative services fee | 431 |
| Shareholder servicing costs | 67,632 |
| Payable for independent Trustees' compensation | 3,172 |
| Accrued expenses and other liabilities | 70,418 |
| Total liabilities | $823,046 |
| Net assets | $478,707,656 |
| Net assets consist of | |
| Paid-in capital | $478,716,945 |
| Total distributable earnings (loss) | (9,289) |
| Net assets | $478,707,656 |
| Shares of beneficial interest outstanding | 478,942,464 |
Statement of Assets and Liabilities – continued
| | Net assets | Shares
outstanding | Net asset value
per share |
| Class A | $161,676,900 | 161,756,289 | $1.00 |
| Class B | 3,501,272 | 3,502,986 | 1.00 |
| Class C | 22,344,385 | 22,355,314 | 1.00 |
| Class I | 17,491,953 | 17,500,558 | 1.00 |
| Class R1 | 6,817,690 | 6,821,015 | 1.00 |
| Class R2 | 17,342,135 | 17,350,637 | 1.00 |
| Class R3 | 19,628,289 | 19,637,953 | 1.00 |
| Class R4 | 2,786,647 | 2,788,007 | 1.00 |
| Class R6 | 227,118,385 | 227,229,705 | 1.00 |
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 R6.
See Notes to Financial Statements
Financial Statements
Statement of Operations
Year ended 8/31/23
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 (loss) | |
| Income | |
| Interest | $20,478,967 |
| Other | 1,651 |
| Total investment income | $20,480,618 |
| Expenses | |
| Management fee | $1,962,246 |
| Distribution and service fees | 1,006,811 |
| Shareholder servicing costs | 386,738 |
| Administrative services fee | 81,854 |
| Independent Trustees' compensation | 10,356 |
| Custodian fee | 24,267 |
| Shareholder communications | 12,503 |
| Audit and tax fees | 46,296 |
| Legal fees | 4,192 |
| Miscellaneous | 203,641 |
| Total expenses | $3,738,904 |
| Reduction of expenses by investment adviser and distributor | (1,767,192) |
| Net expenses | $1,971,712 |
| Net investment income (loss) | $18,508,906 |
| Change in net assets from operations | $18,508,906 |
See Notes to Financial Statements
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.
| | Year ended |
| | 8/31/23 | 8/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $18,508,906 | $1,411,816 |
| Net realized gain (loss) | — | (4,685) |
| Change in net assets from operations | $18,508,906 | $1,407,131 |
| Total distributions to shareholders | $(18,508,906) | $(1,446,753) |
| Change in net assets from fund share transactions | $(29,311,697) | $242,804,440 |
| Total change in net assets | $(29,311,697) | $242,764,818 |
| Net assets | | |
| At beginning of period | 508,019,353 | 265,254,535 |
| At end of period | $478,707,656 | $508,019,353 |
See Notes to Financial Statements
Financial Statements
Financial Highlights
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 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 that 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.
| Class A | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.04 | $0.00(w) | $0.00 | $0.00(w) | $0.02 |
| Net realized and unrealized gain (loss) | — | (0.00)(w) | 0.00(w) | 0.00(w) | 0.00(w) |
| Total from investment operations | $0.04 | $0.00(w) | $0.00(w) | $0.00(w) | $0.02 |
| Less distributions declared to shareholders |
| From net investment income | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| From net realized gain | — | (0.00)(w) | — | — | — |
| Total distributions declared to shareholders | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 3.83 | 0.28 | 0.00 | 0.54 | 1.58 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.83 | 0.91 | 0.91 | 0.96 | 0.98 |
| Expenses after expense reductions | 0.43 | 0.21 | 0.05 | 0.44 | 0.72 |
| Net investment income (loss) | 3.74 | 0.33 | 0.00 | 0.44 | 1.57 |
| Net assets at end of period (000 omitted) | $161,677 | $173,514 | $128,482 | $140,426 | $99,511 |
See Notes to Financial Statements
Financial Highlights – continued
| Class B | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.04 | $0.00(w) | $0.00 | $0.00(w) | $0.02 |
| Net realized and unrealized gain (loss) | — | (0.00)(w) | 0.00(w) | 0.00(w) | 0.00(w) |
| Total from investment operations | $0.04 | $0.00(w) | $0.00(w) | $0.00(w) | $0.02 |
| Less distributions declared to shareholders |
| From net investment income | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| From net realized gain | — | (0.00)(w) | — | — | — |
| Total distributions declared to shareholders | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 3.83 | 0.28 | 0.00 | 0.54 | 1.58 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.58 | 1.66 | 1.66 | 1.71 | 1.73 |
| Expenses after expense reductions | 0.43 | 0.18 | 0.05 | 0.47 | 0.72 |
| Net investment income (loss) | 3.68 | 0.25 | 0.00 | 0.49 | 1.57 |
| Net assets at end of period (000 omitted) | $3,501 | $5,194 | $6,792 | $9,528 | $8,977 |
| Class C | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.04 | $0.00(w) | $0.00 | $0.00(w) | $0.02 |
| Net realized and unrealized gain (loss) | — | (0.00)(w) | 0.00(w) | 0.00(w) | 0.00(w) |
| Total from investment operations | $0.04 | $0.00(w) | $0.00(w) | $0.00(w) | $0.02 |
| Less distributions declared to shareholders |
| From net investment income | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| From net realized gain | — | (0.00)(w) | — | — | — |
| Total distributions declared to shareholders | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 3.83 | 0.28 | 0.00 | 0.54 | 1.58 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.58 | 1.66 | 1.66 | 1.71 | 1.73 |
| Expenses after expense reductions | 0.43 | 0.25 | 0.05 | 0.40 | 0.72 |
| Net investment income (loss) | 3.56 | 0.40 | 0.00 | 0.37 | 1.57 |
| Net assets at end of period (000 omitted) | $22,344 | $43,674 | $23,748 | $34,508 | $19,438 |
See Notes to Financial Statements
Financial Highlights – continued
| Class I | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19(i) |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.04 | $0.00(w) | $0.00 | $0.00(w) | $0.02 |
| Net realized and unrealized gain (loss) | — | (0.00)(w) | 0.00(w) | 0.00(w) | 0.00(w) |
| Total from investment operations | $0.04 | $0.00(w) | $0.00(w) | $0.00(w) | $0.02 |
| Less distributions declared to shareholders |
| From net investment income | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| From net realized gain | — | (0.00)(w) | — | — | — |
| Total distributions declared to shareholders | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 3.83 | 0.28 | 0.00 | 0.54 | 1.52(n) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.58 | 0.66 | 0.65 | 0.69 | 0.73(a) |
| Expenses after expense reductions | 0.43 | 0.20 | 0.05 | 0.23 | 0.72(a) |
| Net investment income (loss) | 3.75 | 0.29 | 0.00 | 0.06 | 1.60(a) |
| Net assets at end of period (000 omitted) | $17,492 | $17,382 | $12,819 | $9,797 | $56 |
| Class R1 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.04 | $0.00(w) | $0.00 | $0.00(w) | $0.02 |
| Net realized and unrealized gain (loss) | — | (0.00)(w) | 0.00(w) | 0.00(w) | 0.00(w) |
| Total from investment operations | $0.04 | $0.00(w) | $0.00(w) | $0.00(w) | $0.02 |
| Less distributions declared to shareholders |
| From net investment income | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| From net realized gain | — | (0.00)(w) | — | — | — |
| Total distributions declared to shareholders | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 3.82 | 0.28 | 0.00 | 0.54 | 1.57 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.58 | 1.66 | 1.65 | 1.71 | 1.73 |
| Expenses after expense reductions | 0.43 | 0.19 | 0.05 | 0.47 | 0.72 |
| Net investment income (loss) | 3.70 | 0.27 | 0.00 | 0.48 | 1.57 |
| Net assets at end of period (000 omitted) | $6,818 | $9,298 | $8,761 | $9,209 | $7,610 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R2 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.04 | $0.00(w) | $0.00 | $0.01 | $0.02 |
| Net realized and unrealized gain (loss) | — | (0.00)(w) | 0.00(w) | 0.00(w) | 0.00(w) |
| Total from investment operations | $0.04 | $0.00(w) | $0.00(w) | $0.01 | $0.02 |
| Less distributions declared to shareholders |
| From net investment income | $(0.04) | $(0.00)(w) | $— | $(0.01) | $(0.02) |
| From net realized gain | — | (0.00)(w) | — | — | — |
| Total distributions declared to shareholders | $(0.04) | $(0.00)(w) | $— | $(0.01) | $(0.02) |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 3.82 | 0.28 | 0.00 | 0.54 | 1.57 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.08 | 1.16 | 1.16 | 1.21 | 1.23 |
| Expenses after expense reductions | 0.43 | 0.19 | 0.05 | 0.48 | 0.72 |
| Net investment income (loss) | 3.67 | 0.26 | 0.00 | 0.51 | 1.57 |
| Net assets at end of period (000 omitted) | $17,342 | $23,726 | $26,432 | $33,676 | $31,672 |
| Class R3 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.04 | $0.00(w) | $0.00 | $0.00(w) | $0.02 |
| Net realized and unrealized gain (loss) | — | (0.00)(w) | 0.00(w) | 0.00(w) | 0.00(w) |
| Total from investment operations | $0.04 | $0.00(w) | $0.00(w) | $0.00(w) | $0.02 |
| Less distributions declared to shareholders |
| From net investment income | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| From net realized gain | — | (0.00)(w) | — | — | — |
| Total distributions declared to shareholders | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 3.82 | 0.28 | 0.00 | 0.54 | 1.57 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.83 | 0.91 | 0.90 | 0.96 | 0.98 |
| Expenses after expense reductions | 0.43 | 0.19 | 0.05 | 0.44 | 0.72 |
| Net investment income (loss) | 3.74 | 0.29 | 0.00 | 0.44 | 1.55 |
| Net assets at end of period (000 omitted) | $19,628 | $21,166 | $21,266 | $24,536 | $16,471 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R4 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.04 | $0.00(w) | $0.00 | $0.01 | $0.02 |
| Net realized and unrealized gain (loss) | — | (0.00)(w) | 0.00(w) | 0.00(w) | 0.00(w) |
| Total from investment operations | $0.04 | $0.00(w) | $0.00(w) | $0.01 | $0.02 |
| Less distributions declared to shareholders |
| From net investment income | $(0.04) | $(0.00)(w) | $— | $(0.01) | $(0.02) |
| From net realized gain | — | (0.00)(w) | — | — | — |
| Total distributions declared to shareholders | $(0.04) | $(0.00)(w) | $— | $(0.01) | $(0.02) |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 3.83 | 0.28 | 0.00 | 0.54 | 1.57 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.58 | 0.66 | 0.65 | 0.71 | 0.73 |
| Expenses after expense reductions | 0.43 | 0.19 | 0.05 | 0.49 | 0.72 |
| Net investment income (loss) | 3.77 | 0.27 | 0.00 | 0.54 | 1.57 |
| Net assets at end of period (000 omitted) | $2,787 | $2,684 | $2,676 | $2,709 | $2,676 |
| Class R6 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19(i) |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.04 | $0.01 | $0.00 | $0.00(w) | $0.02 |
| Net realized and unrealized gain (loss) | — | (0.01) | 0.00(w) | 0.00(w) | 0.00(w) |
| Total from investment operations | $0.04 | $0.00(w) | $0.00(w) | $0.00(w) | $0.02 |
| Less distributions declared to shareholders |
| From net investment income | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| From net realized gain | — | (0.00)(w) | — | — | — |
| Total distributions declared to shareholders | $(0.04) | $(0.00)(w) | $— | $(0.00)(w) | $(0.02) |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 3.89 | 0.30 | 0.00 | 0.58 | 1.58(n) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.53 | 0.56 | 0.59 | 0.65 | 0.66(a) |
| Expenses after expense reductions | 0.37 | 0.37 | 0.05 | 0.42 | 0.65(a) |
| Net investment income (loss) | 3.85 | 0.99 | 0.00 | 0.46 | 1.65(a) |
| Net assets at end of period (000 omitted) | $227,118 | $211,381 | $113 | $113 | $54 |
See Notes to Financial Statements
Financial Highlights – continued
| (a) | Annualized. |
| (d) | Per share data is based on average shares outstanding. |
| (i) | For Class I and Class R6, the period is from the class inception, September 18, 2018, through the stated period end. |
| (n) | Not annualized. |
| (r) | Certain expenses have been reduced without which performance would have been lower. |
| (t) | Total returns do not include any applicable sales charges. |
| (w) | Per share amount was less than $0.01. |
See Notes to Financial Statements
Notes to Financial Statements
(1) Business and Organization
MFS U.S. Government Cash Reserve Fund (the fund) is a diversified series of MFS Series Trust I (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 Standards 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.
Balance Sheet Offsetting — 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 International Swaps and Derivatives Association (ISDA) Master Agreement, or similar 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. 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 master netting agreement counterparty is subject. Balance sheet offsetting disclosures, 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 — Subject to its oversight, the fund’s Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund’s adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policies and procedures, market quotations are not considered to be readily available for debt instruments. Debt instruments held by the fund are generally valued at amortized cost, which approximates market value. Amortized cost involves valuing an instrument at its cost as adjusted for amortization of premium or accretion of discount rather than its current market value. The amortized cost value of an instrument can be different from the market value of an instrument.
