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 811-06102
MFS SERIES TRUST VI
(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
111 Huntington Avenue
Boston, Massachusetts 02199
(Name and address of agents for service)
Registrant's telephone number, including area code: (617) 954-5000
Date of fiscal year end: October 31
Date of reporting period: October 31, 2022
ITEM 1. REPORTS TO STOCKHOLDERS.
Item 1(a):
Annual Report
October 31, 2022
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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
LETTER FROM THE CHAIR AND CEO
Dear Shareholders:
Global markets have recently been buffeted by a series of crosscurrents, including rising inflation, tighter financial conditions, and evolving geopolitical tensions. Consequently, at a time when global growth faces multiple headwinds, central banks have been presented with the challenge of reining in rising prices without tipping economies into recession. The U.S. Federal Reserve has made it clear that rates must move higher and tighter policy must be sustained to restore price stability and that this will likely bring some pain to households and businesses. Against that backdrop, richly valued, interest rate–sensitive growth equities have been hit particularly hard by rising interest rates. Volatility in fixed income and currency markets has picked up, with fiscal policy missteps in the United Kingdom leading to a crisis of market confidence that ultimately resulted in the ouster of Prime Minister Liz Truss. That episode could forewarn other governments to avoid policy overreach.
There are, however, encouraging signs for the markets. China has modestly relaxed its zero-COVID policy, and cases globally, while numerous, appear to be causing fewer serious illnesses. Meanwhile, unemployment is low and global supply chain bottlenecks are easing, though lingering coronavirus restrictions in China and disruptions stemming from Russia’s invasion of Ukraine could hamper these advances. Additionally, easier Chinese monetary and regulatory policies and the record pace of corporate stock buybacks are supportive elements, albeit in an otherwise turbulent investment environment.
It is important to have a deep understanding of company fundamentals during times of market transition, and we have built our unique global research platform to do just that.
At MFS®, we put our clients’ assets to work responsibly by carefully navigating increasingly complex global capital markets. Our investment team is guided by a commitment to long-term fundamental investing. Our global investment platform — combining collective expertise, long-term discipline, and thoughtful risk management — seeks to uncover what we believe are the best, most durable investment ideas in markets around the world, enabling us to potentially create value for investors.
Respectfully,
Michael W. Roberge
Chair and Chief Executive Officer
MFS Investment Management
December 15, 2022
The opinions expressed in this letter are subject to change and may not be relied upon for investment advice. No forecasts can be guaranteed.
Portfolio structure
Top ten holdings
| NextEra Energy, Inc. | 11.8% |
| PG&E Corp. | 5.8% |
| Sempra Energy | 5.3% |
| Dominion Energy, Inc. | 4.7% |
| Southern Co. | 3.3% |
| Constellation Energy | 3.3% |
| American Electric Power Co., Inc. | 3.1% |
| Iberdrola S.A. | 3.1% |
| DTE Energy Co. | 3.0% |
| Edison International | 3.0% |
Top five industries
| Utilities - Electric Power | 84.0% |
| Energy - Renewables | 5.5% |
| Telecommunications - Wireless | 4.6% |
| Natural Gas - Distribution | 2.3% |
| Cable TV | 1.7% |
Issuer country weightings (x)
| United States | 75.0% |
| Spain | 5.7% |
| Germany | 4.8% |
| Portugal | 4.1% |
| United Kingdom | 3.8% |
| Italy | 2.0% |
| Brazil | 1.2% |
| Canada | 0.9% |
| Hong Kong | 0.6% |
| Other Countries | 1.9% |
| (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. |
Where the fund holds convertible bonds, they are treated as part of the equity portion of the portfolio.
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 October 31, 2022.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended October 31, 2022, Class A shares of the MFS Utilities Fund (fund) provided a total return of -0.50%, at net asset value. This compares with a return of -14.61% for the fund’s benchmark, the Standard & Poor’s 500 Stock Index, and a return of 2.88% for the fund’s other benchmark, the Standard & Poor’s 500 Utilities Index.
Market Environment
During the reporting period, markets continued to grapple with the strongest global inflationary pressures in decades along with signs of slowing economic growth. Intermittent coronavirus flareups, particularly in China, where home-grown vaccines have proved less effective than elsewhere, kept supply chains stretched for a considerable period. At the same time, the reopening of the economy in the parts of the world where the virus has been better contained has led to a shift in consumption patterns in favor of services, straining already tight labor markets in most developed economies, while reducing demand for manufactured goods, primarily from Asia. As a result of Russia’s invasion of Ukraine, geopolitical considerations, such as sanctions and trade bans, have resulted in additional supply chain tumult and volatile global energy prices. Taken together, these factors have contributed to market volatility.
The ripple effects from the Russian invasion further complicated the mission central banks must undertake to rein in surging inflation. Energy shocks have historically resulted in global growth slowdowns, if not pullbacks, so policymakers will find themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, policymakers remained focused on corralling inflation, although investors appeared to have expected varying degrees of action from the central banks. The Fed was expected to be the most hawkish developed market central bank and the European Central Bank less so, given the growth-depleting effects on Europe's economy stemming from the invasion, while the Bank of Japan remained on the monetary sidelines, leading to a dramatic weakening of the yen.
Against an environment of still-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, tentative signs that supply chain bottlenecks (particularly semiconductors) may be easing, low levels of unemployment across developed markets and somewhat easier prices for non-energy raw materials were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the Standard & Poor’s 500 Utilities Index, the fund’s allocation to the wireless communications industry, for which the benchmark has no exposure, detracted from the relative performance. Here, the fund’s holdings of telecommunications services provider Cellnex Telecom(b) (Spain) and real estate investment trust SBA Communications(b) held back relative results. The share price of Cellnex Telecom fell as the lack of a share buyback plan appeared to have weighed on the stock.
Management Review - continued
Security selection within the renewables industry also held back relative results, led by the fund’s holdings of renewable energy company EDP Renovaveis(b) (Portugal). The share price of EDP Renovaveis retreated as the company reported weaker-than-expected financial results due to lower selling prices, which affected revenues, and foreign exchange headwinds.
Stocks in other industries that further weakened relative performance included the fund’s holdings of electricity and gas distributor Enel(b) (Italy), cable services provider Charter Communications(b), electric services provider SSE(b) (United Kingdom), electric utility company Iberdrola(b) (Spain), gas distributor China Resources Gas(b) (Hong Kong) and integrated utility company EDP-Energias De Portugal(b) (Portugal). Not owning shares of energy products and services supplier Consolidated Edison further dampened relative returns.
Contributors to Performance
An underweight exposure to the water utilities industry contributed to relative performance. Here, not owning shares of public utility firm American Water Works benefited relative performance. The stock price of American Water Works declined as the company’s earnings results came in softer than anticipated, driven by an increase in operations and maintenance expenses due to higher inflationary pressures.
Elsewhere, the fund’s underweight holdings of electricity provider NextEra Energy, power & natural gas distributor Duke Energy, electricity and natural gas provider Public Service Enterprise Group and utility services provider Exelon aided relative results. The fund’s position in utility company PG&E, which was not a benchmark constituent until October 2022, also contributed to relative performance. The share price of PG&E rose as management reiterated its favorable forward-looking earnings guidance, which appeared to have supported investor sentiment. Avoiding shares of poor-performing natural gas and electricity distributor Eversource Energy benefited relative returns. Additionally, the fund’s holdings of energy-based holding company Equatorial Energia(b) (Brazil) and electricity generation company Energisa(b) (Brazil) further strengthened relative results. The timing of the fund’s ownership in shares of utility company PPL added to the fund’s positive relative performance.
Respectfully,
Portfolio Manager(s)
Claud Davis and J. Scott Walker
| (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 10/31/22
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 10/31/22
Average annual without sales charge
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| A | 2/14/92 | (0.50)% | 7.45% | 7.90% |
| B | 9/07/93 | (1.24)% | 6.64% | 7.10% |
| C | 1/03/94 | (1.23)% | 6.65% | 7.10% |
| I | 1/02/97 | (0.24)% | 7.72% | 8.17% |
| R1 | 4/01/05 | (1.27)% | 6.64% | 7.09% |
| R2 | 10/31/03 | (0.72)% | 7.18% | 7.64% |
| R3 | 4/01/05 | (0.49)% | 7.44% | 7.91% |
| R4 | 4/01/05 | (0.24)% | 7.72% | 8.17% |
| R6 | 6/01/12 | (0.15)% | 7.81% | 8.28% |
Comparative benchmark(s)
| Standard & Poor’s 500 Stock Index (f) | (14.61)% | 10.44% | 12.79% |
| Standard & Poor’s 500 Utilities Index (f) | 2.88% | 7.43% | 9.92% |
Average annual with sales charge
| | | | |
A
With Initial Sales Charge (5.75%) | (6.22)% | 6.18% | 7.27% |
B
With CDSC (Declining over six years from 4% to 0%) (v) | (4.99)% | 6.33% | 7.10% |
C
With CDSC (1% for 12 months) (v) | (2.16)% | 6.65% | 7.10% |
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 500 Utilities Index(g) – a market capitalization-weighted index designed to measure the utilities sector, including those companies considered electric, gas or water utilities, or companies that operate as independent producers and/or distributors of power.
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,
May 1, 2022 through October 31, 2022
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 May 1, 2022 through October 31, 2022.
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
5/01/22 | Ending
Account Value
10/31/22 | Expenses
Paid During
Period (p)
5/01/22-10/31/22 |
| A | Actual | 0.99% | $1,000.00 | $947.24 | $4.86 |
| Hypothetical (h) | 0.99% | $1,000.00 | $1,020.21 | $5.04 |
| B | Actual | 1.74% | $1,000.00 | $943.51 | $8.52 |
| Hypothetical (h) | 1.74% | $1,000.00 | $1,016.43 | $8.84 |
| C | Actual | 1.74% | $1,000.00 | $943.62 | $8.52 |
| Hypothetical (h) | 1.74% | $1,000.00 | $1,016.43 | $8.84 |
| I | Actual | 0.74% | $1,000.00 | $948.75 | $3.63 |
| Hypothetical (h) | 0.74% | $1,000.00 | $1,021.48 | $3.77 |
| R1 | Actual | 1.74% | $1,000.00 | $943.62 | $8.52 |
| Hypothetical (h) | 1.74% | $1,000.00 | $1,016.43 | $8.84 |
| R2 | Actual | 1.24% | $1,000.00 | $946.17 | $6.08 |
| Hypothetical (h) | 1.24% | $1,000.00 | $1,018.95 | $6.31 |
| R3 | Actual | 0.99% | $1,000.00 | $947.25 | $4.86 |
| Hypothetical (h) | 0.99% | $1,000.00 | $1,020.21 | $5.04 |
| R4 | Actual | 0.74% | $1,000.00 | $948.55 | $3.63 |
| Hypothetical (h) | 0.74% | $1,000.00 | $1,021.48 | $3.77 |
| R6 | Actual | 0.65% | $1,000.00 | $949.20 | $3.19 |
| Hypothetical (h) | 0.65% | $1,000.00 | $1,021.93 | $3.31 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Portfolio of Investments
10/31/22
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 98.6% |
| Cable TV – 1.7% | |
| Charter Communications, Inc., “A” (a) | | 141,756 | $52,112,341 |
| Energy - Renewables – 5.5% | |
| AES Corp. | | 2,598,030 | $67,964,465 |
| EDP Renovaveis S.A. | | 4,284,383 | 90,227,425 |
| Orsted A/S | | 144,311 | 11,902,214 |
| | | | | $170,094,104 |
| Natural Gas - Distribution – 2.3% | |
| Atmos Energy Corp. | | 396,597 | $42,257,410 |
| China Resources Gas Group Ltd. | | 5,300,000 | 13,571,306 |
| UGI Corp. | | 473,425 | 16,726,105 |
| | | | | $72,554,821 |
| Telecommunications - Wireless – 4.6% | |
| Cellnex Telecom S.A. | | 2,524,435 | $82,576,983 |
| Rogers Communications, Inc. | | 662,134 | 27,562,388 |
| SBA Communications Corp., REIT | | 31,651,177 | 32,695,956 |
| | | | | $142,835,327 |
| Telephone Services – 0.6% | |
| Hellenic Telecommunications Organization S.A. | | 1,128,630 | $17,734,361 |
| Utilities - Electric Power – 83.4% | |
| ALLETE, Inc. | | 479,128 | $26,960,532 |
| Alliant Energy Corp. | | 1,012,452 | 52,819,621 |
| Ameren Corp. | | 823,663 | 67,145,008 |
| American Electric Power Co., Inc. | | 1,159,829 | 101,972,166 |
| CenterPoint Energy, Inc. | | 1,863,113 | 53,303,663 |
| CLP Holdings Ltd. | | 2,853,500 | 19,157,472 |
| Constellation Energy | | 1,081,725 | 102,266,281 |
| Dominion Energy, Inc. | | 2,062,813 | 144,335,026 |
| DTE Energy Co. | | 838,028 | 93,951,319 |
| Duke Energy Corp. | | 273,571 | 25,491,346 |
| E.ON SE | | 6,504,304 | 54,482,698 |
| Edison International | | 1,559,343 | 93,622,954 |
| Enel S.p.A. | | 14,069,969 | 62,835,099 |
| Energias de Portugal S.A. | | 8,226,319 | 35,973,744 |
| Energisa S.A., IEU | | 2,012,500 | 18,891,903 |
| Entergy Corp. | | 652,648 | 69,924,707 |
| Equatorial Energia S.A. | | 3,330,800 | 19,363,842 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Utilities - Electric Power – continued | |
| Evergy, Inc. | | 1,054,093 | $64,436,705 |
| Exelon Corp. | | 2,083,978 | 80,420,711 |
| FirstEnergy Corp. | | 1,089,506 | 41,085,271 |
| Iberdrola S.A. | | 9,325,674 | 94,695,400 |
| National Grid PLC | | 4,384,007 | 47,681,562 |
| NextEra Energy, Inc. | | 4,709,596 | 364,993,690 |
| PG&E Corp. (a) | | 11,977,202 | 178,819,626 |
| Pinnacle West Capital Corp. | | 463,246 | 31,134,764 |
| Portland General Electric Co. | | 779,717 | 35,040,482 |
| PPL Corp. | | 2,914,682 | 77,209,926 |
| Public Service Enterprise Group, Inc. | | 1,067,539 | 59,856,912 |
| RWE AG | | 2,398,544 | 92,420,380 |
| Sempra Energy | | 1,092,290 | 164,870,252 |
| Southern Co. | | 1,567,987 | 102,671,789 |
| SSE PLC | | 3,803,726 | 67,874,479 |
| Vistra Corp. | | 574,260 | 13,190,752 |
| Xcel Energy, Inc. | | 239,821 | 15,614,745 |
| | | | | $2,574,514,827 |
| Utilities - Water – 0.5% | |
| Veolia Environnement S.A. | | 683,579 | $15,260,605 |
| Total Common Stocks (Identified Cost, $2,385,071,036) | | $3,045,106,386 |
| Convertible Preferred Stocks – 0.6% |
| Utilities - Electric Power – 0.6% | |
| DTE Energy Co., 6.25% | | 175,400 | $9,010,298 |
| NextEra Energy, Inc., 5.279% | | 175,500 | 8,676,720 |
| Total Convertible Preferred Stocks (Identified Cost, $14,864,754) | $17,687,018 |
| Investment Companies (h) – 0.8% |
| Money Market Funds – 0.8% | |
| MFS Institutional Money Market Portfolio, 3.02% (v) (Identified Cost, $25,671,531) | | | 25,673,111 | $25,673,112 |
|
|
| Other Assets, Less Liabilities – (0.0)% | | (575,821) |
| Net Assets – 100.0% | $3,087,890,695 |
| (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 $25,673,112 and $3,062,793,404, 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: |
| IEU | International Equity Unit |
| 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 |
| EUR | Euro |
| GBP | British Pound |
Derivative Contracts at 10/31/22
| Forward Foreign Currency Exchange Contracts |
Currency
Purchased | Currency
Sold | Counterparty | Settlement
Date | Unrealized
Appreciation
(Depreciation) |
| Asset Derivatives |
| EUR | 41,808,569 | USD | 41,585,031 | BNP Paribas S.A. | 1/20/2023 | $14,281 |
| GBP | 8,489,261 | USD | 9,606,186 | State Street Bank Corp. | 1/20/2023 | 156,769 |
| USD | 2,162,114 | EUR | 2,150,438 | State Street Bank Corp. | 1/20/2023 | 22,439 |
| | | | | | | $193,489 |
| Liability Derivatives |
| USD | 15,593,694 | CAD | 21,456,970 | HSBC Bank | 1/20/2023 | $(173,738) |
| USD | 1,904,054 | CAD | 2,596,196 | Morgan Stanley Capital Services, Inc. | 1/20/2023 | (3,735) |
| USD | 367,635,968 | EUR | 370,065,133 | HSBC Bank | 1/20/2023 | (576,940) |
| USD | 10,268,828 | EUR | 10,326,938 | State Street Bank Corp. | 1/20/2023 | (6,422) |
| USD | 71,766,329 | GBP | 63,876,917 | HSBC Bank | 1/20/2023 | (1,694,423) |
| USD | 6,772,368 | GBP | 5,991,903 | Morgan Stanley Capital Services, Inc. | 1/20/2023 | (118,535) |
| USD | 2,953,700 | GBP | 2,568,855 | State Street Bank Corp. | 1/20/2023 | (576) |
| | | | | | | $(2,574,369) |
See Notes to Financial Statements
Financial Statements
Statement of Assets and Liabilities
At 10/31/22
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, $2,399,935,790) | $3,062,793,404 |
| Investments in affiliated issuers, at value (identified cost, $25,671,531) | 25,673,112 |
| Cash | 356,581 |
| Receivables for | |
| Forward foreign currency exchange contracts | 193,489 |
| Fund shares sold | 1,968,284 |
| Dividends | 3,425,766 |
| Total assets | $3,094,410,636 |
| Liabilities | |
| Payable to custodian | $338,047 |
| Payables for | |
| Forward foreign currency exchange contracts | 2,574,369 |
| Fund shares reacquired | 2,195,228 |
| Payable to affiliates | |
| Investment adviser | 198,496 |
| Administrative services fee | 5,130 |
| Shareholder servicing costs | 901,319 |
| Distribution and service fees | 74,664 |
| Payable for independent Trustees' compensation | 10 |
| Deferred country tax expense payable | 15 |
| Accrued expenses and other liabilities | 232,663 |
| Total liabilities | $6,519,941 |
| Net assets | $3,087,890,695 |
| Net assets consist of | |
| Paid-in capital | $2,230,477,153 |
| Total distributable earnings (loss) | 857,413,542 |
| Net assets | $3,087,890,695 |
| Shares of beneficial interest outstanding | 134,828,588 |
Statement of Assets and Liabilities – continued
| | Net assets | Shares
outstanding | Net asset value
per share (a) |
| Class A | $1,861,664,903 | 81,367,452 | $22.88 |
| Class B | 31,760,062 | 1,395,833 | 22.75 |
| Class C | 104,022,385 | 4,572,253 | 22.75 |
| Class I | 714,999,097 | 31,089,953 | 23.00 |
| Class R1 | 5,242,606 | 231,424 | 22.65 |
| Class R2 | 38,534,005 | 1,690,217 | 22.80 |
| Class R3 | 217,043,285 | 9,494,713 | 22.86 |
| Class R4 | 23,368,939 | 1,020,019 | 22.91 |
| Class R6 | 91,255,413 | 3,966,724 | 23.01 |
| (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 $24.28 [100 / 94.25 x $22.88]. 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 10/31/22
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 | $89,025,472 |
| Dividends from affiliated issuers | 495,085 |
| Other | 164,741 |
| Income on securities loaned | 61,628 |
| Foreign taxes withheld | (2,437,310) |
| Total investment income | $87,309,616 |
| Expenses | |
| Management fee | $19,249,189 |
| Distribution and service fees | 7,405,358 |
| Shareholder servicing costs | 3,532,892 |
| Administrative services fee | 501,474 |
| Independent Trustees' compensation | 48,353 |
| Custodian fee | 331,564 |
| Shareholder communications | 198,776 |
| Audit and tax fees | 74,021 |
| Legal fees | 12,479 |
| Miscellaneous | 236,917 |
| Total expenses | $31,591,023 |
| Fees paid indirectly | (67,925) |
| Reduction of expenses by investment adviser and distributor | (453,419) |
| Net expenses | $31,069,679 |
| Net investment income (loss) | $56,239,937 |
Statement of Operations – continued
| Realized and unrealized gain (loss) |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers (net of $798,164 country tax) | $138,065,792 |
| Affiliated issuers | (6,751) |
| Forward foreign currency exchange contracts | 87,315,039 |
| Foreign currency | (479,269) |
| Net realized gain (loss) | $224,894,811 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers (net of $246,880 decrease in deferred country tax) | $(292,994,204) |
| Affiliated issuers | 1,581 |
| Forward foreign currency exchange contracts | (3,721,370) |
| Translation of assets and liabilities in foreign currencies | (163,781) |
| Net unrealized gain (loss) | $(296,877,774) |
| Net realized and unrealized gain (loss) | $(71,982,963) |
| Change in net assets from operations | $(15,743,026) |
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 |
| | 10/31/22 | 10/31/21 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $56,239,937 | $63,220,532 |
| Net realized gain (loss) | 224,894,811 | 89,255,386 |
| Net unrealized gain (loss) | (296,877,774) | 392,059,377 |
| Change in net assets from operations | $(15,743,026) | $544,535,295 |
| Total distributions to shareholders | $(196,277,058) | $(161,630,114) |
| Change in net assets from fund share transactions | $108,277,444 | $(204,657,745) |
| Total change in net assets | $(103,742,640) | $178,247,436 |
| Net assets | | |
| At beginning of period | 3,191,633,335 | 3,013,385,899 |
| At end of period | $3,087,890,695 | $3,191,633,335 |
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 |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $24.45 | $21.65 | $23.54 | $20.08 | $20.46 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.41 | $0.46 | $0.54 | $0.55 | $0.55 |
| Net realized and unrealized gain (loss) | (0.48) | 3.52 | (0.93) | 3.73 | (0.35) |
| Total from investment operations | $(0.07) | $3.98 | $(0.39) | $4.28 | $0.20 |
| Less distributions declared to shareholders |
| From net investment income | $(0.44) | $(0.26) | $(0.31) | $(0.49) | $(0.50) |
| From net realized gain | (1.06) | (0.92) | (1.19) | (0.33) | (0.08) |
| Total distributions declared to shareholders | $(1.50) | $(1.18) | $(1.50) | $(0.82) | $(0.58) |
| Net asset value, end of period (x) | $22.88 | $24.45 | $21.65 | $23.54 | $20.08 |
| Total return (%) (r)(s)(t)(x) | (0.50) | 18.90 | (1.70) | 21.94 | 0.98 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
| Expenses after expense reductions (f) | 0.99 | 0.99 | 0.99 | 0.99 | 0.99 |
| Net investment income (loss) | 1.72 | 1.98 | 2.51 | 2.51 | 2.70 |
| Portfolio turnover | 23 | 12 | 30 | 30 | 23 |
| Net assets at end of period (000 omitted) | $1,861,665 | $1,951,571 | $1,744,515 | $1,956,524 | $1,706,956 |
See Notes to Financial Statements
Financial Highlights – continued
| Class B | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $24.30 | $21.53 | $23.42 | $19.98 | $20.36 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.24 | $0.30 | $0.38 | $0.38 | $0.39 |
| Net realized and unrealized gain (loss) | (0.49) | 3.49 | (0.93) | 3.72 | (0.35) |
| Total from investment operations | $(0.25) | $3.79 | $(0.55) | $4.10 | $0.04 |
| Less distributions declared to shareholders |
| From net investment income | $(0.24) | $(0.10) | $(0.15) | $(0.33) | $(0.34) |
| From net realized gain | (1.06) | (0.92) | (1.19) | (0.33) | (0.08) |
| Total distributions declared to shareholders | $(1.30) | $(1.02) | $(1.34) | $(0.66) | $(0.42) |
| Net asset value, end of period (x) | $22.75 | $24.30 | $21.53 | $23.42 | $19.98 |
| Total return (%) (r)(s)(t)(x) | (1.24) | 18.02 | (2.45) | 21.02 | 0.22 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.75 | 1.75 | 1.75 | 1.75 | 1.75 |
| Expenses after expense reductions (f) | 1.74 | 1.74 | 1.74 | 1.74 | 1.74 |
| Net investment income (loss) | 1.01 | 1.27 | 1.75 | 1.76 | 1.94 |
| Portfolio turnover | 23 | 12 | 30 | 30 | 23 |
| Net assets at end of period (000 omitted) | $31,760 | $49,750 | $63,594 | $99,924 | $113,779 |
| Class C | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $24.30 | $21.53 | $23.42 | $19.98 | $20.36 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.24 | $0.30 | $0.38 | $0.38 | $0.38 |
| Net realized and unrealized gain (loss) | (0.49) | 3.49 | (0.93) | 3.72 | (0.34) |
| Total from investment operations | $(0.25) | $3.79 | $(0.55) | $4.10 | $0.04 |
| Less distributions declared to shareholders |
| From net investment income | $(0.24) | $(0.10) | $(0.15) | $(0.33) | $(0.34) |
| From net realized gain | (1.06) | (0.92) | (1.19) | (0.33) | (0.08) |
| Total distributions declared to shareholders | $(1.30) | $(1.02) | $(1.34) | $(0.66) | $(0.42) |
| Net asset value, end of period (x) | $22.75 | $24.30 | $21.53 | $23.42 | $19.98 |
| Total return (%) (r)(s)(t)(x) | (1.23) | 18.00 | (2.45) | 21.02 | 0.21 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.75 | 1.75 | 1.75 | 1.75 | 1.75 |
| Expenses after expense reductions (f) | 1.74 | 1.74 | 1.74 | 1.74 | 1.74 |
| Net investment income (loss) | 1.00 | 1.28 | 1.76 | 1.75 | 1.91 |
| Portfolio turnover | 23 | 12 | 30 | 30 | 23 |
| Net assets at end of period (000 omitted) | $104,022 | $149,761 | $230,614 | $370,036 | $424,769 |
See Notes to Financial Statements
Financial Highlights – continued
| Class I | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $24.57 | $21.74 | $23.64 | $20.16 | $20.54 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.47 | $0.53 | $0.60 | $0.60 | $0.60 |
| Net realized and unrealized gain (loss) | (0.48) | 3.54 | (0.94) | 3.76 | (0.35) |
| Total from investment operations | $(0.01) | $4.07 | $(0.34) | $4.36 | $0.25 |
| Less distributions declared to shareholders |
| From net investment income | $(0.50) | $(0.32) | $(0.37) | $(0.55) | $(0.55) |
| From net realized gain | (1.06) | (0.92) | (1.19) | (0.33) | (0.08) |
| Total distributions declared to shareholders | $(1.56) | $(1.24) | $(1.56) | $(0.88) | $(0.63) |
| Net asset value, end of period (x) | $23.00 | $24.57 | $21.74 | $23.64 | $20.16 |
| Total return (%) (r)(s)(t)(x) | (0.24) | 19.23 | (1.49) | 22.26 | 1.22 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 0.75 | 0.75 | 0.75 | 0.75 | 0.75 |
| Expenses after expense reductions (f) | 0.74 | 0.74 | 0.74 | 0.74 | 0.74 |
| Net investment income (loss) | 1.96 | 2.24 | 2.76 | 2.77 | 2.93 |
| Portfolio turnover | 23 | 12 | 30 | 30 | 23 |
| Net assets at end of period (000 omitted) | $714,999 | $687,188 | $626,500 | $698,558 | $587,221 |
| Class R1 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $24.23 | $21.47 | $23.37 | $19.94 | $20.32 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.23 | $0.28 | $0.37 | $0.38 | $0.39 |
| Net realized and unrealized gain (loss) | (0.49) | 3.51 | (0.92) | 3.71 | (0.34) |
| Total from investment operations | $(0.26) | $3.79 | $(0.55) | $4.09 | $0.05 |
| Less distributions declared to shareholders |
| From net investment income | $(0.26) | $(0.11) | $(0.16) | $(0.33) | $(0.35) |
| From net realized gain | (1.06) | (0.92) | (1.19) | (0.33) | (0.08) |
| Total distributions declared to shareholders | $(1.32) | $(1.03) | $(1.35) | $(0.66) | $(0.43) |
| Net asset value, end of period (x) | $22.65 | $24.23 | $21.47 | $23.37 | $19.94 |
| Total return (%) (r)(s)(t)(x) | (1.27) | 18.06 | (2.48) | 21.03 | 0.23 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.75 | 1.75 | 1.75 | 1.75 | 1.75 |
| Expenses after expense reductions (f) | 1.74 | 1.74 | 1.74 | 1.74 | 1.74 |
| Net investment income (loss) | 0.96 | 1.23 | 1.75 | 1.77 | 1.93 |
| Portfolio turnover | 23 | 12 | 30 | 30 | 23 |
| Net assets at end of period (000 omitted) | $5,243 | $5,126 | $5,171 | $6,561 | $6,453 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R2 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $24.36 | $21.58 | $23.47 | $20.03 | $20.40 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.35 | $0.41 | $0.48 | $0.49 | $0.50 |
| Net realized and unrealized gain (loss) | (0.47) | 3.50 | (0.92) | 3.72 | (0.35) |
| Total from investment operations | $(0.12) | $3.91 | $(0.44) | $4.21 | $0.15 |
| Less distributions declared to shareholders |
| From net investment income | $(0.38) | $(0.21) | $(0.26) | $(0.44) | $(0.44) |
| From net realized gain | (1.06) | (0.92) | (1.19) | (0.33) | (0.08) |
| Total distributions declared to shareholders | $(1.44) | $(1.13) | $(1.45) | $(0.77) | $(0.52) |
| Net asset value, end of period (x) | $22.80 | $24.36 | $21.58 | $23.47 | $20.03 |
| Total return (%) (r)(s)(t)(x) | (0.72) | 18.60 | (1.96) | 21.59 | 0.77 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.25 | 1.25 | 1.25 | 1.25 | 1.25 |
| Expenses after expense reductions (f) | 1.24 | 1.24 | 1.24 | 1.24 | 1.24 |
| Net investment income (loss) | 1.47 | 1.74 | 2.26 | 2.26 | 2.46 |
| Portfolio turnover | 23 | 12 | 30 | 30 | 23 |
| Net assets at end of period (000 omitted) | $38,534 | $41,968 | $41,020 | $59,224 | $57,733 |
| Class R3 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $24.43 | $21.63 | $23.52 | $20.07 | $20.45 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.41 | $0.47 | $0.54 | $0.57 | $0.55 |
| Net realized and unrealized gain (loss) | (0.48) | 3.51 | (0.93) | 3.71 | (0.35) |
| Total from investment operations | $(0.07) | $3.98 | $(0.39) | $4.28 | $0.20 |
| Less distributions declared to shareholders |
| From net investment income | $(0.44) | $(0.26) | $(0.31) | $(0.50) | $(0.50) |
| From net realized gain | (1.06) | (0.92) | (1.19) | (0.33) | (0.08) |
| Total distributions declared to shareholders | $(1.50) | $(1.18) | $(1.50) | $(0.83) | $(0.58) |
| Net asset value, end of period (x) | $22.86 | $24.43 | $21.63 | $23.52 | $20.07 |
| Total return (%) (r)(s)(t)(x) | (0.49) | 18.91 | (1.71) | 21.92 | 0.97 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
| Expenses after expense reductions (f) | 0.99 | 0.99 | 0.99 | 0.99 | 0.99 |
| Net investment income (loss) | 1.71 | 1.99 | 2.51 | 2.63 | 2.71 |
| Portfolio turnover | 23 | 12 | 30 | 30 | 23 |
| Net assets at end of period (000 omitted) | $217,043 | $201,006 | $201,509 | $279,639 | $72,490 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R4 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $24.48 | $21.67 | $23.56 | $20.10 | $20.48 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.48 | $0.53 | $0.60 | $0.60 | $0.61 |
| Net realized and unrealized gain (loss) | (0.49) | 3.52 | (0.93) | 3.74 | (0.36) |
| Total from investment operations | $(0.01) | $4.05 | $(0.33) | $4.34 | $0.25 |
| Less distributions declared to shareholders |
| From net investment income | $(0.50) | $(0.32) | $(0.37) | $(0.55) | $(0.55) |
| From net realized gain | (1.06) | (0.92) | (1.19) | (0.33) | (0.08) |
| Total distributions declared to shareholders | $(1.56) | $(1.24) | $(1.56) | $(0.88) | $(0.63) |
| Net asset value, end of period (x) | $22.91 | $24.48 | $21.67 | $23.56 | $20.10 |
| Total return (%) (r)(s)(t)(x) | (0.24) | 19.19 | (1.46) | 22.22 | 1.22 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 0.75 | 0.75 | 0.75 | 0.75 | 0.75 |
| Expenses after expense reductions (f) | 0.74 | 0.74 | 0.74 | 0.74 | 0.74 |
| Net investment income (loss) | 1.98 | 2.25 | 2.76 | 2.76 | 3.01 |
| Portfolio turnover | 23 | 12 | 30 | 30 | 23 |
| Net assets at end of period (000 omitted) | $23,369 | $25,766 | $24,920 | $49,530 | $48,109 |
| Class R6 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $24.58 | $21.75 | $23.64 | $20.17 | $20.54 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.49 | $0.54 | $0.61 | $0.61 | $0.61 |
| Net realized and unrealized gain (loss) | (0.48) | 3.54 | (0.92) | 3.76 | (0.34) |
| Total from investment operations | $0.01 | $4.08 | $(0.31) | $4.37 | $0.27 |
| Less distributions declared to shareholders |
| From net investment income | $(0.52) | $(0.33) | $(0.39) | $(0.57) | $(0.56) |
| From net realized gain | (1.06) | (0.92) | (1.19) | (0.33) | (0.08) |
| Total distributions declared to shareholders | $(1.58) | $(1.25) | $(1.58) | $(0.90) | $(0.64) |
| Net asset value, end of period (x) | $23.01 | $24.58 | $21.75 | $23.64 | $20.17 |
| Total return (%) (r)(s)(t)(x) | (0.15) | 19.31 | (1.36) | 22.29 | 1.36 |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 0.66 | 0.66 | 0.66 | 0.66 | 0.66 |
| Expenses after expense reductions (f) | 0.65 | 0.65 | 0.65 | 0.65 | 0.65 |
| Net investment income (loss) | 2.04 | 2.29 | 2.84 | 2.84 | 3.02 |
| Portfolio turnover | 23 | 12 | 30 | 30 | 23 |
| Net assets at end of period (000 omitted) | $91,255 | $79,499 | $75,542 | $92,437 | $119,752 |
See Notes to Financial Statements
Financial Highlights – continued
| (d) | Per share data is based on average shares outstanding. |
| (f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. See Note 2 in the Notes to Financial Statements for additional information. |
| (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 Utilities Fund (the fund) is a diversified series of MFS Series Trust VI (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 utility 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 utilities sector can be very volatile due to supply and/or demand for services or fuel, financing costs, conservation efforts, the negative impact of regulation, and other factors. 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.
In June 2022, the FASB issued Accounting Standards Update 2022-03, Fair Value Measurement (Topic 820) – Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which affects all entities that have investments in equity securities measured at fair value that are subject to contractual sale restrictions. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is a characteristic of the reporting entity holding the equity security rather than a characteristic of the asset and, therefore, is not considered in measuring the fair value of the equity security. The fund decided to early adopt ASU 2022-03 effective as of June 30, 2022 as the guidance in ASU 2022-03 was consistent with the fund’s existing practices for fair value measurement.
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
Notes to Financial Statements - continued
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. Effective September 8, 2022, and 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 days or less may be valued at amortized cost, which approximates market value.
Forward foreign currency exchange contracts are generally valued at the mean of bid and asked prices for the time period interpolated from rates provided by a third-party pricing service for proximate time periods. 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
Notes to Financial Statements - continued
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. Other financial instruments are derivative instruments, such as forward foreign currency exchange contracts. The following is a summary of the levels used as of October 31, 2022 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities | $3,062,793,404 | $— | $— | $3,062,793,404 |
| Mutual Funds | 25,673,112 | — | — | 25,673,112 |
| Total | $3,088,466,516 | $— | $— | $3,088,466,516 |
| Other Financial Instruments | | | | |
| Forward Foreign Currency Exchange Contracts – Assets | $— | $193,489 | $— | $193,489 |
| Forward Foreign Currency Exchange Contracts – Liabilities | — | (2,574,369) | — | (2,574,369) |
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.
Notes to Financial Statements - continued
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.
The derivative instruments used by the fund during the period were forward foreign currency exchange contracts. 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. The fund's period end derivatives, as presented in the Portfolio of Investments and the associated Derivative Contract tables, generally are indicative of the volume of its derivative activity during the period.
The following table presents, by major type of derivative contract, the fair value, on a gross basis, of the asset and liability components of derivatives held by the fund at October 31, 2022 as reported in the Statement of Assets and Liabilities:
| | | Fair Value |
| Risk | Derivative Contracts | Asset Derivatives | Liability Derivatives |
| Foreign Exchange | Forward Foreign Currency Exchange Contracts | $193,489 | $(2,574,369) |
The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the year ended October 31, 2022 as reported in the Statement of Operations:
| Risk | Forward Foreign
Currency
Exchange
Contracts |
| Foreign Exchange | $87,315,039 |
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 October 31, 2022 as reported in the Statement of Operations:
| Risk | Forward Foreign
Currency
Exchange
Contracts |
| Foreign Exchange | $(3,721,370) |
Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain, but not all, uncleared derivatives, the fund attempts to reduce its exposure to counterparty credit risk whenever possible by entering into an ISDA Master Agreement on a bilateral basis. The ISDA Master Agreement gives each party to the agreement the right to terminate all transactions traded under such agreement if there is a specified deterioration in the credit quality of the other party. Upon an event of default or a termination of the ISDA Master Agreement, the non-defaulting party has the right to close out all transactions
Notes to Financial Statements - continued
traded under such agreement and to net amounts owed under each agreement to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the ISDA Master Agreement could result in a reduction of the fund's credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any.
Collateral and margin requirements differ by type of derivative. For cleared derivatives (e.g., futures contracts, cleared swaps, and exchange-traded options), margin requirements are set by the clearing broker and the clearing house and collateral, in the form of cash or securities, is posted by the fund directly with the clearing broker. Collateral terms are counterparty agreement specific for uncleared derivatives (e.g., forward foreign currency exchange contracts, uncleared swap agreements, and uncleared options) and collateral, in the form of cash and securities, is held in segregated accounts with the fund's custodian in connection with these agreements. For derivatives traded under an ISDA Master Agreement, which contains a credit support annex, the collateral requirements are netted across all transactions traded under such counterparty-specific agreement and an amount is posted from one party to the other to collateralize such obligations. Cash that has been segregated or delivered to cover the fund's collateral or margin obligations under derivative contracts, if any, will be reported separately in the Statement of Assets and Liabilities as restricted cash for uncleared derivatives and/or deposits with brokers for cleared derivatives. Securities pledged as collateral or margin for the same purpose, if any, are noted in the Portfolio of Investments. The fund may be required to make payments of interest on uncovered collateral or margin obligations with the broker. Any such payments are included in “Miscellaneous” expense in the Statement of Operations.
Forward Foreign Currency Exchange Contracts — The fund entered into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. These contracts may be used to hedge the fund’s currency risk or for non-hedging purposes. For hedging purposes, the fund may enter into contracts to deliver or receive foreign currency that the fund will receive from or use in its normal investment activities. The fund may also use contracts to hedge against declines in the value of foreign currency denominated securities due to unfavorable exchange rate movements. For non-hedging purposes, the fund may enter into contracts with the intent of changing the relative exposure of the fund’s portfolio of securities to different currencies to take advantage of anticipated exchange rate changes.
Forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any unrealized gains or losses are recorded as a receivable or payable for forward foreign currency exchange contracts until the contract settlement date. On contract settlement date, any gain or loss on the contract is recorded as realized gains or losses on forward foreign currency exchange contracts.
Risks may arise upon entering into these contracts from unanticipated movements in the value of the contract and from the potential inability of counterparties to meet the terms of their contracts. Generally, the fund’s maximum risk due to counterparty credit risk is the unrealized gain on the contract due to the use of Continuous Linked Settlement, a multicurrency cash settlement system for the centralized settlement of foreign transactions. This risk is mitigated in cases where there is an ISDA Master
Notes to Financial Statements - continued
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.
Security Loans — Under its Securities Lending Agency Agreement with the fund, JPMorgan Chase and Co., 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 October 31, 2022, 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 — Investment transactions are recorded on the trade date. 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. 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
The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Fees Paid Indirectly — The fund's custody fee may be reduced by a credit earned under an arrangement that measures the value of U.S. dollars deposited with the custodian by the fund. The amount of the credit, for the year ended October 31, 2022, is shown as a reduction of total expenses in the Statement of Operations.