Notes to Financial Statements - continued
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 significant 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 August 31, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Short-Term Securities | $— | $478,960,344 | $— | $478,960,344 |
For further information regarding security characteristics, see the Portfolio of Investments.
Repurchase Agreements - The fund enters into bilateral repurchase agreements under the terms of Master Repurchase Agreements with approved counterparties, some of which may be novated to the clearing agency, Fixed Income Clearing Corporation (FICC). Each repurchase agreement is recorded at cost. For both bilateral and cleared repurchase agreements, the fund requires that the securities collateral in a repurchase transaction be transferred to a custodian. On a daily basis, the fund monitors the collateral to ensure that its value, including accrued interest, is greater than amounts owed to the fund under each such repurchase agreement. In the event of default, the settlement of a cleared repurchase agreement is guaranteed by FICC. Upon an event of default on a bilateral repurchase agreement, the non-defaulting party may close out all transactions traded under a Master Repurchase 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. At August 31, 2023, the fund had investments in repurchase agreements with a gross value of $71,832,000 in the Statement of Assets and Liabilities. The value of the related collateral exceeded the value of the repurchase agreements at period end.
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 — 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.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
Notes to Financial Statements - continued
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.
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.
During the year ended August 31, 2023, there were no significant adjustments due to differences between book and tax accounting.
The tax character of distributions declared to shareholders for the last two fiscal years is as follows:
| | Year ended
8/31/23 | Year ended
8/31/22 |
| Ordinary income (including any short-term capital gains) | $18,508,906 | $1,446,753 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 8/31/23 | |
| Cost of investments | $478,960,344 |
| Undistributed ordinary income | 10,793 |
| Capital loss carryforwards | (4,685) |
| Other temporary differences | (15,397) |
| Total distributable earnings (loss) | $(9,289) |
As of August 31, 2023, the fund had capital loss carryforwards available to offset future realized gains. These net capital losses may be carried forward indefinitely and their character is retained as short-term and/or long-term losses. Such losses are characterized as follows:
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 and common expenses are allocated to shareholders based on the value of settled shares outstanding of each class. The fund's realized and unrealized gain (loss) 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 C shares will convert to Class A shares approximately eight years after purchase. Effective March 21, 2022, all
Notes to Financial Statements - continued
Class 529B and Class 529C shares were converted into Class 529A shares. Effective May 20, 2022, all Class 529A shares were redeemed. The fund’s distributions declared to shareholders as reported in the Statements of Changes in Net Assets are presented by class as follows:
| | Year
ended
8/31/23 | | Year
ended
8/31/22 |
| Class A | $6,583,697 | | $486,267 |
| Class B | 162,141 | | 15,213 |
| Class C | 1,035,237 | | 122,442 |
| Class I | 622,554 | | 43,743 |
| Class R1 | 319,569 | | 26,149 |
| Class R2 | 729,550 | | 67,713 |
| Class R3 | 690,748 | | 55,479 |
| Class R4 | 102,789 | | 7,536 |
| Class R6 | 8,262,621 | | 616,716 |
| Class 529A | — | | 4,756 |
| Class 529B | — | | 19 |
| Class 529C | — | | 720 |
| Total | $18,508,906 | | $1,446,753 |
(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 based on the fund's average daily net assets:
| Up to $1 billion | 0.40% |
| In excess of $1 billion | 0.35% |
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until December 31, 2023. For the year ended August 31, 2023, this management fee reduction amounted to $63,730, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.39% of the fund’s average daily net assets.
The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, and investment-related expenses, such that total fund operating expenses do not exceed the following rates annually of each class’s average daily net assets:
| Classes |
| A | B | C | I | R1 | R2 | R3 | R4 | R6 |
| 0.45% | 0.45% | 0.45% | 0.45% | 0.45% | 0.45% | 0.45% | 0.45% | 0.37% |
Notes to Financial Statements - continued
This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until December 31, 2024. For the year ended August 31, 2023, this reduction amounted to $696,651, which is included in the reduction of total expenses in the Statement of Operations.
Distributor — 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 MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, 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. The distribution and service fees are computed daily and paid monthly.
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% | 0.00% | $ 440,239 |
| Class B | 0.75% | 0.25% | 1.00% | 0.00% | 44,094 |
| Class C | 0.75% | 0.25% | 1.00% | 0.00% | 290,650 |
| Class R1 | 0.75% | 0.25% | 1.00% | 0.00% | 86,416 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.00% | 99,284 |
| Class R3 | — | 0.25% | 0.25% | 0.00% | 46,128 |
| Total Distribution and Service Fees | | | | | $1,006,811 |
| (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 year ended August 31, 2023 based on each class's average daily net assets. MFD has agreed in writing to waive any distribution and/or service fees for Class A, Class B, Class C, Class R1, Class R2, and Class R3 shares. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue until at least December 31, 2024. These reductions, for the year ended August 31, 2023, for Class A, Class B, Class C, Class R1, Class R2, and Class R3 shares, amounted to $440,239, $44,094, $290,650, $86,416, $99,284, and $46,128, respectively, and are included in the reduction of total expenses in the Statement of Operations. |
Certain Class A shares acquired through an exchange may be subject to a contingent deferred sales charge (CDSC) upon redemption depending on when the shares exchanged were originally purchased. Class B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. Class C shares are subject to
Notes to Financial Statements - continued
a CDSC in the event of a shareholder redemption within 12 months of purchase. All contingent deferred sales charges are paid to MFD and during the year ended August 31, 2023, were as follows:
| | Amount |
| Class A | $42,465 |
| Class B | 6,820 |
| Class C | 4,666 |
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 year ended August 31, 2023, the fee was $149,583, which equated to 0.0305% annually of the fund's average daily net assets. MFSC also receives reimbursement 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 R6 shares do not incur sub-accounting fees. For the year ended August 31, 2023, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $237,155.
Administrator — MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund 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 is computed daily and paid monthly. The administrative services fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.0167% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. 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 from MFS for their services to the fund. 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. The DB plan resulted in a pension expense of $271 and is included in “Independent Trustees’ compensation” in the Statement of Operations for the year ended August 31, 2023. The liability for deferred retirement benefits payable to those former independent Trustees under the DB plan amounted to $3,158 at August 31, 2023, and is included in “Payable for independent Trustees’ compensation” in the Statement of Assets and Liabilities. The deferred retirement benefits compensation fee is accrued daily and paid monthly.
On August 3, 2022, MFS redeemed 51,120 shares of Class R6 for an aggregate amount of $51,120.
Notes to Financial Statements - continued
At August 31, 2023, MFS held 100% of the outstanding shares of Class R4.
(4) 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. The number of shares sold, reinvested and reacquired corresponds to the net proceeds from the sale of shares, reinvestment of distributions and cost of shares reacquired, respectively, since shares are sold and reacquired at $1.00 per share. Transactions in fund shares were as follows:
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| Shares sold | | | |
| Class A | 108,710,224 | | 123,951,695 |
| Class B | 1,303,534 | | 2,804,827 |
| Class C | 14,199,535 | | 40,945,876 |
| Class I | 8,642,718 | | 11,094,678 |
| Class R1 | 1,604,037 | | 5,278,718 |
| Class R2 | 4,229,786 | | 6,705,215 |
| Class R3 | 7,598,397 | | 10,309,753 |
| Class R6 | 57,435,889 | | 236,309,535 |
| Class 529A | — | | 15,058,151 |
| Class 529B | — | | 27,133 |
| Class 529C | — | | 825,851 |
| | 203,724,120 | | 453,311,432 |
Shares issued to shareholders in
reinvestment of distributions | | | |
| Class A | 6,463,828 | | 471,125 |
| Class B | 157,188 | | 14,689 |
| Class C | 1,009,707 | | 121,554 |
| Class I | 615,814 | | 43,511 |
| Class R1 | 319,569 | | 26,150 |
| Class R2 | 728,922 | | 67,713 |
| Class R3 | 690,468 | | 55,478 |
| Class R4 | 102,788 | | 7,536 |
| Class R6 | 8,170,377 | | 616,716 |
| Class 529A | — | | 3,968 |
| Class 529B | — | | 19 |
| Class 529C | — | | 719 |
| | 18,258,661 | | 1,429,178 |
Notes to Financial Statements - continued
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| Shares reacquired | | | |
| Class A | (127,012,391) | | (79,405,284) |
| Class B | (3,154,476) | | (4,420,196) |
| Class C | (36,548,215) | | (21,138,653) |
| Class I | (9,147,729) | | (6,577,364) |
| Class R1 | (4,404,972) | | (4,770,376) |
| Class R2 | (11,344,876) | | (9,487,735) |
| Class R3 | (9,826,584) | | (10,471,625) |
| Class R6 | (49,855,234) | | (25,560,214) |
| Class 529A | — | | (43,002,145) |
| Class 529B | — | | (209,387) |
| Class 529C | — | | (6,893,191) |
| | (251,294,477) | | (211,936,170) |
| Net change | | | |
| Class A | (11,838,339) | | 45,017,536 |
| Class B | (1,693,754) | | (1,600,680) |
| Class C | (21,338,973) | | 19,928,777 |
| Class I | 110,803 | | 4,560,825 |
| Class R1 | (2,481,366) | | 534,492 |
| Class R2 | (6,386,168) | | (2,714,807) |
| Class R3 | (1,537,719) | | (106,394) |
| Class R4 | 102,788 | | 7,536 |
| Class R6 | 15,751,032 | | 211,366,037 |
| Class 529A | — | | (27,940,026) |
| Class 529B | — | | (182,235) |
| Class 529C | — | | (6,066,621) |
| | (29,311,696) | | 242,804,440 |
Effective June 1, 2019, purchases of the fund’s Class B and Class 529B shares were closed to new and existing investors subject to certain exceptions. Effective after the close of business on March 18, 2022, all sales of Class 529B and Class 529C shares were suspended, and Class 529B and Class 529C shares were converted into Class 529A shares of the fund effective March 21, 2022. Effective after the close of business on May 13, 2022, all sales and redemptions of Class 529A shares were suspended, and all Class 529A shares were redeemed on May 20, 2022. Effective at the close of business on May 29, 2020, the fund was closed to all purchases subject to certain exceptions. On March 30, 2023, the fund announced that effective after the close of business on September 29, 2023, purchases of Class R1 and Class R2 shares will be closed to new eligible investors.
Notes to Financial Statements - continued
(5) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate 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 highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. 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 rates equal to customary reference rates plus an agreed upon spread. For the year ended August 31, 2023, the fund’s commitment fee and interest expense were $2,628 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
Report of Independent Registered Public Accounting Firm
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of MFS U.S. Government Cash Reserve Fund (the “Fund”), including the portfolio of investments, as of August 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of August 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund's financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
Report of Independent Registered Public Accounting Firm – continued
evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of August 31, 2023, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 16, 2023
We have served as the auditor of one or more of the MFS investment companies since 1924.
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of October 1, 2023, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and Officer is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
| INTERESTED TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022); President (until December 2018); Chief Investment Officer (until December 2018) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 68) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
| OFFICERS | | | | | | | | |
Christopher R. Bohane (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022); Natixis Investment Managers (investment management), Funds Chief Compliance Officer, Deputy General Counsel & Senior Vice President (until 2018) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 52) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 52) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 48) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
| (h) | Date first appointed to serve as Trustee/Officer of an MFS Fund. Each Trustee has served continuously since appointment unless indicated otherwise. From January 2012 through December 2016, Messrs. DiLorenzo and Yost served as Treasurer and Deputy Treasurer of the Funds, respectively. |
| (j) | Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”). |
| (k) | “Interested person” of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of a position with MFS. The address of MFS is 111 Huntington Avenue, Boston, Massachusetts 02199-7618. |
Trustees and Officers - continued
Each Trustee (other than Messrs. Jones, Kilman and Roberge) has been elected by shareholders and each Trustee and Officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. The Trust does not hold annual meetings for the purpose of electing Trustees, and Trustees are not elected for fixed terms. Under the terms of the Board's retirement policy, an Independent Trustee shall retire at the end of the calendar year in which he or she reaches the earlier of 75 years of age or 15 years of service on the Board (or, in the case of any Independent Trustee who joined the Board prior to 2015, 20 years of service on the Board).
Messrs. Buller, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.
Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116 |
Board Review of Investment Advisory Agreement
MFS U.S. Government Cash Reserve Fund
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-interested (“independent”) Trustees, voting separately, annually approve the continuation of the Fund’s investment advisory agreement with MFS. The Trustees consider matters bearing on the Fund and its advisory arrangements at their meetings throughout the year, including a review of performance data at each regular meeting. In addition, the independent Trustees met several times over the course of three months beginning in May and ending in July, 2023 (“contract review meetings”) for the specific purpose of considering whether to approve the continuation of the investment advisory agreement for the Fund and the other investment companies that the Board oversees (the “MFS Funds”). The independent Trustees were assisted in their evaluation of the Fund’s investment advisory agreement by independent legal counsel, from whom they received separate legal advice and with whom they met separately from MFS during various contract review meetings. The independent Trustees were also assisted in this process by an independent consultant who was retained by and reported to the independent Trustees.