Tax Matters and Distributions — The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be subject to capital gains tax imposed by those countries.
Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future.
Book/tax differences primarily relate to wash sale loss deferrals, derivative transactions, 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
10/31/22 | Year ended
10/31/21 |
| Ordinary income (including any short-term capital gains) | $82,777,891 | $35,726,050 |
| Long-term capital gains | 113,499,167 | 125,904,064 |
| Total distributions | $196,277,058 | $161,630,114 |
Notes to Financial Statements - continued
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 10/31/22 | |
| Cost of investments | $2,434,342,920 |
| Gross appreciation | 769,349,660 |
| Gross depreciation | (117,606,944) |
| Net unrealized appreciation (depreciation) | $651,742,716 |
| Undistributed ordinary income | 34,499,036 |
| Undistributed long-term capital gain | 171,382,478 |
| Other temporary differences | (210,688) |
| Total distributable earnings (loss) | $857,413,542 |
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
10/31/22 | | Year
ended
10/31/21 |
| Class A | $118,840,841 | | $94,477,039 |
| Class B | 2,497,443 | | 2,887,495 |
| Class C | 7,663,422 | | 10,265,504 |
| Class I | 45,070,737 | | 35,337,329 |
| Class R1 | 280,651 | | 240,493 |
| Class R2 | 2,436,847 | | 2,050,092 |
| Class R3 | 12,473,140 | | 10,618,983 |
| Class R4 | 1,636,567 | | 1,386,227 |
| Class R6 | 5,377,410 | | 4,366,952 |
| Total | $196,277,058 | | $161,630,114 |
(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 $3 billion | 0.60% |
| In excess of $3 billion and up to $10 billion | 0.55% |
| In excess of $10 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. Effective March 1, 2022, MFS has also agreed in writing to waive at
Notes to Financial Statements - continued
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 February 29, 2024. For the year ended October 31, 2022, this management fee reduction amounted to $452,576, which is included in the reduction of total expenses in the Statement of Operations.
The management fee incurred for the year ended October 31, 2022 was equivalent to an annual effective rate of 0.58% of the fund's average daily net assets.
Distributor — MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $186,966 for the year ended October 31, 2022, as its portion of the initial sales charge on sales of Class A shares of the fund.
The Board of Trustees has adopted a distribution plan for certain share classes pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund's distribution plan provides that the fund will pay MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.
Distribution Plan Fee Table:
| | Distribution
Fee Rate (d) | Service
Fee Rate (d) | Total
Distribution
Plan (d) | Annual
Effective
Rate (e) | Distribution
and Service
Fee |
| Class A | — | 0.25% | 0.25% | 0.25% | $ 4,888,583 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 418,275 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 1,307,288 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 51,485 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 203,204 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 536,523 |
| Total Distribution and Service Fees | | | | | $7,405,358 |
| (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 October 31, 2022 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 October 31, 2022, this rebate amounted to $741, $8, $54, $7, and $33 for Class A, Class B, Class R1, 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
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 October 31, 2022, were as follows:
| | Amount |
| Class A | $27,222 |
| Class B | 15,462 |
| Class C | 8,154 |
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 October 31, 2022, the fee was $528,921, which equated to 0.0164% 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 October 31, 2022, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $3,003,971.
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 incurred for the year ended October 31, 2022 was equivalent to an annual effective rate of 0.0155% of the fund's average daily net assets.
Trustees’ and Officers’ Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration 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.
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 October 31, 2022, the fund engaged in purchase and sale transactions pursuant to this policy, which amounted to $4,860,325 and $4,763,116, respectively. The sales transactions resulted in net realized gains (losses) of $330,089.
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 October 31, 2022, this reimbursement amounted to $164,755, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended October 31, 2022, purchases and sales of investments, other than short-term obligations, aggregated $785,288,099 and $723,768,967, 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
10/31/22 | | Year ended
10/31/21 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Class A | 7,478,168 | $179,884,785 | | 7,874,900 | $180,815,780 |
| Class B | 43,661 | 1,048,357 | | 14,845 | 335,287 |
| Class C | 597,097 | 14,271,307 | | 513,953 | 11,949,650 |
| Class I | 7,048,453 | 170,317,492 | | 4,844,245 | 112,942,915 |
| Class R1 | 82,864 | 1,964,491 | | 44,031 | 1,017,001 |
| Class R2 | 627,288 | 14,931,561 | | 348,948 | 8,065,585 |
| Class R3 | 2,424,571 | 58,848,253 | | 915,406 | 21,468,572 |
| Class R4 | 352,125 | 8,538,962 | | 212,326 | 4,877,568 |
| Class R6 | 1,488,939 | 36,258,768 | | 1,163,315 | 27,227,539 |
| | 20,143,166 | $486,063,976 | | 15,931,969 | $368,699,897 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Class A | 4,678,261 | $111,893,470 | | 3,919,494 | $88,691,610 |
| Class B | 97,379 | 2,320,230 | | 116,278 | 2,605,823 |
| Class C | 315,384 | 7,513,890 | | 451,868 | 10,123,119 |
| Class I | 1,678,213 | 40,313,039 | | 1,373,518 | 31,251,843 |
| Class R1 | 11,825 | 280,651 | | 10,756 | 240,493 |
| Class R2 | 101,968 | 2,431,781 | | 90,390 | 2,036,094 |
| Class R3 | 522,110 | 12,473,140 | | 469,846 | 10,618,947 |
| Class R4 | 61,134 | 1,463,038 | | 55,445 | 1,256,825 |
| Class R6 | 182,369 | 4,381,030 | | 131,172 | 2,987,409 |
| | 7,648,643 | $183,070,269 | | 6,618,767 | $149,812,163 |
Notes to Financial Statements - continued
| | Year ended
10/31/22 | | Year ended
10/31/21 |
| | Shares | Amount | | Shares | Amount |
| Shares reacquired | | | | | |
| Class A | (10,611,604) | $(254,322,484) | | (12,553,103) | $(292,087,220) |
| Class B | (792,305) | (18,917,727) | | (1,037,361) | (23,985,070) |
| Class C | (2,502,609) | (59,515,715) | | (5,513,991) | (124,958,158) |
| Class I | (5,606,583) | (134,488,508) | | (7,059,825) | (164,223,053) |
| Class R1 | (74,865) | (1,771,476) | | (83,982) | (1,929,069) |
| Class R2 | (761,616) | (18,145,589) | | (617,443) | (14,268,315) |
| Class R3 | (1,679,813) | (40,151,114) | | (2,472,316) | (57,585,546) |
| Class R4 | (445,731) | (10,785,473) | | (365,253) | (8,494,981) |
| Class R6 | (939,282) | (22,758,715) | | (1,533,100) | (35,638,393) |
| | (23,414,408) | $(560,856,801) | | (31,236,374) | $(723,169,805) |
| Net change | | | | | |
| Class A | 1,544,825 | $37,455,771 | | (758,709) | $(22,579,830) |
| Class B | (651,265) | (15,549,140) | | (906,238) | (21,043,960) |
| Class C | (1,590,128) | (37,730,518) | | (4,548,170) | (102,885,389) |
| Class I | 3,120,083 | 76,142,023 | | (842,062) | (20,028,295) |
| Class R1 | 19,824 | 473,666 | | (29,195) | (671,575) |
| Class R2 | (32,360) | (782,247) | | (178,105) | (4,166,636) |
| Class R3 | 1,266,868 | 31,170,279 | | (1,087,064) | (25,498,027) |
| Class R4 | (32,472) | (783,473) | | (97,482) | (2,360,588) |
| Class R6 | 732,026 | 17,881,083 | | (238,613) | (5,423,445) |
| | 4,377,401 | $108,277,444 | | (8,685,638) | $(204,657,745) |
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 16, 2023 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 October 31, 2022, the fund’s commitment fee and interest expense were $12,957 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 | $21,815,025 | $384,382,680 | $380,519,423 | $(6,751) | $1,581 | $25,673,112 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $495,085 | $— |
(8) LIBOR Transition
Certain of the fund's investments, including investments in certain debt instruments and derivatives (if any), as well as borrowings by the fund and certain other contractual arrangements of the fund, may be based on the London Interbank Offered Rate (“LIBOR”). In 2017, the regulatory authority that oversees financial services firms in the United Kingdom announced plans to transition away from LIBOR by the end of 2021. In March 2021, the administrator of LIBOR announced the extension of the publication of the more commonly used U.S. dollar LIBOR settings to the end of June 2023. Although the full impacts of the transition away from LIBOR are not fully known, the transition may result in, among other things, an increase in volatility or illiquidity of the markets for instruments that currently rely on LIBOR to determine interest rates and this 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 will 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 those modified contracts as a continuation of the existing contracts. Management is still evaluating the impact to the fund of the June 30, 2023 planned discontinuation of the more commonly used U.S. dollar LIBOR settings.
(9) Russia and Ukraine Conflict
The market disruptions, which began in late February 2022, associated with geopolitical events related to the conflict between Russia and Ukraine may adversely affect the value of the fund’s assets and thus the fund’s performance. Management continues to monitor these events and to evaluate the related impacts, if any, to the fund.
Report of Independent Registered Public Accounting Firm
To the Shareholders of MFS Utilities Fund and the Board of Trustees of MFS Series Trust VI
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of MFS Utilities Fund (the “Fund”) (one of the funds constituting MFS Series Trust VI (the “Trust”)), including the portfolio of investments, as of October 31, 2022, 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 VI) at October 31, 2022, 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 October 31, 2022, 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
December 15, 2022
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of December 1, 2022, 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 TRUSTEES | | | | | | | | | | |
Michael W. Roberge (k)
(age 56) | | 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 71) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 68) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 67) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 67) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 61) | | 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 66) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 66) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 65) | | 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 48) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 54) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
John W. Clark, Jr. (k)
(age 55) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 54) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 55) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 49) | | 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 46) | | 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 43) | | 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 51) | | 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 40) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Counsel |
James O. Yost (k)
(age 62) | | 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 | JPMorgan Chase Bank, NA
4 Metrotech Center
New York, NY 11245 |
| 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) | |
Claud Davis
J. Scott Walker | |
Board Review of Investment Advisory Agreement
MFS Utilities 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, 2022 (“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, 2021 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, 2021, 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 1st quintile for the three-year period ended December 31, 2021 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 $3 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, 2022.
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 2022 income tax forms in January 2023. 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 $140,067,000 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 76.32% of the ordinary income dividends paid during the fiscal 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
October 31, 2022
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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
LETTER FROM THE CHAIR AND CEO
Dear Shareholders:
Global markets have recently been buffeted by a series of crosscurrents, including rising inflation, tighter financial conditions, and evolving geopolitical tensions. Consequently, at a time when global growth faces multiple headwinds, central banks have been presented with the challenge of reining in rising prices without tipping economies into recession. The U.S. Federal Reserve has made it clear that rates must move higher and tighter policy must be sustained to restore price stability and that this will likely bring some pain to households and businesses. Against that backdrop, richly valued, interest rate–sensitive growth equities have been hit particularly hard by rising interest rates. Volatility in fixed income and currency markets has picked up, with fiscal policy missteps in the United Kingdom leading to a crisis of market confidence that ultimately resulted in the ouster of Prime Minister Liz Truss. That episode could forewarn other governments to avoid policy overreach.
There are, however, encouraging signs for the markets. China has modestly relaxed its zero-COVID policy, and cases globally, while numerous, appear to be causing fewer serious illnesses. Meanwhile, unemployment is low and global supply chain bottlenecks are easing, though lingering coronavirus restrictions in China and disruptions stemming from Russia’s invasion of Ukraine could hamper these advances. Additionally, easier Chinese monetary and regulatory policies and the record pace of corporate stock buybacks are supportive elements, albeit in an otherwise turbulent investment environment.
It is important to have a deep understanding of company fundamentals during times of market transition, and we have built our unique global research platform to do just that.
At MFS®, we put our clients’ assets to work responsibly by carefully navigating increasingly complex global capital markets. Our investment team is guided by a commitment to long-term fundamental investing. Our global investment platform — combining collective expertise, long-term discipline, and thoughtful risk management — seeks to uncover what we believe are the best, most durable investment ideas in markets around the world, enabling us to potentially create value for investors.
Respectfully,
Michael W. Roberge
Chair and Chief Executive Officer
MFS Investment Management
December 15, 2022
The opinions expressed in this letter are subject to change and may not be relied upon for investment advice. No forecasts can be guaranteed.
Portfolio structure
Top ten holdings
| Visa, Inc., “A” | 3.2% |
| Thermo Fisher Scientific, Inc. | 3.0% |
| Roche Holding AG | 2.8% |
| Schneider Electric SE | 2.8% |
| Accenture PLC, “A” | 2.6% |
| Medtronic PLC | 2.6% |
| Honeywell International, Inc. | 2.4% |
| LVMH Moet Hennessy Louis Vuitton SE | 2.4% |
| Nestle S.A. | 2.3% |
| Linde PLC | 2.2% |
GICS equity sectors (g)
| Health Care | 19.9% |
| Industrials | 18.6% |
| Information Technology | 15.3% |
| Consumer Staples | 12.5% |
| Financials | 12.0% |
| Consumer Discretionary | 7.5% |
| Communication Services | 7.1% |
| Materials | 6.8% |
| Equity Warrants (o) | 0.0% |
Issuer country weightings (x)
| United States | 56.7% |
| France | 10.8% |
| Switzerland | 8.8% |
| United Kingdom | 6.6% |
| Canada | 4.0% |
| Germany | 3.9% |
| Netherlands | 2.3% |
| Japan | 1.8% |
| Sweden | 1.3% |
| Other Countries | 3.8% |
Currency exposure weightings (y)
| United States Dollar | 59.5% |
| Euro | 20.3% |
| Swiss Franc | 8.8% |
| British Pound Sterling | 6.6% |
| Japanese Yen | 1.8% |
| Swedish Krona | 1.3% |
| South Korean Won | 0.9% |
| Danish Krone | 0.5% |
| Mexican Peso | 0.3% |
| (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. |
Portfolio Composition - continued
| (x) | Represents the portfolio’s exposure to issuer countries as a percentage of a portfolio’s net assets. For purposes of this presentation, United States includes Cash & 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 October 31, 2022.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended October 31, 2022, Class A shares of the MFS Global Equity Fund (fund) provided a total return of -20.50%, at net asset value. This compares with a return of -18.48% for the fund’s benchmark, the MSCI World Index (net div).
Market Environment
During the reporting period, markets continued to grapple with the strongest global inflationary pressures in decades along with signs of slowing economic growth. Intermittent coronavirus flareups, particularly in China, where home-grown vaccines have proved less effective than elsewhere, kept supply chains stretched for a considerable period. At the same time, the reopening of the economy in the parts of the world where the virus has been better contained has led to a shift in consumption patterns in favor of services, straining already tight labor markets in most developed economies, while reducing demand for manufactured goods, primarily from Asia. As a result of Russia’s invasion of Ukraine, geopolitical considerations, such as sanctions and trade bans, have resulted in additional supply chain tumult and volatile global energy prices. Taken together, these factors have contributed to market volatility.
The ripple effects from the Russian invasion further complicated the mission central banks must undertake to rein in surging inflation. Energy shocks have historically resulted in global growth slowdowns, if not pullbacks, so policymakers will find themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, policymakers remained focused on corralling inflation, although investors appeared to have expected varying degrees of action from the central banks. The Fed was expected to be the most hawkish developed market central bank and the European Central Bank less so, given the growth-depleting effects on Europe's economy stemming from the invasion, while the Bank of Japan remained on the monetary sidelines, leading to a dramatic weakening of the yen.
Against an environment of still-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, tentative signs that supply chain bottlenecks (particularly semiconductors) may be easing, low levels of unemployment across developed markets and somewhat easier prices for non-energy raw materials were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the MSCI World Index, the fund’s lack of exposure to the strong-performing energy sector detracted from performance. Within this sector, not owning shares of integrated oil and gas companies Exxon Mobil and Chevron weighed on the fund’s relative results. The share price of Exxon benefited from stronger-than-expected revenue growth, driven by the high energy price environment, better margins in its refining segment and a reduction in the company’s overall debt levels.
Management Review - continued
Security selection within the health care, consumer staples and industrials sectors also held back the fund’s relative returns. Within the health care sector, not owning shares of health insurance and Medicare/Medicaid provider UnitedHealth Group dampened relative performance. The share price of UnitedHealth Group advanced on the back of operating margin growth, robust revenue gains in its surgical centers and better-than-expected Medical Loss Ratio (MLR) figures. Additionally, the stronger onboarding of value-based members and a decline in COVID-19 hospitalizations further supported UnitedHealth Group's overall performance. There were no individual securities within the consumer staples sector, either in the fund or benchmark, that were among the fund's top relative detractors for the reporting period. Within the industrials sector, the fund’s overweight position in consumer credit reporting agency Equifax weakened relative performance.
Elsewhere, not owning shares of computer and personal electronics maker Apple, and the fund’s overweight positions in communication services provider Liberty Broadband, cable services provider Comcast, paint and specialty chemicals manufacturer Akzo Nobel (Netherlands), online auctioneer eBay and digital payment technology developer PayPal Holdings, held back the fund’s relative returns. The share price of Apple advanced due to better-than-expected revenue growth, driven by fewer supply chain issues. Despite ongoing component shortages impacting Mac and iPad sales and global currency headwinds, Apple continued to demonstrate the strength of its product ecosystem with broad-based growth. Apple’s iPhone and Services Segment sales remained strong across all regions with revenue growth ahead of estimates.
During the reporting period, the fund’s relative currency exposure, resulting primarily from differences between the fund's and the benchmark's exposures to holdings of securities denominated in foreign currencies, was another detractor from relative performance. All of MFS’ investment decisions are driven by the fundamentals of each individual opportunity and as such, it is common for our funds to have different currency exposure than the benchmark.
Contributors to Performance
Stock selection, and to a lesser extent, an underweight position in both the information technology and consumer discretionary sectors contributed to the fund’s relative performance. Within the information technology sector, not owning shares of weak-performing software giant Microsoft and computer graphics processor maker NVIDIA, and overweight positions in digital payments services provider Visa and financial technology services provider Fiserv, aided relative returns. The share price of Microsoft declined as the company continued to experience decelerating demand for its cloud services and weaker sales of Office and Windows among small and mid-sized businesses. Additionally, foreign currency headwinds, lower order volumes from China, rising interest rates and the ongoing conflict in Ukraine further weighed on Microsoft’s overall results. Within the consumer discretionary sector, not owning shares of internet retailer Amazon.com and electric vehicle manufacturer Tesla benefited relative performance as both stocks underperformed the benchmark. The share price of Amazon.com declined, driven by softening demand as consumer spending trends and the macroeconomic environment continued to worsen.
Elsewhere, not owning shares of weak-performing social networking service provider Meta Platforms, an underweight position in technology company Alphabet, and overweight positions in transcontinental railway operator Canadian Pacific Railway and
Management Review - continued
industrial gas supplier Linde, further strengthened the fund’s relative returns. The share price of Meta Platforms declined over rising competition from TikTok, headwinds from Apple's App Tracking Transparency feature and incremental e-commerce and supply chain issues. Additionally, Meta Platform's softer-than-expected outlook for the remainder of the year appeared to have weighed on the stock price, reflecting uncertain macroeconomic conditions and further weakening of online advertising demand.
Respectfully,
Portfolio Manager(s)
Ryan McAllister and Roger Morley
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 10/31/22
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 10/31/22
Average annual without sales charge
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| A | 9/07/93 | (20.50)% | 4.75% | 8.36% |
| B | 12/29/86 | (21.09)% | 3.97% | 7.55% |
| C | 1/03/94 | (21.09)% | 3.97% | 7.55% |
| I | 1/02/97 | (20.30)% | 5.01% | 8.63% |
| R1 | 4/01/05 | (21.09)% | 3.96% | 7.55% |
| R2 | 10/31/03 | (20.70)% | 4.48% | 8.09% |
| R3 | 4/01/05 | (20.50)% | 4.75% | 8.36% |
| R4 | 4/01/05 | (20.29)% | 5.01% | 8.63% |
| R6 | 6/01/12 | (20.22)% | 5.11% | 8.72% |
Comparative benchmark(s)
| | | | |
| MSCI World Index (net div) (f) | (18.48)% | 6.37% | 8.94% |
Average annual with sales charge
| | | | |
A
With Initial Sales Charge (5.75%) | (25.07)% | 3.52% | 7.72% |
B
With CDSC (Declining over six years from 4% to 0%) (v) | (24.08)% | 3.62% | 7.55% |
C
With CDSC (1% for 12 months) (v) | (21.84)% | 3.97% | 7.55% |
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 World Index(e) (net div) – a market capitalization-weighted index that is designed to measure equity market performance in the global developed 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. |
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,
May 1, 2022 through October 31, 2022
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 May 1, 2022 through October 31, 2022.