In connection with their deliberations regarding the continuation of the investment advisory agreement, the Trustees, including the independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. The investment advisory agreement for the Fund was considered separately, although the Trustees also took into account the common interests of all MFS Funds in their review. As described below, the Trustees considered the nature, quality, and extent of the various investment advisory, administrative, and shareholder services performed by MFS under the existing investment advisory agreement and other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance of the Fund for various time periods ended December 31, 2022 and the investment performance of a group of funds with substantially similar investment classifications/objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s advisory fees and other expenses and the advisory fees and other expenses of comparable funds identified by Broadridge as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (iii) information provided by MFS on the advisory fees of portfolios of other clients of MFS, including institutional separate accounts and other clients, (iv) information as to whether and to what extent applicable expense waivers, reimbursements or fee “breakpoints” are observed for the Fund, (v) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (vi) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vii) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (viii) information regarding the overall organization of MFS, including information about
Board Review of Investment Advisory Agreement - continued
MFS’ senior management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.
The Trustees’ conclusion as to the continuation of the investment advisory agreement was based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors. It is also important to recognize that the fee arrangements for the Fund and other MFS Funds are the result of years of review and discussion between the independent Trustees and MFS, that certain aspects of such arrangements may receive greater scrutiny in some years than in others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements during the course of the year and in prior years.
Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over the one- and three year periods ended December 31, 2022. The total return performance of the Fund’s Class I shares was in the 4th quintile relative to the other funds in the universe for each of the one- and three-year periods (the 1st quintile being the best performers and the 5th quintile being the worst performers). The Fund began offering Class I shares on September 18, 2018; therefore, no performance data for Class I shares for the five-year period was available. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account information provided by MFS in connection with the contract review meetings, as well as during investment review meetings conducted with portfolio management personnel during the course of the year regarding the Fund’s performance. In addition, the Trustees noted the market conditions affecting all money market funds, in particular the low interest rate environment during portions of the one- and three-year periods, and MFS’ voluntary waiver of all or a portion of its fees to ensure that the Fund avoided a negative yield during certain periods. After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that they were satisfied with MFS’ responses and efforts relating to investment performance.
In assessing the reasonableness of the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s Class I shares as a percentage of average daily net assets and the advisory fee and total expense ratios of the Broadridge expense group based on information provided by Broadridge. The Trustees considered that MFS currently observes an expense limitation for the Fund, which may not be changed without the Trustees’ approval. The Trustees also considered that, according to the data provided by Broadridge (which takes into account any fee reductions or expense limitations that
Board Review of Investment Advisory Agreement - continued
were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate was lower than the Broadridge expense group median and the Fund’s total expense ratio was higher than the Broadridge expense group median.
The Trustees also considered the advisory fees charged by MFS to any institutional separate accounts advised by MFS (“separate accounts”) and unaffiliated investment companies for which MFS serves as subadviser (“subadvised funds”) that have comparable investment strategies to the Fund, if any. In comparing these fees, the Trustees considered information provided by MFS as to the generally broader scope of services provided by MFS to the Fund, as well as the more extensive regulatory burdens imposed on MFS in managing the Fund, in comparison to separate accounts and subadvised funds. The Trustees also considered the higher demands placed on MFS’ investment personnel and trading infrastructure as a result of the daily cash in-flows and out-flows of the Fund in comparison to separate accounts.
The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is subject to a contractual breakpoint that reduces the Fund’s advisory fee rate on average daily net assets over $1 billion. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the breakpoint and the group fee waiver were sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.
The Trustees also considered information prepared by MFS relating to MFS’ costs and profits with respect to the Fund, the MFS Funds considered as a group, and other investment companies and accounts advised by MFS, as well as MFS’ methodologies used to determine and allocate its costs to the MFS Funds, the Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that the advisory fees charged to the Fund represent reasonable compensation in light of the services being provided by MFS to the Fund.
In addition, the Trustees considered MFS’ resources and related efforts to continue to retain, attract and motivate capable personnel to serve the Fund. The Trustees also considered current and developing conditions in the financial services industry, including the presence of large and well-capitalized companies which are spending, and appear to be prepared to continue to spend, substantial sums to engage personnel and to provide services to competing investment companies. In this regard, the Trustees also considered the financial resources of MFS and its ultimate parent, Sun Life Financial Inc. The Trustees also considered the advantages and possible disadvantages to the Fund of having an adviser that also serves other investment companies as well as other accounts.
Board Review of Investment Advisory Agreement - continued
The Trustees also considered the nature, quality, cost, and extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the nature, extent and quality of certain other services MFS performs or arranges for on the Fund’s behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’ interaction with third-party service providers, principally custodians and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-called “fall-out benefits” to MFS such as reputational value derived from serving as investment manager to the MFS Funds. The Trustees also considered that MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses a Fund, if applicable, for the costs of external research acquired through the use of the Fund’s portfolio brokerage commissions.
Based on their evaluation of factors that they deemed to be material, including those factors described above, the Board of Trustees, including the independent Trustees, concluded that the Fund’s investment advisory agreement with MFS should be continued for an additional one-year period, commencing August 1, 2023.
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 mfs.com/proxyvoting, 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 by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Portfolio Holdings Information
The fund files monthly portfolio information with the SEC on Form N-MFP. The fund’s Form N-MFP reports are available on the SEC’s Web site at http://www.sec.gov. A shareholder can also access the fund’s portfolio holdings as of each month end and the fund’s Form N-MFP reports at mfs.com/openendfunds after choosing “Click here for access to Money Market fund reports”.
Further Information
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 at https://www.mfs.com/announcements or at mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.
Under the Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.
Federal Tax Information (unaudited)
The fund will notify shareholders of amounts for use in preparing 2023 income tax forms in January 2024. The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund intends to pass through the maximum amount allowable as Section 163(j) Interest Dividends as defined in Treasury Regulation §1.163(j)-1(b).
| FACTS | WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION? |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: |
| • Social Security number and account balances |
| • Account transactions and transaction history |
| • Checking account information and wire transfer instructions |
| When you are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| Who we are |
| Who is providing this notice? | MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., and MFS Heritage Trust Company. |
| What we do |
How does MFS
protect my personal
information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you. |
How does MFS
collect my personal
information? | We collect your personal information, for example, when you |
| • open an account or provide account information |
| • direct us to buy securities or direct us to sell your securities |
| • make a wire transfer |
| We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
| Why can't I limit all sharing? | Federal law gives you the right to limit only |
| • sharing for affiliates' everyday business purposes – information about your creditworthiness |
| • affiliates from using your information to market to you |
| • sharing for nonaffiliates to market to you |
| State laws and individual companies may give you additional rights to limit sharing. |
| Definitions |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice. |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share with nonaffiliates so they can market to you. |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. |
| • MFS doesn't jointly market. |
| Other important information |
| If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. |
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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 219341
Kansas City, MO 64121-9341
OVERNIGHT MAIL
MFS Service Center, Inc.
Suite 219341
430 W 7th Street
Kansas City, MO 64105-1407
Annual Report
August 31, 2023
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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 • MAY LOSE VALUE • NO BANK GUARANTEE
Portfolio structure
Top ten holdings
| JPMorgan Chase & Co. | 4.1% |
| Comcast Corp., “A” | 2.9% |
| ConocoPhillips | 2.8% |
| Cigna Corp. | 2.8% |
| Marsh & McLennan Cos., Inc. | 2.7% |
| Aon PLC | 2.6% |
| Johnson & Johnson | 2.4% |
| Progressive Corp. | 2.4% |
| Lowe’s Cos., Inc. | 2.3% |
| Texas Instruments, Inc. | 2.3% |
GICS equity sectors (g)
| Financials | 24.4% |
| Health Care | 16.5% |
| Industrials | 15.5% |
| Information Technology | 8.5% |
| Consumer Staples | 7.9% |
| Utilities | 7.7% |
| Energy | 5.5% |
| Communication Services | 3.9% |
| Materials | 3.7% |
| Consumer Discretionary | 3.7% |
| Real Estate | 2.2% |
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Percentages are based on net assets as of August 31, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended August 31, 2023, Class A shares of the MFS Value Fund (fund) provided a total return of 6.90%, at net asset value. This compares with a return of 8.59% for the fund’s benchmark, the Russell 1000® Value Index.
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Those shifts exposed an asset-liability mismatch that forced the closure of several institutions by regulators. Given the importance of small and mid-sized lenders to the provision of credit in the US, concerns were raised in the aftermath of the crisis that credit availability could become constrained, leading to slower economic growth, although those effects have been limited thus far. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as focus turned to the country’s highly-indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks remained focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates.
Against an environment of relatively tight labor markets, tighter global financial conditions and volatile materials prices, investor anxiety appeared to have increased over the potential that corporate profit margins may be past peak for this cycle. That said, signs that supply chains have generally normalized, coupled with low levels of unemployment across developed markets and hopes that inflation levels have peaked, were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the Russell 1000® Value Index, stock selection and an overweight position in the utilities sector detracted from the fund’s performance led by its overweight positions in energy products and services supplier Dominion Energy, power & natural gas distributor Duke Energy and retail electric services provider Southern Company. The share price of Dominion Energy fell following the announcement of an in-depth strategic review of the company’s businesses that appeared to have negatively affected investors’ sentiment.
Management Review - continued
Security selection within both the industrials and consumer staples sectors also held back the fund’s relative returns. Within the industrials sector, not owning shares of diversified industrial conglomerate General Electric, and an overweight position in global security company Northrop Grumman, dampened relative results. The share price of General Electric appreciated on the back of strong organic revenue growth, particularly driven by strength in its Renewables and Aviation divisions, which experienced solid order growth and a favorable sales outlook. Within the consumer staples sector, the fund’s overweight position in retail giant Target further weakened relative performance.
Elsewhere, not owning shares of social networking service provider Meta Platforms and insurance and investment firm Berkshire Hathaway hurt relative results. The share price of Meta Platforms appreciated as the company reported solid revenue growth and implemented robust cost controls, such as job restructuring and property consolidation. Additionally, stronger-than-anticipated user engagement across its applications further supported Meta Platform’s overall financial results. The fund’s overweight positions in pharmaceutical giant Pfizer and securities exchange services provider NASDAQ further detracted from relative performance.
Contributors to Performance
Favorable stock selection within the financials sector contributed to relative performance, led by the fund’s overweight positions in global financial services firm JPMorgan Chase and risk and consultancy services provider Marsh & McLennan. The share price of JPMorgan Chase advanced due to a stronger-than-expected recovery of asset management and global private banking revenues.
An underweight position in the real estate sector also aided relative results. There were no individual stocks within this sector, either in the fund or in the benchmark, that were among the fund's top relative contributors over the reporting period.
Security selection within the consumer discretionary sector also helped relative performance, driven by the fund’s holdings of hotel operator Marriott International(b). The share price of Marriott International benefited from higher-than-anticipated fee income and strong capital returns that reflected off-the-charts international lodging demand.
Stocks in other sectors that supported relative performance included the fund’s overweight positions in diversified industrial manufacturer Eaton, cable services provider Comcast, specialty materials, chemicals and agricultural products developer DuPont de Nemours and industrial products and equipment manufacturer Illinois Tool Works. The share price of Eaton benefited from higher-than-expected operating revenue in the Americas region, driven by a robust backlog of electrical orders and power grid improvement projects. Additionally, the fund’s position in semiconductor industry services provider KLA(b), and not owning shares of poor-performing diversified entertainment company Walt Disney and drugstore retailer CVS Health, further bolstered relative performance.
Management Review - continued
Respectfully,
Portfolio Manager(s)
Katherine Cannan and Nevin Chitkara
| (b) | Security is not a benchmark constituent. |
The views expressed in this report are those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market or other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS portfolio. References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio’s current or future investments.
Performance Summary THROUGH 8/31/23
The following chart illustrates a representative class of the fund’s historical performance in comparison to its benchmark(s). Performance results include the deduction of the maximum applicable sales charge and reflect the percentage change in net asset value, including reinvestment of dividends and capital gains distributions. The performance of other share classes will be greater than or less than that of the class depicted below. Benchmarks are unmanaged and may not be invested in directly. Benchmark returns do not reflect sales charges, commissions or expenses. (See Notes to Performance Summary.)
Performance data shown represents past performance and is no guarantee of future results. Investment return and principal value fluctuate so your shares, when sold, may be worth more or less than the original cost; current performance may be lower or higher than quoted. The performance shown does not reflect the deduction of taxes, if any, that a shareholder would pay on fund distributions or the redemption of fund shares.
Growth of a Hypothetical $10,000 Investment
Performance Summary - continued
Total Returns through 8/31/23
Average annual without sales charge
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| A | 1/02/96 | 6.90% | 7.44% | 9.28% |
| B | 11/04/97 | 6.07% | 6.63% | 8.46% |
| C | 11/05/97 | 6.11% | 6.64% | 8.46% |
| I | 1/02/97 | 7.15% | 7.71% | 9.55% |
| R1 | 4/01/05 | 6.08% | 6.63% | 8.46% |
| R2 | 10/31/03 | 6.62% | 7.17% | 9.00% |
| R3 | 4/01/05 | 6.89% | 7.44% | 9.27% |
| R4 | 4/01/05 | 7.16% | 7.71% | 9.55% |
| R6 | 5/01/06 | 7.28% | 7.82% | 9.67% |
Comparative benchmark(s)
| Russell 1000® Value Index (f) | 8.59% | 7.11% | 9.15% |
Average annual with sales charge
| | | | |
A
With Initial Sales Charge (5.75%) | 0.76% | 6.18% | 8.63% |
B
With CDSC (Declining over six years from 4% to 0%) (v) | 2.09% | 6.32% | 8.46% |
C
With CDSC (1% for 12 months) (v) | 5.11% | 6.64% | 8.46% |
CDSC – Contingent Deferred Sales Charge.