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
5/01/22 | Ending
Account Value
10/31/22 | Expenses
Paid During
Period (p)
5/01/22-10/31/22 |
| A | Actual | 1.16% | $1,000.00 | $911.04 | $5.59 |
| Hypothetical (h) | 1.16% | $1,000.00 | $1,019.36 | $5.90 |
| B | Actual | 1.92% | $1,000.00 | $907.81 | $9.23 |
| Hypothetical (h) | 1.92% | $1,000.00 | $1,015.53 | $9.75 |
| C | Actual | 1.92% | $1,000.00 | $907.68 | $9.23 |
| Hypothetical (h) | 1.92% | $1,000.00 | $1,015.53 | $9.75 |
| I | Actual | 0.91% | $1,000.00 | $912.35 | $4.39 |
| Hypothetical (h) | 0.91% | $1,000.00 | $1,020.62 | $4.63 |
| R1 | Actual | 1.92% | $1,000.00 | $907.76 | $9.23 |
| Hypothetical (h) | 1.92% | $1,000.00 | $1,015.53 | $9.75 |
| R2 | Actual | 1.42% | $1,000.00 | $909.95 | $6.84 |
| Hypothetical (h) | 1.42% | $1,000.00 | $1,018.05 | $7.22 |
| R3 | Actual | 1.16% | $1,000.00 | $911.16 | $5.59 |
| Hypothetical (h) | 1.16% | $1,000.00 | $1,019.36 | $5.90 |
| R4 | Actual | 0.91% | $1,000.00 | $912.43 | $4.39 |
| Hypothetical (h) | 0.91% | $1,000.00 | $1,020.62 | $4.63 |
| R6 | Actual | 0.82% | $1,000.00 | $912.80 | $3.95 |
| Hypothetical (h) | 0.82% | $1,000.00 | $1,021.07 | $4.18 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Portfolio of Investments
10/31/22
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 99.7% |
| Aerospace & Defense – 3.2% | |
| Honeywell International, Inc. | | 308,220 | $62,883,045 |
| MTU Aero Engines Holding AG | | 61,624 | 11,038,110 |
| Rolls-Royce Holdings PLC (a) | | 11,146,404 | 9,989,677 |
| | | | | $83,910,832 |
| Airlines – 0.7% | |
| Aena S.A. (a) | | 162,820 | $19,172,053 |
| Alcoholic Beverages – 5.4% | |
| Carlsberg Group | | 109,246 | $12,875,841 |
| Diageo PLC | | 1,301,855 | 53,716,965 |
| Heineken N.V. | | 436,921 | 36,529,195 |
| Pernod Ricard S.A. | | 211,183 | 37,086,274 |
| | | | | $140,208,275 |
| Apparel Manufacturers – 4.4% | |
| Burberry Group PLC | | 838,066 | $17,443,858 |
| Compagnie Financiere Richemont S.A. | | 372,650 | 36,448,136 |
| LVMH Moet Hennessy Louis Vuitton SE | | 96,764 | 61,105,668 |
| | | | | $114,997,662 |
| Automotive – 0.4% | |
| Aptiv PLC (a) | | 109,134 | $9,938,833 |
| Broadcasting – 2.4% | |
| Omnicom Group, Inc. | | 98,790 | $7,186,973 |
| Walt Disney Co. (a) | | 364,711 | 38,856,310 |
| WPP Group PLC | | 1,747,058 | 15,347,010 |
| | | | | $61,390,293 |
| Brokerage & Asset Managers – 3.2% | |
| Charles Schwab Corp. | | 648,663 | $51,678,981 |
| Deutsche Boerse AG | | 86,044 | 14,000,681 |
| London Stock Exchange Group PLC | | 184,768 | 16,031,744 |
| | | | | $81,711,406 |
| Business Services – 9.5% | |
| Accenture PLC, “A” | | 239,199 | $67,908,596 |
| Adecco S.A. | | 194,021 | 6,072,420 |
| Brenntag AG | | 178,800 | 10,856,393 |
| Cognizant Technology Solutions Corp., “A” | | 434,289 | 27,034,490 |
| Compass Group PLC | | 671,154 | 14,135,163 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Business Services – continued | |
| Equifax, Inc. | | 178,464 | $30,256,787 |
| Fidelity National Information Services, Inc. | | 459,378 | 38,123,780 |
| Fiserv, Inc. (a) | | 389,707 | 40,038,497 |
| PayPal Holdings, Inc. (a) | | 143,229 | 11,971,080 |
| | | | | $246,397,206 |
| Cable TV – 2.2% | |
| Comcast Corp., “A” | | 1,796,871 | $57,032,686 |
| Chemicals – 2.2% | |
| 3M Co. | | 231,932 | $29,174,726 |
| PPG Industries, Inc. | | 250,149 | 28,562,013 |
| | | | | $57,736,739 |
| Computer Software – 2.9% | |
| Check Point Software Technologies Ltd. (a) | | 217,021 | $28,045,624 |
| Oracle Corp. | | 606,325 | 47,335,793 |
| | | | | $75,381,417 |
| Computer Software - Systems – 0.9% | |
| Samsung Electronics Co. Ltd. | | 536,669 | $22,316,577 |
| Construction – 0.6% | |
| Otis Worldwide Corp. | | 204,723 | $14,461,633 |
| Consumer Products – 4.6% | |
| Colgate-Palmolive Co. | | 212,588 | $15,697,498 |
| Essity AB | | 1,614,071 | 34,119,858 |
| International Flavors & Fragrances, Inc. | | 347,902 | 33,958,714 |
| Reckitt Benckiser Group PLC | | 535,286 | 35,481,454 |
| | | | | $119,257,524 |
| Electrical Equipment – 4.6% | |
| Amphenol Corp., “A” | | 259,318 | $19,664,084 |
| Legrand S.A. | | 375,580 | 28,631,817 |
| Schneider Electric SE | | 564,973 | 71,611,992 |
| | | | | $119,907,893 |
| Electronics – 1.0% | |
| Hoya Corp. | | 128,100 | $11,953,243 |
| Microchip Technology, Inc. | | 214,112 | 13,219,275 |
| | | | | $25,172,518 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Food & Beverages – 3.8% | |
| Danone S.A. | | 792,696 | $39,435,441 |
| Nestle S.A. | | 553,413 | 60,262,799 |
| | | | | $99,698,240 |
| Gaming & Lodging – 1.0% | |
| Marriott International, Inc., “A” | | 107,199 | $17,163,632 |
| Whitbread PLC | | 335,414 | 9,893,269 |
| | | | | $27,056,901 |
| Insurance – 3.2% | |
| Aon PLC | | 133,451 | $37,565,122 |
| Willis Towers Watson PLC | | 203,104 | 44,319,324 |
| | | | | $81,884,446 |
| Internet – 1.9% | |
| Alphabet, Inc., “A” (a) | | 337,454 | $31,892,778 |
| eBay, Inc. | | 462,399 | 18,421,976 |
| | | | | $50,314,754 |
| Machinery & Tools – 1.2% | |
| Carrier Global Corp. | | 175,158 | $6,964,282 |
| Kubota Corp. | | 1,801,800 | 25,161,826 |
| | | | | $32,126,108 |
| Major Banks – 3.6% | |
| Erste Group Bank AG | | 333,624 | $8,229,410 |
| Goldman Sachs Group, Inc. | | 162,631 | 56,028,006 |
| UBS AG | | 1,892,761 | 30,035,424 |
| | | | | $94,292,840 |
| Medical Equipment – 14.1% | |
| Abbott Laboratories | | 389,754 | $38,562,261 |
| Boston Scientific Corp. (a) | | 1,040,623 | 44,861,258 |
| Cooper Cos., Inc. | | 77,262 | 21,122,658 |
| EssilorLuxottica | | 66,486 | 10,535,763 |
| Medtronic PLC | | 766,986 | 66,988,557 |
| Olympus Corp. | | 502,000 | 10,600,760 |
| Sonova Holding AG | | 51,146 | 12,089,937 |
| Stryker Corp. | | 210,274 | 48,203,212 |
| Thermo Fisher Scientific, Inc. | | 153,651 | 78,972,004 |
| Waters Corp. (a) | | 74,538 | 22,299,533 |
| Zimmer Biomet Holdings, Inc. | | 112,051 | 12,700,981 |
| | | | | $366,936,924 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Other Banks & Diversified Financials – 5.2% | |
| American Express Co. | | 230,861 | $34,271,315 |
| Grupo Financiero Banorte S.A. de C.V. | | 1,067,984 | 8,681,109 |
| Julius Baer Group Ltd. | | 206,144 | 9,875,396 |
| Visa, Inc., “A” | | 399,579 | 82,776,786 |
| | | | | $135,604,606 |
| Pharmaceuticals – 5.3% | |
| Bayer AG | | 566,769 | $29,809,026 |
| Merck KGaA | | 215,549 | 35,147,689 |
| Roche Holding AG | | 219,609 | 72,932,514 |
| | | | | $137,889,229 |
| Printing & Publishing – 0.1% | |
| Wolters Kluwer N.V. | | 24,096 | $2,561,074 |
| Railroad & Shipping – 4.9% | |
| Canadian National Railway Co. | | 403,727 | $47,817,426 |
| Canadian Pacific Railway Ltd. | | 750,930 | 55,936,776 |
| Union Pacific Corp. | | 121,031 | 23,860,051 |
| | | | | $127,614,253 |
| Specialty Chemicals – 4.4% | |
| Akzo Nobel N.V. | | 336,678 | $20,775,164 |
| L'Air Liquide S.A. | | 172,815 | 22,594,779 |
| Linde PLC | | 192,289 | 57,512,460 |
| Linde PLC | | 41,734 | 12,409,605 |
| | | | | $113,292,008 |
| Specialty Stores – 0.4% | |
| Hermes International | | 7,341 | $9,507,341 |
| Telecommunications - Wireless – 1.3% | |
| Liberty Broadband Corp. (a) | | 404,535 | $34,154,890 |
| Trucking – 1.1% | |
| United Parcel Service, Inc., “B” | | 162,762 | $27,306,581 |
| Total Common Stocks (Identified Cost, $1,629,190,227) | | $2,589,233,742 |
| | Strike
Price | First
Exercise | | |
| Warrants – 0.0% | | | | |
| Apparel Manufacturers – 0.0% |
| Compagnie Financiere Richemont S.A. (1 share for 2 warrants, Expiration 12/04/23) (a) (Identified Cost, $0) | CHF 67.00 | 11/20/23 | 846,954 | $414,448 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Investment Companies (h) – 0.3% |
| Money Market Funds – 0.3% | |
| MFS Institutional Money Market Portfolio, 3.02% (v) (Identified Cost, $8,194,315) | | | 8,194,315 | $8,194,315 |
|
|
| Other Assets, Less Liabilities – 0.0% | | 1,074,621 |
| Net Assets – 100.0% | $2,598,917,126 |
| (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 $8,194,315 and $2,589,648,190, 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. | | | |
| 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: |
| CHF | Swiss Franc |
See Notes to Financial Statements
Financial Statements
Statement of Assets and Liabilities
At 10/31/22
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, $1,629,190,227) | $2,589,648,190 |
| Investments in affiliated issuers, at value (identified cost, $8,194,315) | 8,194,315 |
| Receivables for | |
| Fund shares sold | 2,355,577 |
| Dividends | 8,849,814 |
| Other assets | 17 |
| Total assets | $2,609,047,913 |
| Liabilities | |
| Payable to custodian | $5,318 |
| Payables for | |
| Fund shares reacquired | 9,050,561 |
| Payable to affiliates | |
| Investment adviser | 220,765 |
| Administrative services fee | 4,350 |
| Shareholder servicing costs | 584,082 |
| Distribution and service fees | 29,356 |
| Payable for independent Trustees' compensation | 3,430 |
| Accrued expenses and other liabilities | 232,925 |
| Total liabilities | $10,130,787 |
| Net assets | $2,598,917,126 |
| Net assets consist of | |
| Paid-in capital | $1,427,424,609 |
| Total distributable earnings (loss) | 1,171,492,517 |
| Net assets | $2,598,917,126 |
| Shares of beneficial interest outstanding | 55,745,614 |
Statement of Assets and Liabilities – continued
| | Net assets | Shares
outstanding | Net asset value
per share (a) |
| Class A | $649,694,707 | 14,159,606 | $45.88 |
| Class B | 7,438,632 | 179,857 | 41.36 |
| Class C | 66,875,463 | 1,704,691 | 39.23 |
| Class I | 946,778,121 | 19,989,540 | 47.36 |
| Class R1 | 1,260,260 | 31,236 | 40.35 |
| Class R2 | 24,651,978 | 555,703 | 44.36 |
| Class R3 | 66,160,135 | 1,452,831 | 45.54 |
| Class R4 | 70,784,230 | 1,533,526 | 46.16 |
| Class R6 | 765,273,600 | 16,138,624 | 47.42 |
| (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 $48.68 [100 / 94.25 x $45.88]. 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 10/31/22
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 | $51,118,717 |
| Dividends from affiliated issuers | 80,004 |
| Income on securities loaned | 62,114 |
| Other | 11 |
| Foreign taxes withheld | (3,355,319) |
| Total investment income | $47,905,527 |
| Expenses | |
| Management fee | $23,538,971 |
| Distribution and service fees | 3,225,560 |
| Shareholder servicing costs | 2,317,972 |
| Administrative services fee | 473,926 |
| Independent Trustees' compensation | 44,559 |
| Custodian fee | 299,709 |
| Shareholder communications | 173,383 |
| Audit and tax fees | 67,414 |
| Legal fees | 11,944 |
| Miscellaneous | 275,699 |
| Total expenses | $30,429,137 |
| Fees paid indirectly | (1,340) |
| Reduction of expenses by investment adviser and distributor | (432,586) |
| Net expenses | $29,995,211 |
| Net investment income (loss) | $17,910,316 |
| Realized and unrealized gain (loss) |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $245,747,379 |
| Foreign currency | (208,758) |
| Net realized gain (loss) | $245,538,621 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $(971,781,610) |
| Translation of assets and liabilities in foreign currencies | (922,605) |
| Net unrealized gain (loss) | $(972,704,215) |
| Net realized and unrealized gain (loss) | $(727,165,594) |
| Change in net assets from operations | $(709,255,278) |
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 |
| | 10/31/22 | 10/31/21 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $17,910,316 | $16,523,183 |
| Net realized gain (loss) | 245,538,621 | 186,811,954 |
| Net unrealized gain (loss) | (972,704,215) | 863,637,517 |
| Change in net assets from operations | $(709,255,278) | $1,066,972,654 |
| Total distributions to shareholders | $(184,733,937) | $(81,529,939) |
| Change in net assets from fund share transactions | $(324,546,706) | $(30,794,218) |
| Total change in net assets | $(1,218,535,921) | $954,648,497 |
| Net assets | | |
| At beginning of period | 3,817,453,047 | 2,862,804,550 |
| At end of period | $2,598,917,126 | $3,817,453,047 |
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 |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $60.75 | $45.22 | $45.79 | $41.44 | $43.43 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.22 | $0.17 | $0.25 | $0.42 | $0.40 |
| Net realized and unrealized gain (loss) | (12.07) | 16.60 | 0.16(g) | 6.10 | (1.23) |
| Total from investment operations | $(11.85) | $16.77 | $0.41 | $6.52 | $(0.83) |
| Less distributions declared to shareholders |
| From net investment income | $(0.18) | $(0.23) | $(0.45) | $(0.42) | $(0.29) |
| From net realized gain | (2.84) | (1.01) | (0.53) | (1.75) | (0.87) |
| Total distributions declared to shareholders | $(3.02) | $(1.24) | $(0.98) | $(2.17) | $(1.16) |
| Net asset value, end of period (x) | $45.88 | $60.75 | $45.22 | $45.79 | $41.44 |
| Total return (%) (r)(s)(t)(x) | (20.50) | 37.58 | 0.83 | 16.67 | (1.99) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.16 | 1.14 | 1.16 | 1.17 | 1.16 |
| Expenses after expense reductions (f) | 1.15 | 1.13 | 1.15 | 1.15 | 1.15 |
| Net investment income (loss) | 0.42 | 0.29 | 0.55 | 0.98 | 0.91 |
| Portfolio turnover | 8 | 10 | 9 | 7 | 12 |
| Net assets at end of period (000 omitted) | $649,695 | $857,804 | $667,074 | $721,141 | $671,000 |
See Notes to Financial Statements
Financial Highlights – continued
| Class B | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $55.28 | $41.35 | $41.93 | $38.09 | $40.03 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.17) | $(0.23) | $(0.09) | $0.10 | $0.06 |
| Net realized and unrealized gain (loss) | (10.91) | 15.17 | 0.15(g) | 5.60 | (1.12) |
| Total from investment operations | $(11.08) | $14.94 | $0.06 | $5.70 | $(1.06) |
| Less distributions declared to shareholders |
| From net investment income | $— | $— | $(0.11) | $(0.11) | $(0.01) |
| From net realized gain | (2.84) | (1.01) | (0.53) | (1.75) | (0.87) |
| Total distributions declared to shareholders | $(2.84) | $(1.01) | $(0.64) | $(1.86) | $(0.88) |
| Net asset value, end of period (x) | $41.36 | $55.28 | $41.35 | $41.93 | $38.09 |
| Total return (%) (r)(s)(t)(x) | (21.09) | 36.56 | 0.08 | 15.79 | (2.73) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.91 | 1.89 | 1.91 | 1.92 | 1.91 |
| Expenses after expense reductions (f) | 1.90 | 1.87 | 1.90 | 1.91 | 1.90 |
| Net investment income (loss) | (0.36) | (0.45) | (0.21) | 0.24 | 0.15 |
| Portfolio turnover | 8 | 10 | 9 | 7 | 12 |
| Net assets at end of period (000 omitted) | $7,439 | $15,166 | $15,902 | $22,592 | $24,726 |
| Class C | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $52.58 | $39.38 | $40.00 | $36.44 | $38.35 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.15) | $(0.22) | $(0.08) | $0.09 | $0.06 |
| Net realized and unrealized gain (loss) | (10.36) | 14.43 | 0.14(g) | 5.34 | (1.07) |
| Total from investment operations | $(10.51) | $14.21 | $0.06 | $5.43 | $(1.01) |
| Less distributions declared to shareholders |
| From net investment income | $— | $— | $(0.15) | $(0.12) | $(0.03) |
| From net realized gain | (2.84) | (1.01) | (0.53) | (1.75) | (0.87) |
| Total distributions declared to shareholders | $(2.84) | $(1.01) | $(0.68) | $(1.87) | $(0.90) |
| Net asset value, end of period (x) | $39.23 | $52.58 | $39.38 | $40.00 | $36.44 |
| Total return (%) (r)(s)(t)(x) | (21.09) | 36.54 | 0.09 | 15.78 | (2.72) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.91 | 1.89 | 1.91 | 1.92 | 1.91 |
| Expenses after expense reductions (f) | 1.90 | 1.87 | 1.90 | 1.91 | 1.90 |
| Net investment income (loss) | (0.35) | (0.46) | (0.19) | 0.23 | 0.16 |
| Portfolio turnover | 8 | 10 | 9 | 7 | 12 |
| Net assets at end of period (000 omitted) | $66,875 | $112,939 | $110,351 | $143,769 | $149,669 |
See Notes to Financial Statements
Financial Highlights – continued
| Class I | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $62.59 | $46.55 | $47.09 | $42.57 | $44.58 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.36 | $0.31 | $0.37 | $0.53 | $0.52 |
| Net realized and unrealized gain (loss) | (12.45) | 17.08 | 0.18(g) | 6.27 | (1.27) |
| Total from investment operations | $(12.09) | $17.39 | $0.55 | $6.80 | $(0.75) |
| Less distributions declared to shareholders |
| From net investment income | $(0.30) | $(0.34) | $(0.56) | $(0.53) | $(0.39) |
| From net realized gain | (2.84) | (1.01) | (0.53) | (1.75) | (0.87) |
| Total distributions declared to shareholders | $(3.14) | $(1.35) | $(1.09) | $(2.28) | $(1.26) |
| Net asset value, end of period (x) | $47.36 | $62.59 | $46.55 | $47.09 | $42.57 |
| Total return (%) (r)(s)(t)(x) | (20.30) | 37.91 | 1.10 | 16.94 | (1.76) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 0.91 | 0.89 | 0.91 | 0.92 | 0.91 |
| Expenses after expense reductions (f) | 0.90 | 0.88 | 0.90 | 0.91 | 0.90 |
| Net investment income (loss) | 0.67 | 0.53 | 0.80 | 1.21 | 1.17 |
| Portfolio turnover | 8 | 10 | 9 | 7 | 12 |
| Net assets at end of period (000 omitted) | $946,778 | $1,245,750 | $908,819 | $947,284 | $935,292 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R1 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $54.00 | $40.41 | $40.97 | $37.25 | $39.18 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $(0.17) | $(0.23) | $(0.09) | $0.09 | $0.06 |
| Net realized and unrealized gain (loss) | (10.64) | 14.83 | 0.15(g) | 5.47 | (1.09) |
| Total from investment operations | $(10.81) | $14.60 | $0.06 | $5.56 | $(1.03) |
| Less distributions declared to shareholders |
| From net investment income | $— | $— | $(0.09) | $(0.09) | $(0.03) |
| From net realized gain | (2.84) | (1.01) | (0.53) | (1.75) | (0.87) |
| Total distributions declared to shareholders | $(2.84) | $(1.01) | $(0.62) | $(1.84) | $(0.90) |
| Net asset value, end of period (x) | $40.35 | $54.00 | $40.41 | $40.97 | $37.25 |
| Total return (%) (r)(s)(t)(x) | (21.09) | 36.57 | 0.08 | 15.77 | (2.73) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.91 | 1.89 | 1.91 | 1.92 | 1.91 |
| Expenses after expense reductions (f) | 1.90 | 1.87 | 1.90 | 1.91 | 1.90 |
| Net investment income (loss) | (0.36) | (0.46) | (0.23) | 0.22 | 0.16 |
| Portfolio turnover | 8 | 10 | 9 | 7 | 12 |
| Net assets at end of period (000 omitted) | $1,260 | $2,081 | $1,556 | $2,485 | $2,538 |
| Class R2 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $58.85 | $43.83 | $44.38 | $40.21 | $42.16 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.08 | $0.02 | $0.13 | $0.31 | $0.28 |
| Net realized and unrealized gain (loss) | (11.68) | 16.09 | 0.16(g) | 5.91 | (1.19) |
| Total from investment operations | $(11.60) | $16.11 | $0.29 | $6.22 | $(0.91) |
| Less distributions declared to shareholders |
| From net investment income | $(0.05) | $(0.08) | $(0.31) | $(0.30) | $(0.17) |
| From net realized gain | (2.84) | (1.01) | (0.53) | (1.75) | (0.87) |
| Total distributions declared to shareholders | $(2.89) | $(1.09) | $(0.84) | $(2.05) | $(1.04) |
| Net asset value, end of period (x) | $44.36 | $58.85 | $43.83 | $44.38 | $40.21 |
| Total return (%) (r)(s)(t)(x) | (20.70) | 37.22 | 0.59 | 16.36 | (2.24) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.41 | 1.39 | 1.41 | 1.42 | 1.41 |
| Expenses after expense reductions (f) | 1.40 | 1.38 | 1.40 | 1.41 | 1.40 |
| Net investment income (loss) | 0.16 | 0.04 | 0.30 | 0.76 | 0.66 |
| Portfolio turnover | 8 | 10 | 9 | 7 | 12 |
| Net assets at end of period (000 omitted) | $24,652 | $36,791 | $27,772 | $37,042 | $40,944 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R3 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $60.32 | $44.89 | $45.46 | $41.16 | $43.14 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.21 | $0.16 | $0.24 | $0.41 | $0.39 |
| Net realized and unrealized gain (loss) | (11.97) | 16.49 | 0.17(g) | 6.06 | (1.21) |
| Total from investment operations | $(11.76) | $16.65 | $0.41 | $6.47 | $(0.82) |
| Less distributions declared to shareholders |
| From net investment income | $(0.18) | $(0.21) | $(0.45) | $(0.42) | $(0.29) |
| From net realized gain | (2.84) | (1.01) | (0.53) | (1.75) | (0.87) |
| Total distributions declared to shareholders | $(3.02) | $(1.22) | $(0.98) | $(2.17) | $(1.16) |
| Net asset value, end of period (x) | $45.54 | $60.32 | $44.89 | $45.46 | $41.16 |
| Total return (%) (r)(s)(t)(x) | (20.50) | 37.60 | 0.83 | 16.65 | (2.00) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.16 | 1.14 | 1.16 | 1.17 | 1.16 |
| Expenses after expense reductions (f) | 1.15 | 1.13 | 1.15 | 1.16 | 1.15 |
| Net investment income (loss) | 0.41 | 0.29 | 0.54 | 0.97 | 0.90 |
| Portfolio turnover | 8 | 10 | 9 | 7 | 12 |
| Net assets at end of period (000 omitted) | $66,160 | $88,285 | $70,852 | $91,019 | $90,003 |
| Class R4 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $61.08 | $45.44 | $45.98 | $41.63 | $43.62 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.35 | $0.30 | $0.36 | $0.54 | $0.51 |
| Net realized and unrealized gain (loss) | (12.13) | 16.69 | 0.17(g) | 6.09 | (1.23) |
| Total from investment operations | $(11.78) | $16.99 | $0.53 | $6.63 | $(0.72) |
| Less distributions declared to shareholders |
| From net investment income | $(0.30) | $(0.34) | $(0.54) | $(0.53) | $(0.40) |
| From net realized gain | (2.84) | (1.01) | (0.53) | (1.75) | (0.87) |
| Total distributions declared to shareholders | $(3.14) | $(1.35) | $(1.07) | $(2.28) | $(1.27) |
| Net asset value, end of period (x) | $46.16 | $61.08 | $45.44 | $45.98 | $41.63 |
| Total return (%) (r)(s)(t)(x) | (20.29) | 37.94 | 1.09 | 16.93 | (1.75) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 0.91 | 0.89 | 0.91 | 0.92 | 0.91 |
| Expenses after expense reductions (f) | 0.90 | 0.88 | 0.90 | 0.91 | 0.90 |
| Net investment income (loss) | 0.67 | 0.53 | 0.80 | 1.25 | 1.16 |
| Portfolio turnover | 8 | 10 | 9 | 7 | 12 |
| Net assets at end of period (000 omitted) | $70,784 | $95,164 | $84,424 | $97,861 | $136,066 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R6 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $62.65 | $46.58 | $47.13 | $42.61 | $44.61 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.39 | $0.36 | $0.41 | $0.59 | $0.54 |
| Net realized and unrealized gain (loss) | (12.43) | 17.11 | 0.17(g) | 6.26 | (1.24) |
| Total from investment operations | $(12.04) | $17.47 | $0.58 | $6.85 | $(0.70) |
| Less distributions declared to shareholders |
| From net investment income | $(0.35) | $(0.39) | $(0.60) | $(0.58) | $(0.43) |
| From net realized gain | (2.84) | (1.01) | (0.53) | (1.75) | (0.87) |
| Total distributions declared to shareholders | $(3.19) | $(1.40) | $(1.13) | $(2.33) | $(1.30) |
| Net asset value, end of period (x) | $47.42 | $62.65 | $46.58 | $47.13 | $42.61 |
| Total return (%) (r)(s)(t)(x) | (20.22) | 38.06 | 1.17 | 17.07 | (1.66) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 0.82 | 0.80 | 0.82 | 0.83 | 0.81 |
| Expenses after expense reductions (f) | 0.80 | 0.78 | 0.81 | 0.82 | 0.80 |
| Net investment income (loss) | 0.73 | 0.63 | 0.89 | 1.35 | 1.20 |
| Portfolio turnover | 8 | 10 | 9 | 7 | 12 |
| Net assets at end of period (000 omitted) | $765,274 | $1,363,474 | $976,055 | $923,304 | $809,357 |
| (d) | Per share data is based on average shares outstanding. |
| (f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. See Note 2 in the Notes to Financial Statements for additional information. |
| (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. |
| (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 Global Equity Fund (the fund) is a diversified series of MFS Series Trust VI (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.
In June 2022, the FASB issued Accounting Standards Update 2022-03, Fair Value Measurement (Topic 820) – Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which affects all entities that have investments in equity securities measured at fair value that are subject to contractual sale restrictions. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is a characteristic of the reporting entity holding the equity security rather than a characteristic of the asset and, therefore, is not considered in measuring the fair value of the equity security. The fund decided to early adopt ASU 2022-03 effective as of June 30, 2022 as the guidance in ASU 2022-03 was consistent with the fund’s existing practices for fair value measurement.
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.
Notes to Financial Statements - continued
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. Effective September 8, 2022, and 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 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
Notes to Financial Statements - continued
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 October 31, 2022 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | | | | |
| United States | $1,463,341,066 | $— | $— | $1,463,341,066 |
| France | 280,509,075 | — | — | 280,509,075 |
| Switzerland | 228,131,074 | — | — | 228,131,074 |
| United Kingdom | 172,039,140 | — | — | 172,039,140 |
| Canada | 103,754,202 | — | — | 103,754,202 |
| Germany | 100,851,899 | — | — | 100,851,899 |
| Netherlands | 59,865,433 | — | — | 59,865,433 |
| Japan | 47,715,829 | — | — | 47,715,829 |
| Sweden | 34,119,858 | — | — | 34,119,858 |
| Other Countries | 77,004,037 | 22,316,577 | — | 99,320,614 |
| Mutual Funds | 8,194,315 | — | — | 8,194,315 |
| Total | $2,575,525,928 | $22,316,577 | $— | $2,597,842,505 |
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, JPMorgan Chase and Co., 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
Notes to Financial Statements - continued
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 October 31, 2022, 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 — Investment transactions are recorded on the trade date. 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. 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.
Fees Paid Indirectly — The fund's custody fee may be reduced by a credit earned under an arrangement that measures the value of U.S. dollars deposited with the custodian by the fund. The amount of the credit, for the year ended October 31, 2022, is shown as a reduction of total expenses in the Statement of Operations.
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. 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 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
10/31/22 | Year ended
10/31/21 |
| Ordinary income (including any short-term capital gains) | $19,789,607 | $19,000,381 |
| Long-term capital gains | 164,944,330 | 62,529,558 |
| Total distributions | $184,733,937 | $81,529,939 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 10/31/22 | |
| Cost of investments | $1,651,363,606 |
| Gross appreciation | 1,098,075,226 |
| Gross depreciation | (151,596,327) |
| Net unrealized appreciation (depreciation) | $946,478,899 |
| Undistributed ordinary income | 17,125,305 |
| Undistributed long-term capital gain | 208,537,055 |
| Other temporary differences | (648,742) |
| Total distributable earnings (loss) | $1,171,492,517 |
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
Notes to Financial Statements - continued
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
10/31/22 | | Year
ended
10/31/21 |
| Class A | $42,467,364 | | $18,069,813 |
| Class B | 742,277 | | 379,523 |
| Class C | 5,994,793 | | 2,775,096 |
| Class I | 62,197,001 | | 26,343,700 |
| Class R1 | 109,269 | | 38,933 |
| Class R2 | 1,785,958 | | 669,457 |
| Class R3 | 4,368,531 | | 1,864,571 |
| Class R4 | 4,886,283 | | 2,144,683 |
| Class R6 | 62,182,461 | | 29,244,163 |
| Total | $184,733,937 | | $81,529,939 |
(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 | 0.75% |
| In excess of $2 billion and up to $5 billion | 0.65% |
| In excess of $5 billion | 0.60% |
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. Effective March 1, 2022, 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 February 29, 2024. For the year ended October 31, 2022, this management fee reduction amounted to $432,049, which is included in the reduction of total expenses in the Statement of Operations.
The management fee incurred for the year ended October 31, 2022 was equivalent to an annual effective rate of 0.75% of the fund's average daily net assets.
Distributor — MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $75,736 for the year ended October 31, 2022, 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.
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% | $ 1,872,416 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 108,092 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 886,724 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 16,706 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 150,746 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 190,876 |
| Total Distribution and Service Fees | | | | | $3,225,560 |
| (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 October 31, 2022 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 October 31, 2022, this rebate amounted to $503, $16, $3, and $15 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 October 31, 2022, were as follows:
| | Amount |
| Class A | $3,604 |
| Class B | 8,366 |
| Class C | 4,886 |
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 October 31, 2022, the fee was $228,269, which equated to 0.0074% 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 October 31, 2022, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $2,089,703.
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 incurred for the year ended October 31, 2022 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. 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 $262 and is included in “Independent Trustees’ compensation” in the Statement of Operations for the year ended October 31, 2022. The liability for deferred retirement benefits payable to those former independent Trustees under the DB plan amounted to $3,296 at October 31, 2022, and is included in “Payable for independent Trustees’ compensation” in the Statement of Assets and Liabilities.
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.
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 October 31, 2022, the fund engaged in sale transactions pursuant to this policy, which amounted to $3,837,846. The sales transactions resulted in net realized gains (losses) of $795,818.
(4) Portfolio Securities
For the year ended October 31, 2022, purchases and sales of investments, other than short-term obligations, aggregated $242,220,082 and $740,505,484, 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
10/31/22 | | Year ended
10/31/21 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Class A | 1,598,114 | $83,819,854 | | 1,775,292 | $99,973,867 |
| Class B | 723 | 36,283 | | 2,428 | 120,744 |
| Class C | 129,420 | 5,937,150 | | 175,401 | 8,503,213 |
| Class I | 4,668,176 | 247,307,932 | | 4,491,898 | 262,991,444 |
| Class R1 | 7,916 | 345,974 | | 2,992 | 149,109 |
| Class R2 | 121,943 | 6,225,015 | | 200,658 | 10,698,239 |
| Class R3 | 352,981 | 18,279,571 | | 360,080 | 19,887,781 |
| Class R4 | 204,357 | 10,632,175 | | 253,665 | 14,349,731 |
| Class R6 | 4,027,793 | 214,466,893 | | 4,956,206 | 289,184,502 |
| | 11,111,423 | $587,050,847 | | 12,218,620 | $705,858,630 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Class A | 684,451 | $39,129,987 | | 326,776 | $16,721,145 |
| Class B | 13,838 | 717,887 | | 7,844 | 367,633 |
| Class C | 114,666 | 5,642,648 | | 58,709 | 2,617,845 |
| Class I | 972,259 | 57,246,629 | | 462,774 | 24,341,891 |
| Class R1 | 2,159 | 109,269 | | 850 | 38,933 |
| Class R2 | 31,891 | 1,766,786 | | 13,177 | 654,619 |
| Class R3 | 76,992 | 4,368,531 | | 36,697 | 1,864,571 |
| Class R4 | 83,542 | 4,793,659 | | 40,089 | 2,057,798 |
| Class R6 | 1,012,072 | 59,611,019 | | 533,533 | 28,069,162 |
| | 2,991,870 | $173,386,415 | | 1,480,449 | $76,733,597 |
| Shares reacquired | | | | | |
| Class A | (2,242,147) | $(115,135,541) | | (2,733,635) | $(155,336,243) |
| Class B | (109,056) | (5,147,616) | | (120,501) | (6,250,746) |
| Class C | (687,244) | (30,353,116) | | (888,750) | (43,001,502) |
| Class I | (5,553,460) | (291,363,232) | | (4,577,295) | (263,218,385) |
| Class R1 | (17,376) | (780,110) | | (3,798) | (194,160) |
| Class R2 | (223,278) | (11,264,562) | | (222,391) | (12,159,216) |
| Class R3 | (440,771) | (22,596,576) | | (511,349) | (28,176,012) |
| Class R4 | (312,394) | (15,826,474) | | (593,510) | (32,317,749) |
| Class R6 | (10,664,146) | (592,516,741) | | (4,679,404) | (272,732,432) |
| | (20,249,872) | $(1,084,983,968) | | (14,330,633) | $(813,386,445) |
Notes to Financial Statements - continued
| | Year ended
10/31/22 | | Year ended
10/31/21 |
| | Shares | Amount | | Shares | Amount |
| Net change | | | | | |
| Class A | 40,418 | $7,814,300 | | (631,567) | $(38,641,231) |
| Class B | (94,495) | (4,393,446) | | (110,229) | (5,762,369) |
| Class C | (443,158) | (18,773,318) | | (654,640) | (31,880,444) |
| Class I | 86,975 | 13,191,329 | | 377,377 | 24,114,950 |
| Class R1 | (7,301) | (324,867) | | 44 | (6,118) |
| Class R2 | (69,444) | (3,272,761) | | (8,556) | (806,358) |
| Class R3 | (10,798) | 51,526 | | (114,572) | (6,423,660) |
| Class R4 | (24,495) | (400,640) | | (299,756) | (15,910,220) |
| Class R6 | (5,624,281) | (318,438,829) | | 810,335 | 44,521,232 |
| | (6,146,579) | $(324,546,706) | | (631,564) | $(30,794,218) |
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 16, 2023 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 October 31, 2022, the fund’s commitment fee and interest expense were $13,287 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 | $7,189,905 | $399,970,684 | $398,966,274 | $— | $— | $8,194,315 |
Notes to Financial Statements - continued
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $80,004 | $— |
(8) LIBOR Transition
Certain of the fund's investments, including investments in certain debt instruments and derivatives (if any), as well as borrowings by the fund and certain other contractual arrangements of the fund, may be based on the London Interbank Offered Rate (“LIBOR”). In 2017, the regulatory authority that oversees financial services firms in the United Kingdom announced plans to transition away from LIBOR by the end of 2021. In March 2021, the administrator of LIBOR announced the extension of the publication of the more commonly used U.S. dollar LIBOR settings to the end of June 2023. Although the full impacts of the transition away from LIBOR are not fully known, the transition may result in, among other things, an increase in volatility or illiquidity of the markets for instruments that currently rely on LIBOR to determine interest rates and this 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 will 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 those modified contracts as a continuation of the existing contracts. Management is still evaluating the impact to the fund of the June 30, 2023 planned discontinuation of the more commonly used U.S. dollar LIBOR settings.
(9) Russia and Ukraine Conflict
The market disruptions, which began in late February 2022, associated with geopolitical events related to the conflict between Russia and Ukraine may adversely affect the value of the fund’s assets and thus the fund’s performance. Management continues to monitor these events and to evaluate the related impacts, if any, to the fund.
Report of Independent Registered Public Accounting Firm
To the Shareholders of MFS Global Equity Fund and the Board of Trustees of
MFS Series Trust VI
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of MFS Global Equity Fund (the “Fund”) (one of the funds constituting MFS Series Trust VI (the “Trust”)), including the portfolio of investments, as of October 31, 2022, 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 VI) at October 31, 2022, 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 October 31, 2022, 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
December 15, 2022
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of December 1, 2022, 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 TRUSTEES | | | | | | | | | | |
Michael W. Roberge (k)
(age 56) | | 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 71) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 68) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 67) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 67) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 61) | | 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 66) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 66) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 65) | | 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 48) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 54) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
John W. Clark, Jr. (k)
(age 55) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 54) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 55) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 49) | | 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 46) | | 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 43) | | 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 51) | | 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 40) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Counsel |
James O. Yost (k)
(age 62) | | 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 | JPMorgan Chase Bank, NA
4 Metrotech Center
New York, NY 11245 |
| 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) | |
Ryan McAllister
Roger Morley | |
Board Review of Investment Advisory Agreement
MFS 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, 2022 (“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, 2021 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, 2021, 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 the one-year period and the 2nd quintile for the three-year period ended December 31, 2021 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 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, 2022.
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 2022 income tax forms in January 2023. 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 $226,934,000 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 76.89% of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.
Federal Tax Information (unaudited) - continued
Income derived from foreign sources was $33,516,066. The fund intends to pass through foreign tax credits of $3,287,722 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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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
October 31, 2022
MFS® Global Total
Return Fund
MFS® Global Total
Return Fund
| 1 |
| 2 |
| 5 |
| 8 |
| 11 |
| 13 |
| 46 |
| 48 |
| 50 |
| 51 |
| 57 |
| 78 |
| 80 |
| 84 |
| 88 |
| 88 |
| 88 |
| 88 |
| 88 |
| 90 |
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
LETTER FROM THE CHAIR AND CEO
Dear Shareholders:
Global markets have recently been buffeted by a series of crosscurrents, including rising inflation, tighter financial conditions, and evolving geopolitical tensions. Consequently, at a time when global growth faces multiple headwinds, central banks have been presented with the challenge of reining in rising prices without tipping economies into recession. The U.S. Federal Reserve has made it clear that rates must move higher and tighter policy must be sustained to restore price stability and that this will likely bring some pain to households and businesses. Against that backdrop, richly valued, interest rate–sensitive growth equities have been hit particularly hard by rising interest rates. Volatility in fixed income and currency markets has picked up, with fiscal policy missteps in the United Kingdom leading to a crisis of market confidence that ultimately resulted in the ouster of Prime Minister Liz Truss. That episode could forewarn other governments to avoid policy overreach.