Class I, R1, R2, R3, R4, and R6 shares do not have a sales charge.
| (f) | Source: FactSet Research Systems Inc. |
| (v) | Assuming redemption at the end of the applicable period. |
Benchmark Definition(s)
Russell 1000® Value Index(h) – constructed to provide a comprehensive barometer for the value securities in the large-cap segment of the U.S. equity universe. Companies in this index generally have lower price-to-book ratios and lower forecasted growth values.
It is not possible to invest directly in an index.
| (h) | Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this document. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor, or endorse the content of this document. |
Notes to Performance Summary
Average annual total return represents the average annual change in value for each share class for the periods presented.
Performance Summary - continued
Performance results reflect any applicable expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers the fund's performance results would be less favorable. Please see the prospectus and financial statements for complete details.
Performance results do not include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and may differ from amounts reported in the financial highlights.
From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
Expense Table
Fund expenses borne by the shareholders during the period,
March 1, 2023 through August 31, 2023
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 March 1, 2023 through August 31, 2023.
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.
Expense Table - continued
Share
Class | | Annualized
Expense
Ratio | Beginning
Account Value
3/01/23 | Ending
Account Value
8/31/23 | Expenses
Paid During
Period (p)
3/01/23-8/31/23 |
| A | Actual | 0.79% | $1,000.00 | $1,034.79 | $4.05 |
| Hypothetical (h) | 0.79% | $1,000.00 | $1,021.22 | $4.02 |
| B | Actual | 1.54% | $1,000.00 | $1,030.77 | $7.88 |
| Hypothetical (h) | 1.54% | $1,000.00 | $1,017.44 | $7.83 |
| C | Actual | 1.54% | $1,000.00 | $1,030.85 | $7.88 |
| Hypothetical (h) | 1.54% | $1,000.00 | $1,017.44 | $7.83 |
| I | Actual | 0.54% | $1,000.00 | $1,035.96 | $2.77 |
| Hypothetical (h) | 0.54% | $1,000.00 | $1,022.48 | $2.75 |
| R1 | Actual | 1.54% | $1,000.00 | $1,030.85 | $7.88 |
| Hypothetical (h) | 1.54% | $1,000.00 | $1,017.44 | $7.83 |
| R2 | Actual | 1.04% | $1,000.00 | $1,033.34 | $5.33 |
| Hypothetical (h) | 1.04% | $1,000.00 | $1,019.96 | $5.30 |
| R3 | Actual | 0.79% | $1,000.00 | $1,034.54 | $4.05 |
| Hypothetical (h) | 0.79% | $1,000.00 | $1,021.22 | $4.02 |
| R4 | Actual | 0.54% | $1,000.00 | $1,036.00 | $2.77 |
| Hypothetical (h) | 0.54% | $1,000.00 | $1,022.48 | $2.75 |
| R6 | Actual | 0.44% | $1,000.00 | $1,036.50 | $2.26 |
| Hypothetical (h) | 0.44% | $1,000.00 | $1,022.99 | $2.24 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Portfolio of Investments
8/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 99.5% |
| Aerospace & Defense – 6.3% | |
| General Dynamics Corp. | | 4,433,195 | $1,004,739,315 |
| Honeywell International, Inc. | | 5,422,788 | 1,019,158,777 |
| Northrop Grumman Corp. | | 2,886,421 | 1,250,080,071 |
| RTX Corp. | | 3,864,361 | 332,489,620 |
| | | | | $3,606,467,783 |
| Alcoholic Beverages – 1.6% | |
| Diageo PLC | | 21,569,102 | $886,244,996 |
| Brokerage & Asset Managers – 4.3% | |
| BlackRock, Inc. | | 864,842 | $605,856,415 |
| Citigroup, Inc. | | 15,336,314 | 633,236,405 |
| KKR & Co., Inc. | | 6,283,835 | 394,687,676 |
| NASDAQ, Inc. | | 15,414,666 | 808,961,672 |
| | | | | $2,442,742,168 |
| Business Services – 3.2% | |
| Accenture PLC, “A” | | 3,762,761 | $1,218,269,129 |
| Equifax, Inc. | | 2,854,786 | 590,084,266 |
| | | | | $1,808,353,395 |
| Cable TV – 3.9% | |
| Charter Communications, Inc., “A” (a) | | 1,367,465 | $599,113,766 |
| Comcast Corp., “A” | | 35,036,800 | 1,638,320,768 |
| | | | | $2,237,434,534 |
| Chemicals – 0.8% | |
| PPG Industries, Inc. | | 3,060,384 | $433,840,036 |
| Construction – 1.3% | |
| Otis Worldwide Corp. | | 2,280,489 | $195,095,834 |
| Sherwin-Williams Co. | | 1,998,147 | 542,936,503 |
| | | | | $738,032,337 |
| Consumer Products – 2.3% | |
| Kenvue, Inc. | | 25,157,461 | $579,879,474 |
| Kimberly-Clark Corp. | | 3,609,334 | 464,990,499 |
| Reckitt Benckiser Group PLC | | 3,670,784 | 265,151,368 |
| | | | | $1,310,021,341 |
| Electrical Equipment – 0.7% | |
| Johnson Controls International PLC | | 6,860,412 | $405,175,933 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Electronics – 6.3% | |
| Analog Devices, Inc. | | 4,154,610 | $755,225,006 |
| KLA Corp. | | 1,812,459 | 909,618,798 |
| NXP Semiconductors N.V. | | 3,162,715 | 650,633,730 |
| Texas Instruments, Inc. | | 7,757,090 | 1,303,656,545 |
| | | | | $3,619,134,079 |
| Energy - Independent – 5.5% | |
| ConocoPhillips | | 13,649,007 | $1,624,641,303 |
| EOG Resources, Inc. | | 4,488,043 | 577,252,091 |
| Pioneer Natural Resources Co. | | 3,996,230 | 950,823,004 |
| | | | | $3,152,716,398 |
| Food & Beverages – 2.9% | |
| Archer Daniels Midland Co. | | 2,256,889 | $178,971,298 |
| Nestle S.A. | | 8,003,501 | 964,026,158 |
| PepsiCo, Inc. | | 2,958,071 | 526,299,992 |
| | | | | $1,669,297,448 |
| Gaming & Lodging – 1.4% | |
| Marriott International, Inc., “A” | | 3,907,885 | $795,293,676 |
| Health Maintenance Organizations – 2.8% | |
| Cigna Group | | 5,761,121 | $1,591,567,287 |
| Insurance – 11.1% | |
| Aon PLC | | 4,501,108 | $1,500,624,396 |
| Chubb Ltd. | | 5,669,445 | 1,138,821,417 |
| Marsh & McLennan Cos., Inc. | | 7,863,246 | 1,533,254,338 |
| Progressive Corp. | | 10,154,250 | 1,355,287,747 |
| Travelers Cos., Inc. | | 5,193,403 | 837,332,366 |
| | | | | $6,365,320,264 |
| Machinery & Tools – 4.5% | |
| Eaton Corp. PLC | | 3,992,063 | $919,651,553 |
| Illinois Tool Works, Inc. | | 3,262,427 | 806,961,319 |
| PACCAR, Inc. | | 4,205,736 | 346,090,016 |
| Trane Technologies PLC | | 2,325,340 | 477,299,288 |
| | | | | $2,550,002,176 |
| Major Banks – 6.9% | |
| JPMorgan Chase & Co. | | 16,077,468 | $2,352,615,892 |
| Morgan Stanley | | 12,117,292 | 1,031,787,414 |
| PNC Financial Services Group, Inc. | | 4,387,394 | 529,690,078 |
| | | | | $3,914,093,384 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Medical & Health Technology & Services – 2.1% | |
| McKesson Corp. | | 2,955,071 | $1,218,434,875 |
| Medical Equipment – 4.8% | |
| Abbott Laboratories | | 6,556,721 | $674,686,591 |
| Boston Scientific Corp. (a) | | 9,065,111 | 488,972,087 |
| Danaher Corp. | | 1,129,435 | 299,300,275 |
| Medtronic PLC | | 6,001,011 | 489,082,397 |
| Thermo Fisher Scientific, Inc. | | 1,445,723 | 805,412,283 |
| | | | | $2,757,453,633 |
| Other Banks & Diversified Financials – 2.2% | |
| American Express Co. | | 6,417,813 | $1,013,950,276 |
| Truist Financial Corp. | | 6,972,593 | 213,012,716 |
| | | | | $1,226,962,992 |
| Pharmaceuticals – 6.7% | |
| AbbVie, Inc. | | 2,647,740 | $389,111,870 |
| Johnson & Johnson | | 8,610,262 | 1,392,107,160 |
| Merck & Co., Inc. | | 7,280,802 | 793,461,802 |
| Pfizer, Inc. | | 29,987,529 | 1,060,958,776 |
| Roche Holding AG | | 651,782 | 192,063,004 |
| | | | | $3,827,702,612 |
| Railroad & Shipping – 2.6% | |
| Canadian National Railway Co. | | 2,916,884 | $328,470,307 |
| Union Pacific Corp. | | 5,319,581 | 1,173,339,981 |
| | | | | $1,501,810,288 |
| Real Estate – 2.2% | |
| Prologis, Inc., REIT | | 8,537,734 | $1,060,386,563 |
| Public Storage, Inc., REIT | | 753,957 | 208,378,635 |
| | | | | $1,268,765,198 |
| Specialty Chemicals – 2.0% | |
| Corteva, Inc. | | 5,003,219 | $252,712,591 |
| DuPont de Nemours, Inc. | | 11,497,529 | 884,045,005 |
| | | | | $1,136,757,596 |
| Specialty Stores – 3.5% | |
| Lowe's Cos., Inc. | | 5,681,681 | $1,309,513,837 |
| Target Corp. | | 5,291,327 | 669,617,432 |
| | | | | $1,979,131,269 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Utilities - Electric Power – 7.6% | |
| American Electric Power Co., Inc. | | 3,554,269 | $278,654,690 |
| Dominion Energy, Inc. | | 15,243,611 | 739,924,878 |
| Duke Energy Corp. | | 11,318,483 | 1,005,081,290 |
| Exelon Corp. | | 11,843,940 | 475,178,873 |
| PG&E Corp. (a) | | 21,696,392 | 353,651,190 |
| Southern Co. | | 15,448,329 | 1,046,315,323 |
| Xcel Energy, Inc. | | 8,159,665 | 466,161,661 |
| | | | | $4,364,967,905 |
| Total Common Stocks (Identified Cost, $33,116,978,315) | | $56,807,723,603 |
| Investment Companies (h) – 0.3% |
| Money Market Funds – 0.3% | |
| MFS Institutional Money Market Portfolio, 5.3% (v) (Identified Cost, $160,082,948) | | | 160,082,865 | $160,098,874 |
|
|
| Other Assets, Less Liabilities – 0.2% | | 128,600,600 |
| Net Assets – 100.0% | $57,096,423,077 |
| (a) | Non-income producing security. | | | |
| (h) | An affiliated issuer, which 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. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $160,098,874 and $56,807,723,603, respectively. | | | |
| (v) | Affiliated issuer 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: |
| REIT | Real Estate Investment Trust |
See Notes to Financial Statements
Financial Statements
Statement of Assets and Liabilities
At 8/31/23
This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.
| Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $33,116,978,315) | $56,807,723,603 |
| Investments in affiliated issuers, at value (identified cost, $160,082,948) | 160,098,874 |
| Receivables for | |
| Fund shares sold | 36,108,570 |
| Interest and dividends | 168,884,996 |
| Other assets | 39,785 |
| Total assets | $57,172,855,828 |
| Liabilities | |
| Payable to custodian | $1,070 |
| Payables for | |
| Fund shares reacquired | 58,466,104 |
| Payable to affiliates | |
| Investment adviser | 1,339,072 |
| Administrative services fee | 3,390 |
| Shareholder servicing costs | 14,813,624 |
| Distribution and service fees | 177,390 |
| Payable for independent Trustees' compensation | 2,058 |
| Accrued expenses and other liabilities | 1,630,043 |
| Total liabilities | $76,432,751 |
| Net assets | $57,096,423,077 |
| Net assets consist of | |
| Paid-in capital | $30,697,560,267 |
| Total distributable earnings (loss) | 26,398,862,810 |
| Net assets | $57,096,423,077 |
| Shares of beneficial interest outstanding | 1,181,495,470 |
Statement of Assets and Liabilities – continued
| | Net assets | Shares
outstanding | Net asset value
per share (a) |
| Class A | $7,661,571,558 | 158,932,471 | $48.21 |
| Class B | 26,010,790 | 541,386 | 48.04 |
| Class C | 476,461,407 | 10,014,554 | 47.58 |
| Class I | 24,247,677,138 | 499,546,435 | 48.54 |
| Class R1 | 13,878,065 | 294,640 | 47.10 |
| Class R2 | 298,178,132 | 6,261,267 | 47.62 |
| Class R3 | 2,553,120,708 | 53,218,652 | 47.97 |
| Class R4 | 1,803,819,652 | 37,417,554 | 48.21 |
| Class R6 | 20,015,705,627 | 415,268,511 | 48.20 |
| (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 $51.15 [100 / 94.25 x $48.21]. 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 R6. |
See Notes to Financial Statements
Financial Statements
Statement of Operations
Year ended 8/31/23
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 (loss) | |
| Income | |
| Dividends | $1,413,959,187 |
| Dividends from affiliated issuers | 12,110,074 |
| Income on securities loaned | 1,150,598 |
| Other | 417,940 |
| Interest | 148,584 |
| Foreign taxes withheld | (5,608,280) |
| Total investment income | $1,422,178,103 |
| Expenses | |
| Management fee | $252,309,945 |
| Distribution and service fees | 33,149,099 |
| Shareholder servicing costs | 40,542,980 |
| Administrative services fee | 630,833 |
| Independent Trustees' compensation | 157,594 |
| Custodian fee | 555,113 |
| Shareholder communications | 2,010,263 |
| Audit and tax fees | 63,288 |
| Legal fees | 312,850 |
| Miscellaneous | 2,000,259 |
| Total expenses | $331,732,224 |
| Reduction of expenses by investment adviser and distributor | (7,487,244) |
| Net expenses | $324,244,980 |
| Net investment income (loss) | $1,097,933,123 |
| Realized and unrealized gain (loss) |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $3,510,363,716 |
| Affiliated issuers | 8,542 |
| Foreign currency | (58,758) |
| Net realized gain (loss) | $3,510,313,500 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $(627,528,741) |
| Affiliated issuers | (5,023) |
| Translation of assets and liabilities in foreign currencies | 1,905,909 |
| Net unrealized gain (loss) | $(625,627,855) |
| Net realized and unrealized gain (loss) | $2,884,685,645 |
| Change in net assets from operations | $3,982,618,768 |
See Notes to Financial Statements
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.
| | Year ended |
| | 8/31/23 | 8/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $1,097,933,123 | $1,003,732,902 |
| Net realized gain (loss) | 3,510,313,500 | 3,270,780,892 |
| Net unrealized gain (loss) | (625,627,855) | (8,339,275,510) |
| Change in net assets from operations | $3,982,618,768 | $(4,064,761,716) |
| Total distributions to shareholders | $(4,195,325,497) | $(2,296,655,204) |
| Change in net assets from fund share transactions | $(1,092,875,927) | $(729,015,117) |
| Total change in net assets | $(1,305,582,656) | $(7,090,432,037) |
| Net assets | | |
| At beginning of period | 58,402,005,733 | 65,492,437,770 |
| At end of period | $57,096,423,077 | $58,402,005,733 |
See Notes to Financial Statements
Financial Statements
Financial Highlights
The financial highlights table is intended to help you understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that 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.
| Class A | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $48.43 | $53.60 | $41.31 | $41.31 | $40.82 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.80 | $0.70 | $0.59 | $0.63 | $0.79 |
| Net realized and unrealized gain (loss) | 2.43 | (4.12) | 12.77 | 0.57 | 1.03 |
| Total from investment operations | $3.23 | $(3.42) | $13.36 | $1.20 | $1.82 |
| Less distributions declared to shareholders |
| From net investment income | $(0.76) | $(0.69) | $(0.60) | $(0.65) | $(0.79) |
| From net realized gain | (2.69) | (1.06) | (0.47) | (0.55) | (0.54) |
| Total distributions declared to shareholders | $(3.45) | $(1.75) | $(1.07) | $(1.20) | $(1.33) |
| Net asset value, end of period (x) | $48.21 | $48.43 | $53.60 | $41.31 | $41.31 |
| Total return (%) (r)(s)(t)(x) | 6.90 | (6.59) | 32.85 | 2.93 | 4.85 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.80 | 0.81 | 0.80 | 0.83 | 0.83 |
| Expenses after expense reductions | 0.79 | 0.79 | 0.79 | 0.82 | 0.82 |
| Net investment income (loss) | 1.67 | 1.36 | 1.25 | 1.56 | 2.00 |
| Portfolio turnover | 12 | 12 | 8 | 16 | 11 |
| Net assets at end of period (000 omitted) | $7,661,572 | $7,741,830 | $8,523,158 | $6,460,837 | $6,520,132 |
See Notes to Financial Statements
Financial Highlights – continued
| Class B | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $48.25 | $53.38 | $41.12 | $41.09 | $40.59 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.44 | $0.30 | $0.23 | $0.32 | $0.49 |
| Net realized and unrealized gain (loss) | 2.42 | (4.08) | 12.74 | 0.58 | 1.03 |
| Total from investment operations | $2.86 | $(3.78) | $12.97 | $0.90 | $1.52 |
| Less distributions declared to shareholders |
| From net investment income | $(0.38) | $(0.29) | $(0.24) | $(0.32) | $(0.48) |
| From net realized gain | (2.69) | (1.06) | (0.47) | (0.55) | (0.54) |
| Total distributions declared to shareholders | $(3.07) | $(1.35) | $(0.71) | $(0.87) | $(1.02) |
| Net asset value, end of period (x) | $48.04 | $48.25 | $53.38 | $41.12 | $41.09 |
| Total return (%) (r)(s)(t)(x) | 6.07 | (7.29) | 31.87 | 2.15 | 4.08 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.55 | 1.56 | 1.55 | 1.58 | 1.58 |
| Expenses after expense reductions | 1.54 | 1.54 | 1.54 | 1.56 | 1.57 |
| Net investment income (loss) | 0.92 | 0.59 | 0.50 | 0.79 | 1.24 |
| Portfolio turnover | 12 | 12 | 8 | 16 | 11 |
| Net assets at end of period (000 omitted) | $26,011 | $35,955 | $52,833 | $55,897 | $84,737 |
| Class C | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $47.82 | $52.94 | $40.80 | $40.80 | $40.31 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.43 | $0.30 | $0.23 | $0.32 | $0.49 |
| Net realized and unrealized gain (loss) | 2.42 | (4.05) | 12.63 | 0.56 | 1.03 |
| Total from investment operations | $2.85 | $(3.75) | $12.86 | $0.88 | $1.52 |
| Less distributions declared to shareholders |
| From net investment income | $(0.40) | $(0.31) | $(0.25) | $(0.33) | $(0.49) |
| From net realized gain | (2.69) | (1.06) | (0.47) | (0.55) | (0.54) |
| Total distributions declared to shareholders | $(3.09) | $(1.37) | $(0.72) | $(0.88) | $(1.03) |
| Net asset value, end of period (x) | $47.58 | $47.82 | $52.94 | $40.80 | $40.80 |
| Total return (%) (r)(s)(t)(x) | 6.11 | (7.29) | 31.86 | 2.14 | 4.10 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.55 | 1.56 | 1.55 | 1.58 | 1.58 |
| Expenses after expense reductions | 1.54 | 1.54 | 1.54 | 1.57 | 1.57 |
| Net investment income (loss) | 0.92 | 0.60 | 0.50 | 0.80 | 1.24 |
| Portfolio turnover | 12 | 12 | 8 | 16 | 11 |
| Net assets at end of period (000 omitted) | $476,461 | $562,575 | $686,442 | $650,697 | $881,020 |
See Notes to Financial Statements
Financial Highlights – continued
| Class I | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $48.75 | $53.94 | $41.56 | $41.56 | $41.06 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.93 | $0.83 | $0.71 | $0.74 | $0.90 |
| Net realized and unrealized gain (loss) | 2.44 | (4.14) | 12.85 | 0.56 | 1.02 |
| Total from investment operations | $3.37 | $(3.31) | $13.56 | $1.30 | $1.92 |
| Less distributions declared to shareholders |
| From net investment income | $(0.89) | $(0.82) | $(0.71) | $(0.75) | $(0.88) |
| From net realized gain | (2.69) | (1.06) | (0.47) | (0.55) | (0.54) |
| Total distributions declared to shareholders | $(3.58) | $(1.88) | $(1.18) | $(1.30) | $(1.42) |
| Net asset value, end of period (x) | $48.54 | $48.75 | $53.94 | $41.56 | $41.56 |
| Total return (%) (r)(s)(t)(x) | 7.15 | (6.36) | 33.20 | 3.18 | 5.11 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.55 | 0.56 | 0.55 | 0.58 | 0.58 |
| Expenses after expense reductions | 0.54 | 0.54 | 0.54 | 0.57 | 0.57 |
| Net investment income (loss) | 1.93 | 1.60 | 1.50 | 1.81 | 2.25 |
| Portfolio turnover | 12 | 12 | 8 | 16 | 11 |
| Net assets at end of period (000 omitted) | $24,247,677 | $24,634,555 | $27,444,959 | $21,027,882 | $20,076,773 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R1 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $47.39 | $52.47 | $40.45 | $40.47 | $40.01 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.43 | $0.30 | $0.23 | $0.32 | $0.48 |
| Net realized and unrealized gain (loss) | 2.38 | (4.01) | 12.52 | 0.55 | 1.02 |
| Total from investment operations | $2.81 | $(3.71) | $12.75 | $0.87 | $1.50 |
| Less distributions declared to shareholders |
| From net investment income | $(0.41) | $(0.31) | $(0.26) | $(0.34) | $(0.50) |
| From net realized gain | (2.69) | (1.06) | (0.47) | (0.55) | (0.54) |
| Total distributions declared to shareholders | $(3.10) | $(1.37) | $(0.73) | $(0.89) | $(1.04) |
| Net asset value, end of period (x) | $47.10 | $47.39 | $52.47 | $40.45 | $40.47 |
| Total return (%) (r)(s)(t)(x) | 6.08 | (7.28) | 31.88 | 2.13 | 4.08 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.55 | 1.56 | 1.55 | 1.58 | 1.58 |
| Expenses after expense reductions | 1.54 | 1.54 | 1.54 | 1.57 | 1.57 |
| Net investment income (loss) | 0.92 | 0.60 | 0.50 | 0.80 | 1.24 |
| Portfolio turnover | 12 | 12 | 8 | 16 | 11 |
| Net assets at end of period (000 omitted) | $13,878 | $16,339 | $20,580 | $18,914 | $21,820 |
| Class R2 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $47.88 | $53.01 | $40.86 | $40.87 | $40.39 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.67 | $0.56 | $0.46 | $0.52 | $0.68 |
| Net realized and unrealized gain (loss) | 2.41 | (4.07) | 12.64 | 0.56 | 1.03 |
| Total from investment operations | $3.08 | $(3.51) | $13.10 | $1.08 | $1.71 |
| Less distributions declared to shareholders |
| From net investment income | $(0.65) | $(0.56) | $(0.48) | $(0.54) | $(0.69) |
| From net realized gain | (2.69) | (1.06) | (0.47) | (0.55) | (0.54) |
| Total distributions declared to shareholders | $(3.34) | $(1.62) | $(0.95) | $(1.09) | $(1.23) |
| Net asset value, end of period (x) | $47.62 | $47.88 | $53.01 | $40.86 | $40.87 |
| Total return (%) (r)(s)(t)(x) | 6.62 | (6.83) | 32.53 | 2.66 | 4.60 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 1.05 | 1.06 | 1.05 | 1.08 | 1.08 |
| Expenses after expense reductions | 1.04 | 1.04 | 1.04 | 1.07 | 1.07 |
| Net investment income (loss) | 1.42 | 1.10 | 1.00 | 1.30 | 1.73 |
| Portfolio turnover | 12 | 12 | 8 | 16 | 11 |
| Net assets at end of period (000 omitted) | $298,178 | $323,438 | $409,939 | $359,598 | $437,221 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R3 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $48.22 | $53.37 | $41.14 | $41.15 | $40.66 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.80 | $0.69 | $0.59 | $0.63 | $0.79 |
| Net realized and unrealized gain (loss) | 2.41 | (4.08) | 12.71 | 0.56 | 1.03 |
| Total from investment operations | $3.21 | $(3.39) | $13.30 | $1.19 | $1.82 |
| Less distributions declared to shareholders |
| From net investment income | $(0.77) | $(0.70) | $(0.60) | $(0.65) | $(0.79) |
| From net realized gain | (2.69) | (1.06) | (0.47) | (0.55) | (0.54) |
| Total distributions declared to shareholders | $(3.46) | $(1.76) | $(1.07) | $(1.20) | $(1.33) |
| Net asset value, end of period (x) | $47.97 | $48.22 | $53.37 | $41.14 | $41.15 |
| Total return (%) (r)(s)(t)(x) | 6.87 | (6.58) | 32.85 | 2.92 | 4.87 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.80 | 0.81 | 0.80 | 0.83 | 0.83 |
| Expenses after expense reductions | 0.79 | 0.79 | 0.79 | 0.82 | 0.82 |
| Net investment income (loss) | 1.67 | 1.35 | 1.25 | 1.56 | 1.99 |
| Portfolio turnover | 12 | 12 | 8 | 16 | 11 |
| Net assets at end of period (000 omitted) | $2,553,121 | $2,479,059 | $2,774,355 | $2,036,093 | $2,096,743 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R4 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $48.44 | $53.61 | $41.31 | $41.32 | $40.82 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.92 | $0.82 | $0.70 | $0.73 | $0.89 |
| Net realized and unrealized gain (loss) | 2.43 | (4.11) | 12.78 | 0.56 | 1.03 |
| Total from investment operations | $3.35 | $(3.29) | $13.48 | $1.29 | $1.92 |
| Less distributions declared to shareholders |
| From net investment income | $(0.89) | $(0.82) | $(0.71) | $(0.75) | $(0.88) |
| From net realized gain | (2.69) | (1.06) | (0.47) | (0.55) | (0.54) |
| Total distributions declared to shareholders | $(3.58) | $(1.88) | $(1.18) | $(1.30) | $(1.42) |
| Net asset value, end of period (x) | $48.21 | $48.44 | $53.61 | $41.31 | $41.32 |
| Total return (%) (r)(s)(t)(x) | 7.16 | (6.36) | 33.20 | 3.17 | 5.14 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.55 | 0.56 | 0.55 | 0.58 | 0.58 |
| Expenses after expense reductions | 0.54 | 0.54 | 0.54 | 0.57 | 0.57 |
| Net investment income (loss) | 1.92 | 1.59 | 1.50 | 1.80 | 2.24 |
| Portfolio turnover | 12 | 12 | 8 | 16 | 11 |
| Net assets at end of period (000 omitted) | $1,803,820 | $1,936,377 | $2,625,508 | $2,323,830 | $2,916,674 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R6 | Year ended |
| | 8/31/23 | 8/31/22 | 8/31/21 | 8/31/20 | 8/31/19 |
| Net asset value, beginning of period | $48.43 | $53.60 | $41.31 | $41.32 | $40.83 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.97 | $0.88 | $0.76 | $0.78 | $0.93 |
| Net realized and unrealized gain (loss) | 2.43 | (4.11) | 12.76 | 0.55 | 1.02 |
| Total from investment operations | $3.40 | $(3.23) | $13.52 | $1.33 | $1.95 |
| Less distributions declared to shareholders |
| From net investment income | $(0.94) | $(0.88) | $(0.76) | $(0.79) | $(0.92) |
| From net realized gain | (2.69) | (1.06) | (0.47) | (0.55) | (0.54) |
| Total distributions declared to shareholders | $(3.63) | $(1.94) | $(1.23) | $(1.34) | $(1.46) |
| Net asset value, end of period (x) | $48.20 | $48.43 | $53.60 | $41.31 | $41.32 |
| Total return (%) (r)(s)(t)(x) | 7.28 | (6.26) | 33.33 | 3.29 | 5.22 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions | 0.45 | 0.44 | 0.45 | 0.47 | 0.48 |
| Expenses after expense reductions | 0.44 | 0.43 | 0.44 | 0.46 | 0.47 |
| Net investment income (loss) | 2.03 | 1.72 | 1.60 | 1.92 | 2.35 |
| Portfolio turnover | 12 | 12 | 8 | 16 | 11 |
| Net assets at end of period (000 omitted) | $20,015,706 | $20,671,878 | $22,910,207 | $16,158,507 | $14,716,194 |
| (d) | Per share data is based on average shares outstanding. |
| (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 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
Notes to Financial Statements
(1) Business and Organization
MFS Value Fund (the fund) is a diversified series of MFS Series Trust I (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 Standards 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.