There are, however, encouraging signs for the markets. China has modestly relaxed its zero-COVID policy, and cases globally, while numerous, appear to be causing fewer serious illnesses. Meanwhile, unemployment is low and global supply chain bottlenecks are easing, though lingering coronavirus restrictions in China and disruptions stemming from Russia’s invasion of Ukraine could hamper these advances. Additionally, easier Chinese monetary and regulatory policies and the record pace of corporate stock buybacks are supportive elements, albeit in an otherwise turbulent investment environment.
It is important to have a deep understanding of company fundamentals during times of market transition, and we have built our unique global research platform to do just that.
At MFS®, we put our clients’ assets to work responsibly by carefully navigating increasingly complex global capital markets. Our investment team is guided by a commitment to long-term fundamental investing. Our global investment platform — combining collective expertise, long-term discipline, and thoughtful risk management — seeks to uncover what we believe are the best, most durable investment ideas in markets around the world, enabling us to potentially create value for investors.
Respectfully,
Michael W. Roberge
Chair and Chief Executive Officer
MFS Investment Management
December 15, 2022
The opinions expressed in this letter are subject to change and may not be relied upon for investment advice. No forecasts can be guaranteed.
Portfolio structure (i)
Top ten holdings (i)
| U.S. Treasury Note 2 yr Future - DEC 2022 | 2.5% |
People’s Republic of China, 3.03%,
3/11/2026 | 2.1% |
| Canadian Treasury Bond 10 yr Future - DEC 2022 | 2.0% |
| Johnson & Johnson | 1.7% |
| Roche Holding AG | 1.6% |
| Merck & Co., Inc. | 1.4% |
| U.S. Treasury Ultra Note 10 yr Future - DEC 2022 | 1.4% |
| Canadian Treasury Bond 5 yr Future - DEC 2022 | (1.3)% |
| U.S. Treasury Note 10 yr Future - DEC 2022 | (1.7)% |
| U.S. Treasury Note 5 yr Future - DEC 2022 | (3.9)% |
Composition including fixed income credit quality (a)(i)
| AAA | 3.9% |
| AA | 4.8% |
| A | 9.6% |
| BBB | 10.7% |
| BB | 0.4% |
| U.S. Government | 2.5% |
| Federal Agencies | 3.8% |
| Not Rated | (1.1)% |
| Non-Fixed Income | 60.1% |
| Cash & Cash Equivalents | 2.4% |
| Other | 2.9% |
GICS equity sectors (g)
| Financials | 13.2% |
| Health Care | 10.0% |
| Industrials | 9.4% |
| Consumer Staples | 7.0% |
| Information Technology | 6.4% |
| Communication Services | 3.6% |
| Consumer Discretionary | 2.8% |
| Energy | 2.8% |
| Materials | 2.7% |
| Utilities | 1.7% |
| Real Estate | 0.4% |
| Convertible Debt | 0.1% |
Portfolio Composition - continued
Fixed income sectors (i)
| Investment Grade Corporates | 10.5% |
| Non-U.S. Government Bonds | 7.8% |
| Emerging Markets Bonds | 7.7% |
| Mortgage-Backed Securities | 3.8% |
| Collateralized Debt Obligations | 1.6% |
| Commercial Mortgage-Backed Securities | 1.3% |
| Asset-Backed Securities | 0.4% |
| Municipal Bonds | 0.7% |
| High Yield Corporates | 0.4% |
| U.S. Government Agencies (o) | 0.0% |
| U.S. Treasury Securities | 0.4% |
Issuer country weightings (i)(x)
| United States | 54.1% |
| Japan | 6.5% |
| United Kingdom | 5.0% |
| Canada | 4.1% |
| France | 4.0% |
| Switzerland | 4.0% |
| China | 3.7% |
| Germany | 3.6% |
| South Korea | 2.5% |
| Other Countries | 12.5% |
Currency exposure weightings (i)(y)
| United States Dollar | 55.9% |
| Euro | 15.2% |
| Japanese Yen | 8.0% |
| British Pound Sterling | 4.5% |
| Swiss Franc | 3.8% |
| Canadian Dollar | 2.9% |
| Chinese Renminbi | 2.6% |
| Singapore Dollar | 1.5% |
| South Korean Won | 0.8% |
| Other Currencies | 4.8% |
| (a) | For all securities other than those specifically described below, ratings are assigned to underlying securities utilizing ratings from Moody’s, Fitch, and Standard & Poor’s rating agencies and applying the following hierarchy: If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. If none of the 3 rating agencies above assign a rating, but the security is rated by DBRS Morningstar, then the DBRS Morningstar rating is assigned. If none of the 4 rating agencies listed above rate the security, but the security is rated by the Kroll Bond Rating Agency (KBRA), then the KBRA rating is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). Securities rated BBB or higher are considered investment grade. All ratings are subject to change. U.S. Government includes securities issued by the U.S. Department of the Treasury. Federal Agencies includes rated and unrated U.S. Agency fixed-income securities, U.S. Agency mortgage-backed securities, and collateralized mortgage obligations of U.S. Agency mortgage-backed securities. |
Not Rated includes fixed income securities and fixed income derivatives that have not been rated by any rating agency. Non-Fixed Income includes equity securities (including convertible bonds and equity derivatives), ETFs, and/or commodity-linked derivatives. The fund may or may not have held all of these instruments on this date. The fund is not rated by these agencies.
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. |
| (i) | For purposes of this presentation, the components include the value of securities, and reflect the impact of the equivalent exposure of derivative positions, if any. These amounts may be negative from time to time. Equivalent exposure is a calculated amount that translates the derivative position into a reasonable approximation of the amount of the underlying asset that the portfolio would have to hold at a given point in time to have the same price sensitivity that results from the portfolio’s ownership of the derivative contract. When dealing with derivatives, equivalent exposure is a more representative measure of the potential impact of a position on portfolio performance than value. The bond component will include any accrued interest amounts. |
| (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. |
Where the fund holds convertible bonds, they are treated as part of the equity portion of the portfolio.
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 October 31, 2022.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended October 31, 2022, Class A shares of the MFS Global Total Return Fund (fund) provided a total return of -14.74%, at net asset value. This compares with returns of -18.48% and -20.79% for the fund’s benchmarks, the MSCI World Index (net div) and the Bloomberg Global Aggregate Index (Bloomberg Index), respectively. The fund’s other benchmark, the MFS Global Total Return Blended Index (Blended Index), generated a total return of -19.20%. The Blended Index reflects the blended returns of the equity and fixed income market indices, with percentage allocations to each index designed to resemble the equity and fixed income allocations of the fund. The market indices and related percentage allocations used to compile the Blended Index are set forth in the Performance Summary.
Market Environment
During the reporting period, markets continued to grapple with the strongest global inflationary pressures in decades along with signs of slowing economic growth. Intermittent coronavirus flareups, particularly in China, where home-grown vaccines have proved less effective than elsewhere, kept supply chains stretched for a considerable period. At the same time, the reopening of the economy in the parts of the world where the virus has been better contained has led to a shift in consumption patterns in favor of services, straining already tight labor markets in most developed economies, while reducing demand for manufactured goods, primarily from Asia. As a result of Russia’s invasion of Ukraine, geopolitical considerations, such as sanctions and trade bans, have resulted in additional supply chain tumult and volatile global energy prices. Taken together, these factors have contributed to market volatility.
The ripple effects from the Russian invasion further complicated the mission central banks must undertake to rein in surging inflation. Energy shocks have historically resulted in global growth slowdowns, if not pullbacks, so policymakers will find themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, policymakers remained focused on corralling inflation, although investors appeared to have expected varying degrees of action from the central banks. The Fed was expected to be the most hawkish developed market central bank and the European Central Bank less so, given the growth-depleting effects on Europe's economy stemming from the invasion, while the Bank of Japan remained on the monetary sidelines, leading to a dramatic weakening of the yen.
Against an environment of still-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, tentative signs that supply chain bottlenecks (particularly semiconductors) may be easing, low levels of unemployment across developed markets and somewhat easier prices for non-energy raw materials were supportive factors for the macroeconomic backdrop.
Management Review - continued
Contributors to Performance
Within the equity portion of the fund, stock selection and, to a lesser extent, an underweight position in the communication services sector contributed to the fund's performance relative to the MSCI World Index. Within this sector, avoiding shares of weak-performing social networking service provider Meta Platforms, and an underweight position in technology company Alphabet, benefited the fund’s relative performance. Although Meta Platforms’ revenue and earnings per share results were better than feared, management's softer-than-expected outlook for the remainder of the year appeared to have weighed on the stock price, reflecting uncertain macroeconomic conditions and further weakening of online advertising demand.
Stock selection and an overweight position in the health care sector also strengthened relative performance, driven by the fund's overweight positions in pharmaceutical company Merck, diversified medical products maker Johnson & Johnson, global health services provider Cigna and health services company McKesson. The stock price of Merck rose as the company’s earnings per share and revenue results exceeded expectations, driven by robust sales of Gardasil, Lagevrio and Keytruda. Lower-than-expected selling, general, administrative, and research and development expenses further aided Merck’s outperformance.
An underweight position in the consumer discretionary sector aided relative results, led by the fund not owning shares of underperforming internet retailer Amazon.com. Despite the company's solid operational performance, the stock price of Amazon.com declined as technology stocks came under pressure due to a combination of rising interest rates and a shift away from growth stocks to more defensive stocks amid a global market drop and uncertain macroeconomic conditions.
Stocks in other sectors that further contributed to relative results included the fund's overweight positions in oil and gas company ConocoPhillips, global food company General Mills and global integrated energy company Hess.
Within the fixed income portion of the fund, the fund's shorter duration(d) stance to both the Canadian and US yield curves(y), supported performance relative to the Bloomberg Index as interest rates rose over the reporting period. Additionally, bond selection within emerging markets strengthened relative results.
Detractors from Performance
Within the equity portion of the fund, an underweight position and stock selection in the energy sector detracted from the fund's performance relative to the MSCI World Index. Within this sector, not owning shares of integrated oil and gas company Exxon Mobil and integrated energy company Chevron held back relative results. The stock price of Exxon Mobil advanced, driven by revenue growth amid the strong energy price environment and expanded margins in its refining segment.
Elsewhere, not owning positions in computer and personal electronics maker Apple, health insurance and Medicare/Medicaid provider UnitedHealth Group, pharmaceutical company Eli Lilly and pharmaceutical company Abbvie weighed on relative results. The stock price of Apple rose as the company reported better revenues than forecasted due to lower supply chain impacts versus expectations. Despite ongoing component shortages impacting Mac and iPad sales and global currency headwinds, Apple continued to demonstrate the strength of its product ecosystem with broad-based
Management Review - continued
growth, while iPhone sales remained strong across all regions with revenue growth ahead of estimates. The fund’s holdings of semiconductor manufacturer Taiwan Semiconductor Manufacturing (Taiwan)(b) and commercial banking firm Sberbank Russia (Russia)(b), and overweight positions in power and hand tools manufacturer Stanley Black & Decker and cable services provider Comcast, also dampened relative returns.
During the reporting period, the fund’s relative currency exposure within the equity portion of the fund, resulting primarily from differences between the fund's and the benchmark's exposures to holdings of securities denominated in foreign currencies, was another detractor from relative performance. All of MFS’ investment decisions are driven by the fundamentals of each individual opportunity and as such, it is common for our funds to have different currency exposure than the benchmark.
Within the fixed income portion of the fund, bond selection within both the financial institutions, particularly in “BBB” rated(r) bonds, and in the industrials sectors, detracted from the fund’s performance relative to the Bloomberg Index.
Respectfully,
Portfolio Manager(s)
Pilar Gomez-Bravo, Steven Gorham, Andy Li, Johnathan Munko, Henry Peabody, Jonathan Sage, David Shindler, Robert Spector, and Erik Weisman
Note to Shareholders: Effective January 3, 2022, David Shindler was added as a Portfolio Manager of the fund. Effective September 30, 2022, Vipin Narula is no longer a Portfolio Manager of the fund.
| (b) | Security is not a benchmark constituent. |
| (d) | Duration is a measure of how much a bond’s price is likely to fluctuate with general changes in interest rates, e.g., if rates rise 1.00%, a bond with a 5-year duration is likely to lose about 5.00% of its value. |
| (r) | Securities rated “BBB”, “Baa”, or higher are considered investment grade; securities rated “BB”, “Ba”, or below are considered non-investment grade. Ratings are assigned to underlying securities utilizing ratings from Moody's, Fitch, and Standard & Poor's 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. If none of the 3 rating agencies above assign a rating, but the security is rated by DBRS Morningstar, then the DBRS Morningstar rating is assigned. If none of the 4 rating agencies listed above rate the security, but the security is rated by the Kroll Bond Rating Agency (KBRA), then the KBRA rating is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). For securities that are not rated by any of the rating agencies, the security is considered Not Rated. |
| (y) | A yield curve graphically depicts the yields of different maturity bonds of the same credit quality and type; a normal yield curve is upward sloping, with short-term rates lower than long-term rates. |
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 10/31/22
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 10/31/22
Average annual without sales charge
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| A | 9/04/90 | (14.74)% | 2.30% | 4.73% |
| B | 9/07/93 | (15.43)% | 1.51% | 3.94% |
| C | 1/03/94 | (15.43)% | 1.53% | 3.95% |
| I | 1/02/97 | (14.59)% | 2.55% | 4.99% |
| R1 | 4/01/05 | (15.43)% | 1.52% | 3.95% |
| R2 | 10/31/03 | (14.98)% | 2.04% | 4.47% |
| R3 | 4/01/05 | (14.78)% | 2.30% | 4.74% |
| R4 | 4/01/05 | (14.59)% | 2.54% | 4.99% |
| R6 | 6/01/12 | (14.50)% | 2.64% | 5.09% |
Comparative benchmark(s)
| MSCI World Index (net div) (f) | (18.48)% | 6.37% | 8.94% |
| MFS Global Total Return Blended Index (f)(w) | (19.20)% | 3.08% | 5.07% |
| Bloomberg Global Aggregate Index (f) | (20.79)% | (2.38)% | (0.98)% |
Average annual with sales charge
| | | | |
A
With Initial Sales Charge (5.75%) | (19.64)% | 1.09% | 4.12% |
B
With CDSC (Declining over six years from 4% to 0%) (v) | (18.54)% | 1.19% | 3.94% |
C
With CDSC (1% for 12 months) (v) | (16.20)% | 1.53% | 3.95% |
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. |
| (w) | The MFS Global Total Return Blended Index (a custom index) was comprised of the following at the beginning and at the end of the reporting period: |
| | 10/31/22 |
| MSCI World Index (net div) | 60% |
| Bloomberg Global Aggregate Index | 40% |
Benchmark Definition(s)
Bloomberg Global Aggregate Index(a) – provides a broad-based measure of the global investment-grade fixed income markets. The three major components of this index are the U.S. Aggregate, the Pan-European Aggregate, and the Asian-Pacific Aggregate Indices. The index also includes Eurodollar and Euro-Yen corporate bonds, Canadian government, agency and corporate securities, and USD investment grade 144A securities.
Performance Summary - continued
MSCI World Index(e) (net div) – a market capitalization-weighted index that is designed to measure equity market performance in the global developed markets.
It is not possible to invest directly in an index.
| (a) | Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg's licensors own all proprietary rights in the Bloomberg Indices. Bloomberg neither approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith. |
| (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 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,
May 1, 2022 through October 31, 2022
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 May 1, 2022 through October 31, 2022.
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
5/01/22 | Ending
Account Value
10/31/22 | Expenses
Paid During
Period (p)
5/01/22-10/31/22 |
| A | Actual | 1.09% | $1,000.00 | $932.95 | $5.31 |
| Hypothetical (h) | 1.09% | $1,000.00 | $1,019.71 | $5.55 |
| B | Actual | 1.84% | $1,000.00 | $928.70 | $8.94 |
| Hypothetical (h) | 1.84% | $1,000.00 | $1,015.93 | $9.35 |
| C | Actual | 1.84% | $1,000.00 | $929.17 | $8.95 |
| Hypothetical (h) | 1.84% | $1,000.00 | $1,015.93 | $9.35 |
| I | Actual | 0.84% | $1,000.00 | $933.91 | $4.09 |
| Hypothetical (h) | 0.84% | $1,000.00 | $1,020.97 | $4.28 |
| R1 | Actual | 1.84% | $1,000.00 | $928.66 | $8.94 |
| Hypothetical (h) | 1.84% | $1,000.00 | $1,015.93 | $9.35 |
| R2 | Actual | 1.34% | $1,000.00 | $931.47 | $6.52 |
| Hypothetical (h) | 1.34% | $1,000.00 | $1,018.45 | $6.82 |
| R3 | Actual | 1.09% | $1,000.00 | $932.78 | $5.31 |
| Hypothetical (h) | 1.09% | $1,000.00 | $1,019.71 | $5.55 |
| R4 | Actual | 0.84% | $1,000.00 | $933.69 | $4.09 |
| Hypothetical (h) | 0.84% | $1,000.00 | $1,020.97 | $4.28 |
| R6 | Actual | 0.75% | $1,000.00 | $933.85 | $3.66 |
| Hypothetical (h) | 0.75% | $1,000.00 | $1,021.42 | $3.82 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Portfolio of Investments
10/31/22
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 59.3% |
| Aerospace & Defense – 2.3% | |
| General Dynamics Corp. | | 37,522 | $9,372,995 |
| Honeywell International, Inc. | | 40,463 | 8,255,261 |
| Huntington Ingalls Industries, Inc. | | 8,355 | 2,147,820 |
| L3Harris Technologies, Inc. | | 20,202 | 4,979,187 |
| Lockheed Martin Corp. | | 4,017 | 1,954,993 |
| Northrop Grumman Corp. | | 7,763 | 4,261,965 |
| Thales S.A. | | 6,791 | 863,397 |
| | | | | $31,835,618 |
| Alcoholic Beverages – 0.9% | |
| Diageo PLC | | 107,106 | $4,419,393 |
| Heineken N.V. | | 43,734 | 3,656,423 |
| Kirin Holdings Co. Ltd. | | 88,600 | 1,302,972 |
| Pernod Ricard S.A. | | 19,089 | 3,352,258 |
| | | | | $12,731,046 |
| Apparel Manufacturers – 0.5% | |
| Compagnie Financiere Richemont S.A. | | 57,338 | $5,608,113 |
| LVMH Moet Hennessy Louis Vuitton SE | | 2,620 | 1,654,508 |
| | | | | $7,262,621 |
| Automotive – 1.7% | |
| Aptiv PLC (a) | | 51,938 | $4,729,994 |
| Lear Corp. | | 33,240 | 4,610,721 |
| LKQ Corp. | | 124,244 | 6,912,936 |
| Magna International, Inc. | | 54,633 | 3,044,546 |
| Mercedes-Benz Group AG | | 17,929 | 1,038,294 |
| Stellantis N.V. | | 107,439 | 1,450,372 |
| Toyota Motor Corp. | | 84,300 | 1,169,297 |
| | | | | $22,956,160 |
| Biotechnology – 0.3% | |
| Biogen, Inc. (a) | | 2,938 | $832,747 |
| Gilead Sciences, Inc. | | 44,160 | 3,464,793 |
| | | | | $4,297,540 |
| Broadcasting – 0.2% | |
| Omnicom Group, Inc. | | 40,636 | $2,956,269 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Brokerage & Asset Managers – 1.6% | |
| Cboe Global Markets, Inc. | | 38,275 | $4,765,238 |
| Charles Schwab Corp. | | 146,279 | 11,654,048 |
| NASDAQ, Inc. | | 90,493 | 5,632,284 |
| | | | | $22,051,570 |
| Business Services – 2.5% | |
| Accenture PLC, “A” | | 19,355 | $5,494,884 |
| Amdocs Ltd. | | 48,844 | 4,215,726 |
| CGI, Inc. (a) | | 73,038 | 5,883,356 |
| Cognizant Technology Solutions Corp., “A” | | 11,827 | 736,231 |
| Equifax, Inc. | | 14,964 | 2,536,996 |
| Experian PLC | | 115,180 | 3,664,133 |
| Fidelity National Information Services, Inc. | | 44,808 | 3,718,616 |
| Fiserv, Inc. (a) | | 45,916 | 4,717,410 |
| Secom Co. Ltd. | | 62,000 | 3,532,428 |
| | | | | $34,499,780 |
| Cable TV – 0.7% | |
| Comcast Corp., “A” | | 300,278 | $9,530,824 |
| Chemicals – 0.5% | |
| Nutrien Ltd. | | 9,993 | $844,346 |
| PPG Industries, Inc. | | 57,729 | 6,591,497 |
| | | | | $7,435,843 |
| Computer Software – 0.8% | |
| Microsoft Corp. | | 44,787 | $10,396,406 |
| Computer Software - Systems – 2.1% | |
| Amadeus IT Group S.A. (a) | | 77,157 | $4,021,446 |
| Capgemini | | 10,623 | 1,745,322 |
| Fujitsu Ltd. | | 42,000 | 4,837,083 |
| Hitachi Ltd. | | 159,600 | 7,229,463 |
| Hon Hai Precision Industry Co. Ltd. | | 926,000 | 2,938,620 |
| Lenovo Group Ltd. | | 1,818,000 | 1,448,563 |
| Samsung Electronics Co. Ltd. | | 151,235 | 6,288,881 |
| | | | | $28,509,378 |
| Construction – 1.1% | |
| Anhui Conch Cement Co. Ltd. | | 418,500 | $1,076,952 |
| Masco Corp. | | 125,676 | 5,815,029 |
| Stanley Black & Decker, Inc. | | 44,357 | 3,481,581 |
| Techtronic Industries Co. Ltd. | | 102,500 | 966,887 |
| Vulcan Materials Co. | | 21,786 | 3,566,368 |
| | | | | $14,906,817 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Consumer Products – 1.3% | |
| Colgate-Palmolive Co. | | 75,007 | $5,538,517 |
| Kimberly-Clark Corp. | | 58,363 | 7,263,859 |
| Reckitt Benckiser Group PLC | | 79,125 | 5,244,804 |
| | | | | $18,047,180 |
| Electrical Equipment – 1.4% | |
| Johnson Controls International PLC | | 127,846 | $7,394,612 |
| Legrand S.A. | | 41,094 | 3,132,744 |
| Schneider Electric SE | | 70,171 | 8,894,381 |
| | | | | $19,421,737 |
| Electronics – 2.2% | |
| Intel Corp. | | 114,096 | $3,243,749 |
| Kyocera Corp. | | 78,200 | 3,698,175 |
| NXP Semiconductors N.V. | | 33,522 | 4,896,894 |
| Taiwan Semiconductor Manufacturing Co. Ltd., ADR | | 87,080 | 5,359,774 |
| Texas Instruments, Inc. | | 79,392 | 12,752,737 |
| | | | | $29,951,329 |
| Energy - Independent – 1.6% | |
| ConocoPhillips | | 109,043 | $13,749,232 |
| Hess Corp. | | 55,546 | 7,836,429 |
| | | | | $21,585,661 |
| Energy - Integrated – 1.2% | |
| China Petroleum & Chemical Corp. | | 9,886,000 | $3,904,199 |
| Eni S.p.A. | | 642,126 | 8,410,737 |
| LUKOIL PJSC (u) | | 8,038 | 0 |
| Suncor Energy, Inc. | | 105,988 | 3,645,611 |
| | | | | $15,960,547 |
| Food & Beverages – 2.1% | |
| Archer Daniels Midland Co. | | 35,420 | $3,435,032 |
| Coca-Cola FEMSA S.A.B. de C.V. | | 17,200 | 1,079,988 |
| Danone S.A. | | 97,638 | 4,857,344 |
| General Mills, Inc. | | 113,532 | 9,261,940 |
| J.M. Smucker Co. | | 28,906 | 4,354,978 |
| Nestle S.A. | | 51,179 | 5,573,035 |
| | | | | $28,562,317 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Food & Drug Stores – 0.9% | |
| Albertsons Cos., Inc., “A” | | 79,200 | $1,624,392 |
| BIM Birlesik Magazalar A.S. | | 321,406 | 2,320,822 |
| Tesco PLC | | 3,081,270 | 7,600,775 |
| | | | | $11,545,989 |
| General Merchandise – 0.1% | |
| Dollar Tree, Inc. (a) | | 6,048 | $958,608 |
| Health Maintenance Organizations – 0.8% | |
| Cigna Corp. | | 34,444 | $11,127,479 |
| Insurance – 4.2% | |
| Aon PLC | | 47,530 | $13,379,220 |
| Chubb Ltd. | | 45,953 | 9,874,840 |
| Equitable Holdings, Inc. | | 151,381 | 4,635,286 |
| Everest Re Group Ltd. | | 4,483 | 1,446,485 |
| Hartford Financial Services Group, Inc. | | 34,264 | 2,481,056 |
| Manulife Financial Corp. | | 418,167 | 6,930,826 |
| MetLife, Inc. | | 60,272 | 4,412,513 |
| Samsung Fire & Marine Insurance Co. Ltd. | | 16,804 | 2,356,861 |
| Travelers Cos., Inc. | | 16,105 | 2,970,728 |
| Willis Towers Watson PLC | | 31,289 | 6,827,573 |
| Zurich Insurance Group AG | | 6,093 | 2,600,029 |
| | | | | $57,915,417 |
| Internet – 0.4% | |
| Alphabet, Inc., “A” (a) | | 59,617 | $5,634,403 |
| Leisure & Toys – 0.2% | |
| Brunswick Corp. | | 15,288 | $1,080,403 |
| Nintendo Co. Ltd. | | 23,500 | 957,622 |
| Polaris, Inc. | | 10,457 | 1,062,431 |
| | | | | $3,100,456 |
| Machinery & Tools – 2.1% | |
| Eaton Corp. PLC | | 52,346 | $7,855,564 |
| GEA Group AG | | 25,015 | 875,126 |
| Ingersoll Rand, Inc. | | 139,955 | 7,067,727 |
| Kubota Corp. | | 258,100 | 3,604,322 |
| PACCAR, Inc. | | 10,848 | 1,050,412 |
| Regal Rexnord Corp. | | 45,510 | 5,758,835 |
| Volvo Group | | 136,670 | 2,237,976 |
| | | | | $28,449,962 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Major Banks – 5.9% | |
| ABN AMRO Group N.V., GDR | | 140,136 | $1,378,801 |
| Bank of America Corp. | | 268,161 | 9,664,522 |
| BNP Paribas | | 250,919 | 11,777,369 |
| DBS Group Holdings Ltd. | | 365,200 | 8,823,001 |
| Erste Group Bank AG | | 42,340 | 1,044,389 |
| Goldman Sachs Group, Inc. | | 32,377 | 11,154,200 |
| JPMorgan Chase & Co. | | 95,663 | 12,042,058 |
| Mitsubishi UFJ Financial Group, Inc. | | 1,029,400 | 4,879,975 |
| National Australia Bank Ltd. | | 51,181 | 1,058,455 |
| NatWest Group PLC | | 2,501,300 | 6,735,217 |
| Regions Financial Corp. | | 83,218 | 1,826,635 |
| UBS AG | | 679,987 | 10,790,426 |
| | | | | $81,175,048 |
| Medical & Health Technology & Services – 0.8% | |
| ICON PLC (a) | | 15,379 | $3,042,582 |
| McKesson Corp. | | 16,779 | 6,533,239 |
| Quest Diagnostics, Inc. | | 7,811 | 1,122,050 |
| | | | | $10,697,871 |
| Medical Equipment – 1.7% | |
| Becton, Dickinson and Co. | | 22,439 | $5,294,931 |
| Boston Scientific Corp. (a) | | 132,502 | 5,712,161 |
| Danaher Corp. | | 9,639 | 2,425,847 |
| Medtronic PLC | | 81,315 | 7,102,052 |
| Thermo Fisher Scientific, Inc. | | 5,427 | 2,789,315 |
| | | | | $23,324,306 |
| Metals & Mining – 1.3% | |
| Fortescue Metals Group Ltd. | | 95,513 | $891,320 |
| Glencore PLC | | 788,449 | 4,516,446 |
| Rio Tinto PLC | | 175,618 | 9,137,460 |
| Vale S.A. | | 224,600 | 2,918,865 |
| | | | | $17,464,091 |
| Other Banks & Diversified Financials – 1.4% | |
| China Construction Bank Corp. | | 3,627,000 | $1,926,785 |
| Julius Baer Group Ltd. | | 57,482 | 2,753,694 |
| KB Financial Group, Inc. | | 20,400 | 686,247 |
| Northern Trust Corp. | | 43,626 | 3,679,853 |
| Sberbank of Russia PJSC (a)(u) | | 780,516 | 0 |
| SLM Corp. | | 129,086 | 2,141,537 |
| Tisco Financial Group PCL | | 393,900 | 993,547 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Other Banks & Diversified Financials – continued | |
| Truist Financial Corp. | | 167,559 | $7,504,968 |
| | | | | $19,686,631 |
| Pharmaceuticals – 6.4% | |
| Bayer AG | | 180,335 | $9,484,659 |
| Johnson & Johnson | | 133,748 | 23,268,140 |
| Merck & Co., Inc. | | 194,863 | 19,720,136 |
| Organon & Co. | | 194,984 | 5,104,681 |
| Pfizer, Inc. | | 102,966 | 4,793,067 |
| Roche Holding AG | | 66,863 | 22,205,313 |
| Sanofi | | 20,080 | 1,732,982 |
| Santen Pharmaceutical Co. Ltd. | | 72,800 | 498,405 |
| | | | | $86,807,383 |
| Printing & Publishing – 0.7% | |
| RELX PLC | | 103,690 | $2,790,303 |
| Wolters Kluwer N.V. | | 60,356 | 6,415,015 |
| | | | | $9,205,318 |
| Railroad & Shipping – 0.9% | |
| A.P. Moller-Maersk A/S | | 278 | $581,511 |
| Canadian Pacific Railway Ltd. | | 78,802 | 5,874,505 |
| Nippon Yusen KK | | 58,300 | 1,058,218 |
| Orient Overseas International Ltd. | | 28,500 | 416,445 |
| Union Pacific Corp. | | 24,442 | 4,818,496 |
| | | | | $12,749,175 |
| Real Estate – 0.4% | |
| Extra Space Storage, Inc., REIT | | 13,140 | $2,331,562 |
| National Retail Properties, Inc., REIT | | 32,044 | 1,346,809 |
| Phillips Edison & Co., REIT | | 20,935 | 630,981 |
| W.P. Carey, Inc., REIT | | 19,910 | 1,519,133 |
| | | | | $5,828,485 |
| Restaurants – 0.4% | |
| Cracker Barrel Old Country Store, Inc. | | 7,940 | $906,907 |
| Texas Roadhouse, Inc. | | 12,197 | 1,206,893 |
| Yum China Holdings, Inc. | | 73,460 | 3,037,571 |
| | | | | $5,151,371 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Specialty Chemicals – 0.5% | |
| Akzo Nobel N.V. | | 46,793 | $2,887,424 |
| Axalta Coating Systems Ltd. (a) | | 104,671 | 2,440,928 |
| Chemours Co. | | 27,455 | 786,037 |
| | | | | $6,114,389 |
| Specialty Stores – 0.1% | |
| Wal-Mart de Mexico S.A.B. de C.V. | | 206,572 | $797,908 |
| Telecommunications - Wireless – 1.7% | |
| KDDI Corp. | | 419,000 | $12,384,445 |
| PT Telekom Indonesia | | 4,380,800 | 1,232,999 |
| T-Mobile US, Inc. (a) | | 51,684 | 7,833,227 |
| Vodafone Group PLC | | 1,338,719 | 1,560,421 |
| | | | | $23,011,092 |
| Telephone Services – 0.5% | |
| AT&T, Inc. | | 81,106 | $1,478,562 |
| France Telecom | | 98,896 | 941,276 |
| Hellenic Telecommunications Organization S.A. | | 134,293 | 2,110,170 |
| Quebecor, Inc., “B” | | 112,409 | 2,118,885 |
| | | | | $6,648,893 |
| Tobacco – 1.2% | |
| British American Tobacco PLC | | 155,502 | $6,122,950 |
| Japan Tobacco, Inc. | | 130,700 | 2,165,808 |
| Philip Morris International, Inc. | | 87,016 | 7,992,420 |
| | | | | $16,281,178 |
| Utilities - Electric Power – 1.7% | |
| American Electric Power Co., Inc. | | 6,949 | $610,956 |
| Duke Energy Corp. | | 31,826 | 2,965,547 |
| E.ON SE | | 732,432 | 6,135,149 |
| Edison International | | 54,393 | 3,265,756 |
| Exelon Corp. | | 88,849 | 3,428,683 |
| Iberdrola S.A. | | 477,027 | 4,843,860 |
| PG&E Corp. (a) | | 46,036 | 687,317 |
| Transmissora Alianca de Energia Eletrica S.A., IEU | | 190,161 | 1,479,541 |
| | | | | $23,416,809 |
| Total Common Stocks (Identified Cost, $606,915,069) | | $809,990,905 |
| Bonds – 37.1% |
| Aerospace & Defense – 0.0% |
| Raytheon Technologies Corp., 2.82%, 9/01/2051 | | $ | 770,000 | $470,759 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Airlines – 0.1% |
| EasyJet Finco B.V., 1.875%, 3/03/2028 | | EUR | 1,350,000 | $1,058,371 |
| Alcoholic Beverages – 0.0% |
| Pernod Ricard S.A., 3.75%, 11/02/2032 | | EUR | 400,000 | $394,925 |
| Apparel Manufacturers – 0.1% |
| Tapestry, Inc., 3.05%, 3/15/2032 | | $ | 1,228,000 | $903,486 |
| Asset-Backed & Securitized – 3.3% |
| 3650R Commercial Mortgage Trust, 2021-PF1, “XA”, 1.031%, 11/15/2054 (i) | | $ | 7,251,648 | $432,488 |
| AA Bond Co. Ltd., 3.25%, 7/31/2028 | | GBP | 1,000,000 | 847,093 |
| ACREC 2021-FL1 Ltd., “C”, FLR, 5.593% (LIBOR - 1mo. + 2.15%), 10/16/2036 (n) | | $ | 1,125,500 | 1,053,322 |
| ACRES 2021-FL2 Issuer Ltd., “AS”, FLR, 5.162% (LIBOR - 1mo. + 1.75%), 1/15/2037 (n) | | | 808,500 | 760,753 |
| ACRES 2021-FL2 Issuer Ltd., “B”, FLR, 5.662% (LIBOR - 1mo. + 2.25%), 1/15/2037 (n) | | | 1,320,000 | 1,247,510 |
| Arbor Realty Trust, Inc., CLO, 2019-FL2, “AS”, FLR, 4.94% (LIBOR - 1mo. + 1.45%), 9/15/2034 (n) | | | 1,000,000 | 979,238 |
| Arbor Realty Trust, Inc., CLO, 2021-FL1, “B”, FLR, 4.912% (LIBOR - 1mo. + 1.5%), 12/15/2035 (n) | | | 423,000 | 390,124 |
| Arbor Realty Trust, Inc., CLO, 2021-FL2, “B”, FLR, 5.012% (LIBOR - 1mo. + 1.6%), 5/15/2036 (n) | | | 289,000 | 269,516 |
| Arbor Realty Trust, Inc., CLO, 2021-FL2, “C”, FLR, 5.362% (LIBOR - 1mo. + 1.95%), 5/15/2036 (n) | | | 857,500 | 788,458 |
| Arbor Realty Trust, Inc., CLO, 2022-FL1, “B”, FLR, 4.891% (SOFR - 30 day + 2.1%), 1/15/2037 (n) | | | 1,712,000 | 1,644,820 |
| Arbor Realty Trust, Inc., CLO, 2022-FL1, “C”, FLR, 5.091% (SOFR - 30 day + 2.3%), 1/15/2037 (n) | | | 1,648,500 | 1,582,802 |
| AREIT 2022-CRE6 Trust, “B”, FLR, 4.744% (SOFR - 30 day + 1.85%), 1/16/2037 (n) | | | 620,000 | 566,509 |
| AREIT 2022-CRE6 Trust, “C”, FLR, 5.043% (SOFR - 30 day + 2.15%), 1/16/2037 (n) | | | 312,000 | 288,729 |
| BBCMS Mortgage Trust, 2020-C7, “XA”, 1.624%, 4/15/2053 (i) | | | 1,435,865 | 105,748 |
| BBCMS Mortgage Trust, 2021-C10, “XA”, 1.299%, 7/15/2054 (i) | | | 5,857,287 | 428,232 |
| BBCMS Mortgage Trust, 2021-C9, “XA”, 1.628%, 2/15/2054 (i) | | | 5,381,937 | 491,968 |
| Benchmark 2021-B24 Mortgage Trust, “XA”, 1.152%, 3/15/2054 (i) | | | 4,610,224 | 286,315 |
| Benchmark 2021-B26 Mortgage Trust, “XA”, 0.886%, 6/15/2054 (i) | | | 10,656,696 | 528,990 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Asset-Backed & Securitized – continued |
| Benchmark 2021-B27 Mortgage Trust, “XA”, 1.267%, 7/15/2054 (i) | | $ | 13,986,476 | $995,911 |
| Benchmark 2021-B28 Mortgage Trust, “XA”, 1.284%, 8/15/2054 (i) | | | 13,213,452 | 942,345 |
| Benchmark 2022-B37 Mortgage Trust, “AS”, 5.943%, 1/15/2032 | | | 226,000 | 218,036 |
| BSPRT 2021-FL7 Issuer Ltd., “B”, FLR, 5.462% (LIBOR - 1mo. + 2.05%), 12/15/2038 (n) | | | 388,000 | 358,940 |
| BSPRT 2021-FL7 Issuer Ltd., “C”, FLR, 5.712% (LIBOR - 1mo. + 2.3%), 12/15/2038 (n) | | | 352,000 | 322,731 |