Balance Sheet Offsetting — 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 International Swaps and Derivatives Association (ISDA) Master Agreement, or similar 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. 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 master netting agreement counterparty is subject. Balance sheet offsetting disclosures, 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 — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy and procedures, equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60
Notes to Financial Statements - continued
days or less may be valued at amortized cost, which approximates market value.
Open-end investment companies are generally valued at net asset value per share. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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. In determining values, third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the 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 halt 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 after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's assets or liabilities. These inputs are categorized into three broad levels. In certain cases, 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 significant 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 August 31, 2023 in valuing the fund's assets and liabilities:
Notes to Financial Statements - continued
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities | $56,807,723,603 | $— | $— | $56,807,723,603 |
| Mutual Funds | 160,098,874 | — | — | 160,098,874 |
| Total | $56,967,822,477 | $— | $— | $56,967,822,477 |
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.
Security Loans — Under its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. 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. On loans collateralized by cash, the cash collateral is invested in a money market fund. 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. The lending agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent 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, the lending agent assumes the fund's rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent 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. A portion of the income generated upon investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund and the lending agent. Income from securities lending is separately reported 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. At August 31, 2023, there were no securities on loan or collateral outstanding.
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,
Notes to Financial Statements - continued
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 — 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.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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.
Book/tax differences primarily relate to wash sale loss deferrals, treating a portion of the proceeds from redemptions as a distribution for tax purposes, and redemptions in-kind.
Notes to Financial Statements - continued
The tax character of distributions declared to shareholders for the last two fiscal years is as follows:
| | Year ended
8/31/23 | Year ended
8/31/22 |
| Ordinary income (including any short-term capital gains) | $1,070,687,344 | $1,056,449,863 |
| Long-term capital gains | 3,124,638,153 | 1,240,205,341 |
| Total distributions | $4,195,325,497 | $2,296,655,204 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 8/31/23 | |
| Cost of investments | $33,363,178,226 |
| Gross appreciation | 24,900,632,755 |
| Gross depreciation | (1,295,988,504) |
| Net unrealized appreciation (depreciation) | $23,604,644,251 |
| Undistributed ordinary income | 205,880,062 |
| Undistributed long-term capital gain | 2,587,376,057 |
| Other temporary differences | 962,440 |
| Total distributable earnings (loss) | $26,398,862,810 |
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 and Class C shares will convert to Class A shares approximately eight years after purchase. Effective March 21, 2022, all Class 529B and Class 529C shares were converted into Class 529A shares. Effective
Notes to Financial Statements - continued
May 20, 2022, all Class 529A shares were redeemed. The fund’s distributions declared to shareholders as reported in the Statements of Changes in Net Assets are presented by class as follows:
| | Year
ended
8/31/23 | | Year
ended
8/31/22 |
| Class A | $551,687,615 | | $273,517,488 |
| Class B | 2,129,786 | | 1,216,456 |
| Class C | 35,146,957 | | 17,060,745 |
| Class I | 1,755,219,721 | | 974,046,406 |
| Class R1 | 1,026,641 | | 496,764 |
| Class R2 | 22,240,355 | | 11,816,689 |
| Class R3 | 181,399,016 | | 92,181,871 |
| Class R4 | 138,758,105 | | 86,917,003 |
| Class R6 | 1,507,717,301 | | 838,098,191 |
| Class 529A | — | | 1,199,995 |
| Class 529B | — | | 12,068 |
| Class 529C | — | | 91,528 |
| Total | $4,195,325,497 | | $2,296,655,204 |
(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 based on the fund's average daily net assets:
| Up to $7.5 billion | 0.60% |
| In excess of $7.5 billion and up to $10 billion | 0.53% |
| In excess of $10 billion and up to $20 billion | 0.50% |
| In excess of $20 billion and up to $25 billion | 0.45% |
| In excess of $25 billion and up to $30 billion | 0.42% |
| In excess of $30 billion and up to $35 billion | 0.40% |
| In excess of $35 billion and up to $40 billion | 0.38% |
| In excess of $40 billion and up to $45 billion | 0.36% |
| In excess of $45 billion and up to $50 billion | 0.35% |
| In excess of $50 billion and up to $60 billion | 0.34% |
| In excess of $60 billion and up to $70 billion | 0.33% |
| In excess of $70 billion | 0.32% |
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until December 31, 2023. For the year ended August 31, 2023, this management fee reduction amounted to $7,485,719 which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.42% of the fund's average daily net assets.
Notes to Financial Statements - continued
Distributor — MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $729,985 for the year ended August 31, 2023, 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. The distribution and service fees are computed daily and paid monthly.
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% | $ 19,444,763 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 313,332 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 5,269,675 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 151,017 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 1,565,174 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 6,405,138 |
| Total Distribution and Service Fees | | | | | $33,149,099 |
| (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 year ended August 31, 2023 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 there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates’ seed money. For the year ended
August 31, 2023, this rebate amounted to $1,136, $2, $55, $331, and $1 for Class A, Class B, Class C, Class R2, and Class R3 shares, 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. Class B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. Class C shares are subject to a CDSC in the event of a shareholder redemption within 12 months of purchase. All contingent deferred sales charges are paid to MFD and during the year ended August 31, 2023, were as follows:
| | Amount |
| Class A | $251,761 |
| Class B | 11,805 |
| Class C | 41,994 |
Notes to Financial Statements - continued
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 year ended August 31, 2023, the fee was $1,108,333, which equated to 0.0019% annually of the fund's average daily net assets. MFSC also receives reimbursement 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 R6 shares do not incur sub-accounting fees. For the year ended August 31, 2023, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $39,434,647.
Administrator — MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund 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 is computed daily and paid monthly. The administrative services fee incurred for the year ended August 31, 2023 was equivalent to an annual effective rate of 0.0011% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. 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 from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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. This money market fund does not pay a management fee to MFS but does incur investment and operating costs.
During the year ended August 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $7,401,756 and $48,038,076, respectively. The sales transactions resulted in net realized gains (losses) of $6,186,040.
The adviser has voluntarily undertaken to reimburse the fund from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the year ended August 31, 2023, this reimbursement amounted to $403,777, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended August 31, 2023, purchases and sales of investments, other than in-kind transactions and short-term obligations, aggregated $6,843,817,059 and $10,696,388,829, respectively.
Notes to Financial Statements - 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:
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Class A | 20,294,433 | $967,333,947 | | 25,460,837 | $1,304,528,745 |
| Class B | 15,754 | 744,064 | | 28,780 | 1,448,061 |
| Class C | 1,350,932 | 63,865,236 | | 2,128,366 | 108,930,510 |
| Class I | 88,474,107 | 4,248,776,372 | | 104,177,233 | 5,398,148,950 |
| Class R1 | 93,477 | 4,462,218 | | 71,429 | 3,582,741 |
| Class R2 | 909,315 | 42,973,930 | | 1,017,872 | 51,547,704 |
| Class R3 | 8,233,341 | 390,788,500 | | 9,577,374 | 490,593,967 |
| Class R4 | 6,512,350 | 309,671,787 | | 8,666,712 | 449,117,644 |
| Class R6 | 58,826,001 | 2,802,427,943 | | 69,862,513 | 3,605,133,343 |
| Class 529A | — | — | | 181,738 | 9,356,790 |
| Class 529C | — | — | | 4,314 | 219,593 |
| | 184,709,710 | $8,831,043,997 | | 221,177,168 | $11,422,608,048 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Class A | 9,622,375 | $454,773,857 | | 4,260,498 | $223,606,230 |
| Class B | 43,305 | 2,047,339 | | 21,603 | 1,143,159 |
| Class C | 625,070 | 29,265,383 | | 269,156 | 14,097,412 |
| Class I | 30,616,507 | 1,455,075,269 | | 15,332,772 | 808,558,869 |
| Class R1 | 22,146 | 1,026,641 | | 9,567 | 496,670 |
| Class R2 | 473,548 | 22,137,591 | | 225,850 | 11,770,156 |
| Class R3 | 3,856,794 | 181,396,095 | | 1,763,839 | 92,179,872 |
| Class R4 | 2,861,279 | 135,064,057 | | 1,617,791 | 84,960,067 |
| Class R6 | 29,120,615 | 1,373,877,958 | | 14,489,736 | 758,305,034 |
| Class 529A | — | — | | 22,189 | 1,174,219 |
| Class 529B | — | — | | 230 | 12,068 |
| Class 529C | — | — | | 1,666 | 87,208 |
| | 77,241,639 | $3,654,664,190 | | 38,014,897 | $1,996,390,964 |
Notes to Financial Statements - continued
| | Year ended
8/31/23 | | Year ended
8/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares reacquired | | | | | |
| Class A | (30,835,478) | $(1,469,949,612) | | (28,870,863) | $(1,488,027,464) |
| Class B | (262,928) | (12,473,864) | | (294,900) | (15,068,232) |
| Class C | (3,725,416) | (175,284,541) | | (3,599,146) | (182,095,198) |
| Class I | (124,906,760) | (6,004,551,022) | | (122,942,628) | (6,330,744,591) |
| Class R1 | (165,796) | (7,819,288) | | (128,377) | (6,430,683) |
| Class R2 | (1,876,566) | (88,377,011) | | (2,221,741) | (113,876,779) |
| Class R3 | (10,288,096) | (488,102,680) | | (11,903,542) | (606,937,905) |
| Class R4 | (11,933,485) | (570,618,867) | | (19,281,858) | (995,354,650) |
| Class R6 | (99,479,797) | (4,761,407,229) | | (84,949,346) | (4,358,664,209) |
| Class 529A | — | — | | (952,447) | (45,930,691) |
| Class 529B | — | — | | (9,347) | (478,205) |
| Class 529C | — | — | | (86,922) | (4,405,522) |
| | (283,474,322) | $(13,578,584,114) | | (275,241,117) | $(14,148,014,129) |
| Net change | | | | | |
| Class A | (918,670) | $(47,841,808) | | 850,472 | $40,107,511 |
| Class B | (203,869) | (9,682,461) | | (244,517) | (12,477,012) |
| Class C | (1,749,414) | (82,153,922) | | (1,201,624) | (59,067,276) |
| Class I | (5,816,146) | (300,699,381) | | (3,432,623) | (124,036,772) |
| Class R1 | (50,173) | (2,330,429) | | (47,381) | (2,351,272) |
| Class R2 | (493,703) | (23,265,490) | | (978,019) | (50,558,919) |
| Class R3 | 1,802,039 | 84,081,915 | | (562,329) | (24,164,066) |
| Class R4 | (2,559,856) | (125,883,023) | | (8,997,355) | (461,276,939) |
| Class R6 | (11,533,181) | (585,101,328) | | (597,097) | 4,774,168 |
| Class 529A | — | — | | (748,520) | (35,399,682) |
| Class 529B | — | — | | (9,117) | (466,137) |
| Class 529C | — | — | | (80,942) | (4,098,721) |
| | (21,522,973) | $(1,092,875,927) | | (16,049,052) | $(729,015,117) |
The fund is one of several mutual funds in which certain MFS funds may invest. The MFS funds do not invest in the underlying funds for the purpose of exercising management or control. At the end of the period, the MFS Growth Allocation Fund was the owner of record of approximately 1% of the value of outstanding voting shares of the fund. In addition, the MFS Aggressive Growth Allocation Fund, the MFS Conservative Allocation 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, the MFS Lifetime 2055 Fund, the MFS Lifetime 2060 Fund, the MFS Lifetime 2065 Fund, the MFS Lifetime Income Fund, the MFS Managed Wealth Fund, and the MFS Moderate Allocation Fund were each the owners of record of less than 1% of the value of outstanding voting shares of the fund.
Notes to Financial Statements - continued
Effective June 1, 2019, purchases of the fund’s Class B and Class 529B shares were closed to new and existing investors subject to certain exceptions. Effective after the close of business on March 18, 2022, all sales of Class 529B and Class 529C shares were suspended, and Class 529B and Class 529C shares were converted into Class 529A shares of the fund effective March 21, 2022. Effective after the close of business on May 13, 2022, all sales and redemptions of Class 529A shares were suspended, and all Class 529A shares were redeemed on May 20, 2022. On March 30, 2023, the fund announced that effective after the close of business on September 29, 2023, purchases of Class R1 and Class R2 shares will be closed to new eligible investors.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate 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 highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. 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 rates equal to customary reference rates plus an agreed upon spread. For the year ended August 31, 2023, the fund’s commitment fee and interest expense were $300,345 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in 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 following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $210,070,654 | $5,360,934,889 | $5,410,910,188 | $8,542 | $(5,023) | $160,098,874 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $12,110,074 | $— |
(8) Redemptions In-Kind
On each of the dates listed below, the fund recorded a redemption in-kind of portfolio securities and cash. The redeeming shareholder generally receives a pro rata share of the securities held by the fund. The distribution of such securities generated a
Notes to Financial Statements - continued
realized gain for the fund, which is included in Net realized gain (loss) in the Statement of Operations. For tax purposes, no gains or losses were recognized with respect to the portfolio securities redeemed in-kind.
| Redemption In-Kind Date | | Portfolio Securities
and Cash Amount | | Realized Gain (Loss) |
| November 16, 2022 | | $43,713,254 | | $24,765,112 |
| February 22, 2023 | | $32,716,141 | | $18,042,482 |
| March 17, 2023 | | $125,962,065 | | $65,639,817 |
| August 4, 2023 | | $96,652,082 | | $52,243,640 |
Report of Independent Registered Public Accounting Firm
To the Shareholders of MFS Value Fund and the Board of Trustees of MFS Series Trust I
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of MFS Value Fund (the “Fund”) (one of the funds constituting MFS Series Trust I (the “Trust”)), including the portfolio of investments, as of August 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting MFS Series Trust I) at August 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Report of Independent Registered Public Accounting Firm – continued
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more MFS investment companies since 1993.
Boston, Massachusetts
October 16, 2023
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of October 1, 2023, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and Officer is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
| INTERESTED TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022); President (until December 2018); Chief Investment Officer (until December 2018) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 68) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with Fund | | Trustee/Officer Since(h) | | Number of MFS Funds overseen by the Trustee | | Principal Occupations During
the Past Five Years | | Other Directorships During
the Past Five Years (j) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
| OFFICERS | | | | | | | | |
Christopher R. Bohane (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Trustees and Officers - continued
| Name, Age | | Position(s) Held with
Fund | | Trustee/Officer Since(h) | | Number of MFS Funds for which the Person is an Officer | | Principal Occupations During
the Past Five Years |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022); Natixis Investment Managers (investment management), Funds Chief Compliance Officer, Deputy General Counsel & Senior Vice President (until 2018) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 52) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 52) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 48) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
| (h) | Date first appointed to serve as Trustee/Officer of an MFS Fund. Each Trustee has served continuously since appointment unless indicated otherwise. From January 2012 through December 2016, Messrs. DiLorenzo and Yost served as Treasurer and Deputy Treasurer of the Funds, respectively. |
| (j) | Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”). |
| (k) | “Interested person” of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of a position with MFS. The address of MFS is 111 Huntington Avenue, Boston, Massachusetts 02199-7618. |
Trustees and Officers - continued
Each Trustee (other than Messrs. Jones, Kilman and Roberge) has been elected by shareholders and each Trustee and Officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. The Trust does not hold annual meetings for the purpose of electing Trustees, and Trustees are not elected for fixed terms. Under the terms of the Board's retirement policy, an Independent Trustee shall retire at the end of the calendar year in which he or she reaches the earlier of 75 years of age or 15 years of service on the Board (or, in the case of any Independent Trustee who joined the Board prior to 2015, 20 years of service on the Board).
Messrs. Buller, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.
Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
Katherine Cannan
Nevin Chitkara | |
Board Review of Investment Advisory Agreement
MFS Value Fund
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-interested (“independent”) Trustees, voting separately, annually approve the continuation of the Fund’s investment advisory agreement with MFS. The Trustees consider matters bearing on the Fund and its advisory arrangements at their meetings throughout the year, including a review of performance data at each regular meeting. In addition, the independent Trustees met several times over the course of three months beginning in May and ending in July, 2023 (“contract review meetings”) for the specific purpose of considering whether to approve the continuation of the investment advisory agreement for the Fund and the other investment companies that the Board oversees (the “MFS Funds”). The independent Trustees were assisted in their evaluation of the Fund’s investment advisory agreement by independent legal counsel, from whom they received separate legal advice and with whom they met separately from MFS during various contract review meetings. The independent Trustees were also assisted in this process by an independent consultant who was retained by and reported to the independent Trustees.
In connection with their deliberations regarding the continuation of the investment advisory agreement, the Trustees, including the independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. The investment advisory agreement for the Fund was considered separately, although the Trustees also took into account the common interests of all MFS Funds in their review. As described below, the Trustees considered the nature, quality, and extent of the various investment advisory, administrative, and shareholder services performed by MFS under the existing investment advisory agreement and other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance of the Fund for various time periods ended December 31, 2022 and the investment performance of a group of funds with substantially similar investment classifications/objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s advisory fees and other expenses and the advisory fees and other expenses of comparable funds identified by Broadridge as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (iii) information provided by MFS on the advisory fees of portfolios of other clients of MFS, including institutional separate accounts and other clients, (iv) information as to whether and to what extent applicable expense waivers, reimbursements or fee “breakpoints” are observed for the Fund, (v) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (vi) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vii) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (viii) information regarding the overall organization of MFS, including information about
Board Review of Investment Advisory Agreement - continued
MFS’ senior management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.
The Trustees’ conclusion as to the continuation of the investment advisory agreement was based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors. It is also important to recognize that the fee arrangements for the Fund and other MFS Funds are the result of years of review and discussion between the independent Trustees and MFS, that certain aspects of such arrangements may receive greater scrutiny in some years than in others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements during the course of the year and in prior years.
Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Class I shares in comparison to the performance of funds in its Broadridge performance universe over the five-year period ended December 31, 2022, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Class I shares was in the 2nd quintile relative to the other funds in the universe for this five-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Class I shares was in the 3rd quintile for each of the one- and three-year periods ended December 31, 2022 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account information provided by MFS in connection with the contract review meetings, as well as during investment review meetings conducted with portfolio management personnel during the course of the year regarding the Fund’s performance. After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that they were satisfied with MFS’ responses and efforts relating to investment performance.
In assessing the reasonableness of the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s Class I shares as a percentage of average daily net assets and the advisory fee and total expense ratios of the Broadridge expense group based on information provided by Broadridge. The Trustees considered that, according to the data provided by Broadridge (which takes into account any fee reductions or expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate and total expense ratio were each lower than the Broadridge expense group median.
Board Review of Investment Advisory Agreement - continued
The Trustees also considered the advisory fees charged by MFS to any institutional separate accounts advised by MFS (“separate accounts”) and unaffiliated investment companies for which MFS serves as subadviser (“subadvised funds”) that have comparable investment strategies to the Fund, if any. In comparing these fees, the Trustees considered information provided by MFS as to the generally broader scope of services provided by MFS to the Fund, as well as the more extensive regulatory burdens imposed on MFS in managing the Fund, in comparison to separate accounts and subadvised funds. The Trustees also considered the higher demands placed on MFS’ investment personnel and trading infrastructure as a result of the daily cash in-flows and out-flows of the Fund in comparison to separate accounts.
The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is subject to contractual breakpoints that reduce the Fund’s advisory fee rate on average daily net assets over $7.5 billion, $10 billion, $20 billion, $25 billion, $30 billion, $35 billion, $40 billion, $45 billion, $50 billion, $60 billion, and $70 billion. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the breakpoints and the group fee waiver were sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.
The Trustees also considered information prepared by MFS relating to MFS’ costs and profits with respect to the Fund, the MFS Funds considered as a group, and other investment companies and accounts advised by MFS, as well as MFS’ methodologies used to determine and allocate its costs to the MFS Funds, the Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that the advisory fees charged to the Fund represent reasonable compensation in light of the services being provided by MFS to the Fund.
In addition, the Trustees considered MFS’ resources and related efforts to continue to retain, attract and motivate capable personnel to serve the Fund. The Trustees also considered current and developing conditions in the financial services industry, including the presence of large and well-capitalized companies which are spending, and appear to be prepared to continue to spend, substantial sums to engage personnel and to provide services to competing investment companies. In this regard, the Trustees also considered the financial resources of MFS and its ultimate parent, Sun Life Financial Inc. The Trustees also considered the advantages and possible disadvantages to the Fund of having an adviser that also serves other investment companies as well as other accounts.
The Trustees also considered the nature, quality, cost, and extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund Distributors, Inc., an affiliate of MFS. The
Board Review of Investment Advisory Agreement - continued
Trustees also considered the nature, extent and quality of certain other services MFS performs or arranges for on the Fund’s behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’ interaction with third-party service providers, principally custodians and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-called “fall-out benefits” to MFS such as reputational value derived from serving as investment manager to the MFS Funds. The Trustees also considered that MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses a Fund, if applicable, for the costs of external research acquired through the use of the Fund’s portfolio brokerage commissions.
Based on their evaluation of factors that they deemed to be material, including those factors described above, the Board of Trustees, including the independent Trustees, concluded that the Fund’s investment advisory agreement with MFS should be continued for an additional one-year period, commencing August 1, 2023.
Statement Regarding Liquidity Risk Management Program
The fund has adopted and implemented a liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The fund’s Board of Trustees (the “Board”) has designated MFS as the administrator of the Program. The Program is reasonably designed to assess and manage the liquidity risk of the fund. Liquidity risk is the risk that the fund could not meet requests to redeem shares issued by the fund without significant dilution of remaining investors' interests.
MFS provided a written report to the Board for consideration at its March 2023 meeting that addressed the operation of the Program and provided an assessment of the adequacy and effectiveness of the Program during the period from January 1, 2022 to December 31, 2022 (the “Covered Period”). The report concluded that during the Covered Period the Program had operated effectively in all material respects and had adequately and effectively been implemented to assess and manage the fund’s liquidity risk. MFS also reported that there were no liquidity events that impacted the fund or its ability to timely meet redemptions without dilution to existing shareholders during the Covered Period.
There can be no assurance that the Program will achieve its objectives in the future. Further information on liquidity risk, and other principal risks to which an investment in the fund may be subject, can be found in the prospectus.
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 mfs.com/proxyvoting, 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 by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
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 at https://www.mfs.com/announcements or at mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.
Under the Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.
Federal Tax Information (unaudited)
The fund will notify shareholders of amounts for use in preparing 2023 income tax forms in January 2024. The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund designates the maximum amount allowable as qualified dividend income eligible to be taxed at the same rate as long-term capital gain.
The fund designates $3,678,444,000 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 95.94% of the ordinary income dividends paid during the prior calendar year qualify for the corporate dividends received deduction.
Federal Tax Information (unaudited) - continued
The fund designates the maximum amount allowable as Section 199A dividends as defined in Proposed Treasury Regulation §1.199A-3(d).
| FACTS | WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION? |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: |
| • Social Security number and account balances |
| • Account transactions and transaction history |
| • Checking account information and wire transfer instructions |
| When you are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| Who we are |
| Who is providing this notice? | MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., and MFS Heritage Trust Company. |
| What we do |
How does MFS
protect my personal
information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you. |
How does MFS
collect my personal
information? | We collect your personal information, for example, when you |
| • open an account or provide account information |
| • direct us to buy securities or direct us to sell your securities |
| • make a wire transfer |
| We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
| Why can't I limit all sharing? | Federal law gives you the right to limit only |
| • sharing for affiliates' everyday business purposes – information about your creditworthiness |
| • affiliates from using your information to market to you |
| • sharing for nonaffiliates to market to you |
| State laws and individual companies may give you additional rights to limit sharing. |
| Definitions |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice. |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share with nonaffiliates so they can market to you. |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. |
| • MFS doesn't jointly market. |
| Other important information |
| If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. |
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.
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 219341
Kansas City, MO 64121-9341
OVERNIGHT MAIL
MFS Service Center, Inc.
Suite 219341
430 W 7th Street
Kansas City, MO 64105-1407
Item 1(b):
Not applicable.
ITEM 2. CODE OF ETHICS.
The Registrant has adopted a Code of Ethics (the "Code") pursuant to Section 406 of the Sarbanes-Oxley Act and as defined in Form N-CSR that applies to the Registrant's principal executive officer and principal financial and accounting officer. During the period covered by this report, the Registrant has not amended any provision in the Code that relates to an element of the Code's definition 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.
A copy of the Code is attached hereto as EX-99.COE.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Messrs. Steven E. Buller, James Kilman, and Clarence Otis, Jr. and Ms. Maryanne L. Roepke, members of the Audit Committee, have been determined by the Board of Trustees in their reasonable business judgment to meet the definition of "audit committee financial expert" as such term is defined in Form N-CSR. In addition, Messrs. Buller, Kilman, and Otis and Ms. Roepke are "independent" members of the Audit Committee (as such term has been defined by the Securities and Exchange Commission in regulations implementing Section 407 of the Sarbanes-Oxley Act of 2002). The Securities and Exchange Commission has stated that the designation of a person as an audit committee financial expert pursuant to this Item 3 on the Form N-CSR does not impose on such a person any duties, obligations or liability that are greater than the duties, obligations or liability imposed on such person as a member of the Audit Committee and the Board of Trustees in the absence of such designation or identification.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Items 4(a) through 4(d) and 4(g):
The Board of Trustees has appointed Deloitte & Touche LLP ("Deloitte") to serve as independent accountants to certain series of the Registrant and Ernst & Young LLP ("E&Y") to serve in the same capacity to certain other series of the Registrant (each a "Fund" and collectively the "Funds"). The tables below set forth the audit fees billed to each Fund as well as fees for non-audit services provided to each Fund and/or to each Fund's investment adviser, Massachusetts Financial Services Company ("MFS"), and to various entities either controlling, controlled by, or under common control with MFS that provide ongoing services to the Funds ("MFS Related Entities").
For the fiscal years ended August 31, 2023 and 2022, audit fees billed to each Fund by Deloitte and E&Y were as follows:
Fees Billed by Deloitte | | Audit Fees |
| 2023 | | 2022 |
MFS Low Volatility Global Equity Fund | 55,647 | | 51,490 |
MFS U.S. Government Cash Reserve Fund | 38,733 | | 35,858 |
Total | 94,380 | | 87,348 |
Fees Billed by E&Y | | Audit Fees |
| 2023 | | 2022 |
MFS Core Equity Fund | 56,135 | | 51,941 |
MFS Low Volatility Equity Fund | 48,577 | | 44,956 |
MFS New Discovery Fund | 54,343 | | 50,285 |
MFS Research International Fund | 58,231 | | 53,879 |
MFS Technology Fund | 56,135 | | 51,941 |
MFS Value Fund | 54,671 | | 50,588 |
Total | 328,092 | | 303,590 |
For the fiscal years ended August 31, 2023 and 2022, fees billed by Deloitte and E&Y for audit-related, tax and other services provided to each Fund and for audit-related, tax and other services provided to MFS and MFS Related Entities were as follows:
Fees Billed by Deloitte | | Audit-Related Fees1 | | Tax Fees2 | | All Other Fees3 |
| 2023 | | | 2022 | 2023 | 2022 | 2023 | 2022 |
To MFS Low Volatility Global | 0 | | | 0 | 0 | 400 | 0 | 0 |
Equity Fund | | | | | | | | | | | | | |
To MFS U.S. Government Cash | 0 | | | 0 | 0 | 400 | 0 | 0 |
Reserve Fund | | | | | | | | | | | | | |
Total fees billed by Deloitte | 0 | | | 0 | 0 | 800 | 0 | 0 |
To above Funds | | | | | | | | | | | | | |
| | | | | | | | |
Fees Billed by Deloitte | | Audit-Related Fees1 | | Tax Fees2 | | All Other Fees3 |
| 2023 | | | 2022 | 2023 | 2022 | 2023 | 2022 |
To MFS and MFS Related | 0 | | | 0 | 0 | 0 | | 0 | 7,580 |
Entities of MFS Low Volatility | | | | | | | | | | | | | |
Global Equity Fund* | | | | | | | | | | | | | |
To MFS and MFS Related | 0 | | | 0 | 0 | 0 | | 0 | 7,580 |
Entities of MFS U.S. | | | | | | | | | | | | | |
Government Cash Reserve | | | | | | | | | | | | | |
Fund* | | | | | | | | | | | | | |
Fees Billed by Deloitte | | | | | | | Aggregate Fees for Non-audit Services | |
| | | | | | 2023 | | | | 2022 | |
To MFS Low Volatility Global Equity Fund, | | 0 | | | | 7,980 | |
MFS and MFS Related Entities# | | | | | | | | | | | | | |
To MFS U.S. Government Cash Reserve Fund, MFS | | 0 | | | | 7,980 | |
and MFS Related Entities# | | | | | | | | | | | | | |
| | | | | | | | | | |
Fees Billed by E&Y | | Audit-Related Fees1 | | Tax Fees2 | | All Other Fees4 |
| | 2023 | | | 2022 | | 2023 | | 2022 | | 2023 | 2022 |
| | | | | | | | | | | | |
To MFS Core Equity Fund | | 0 | | | 0 | | 636 | | 644 | | 0 | 882 |
To MFS Low Volatility Equity | | 0 | | | 0 | | 259 | | 644 | | 0 | 98 |
Fund | | | | | | | | | | | | | |
To MFS New Discovery Fund | | 0 | | | 0 | | 636 | | 644 | | 0 | 491 |
| | | | | | | | | | | | |
To MFS Research International | | 0 | | | 0 | | 636 | | 644 | | 0 | 2,560 |
Fund | | | | | | | | | | | | | |
To MFS Technology Fund | | 0 | | | 0 | | 636 | | 644 | | 0 | 363 |
To MFS Value Fund | | 0 | | 0 | | 636 | | 644 | | 0 | | 9,889 | |
Total fees billed by E&Y | | 0 | | 0 | | 3,439 | | 3,864 | | 0 | | 14,283 | |
To above Funds | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Fees Billed by E&Y | | Audit-Related Fees1 | | Tax Fees2 | | All Other Fees4 |
| | 2023 | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | |
| | | | | | | | | | | | | | |
To MFS and MFS Related | | 0 | | 662,511 | | 0 | | 0 | | 3,600 | | 111,415 | |
Entities of MFS Core Equity | | | | | | | | | | | | | | |
Fund* | | | | | | | | | | | | | | |
To MFS and MFS Related | | 0 | | 662,511 | | 0 | | 0 | | 3,600 | | 111,415 | |
Entities of Low Volatility | | | | | | | | | | | | | | |
Equity Fund* | | | | | | | | | | | | | | |
To MFS and MFS Related | | 0 | | 662,511 | | 0 | | 0 | | 3,600 | | 111,415 | |
Entities of MFS New | | | | | | | | | | | | | | |
Discovery Fund* | | | | | | | | | | | | | | |
To MFS and MFS Related | | 0 | | 662,511 | | 0 | | 0 | | 3,600 | | 111,415 | |
Entities of MFS Research | | | | | | | | | | | | | | |
International Fund* | | | | | | | | | | | | | | |
To MFS and MFS Related | | 0 | | 662,511 | | 0 | | 0 | | 3,600 | | 111,415 | |
Entities of MFS Technology | | | | | | | | | | | | | | |
Fund* | | | | | | | | | | | | | | |
To MFS and MFS Related | | 0 | | 662,511 | | 0 | | 0 | | 3,600 | | 111,415 | |
Entities of MFS Value Fund* | | | | | | | | | | | | | | |
| | | | | | |
Fees Billed by E&Y | | | Aggregate Fees for Non-audit Services | | |
| | | | 2023 | | | | | | 2022 | | | |
To MFS Core Equity Fund, MFS and | | | 228,986 | | | | | | 955,882 | | |
MFS Related Entities# | | | | | | | | | | | | | |
To Low Volatility Equity Fund, MFS | | | 228,609 | | | | | | 955,098 | | |
and MFS Related Entities# | | | | | | | | | | | | | |
To MFS New Discovery Fund, MFS and | | | 228,986 | | | | | | 955,491 | | |
MFS Related Entities# | | | | | | | | | | | | | |
To MFS Research International Fund, | | | 228,986 | | | | | | 957,560 | | |
MFS and MFS Related Entities# | | | | | | | | | | | | | |
To MFS Technology Fund, MFS and | | | 228,986 | | | | | | 955,363 | | |
MFS Related Entities# | | | | | | | | | | | | | |
To MFS Value Fund, MFS and MFS | | | 228,986 | | | | | | 964,889 | | |
Related Entities# | | | | | | | | | | | | | |
*This amount reflects the fees billed to MFS and MFS Related Entities for non-audit services relating directly to the operations and financial reporting of the Funds (portions of which services also related to the operations and financial reporting of other funds within the MFS Funds complex).
# This amount reflects the aggregate fees billed by Deloitte or E&Y for non-audit services rendered to the Funds and for non-audit services rendered to MFS and the MFS Related Entities.
1 The fees included under "Audit-Related Fees" are fees related to assurance and related services that are reasonably related to the performance of the audit or review of financial statements, but not reported under ''Audit Fees,'' including accounting consultations, agreed- upon procedure reports, attestation reports, comfort letters and internal control reviews.
2 The fees included under "Tax Fees" are fees associated with tax compliance, tax advice and tax planning, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews and tax distribution and analysis.
3 The fees included under "All Other Fees" are fees for products and services provided by Deloitte other than those reported under "Audit Fees," "Audit-Related Fees" and "Tax Fees".
4 The fees included under "All Other Fees" are fees for products and services provided by E&Y other than those reported under "Audit Fees," "Audit-Related Fees" and "Tax Fees," including fees for services related to review of internal controls and review of Rule 38a-1 compliance program.
Item 4(e)(1):
Set forth below are the policies and procedures established by the Audit Committee of the Board of Trustees relating to the pre-approval of audit and non-audit related services:
To the extent required by applicable law, pre-approval by the Audit Committee of the Board is needed for all audit and permissible non-audit services rendered to the Fund and all permissible non-audit services rendered to MFS or MFS Related Entities if the services relate directly to the operations and financial reporting of the Registrant. Pre-approval is currently on an engagement-by-engagement basis. In the event pre- approval of such services is necessary between regular meetings of the Audit Committee and it is not practical to wait to seek pre-approval at the next regular meeting of the Audit Committee, pre-approval of such services may be referred to the Chair of the Audit Committee for
approval; provided that the Chair may not pre-approve any individual engagement for such services exceeding $50,000 or multiple engagements for such services in the aggregate exceeding $100,000 in each period between regular meetings of the Audit Committee. Any engagement pre-approved by the Chair between regular meetings of the Audit Committee shall be presented for ratification by the entire Audit Committee at its next regularly scheduled meeting.
Item 4(e)(2):
None, or 0%, of the services relating to the Audit-Related Fees, Tax Fees and All Other Fees paid by the Fund and MFS and MFS Related Entities relating directly to the operations and financial reporting of the Registrant disclosed above were approved by the audit committee pursuant to paragraphs (c)(7)(i)(C) of Rule 2-01 of Regulation S-X (which permits audit committee approval after the start of the engagement with respect to services other than audit, review or attest services, if certain conditions are satisfied).
Item 4(f):
Not applicable.
Item 4(h):
The Registrant's Audit Committee has considered whether the provision by a Registrant's independent registered public accounting firm of non-audit services to MFS and MFS Related Entities that were not pre-approved by the Committee (because such services did not relate directly to the operations and financial reporting of the Registrant) was compatible with maintaining the independence of the independent registered public accounting firm as the Registrant's principal auditors.
Item 4(i):
Not applicable.
Item 4(j):
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the Registrant.
ITEM 6. INVESTMENTS
A schedule of investments for each series covered by this Form N-CSR is included as part of the report to shareholders of such series under Item 1(a) of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the Registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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 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. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 13. EXHIBITS.
(a)(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: Attached hereto as EX-99.COE.
(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 as EX-99.302CERT.
(3)Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable.
(4)Change in the registrant's independent public accountant. Not applicable.
(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 as EX-99.906CERT.
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.
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 I
By (Signature and Title)*
/S/ DAVID L. DILORENZO
David L. DiLorenzo, President
Date: October 16, 2023
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)*
/S/ DAVID L. DILORENZO
David L. DiLorenzo, President (Principal Executive Officer)
Date: October 16, 2023
By (Signature and Title)*
/S/ JAMES O. YOST
James O. Yost, Treasurer (Principal Financial Officer and Accounting Officer) Date: October 16, 2023
* Print name and title of each signing officer under his or her signature.