| Business Jet Securities LLC, 2020-1A, “A”, 2.981%, 11/15/2035 (n) | | | 330,729 | 301,680 |
| Business Jet Securities LLC, 2021-1A, “A”, 2.162%, 4/15/2036 (n) | | | 362,773 | 314,192 |
| BXMT 2021-FL4 Ltd., “AS”, FLR, 4.712% (LIBOR - 1mo. + 1.3%), 5/15/2038 (n) | | | 1,400,000 | 1,331,306 |
| BXMT 2021-FL4 Ltd., “B”, FLR, 4.962% (LIBOR - 1mo. + 1.55%), 5/15/2038 (n) | | | 1,996,500 | 1,866,942 |
| Capital Automotive, 2020-1A, “A4”, REIT, 3.19%, 2/15/2050 (n) | | | 520,499 | 483,468 |
| CarMax Auto Owner Trust, 2022-2, “A4”, 3.62%, 9/15/2027 | | | 795,000 | 767,511 |
| CF Hippolyta Issuer LLC, 2020-1, “A1”, 1.69%, 7/15/2060 (n) | | | 373,274 | 328,153 |
| Commercial Mortgage Pass-Through Certificates, 2021-BN32, “XA”, 0.78%, 4/15/2054 (i) | | | 6,787,648 | 297,856 |
| Commercial Mortgage Pass-Through Certificates, 2021-BN34, “XA”, 0.977%, 6/15/2063 (i) | | | 6,606,152 | 373,274 |
| Commercial Mortgage Pass-Through Certificates, 2021-BN35, “XA”, 1.048%, 6/15/2064 (i) | | | 6,197,114 | 368,733 |
| Commercial Mortgage Pass-Through Certificates, 2022-BNK41, “AS”, 3.79%, 4/15/2065 | | | 1,304,000 | 1,058,997 |
| Credit Acceptance Auto Loan Trust, 2021-3A, “A”, 1%, 5/15/2030 (n) | | | 1,579,000 | 1,482,847 |
| Fortress CBO Investments Ltd., 2022-FL3, “AS”, FLR, 5.221% (SOFR - 30 day + 2.25%), 2/23/2039 (n) | | | 592,000 | 564,234 |
| FS Rialto 2021-FL2 Issuer Ltd., “AS”, FLR, 4.962% (LIBOR - 1mo. + 1.6%), 5/16/2038 (n) | | | 1,454,000 | 1,379,941 |
| LoanCore 2021-CRE5 Ltd., “AS”, FLR, 5.162% (LIBOR - 1mo. + 1.75%), 7/15/2036 (n) | | | 1,850,000 | 1,713,209 |
| LoanCore 2021-CRE5 Ltd., “B”, FLR, 5.412% (LIBOR - 1mo. + 2%), 7/15/2036 (n) | | | 782,000 | 721,577 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Asset-Backed & Securitized – continued |
| MF1 2021-FL5 Ltd., “AS”, FLR, 4.69% (LIBOR - 1mo. + 1.2%), 7/15/2036 (n) | | $ | 1,360,000 | $1,284,228 |
| MF1 2021-FL5 Ltd., “B”, FLR, 4.94% (LIBOR - 1mo. + 1.45%), 7/15/2036 (n) | | | 1,977,500 | 1,866,778 |
| MF1 2021-FL5 Ltd., “C”, FLR, 5.19% (LIBOR - 1mo. + 1.7%), 7/15/2036 (n) | | | 225,000 | 208,726 |
| MF1 2021-FL6 Ltd., “AS”, FLR, 4.893% (LIBOR - 1mo. + 1.45%), 7/16/2036 (n) | | | 2,200,000 | 2,078,539 |
| MF1 2021-FL6 Ltd., “B”, FLR, 5.093% (LIBOR - 1mo. + 1.65%), 7/16/2036 (n) | | | 2,200,000 | 2,068,651 |
| MF1 2022-FL8 Ltd., “B”, FLR, 4.844% (SOFR - 30 day + 1.95%), 2/19/2037 (n) | | | 604,312 | 572,801 |
| Morgan Stanley Capital I Trust, 2021-L5, “XA”, 1.296%, 5/15/2054 (i) | | | 4,671,782 | 331,177 |
| Morgan Stanley Capital I Trust, 2021-L6, “XA”, 1.23%, 6/15/2054 (i) | | | 9,724,896 | 623,677 |
| Navistar Financial Dealer Note Master Owner Trust, 2022-1, “A”, FLR, 4.195% (SOFR - 30 day + 1.25%), 5/25/2027 (n) | | | 525,000 | 525,728 |
| PFP III 2021-7 Ltd., “AS”, FLR, 4.562% (LIBOR - 1mo. + 1.15%), 4/14/2038 (n) | | | 1,235,438 | 1,149,989 |
| PFP III 2021-7 Ltd., “B”, FLR, 4.812% (LIBOR - 1mo. + 1.4%), 4/14/2038 (n) | | | 484,976 | 445,123 |
| PFP III 2021-8 Ltd., “B”, FLR, 4.912% (LIBOR - 1mo. + 1.5%), 8/09/2037 (n) | | | 507,000 | 454,252 |
| Starwood Commercial Mortgage, 2021-FL2, “A”, FLR, 4.643% (LIBOR - 1mo. + 1.2%), 4/18/2038 (n) | | | 1,400,000 | 1,363,862 |
| Starwood Commercial Mortgage, 2021-FL2, “AS”, FLR, 4.893% (LIBOR - 1mo. + 1.45%), 4/18/2038 (n) | | | 1,400,000 | 1,341,835 |
| TPG Real Estate Finance, 2021-FL4, “A”, FLR, 4.612% (LIBOR - 1mo. + 1.2%), 3/15/2038 (n) | | | 651,000 | 633,845 |
| TPG Real Estate Finance, 2021-FL4, “AS”, FLR, 4.812% (LIBOR - 1mo. + 1.4%), 3/15/2038 (n) | | | 700,000 | 664,501 |
| Wells Fargo Commercial Mortgage Trust, 2021-C60, “XA”, 1.548%, 8/15/2054 (i) | | | 6,951,019 | 619,004 |
| | | | | $45,117,214 |
| Automotive – 0.2% |
| Hyundai Capital America, 2%, 6/15/2028 (n) | | $ | 1,809,000 | $1,407,545 |
| Hyundai Capital America, 6.375%, 4/08/2030 (n) | | | 978,000 | 953,034 |
| Volkswagen International Finance N.V., 4.375%, 3/28/2168 | | EUR | 900,000 | 722,438 |
| | | | | $3,083,017 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Broadcasting – 0.3% |
| Discovery, Inc., 4.125%, 5/15/2029 | | $ | 718,000 | $606,386 |
| Magallanes, Inc., 4.279%, 3/15/2032 (n) | | | 1,343,000 | 1,084,806 |
| Prosus N.V., 1.539%, 8/03/2028 | | EUR | 500,000 | 366,236 |
| Prosus N.V., 2.085%, 1/19/2030 | | | 690,000 | 477,941 |
| Prosus N.V., 3.68%, 1/21/2030 (n) | | $ | 587,000 | 431,989 |
| Prosus N.V., 2.031%, 8/03/2032 | | EUR | 260,000 | 159,948 |
| Prosus N.V., 3.832%, 2/08/2051 (n) | | $ | 660,000 | 348,401 |
| Walt Disney Co., 3.5%, 5/13/2040 | | | 658,000 | 502,498 |
| | | | | $3,978,205 |
| Brokerage & Asset Managers – 0.1% |
| Ameriprise Financial, Inc., 4.5%, 5/13/2032 | | $ | 459,000 | $425,009 |
| Euroclear Bank S.A., 3.625%, 10/13/2027 | | EUR | 690,000 | 681,599 |
| Low Income Investment Fund, 3.386%, 7/01/2026 | | $ | 285,000 | 269,467 |
| Low Income Investment Fund, 3.711%, 7/01/2029 | | | 760,000 | 705,176 |
| | | | | $2,081,251 |
| Building – 0.1% |
| Holcim Sterling Finance (Netherlands) B.V., 2.25%, 4/04/2034 | | GBP | 850,000 | $642,682 |
| Imerys S.A., 1%, 7/15/2031 | | EUR | 900,000 | 551,098 |
| Vulcan Materials Co., 3.5%, 6/01/2030 | | $ | 908,000 | 771,741 |
| | | | | $1,965,521 |
| Business Services – 0.2% |
| Equinix, Inc., REIT, 1%, 3/15/2033 | | EUR | 1,160,000 | $796,996 |
| Euronet Worldwide, Inc., 1.375%, 5/22/2026 | | | 1,105,000 | 939,278 |
| Fiserv, Inc., 4.4%, 7/01/2049 | | $ | 281,000 | 211,274 |
| Mastercard, Inc., 3.85%, 3/26/2050 | | | 542,000 | 425,214 |
| Verisk Analytics, Inc., 4%, 6/15/2025 | | | 747,000 | 719,740 |
| | | | | $3,092,502 |
| Cable TV – 0.2% |
| Charter Communications Operating LLC/Charter Communications Operating Capital Corp., 6.384%, 10/23/2035 | | $ | 643,000 | $587,293 |
| Charter Communications Operating LLC/Charter Communications Operating Capital Corp., 4.8%, 3/01/2050 | | | 733,000 | 518,764 |
| Comcast Corp., 3.75%, 4/01/2040 | | | 1,064,000 | 819,437 |
| SES S.A., 3.5%, 1/14/2029 | | EUR | 580,000 | 510,461 |
| | | | | $2,435,955 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Chemicals – 0.1% |
| Alpek SAB de C.V., 3.25%, 2/25/2031 (n) | | $ | 501,000 | $383,138 |
| LYB International Finance III, LLC, 4.2%, 5/01/2050 | | | 306,000 | 210,284 |
| Sherwin-Williams Co., 3.8%, 8/15/2049 | | | 305,000 | 210,993 |
| | | | | $804,415 |
| Computer Software – 0.1% |
| Microsoft Corp., 2.921%, 3/17/2052 | | $ | 1,212,000 | $818,889 |
| Microsoft Corp., 3.041%, 3/17/2062 | | | 412,000 | 268,490 |
| | | | | $1,087,379 |
| Computer Software - Systems – 0.1% |
| Apple, Inc., 2.9%, 9/12/2027 | | $ | 994,000 | $913,547 |
| Apple, Inc., 4.5%, 2/23/2036 | | | 204,000 | 195,115 |
| | | | | $1,108,662 |
| Conglomerates – 0.1% |
| Westinghouse Air Brake Technologies Corp., 4.95%, 9/15/2028 | | $ | 1,314,000 | $1,222,262 |
| Consumer Products – 0.2% |
| GSK Consumer Healthcare Capital US LLC, 2.125%, 3/29/2034 | | EUR | 660,000 | $518,665 |
| JAB Holdings B.V., 2.25%, 12/19/2039 | | | 1,200,000 | 708,813 |
| Reckitt Benckiser Treasury Services PLC, 3%, 6/26/2027 (n) | | $ | 1,016,000 | 919,661 |
| | | | | $2,147,139 |
| Electrical Equipment – 0.2% |
| Arrow Electronics, Inc., 3.25%, 9/08/2024 | | $ | 647,000 | $617,317 |
| Telefonaktiebolaget LM Ericsson, 1.125%, 2/08/2027 | | EUR | 840,000 | 687,014 |
| Telefonaktiebolaget LM Ericsson, 1%, 5/26/2029 | | | 1,160,000 | 806,487 |
| | | | | $2,110,818 |
| Electronics – 0.1% |
| Broadcom, Inc., 3.419%, 4/15/2033 (n) | | $ | 844,000 | $641,317 |
| Broadcom, Inc., 3.137%, 11/15/2035 (n) | | | 957,000 | 663,846 |
| Broadcom, Inc., 3.187%, 11/15/2036 (n) | | | 26,000 | 17,734 |
| Broadcom, Inc., 4.926%, 5/15/2037 (n) | | | 274,000 | 225,916 |
| NXP B.V./NXP Funding LLC/NXP USA, Inc., 3.4%, 5/01/2030 | | | 310,000 | 257,302 |
| | | | | $1,806,115 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Emerging Market Quasi-Sovereign – 0.9% |
| Ceske Drahy A.S. (Czech Republic), 5.625%, 10/12/2027 | | EUR | 1,080,000 | $1,052,154 |
| CEZ A.S. (Czech Republic), 2.462%, 4/06/2027 | | | 427,000 | 380,363 |
| Emirates Development Bank PJSC, 1.639%, 6/15/2026 | | $ | 1,730,000 | 1,527,157 |
| Export-Import Bank of India, 3.375%, 8/05/2026 | | | 1,200,000 | 1,089,802 |
| Export-Import Bank of India, 3.875%, 2/01/2028 | | | 1,000,000 | 888,719 |
| First Abu Dhabi Bank PJSC, 0.125%, 2/16/2026 | | EUR | 1,200,000 | 1,040,177 |
| Huarong Finance 2017 Co. Ltd. (People's Republic of China), 4.95%, 11/07/2047 | | $ | 850,000 | 429,176 |
| Korea Hydro & Nuclear Power Co. Ltd., 4.25%, 7/27/2027 (n) | | | 637,000 | 597,977 |
| MDGH - GMTN B.V. (United Arab Emirates), 1%, 3/10/2034 | | EUR | 800,000 | 544,723 |
| MDGH - GMTN RSC Ltd. (United Arab Emirates), 2.5%, 6/03/2031 | | $ | 1,460,000 | 1,157,050 |
| Ooredoo International Finance Ltd. (State of Qatar), 2.625%, 4/08/2031 | | | 820,000 | 674,655 |
| PT Pertamina (Persero) (Republic of Indonesia), 3.65%, 7/30/2029 | | | 1,050,000 | 896,265 |
| Qatar Petroleum, 2.25%, 7/12/2031 | | | 887,000 | 711,818 |
| Qatar Petroleum, 3.125%, 7/12/2041 | | | 776,000 | 550,029 |
| SPP-Distribucia A.S. (Republic of Slovakia), 1%, 6/09/2031 | | EUR | 1,090,000 | 678,933 |
| | | | | $12,218,998 |
| Emerging Market Sovereign – 5.6% |
| Oriental Republic of Uruguay, 4.375%, 1/23/2031 | | $ | 2,450,000 | $2,330,996 |
| Oriental Republic of Uruguay, 8.25%, 5/21/2031 | | UYU | 131,835,000 | 2,686,630 |
| People's Republic of China, 3.03%, 3/11/2026 | | CNY | 201,850,000 | 28,325,264 |
| People's Republic of China, 3.13%, 11/21/2029 | | | 51,320,000 | 7,260,993 |
| Republic of Bulgaria, 4.625%, 9/23/2034 | | EUR | 1,090,000 | 991,017 |
| Republic of Croatia, 2.875%, 4/22/2032 | | | 698,000 | 610,472 |
| Republic of Croatia, 1.125%, 3/04/2033 | | | 1,434,000 | 1,033,674 |
| Republic of Hungary, 5.5%, 6/16/2034 (n) | | $ | 640,000 | 550,272 |
| Republic of Indonesia, 3.55%, 3/31/2032 | | | 990,000 | 844,713 |
| Republic of Korea, 2.125%, 6/10/2027 | | KRW | 5,000,000,000 | 3,204,140 |
| Republic of Korea, 1.875%, 6/10/2029 | | | 18,965,970,000 | 11,535,182 |
| Republic of Korea, 1.375%, 6/10/2030 | | | 13,396,200,000 | 7,687,316 |
| State of Qatar, 4%, 3/14/2029 (n) | | $ | 878,000 | 832,871 |
| State of Qatar, 3.75%, 4/16/2030 | | | 1,230,000 | 1,142,362 |
| State of Qatar, 4.4%, 4/16/2050 | | | 299,000 | 251,160 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Emerging Market Sovereign – continued |
| United Arab Emirates International Government, 3.25%, 10/19/2061 | | $ | 720,000 | $472,464 |
| United Mexican States, 7.5%, 6/03/2027 | | MXN | 84,200,000 | 3,888,258 |
| United Mexican States, 2.659%, 5/24/2031 | | $ | 2,213,000 | 1,713,174 |
| United Mexican States, 3.771%, 5/24/2061 | | | 1,036,000 | 601,281 |
| | | | | $75,962,239 |
| Energy - Independent – 0.2% |
| Tengizchevroil Finance Co. International Ltd., 4%, 8/15/2026 (n) | | $ | 3,609,000 | $2,937,870 |
| Energy - Integrated – 0.2% |
| BP Capital Markets PLC, 3.625%, 6/22/2170 | | EUR | 860,000 | $726,966 |
| Cenovus Energy, Inc., 2.65%, 1/15/2032 | | $ | 939,000 | 724,256 |
| Eni S.p.A., 4.25%, 5/09/2029 (n) | | | 607,000 | 544,122 |
| Galp Energia SGPS S.A., 2%, 1/15/2026 | | EUR | 600,000 | 550,092 |
| MOL PLC, 1.5%, 10/08/2027 | | | 640,000 | 509,184 |
| | | | | $3,054,620 |
| Engineering - Construction – 0.0% |
| Bouygues S.A., 4.625%, 6/07/2032 | | EUR | 500,000 | $505,984 |
| Financial Institutions – 0.6% |
| AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 3.3%, 1/30/2032 | | $ | 367,000 | $275,452 |
| AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 3.85%, 10/29/2041 | | | 293,000 | 194,744 |
| Avolon Holdings Funding Ltd., 4.25%, 4/15/2026 (n) | | | 509,000 | 444,934 |
| Avolon Holdings Funding Ltd., 4.375%, 5/01/2026 (n) | | | 537,000 | 472,070 |
| Avolon Holdings Funding Ltd., 2.75%, 2/21/2028 (n) | | | 665,000 | 508,337 |
| Credit Logement S.A., 1.081% to 2/15/2029, FLR (EUR ICE Swap Rate - 5yr. + 1.1%) to 2/15/2034 | | EUR | 900,000 | 681,122 |
| CTP N.V., 0.942%, 1/20/2026 | | | 850,000 | 668,927 |
| CTP N.V., 1.5%, 9/27/2031 | | | 1,050,000 | 545,717 |
| EXOR N.V., 2.25%, 4/29/2030 | | | 600,000 | 507,458 |
| EXOR N.V., 0.875%, 1/19/2031 | | | 500,000 | 368,649 |
| Grand City Properties S.A., 1.5%, 12/09/2069 | | | 900,000 | 478,582 |
| Logicor Financing S.à r.l., 1.625%, 1/17/2030 | | | 890,000 | 601,465 |
| Logicor Financing S.à r.l., 0.875%, 1/14/2031 | | | 275,000 | 160,360 |
| P3 Group S.à r.l., 0.875%, 1/26/2026 | | | 840,000 | 651,096 |
| Samhallsbyggnadsbolaget i Norden AB, 1.75%, 1/14/2025 | | | 610,000 | 481,764 |
| SBB Treasury Oyj, 0.75%, 12/14/2028 | | | 590,000 | 316,657 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Financial Institutions – continued |
| SBB Treasury Oyj, 1.125%, 11/26/2029 | | EUR | 450,000 | $244,592 |
| VGP N.V., 1.5%, 4/08/2029 | | | 1,000,000 | 586,535 |
| Vonovia SE, REIT, 1.625%, 9/01/2051 | | | 800,000 | 358,942 |
| | | | | $8,547,403 |
| Food & Beverages – 0.5% |
| Anheuser-Busch InBev Worldwide, Inc., 4.375%, 4/15/2038 | | $ | 446,000 | $380,841 |
| Anheuser-Busch InBev Worldwide, Inc., 5.55%, 1/23/2049 | | | 512,000 | 482,187 |
| Bacardi Ltd., 5.15%, 5/15/2038 (n) | | | 658,000 | 551,489 |
| Constellation Brands, Inc., 4.4%, 11/15/2025 | | | 1,053,000 | 1,025,137 |
| Constellation Brands, Inc., 3.15%, 8/01/2029 | | | 1,006,000 | 860,619 |
| Constellation Brands, Inc., 2.25%, 8/01/2031 | | | 400,000 | 306,296 |
| JBS USA Lux S.A./JBS USA Food Co./JBS USA Finance, Inc., 3%, 2/02/2029 (n) | | | 621,000 | 503,112 |
| Kraft Heinz Foods Co., 3.875%, 5/15/2027 | | | 1,121,000 | 1,050,324 |
| PT Indofood CBP Sukses Makmur Tbk, 3.398%, 6/09/2031 | | | 1,680,000 | 1,234,699 |
| | | | | $6,394,704 |
| Gaming & Lodging – 0.2% |
| InterContinental Hotels Group PLC, 3.375%, 10/08/2028 | | GBP | 740,000 | $699,646 |
| Marriott International, Inc., 2.85%, 4/15/2031 | | $ | 606,000 | 471,506 |
| VICI Properties LP, REIT, 4.95%, 2/15/2030 | | | 1,065,000 | 962,549 |
| | | | | $2,133,701 |
| Industrial – 0.0% |
| Investor AB, 2.75%, 6/10/2032 | | EUR | 240,000 | $217,159 |
| Insurance – 0.5% |
| Aflac, Inc., 3.6%, 4/01/2030 | | $ | 213,000 | $188,879 |
| AIA Group Ltd., 0.88%, 9/09/2033 | | EUR | 920,000 | 690,602 |
| AIA Group Ltd., 0.88%, 9/09/2033 | | | 453,000 | 340,047 |
| Allianz SE, 3.2% to 4/30/2028, FLR (CMT - 5yr. + 2.165%) to 4/30/2171 (n) | | $ | 200,000 | 135,060 |
| Allianz SE, 3.5% to 4/30/2026, FLR (CMT - 5yr. + 2.973%) to 4/30/2171 (n) | | | 1,000,000 | 789,499 |
| Argentum Netherlands B.V., 5.125%, 6/01/2048 | | | 660,000 | 574,266 |
| Argentum Netherlands B.V. for Zurich Insurance Co. Ltd., 2.75%, 2/19/2049 | | EUR | 830,000 | 692,551 |
| Aviva PLC, 4% to 6/03/2035, FLR (GBP Government Yield - 5yr. + 4.7%) to 6/03/2055 | | GBP | 927,000 | 766,711 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Insurance – continued |
| Corebridge Financial, Inc., 4.35%, 4/05/2042 (n) | | $ | 244,000 | $182,907 |
| Credit Agricole Assurances S.A., 2%, 7/17/2030 | | EUR | 300,000 | 228,273 |
| La Mondiale, 4.375% to 10/24/2029, FLR (EUR Swap Rate - 5yr. + 4.411%) to 4/24/2069 | | | 500,000 | 397,771 |
| NN Group N.V., 4.625%, 1/13/2048 | | | 1,109,000 | 1,003,864 |
| Zurich Finance (Ireland) DAC, 3%, 4/19/2051 | | $ | 780,000 | 550,875 |
| | | | | $6,541,305 |
| Insurance - Health – 0.0% |
| UnitedHealth Group, Inc., 4.625%, 7/15/2035 | | $ | 184,000 | $168,968 |
| Insurance - Property & Casualty – 0.2% |
| Aon Corp./Aon Global Holdings PLC, 2.6%, 12/02/2031 | | $ | 244,000 | $188,680 |
| Berkshire Hathaway, Inc., 0.5%, 1/15/2041 | | EUR | 755,000 | 401,259 |
| Hiscox Ltd., 6%, 9/22/2027 | | GBP | 690,000 | 773,646 |
| Marsh & McLennan Cos., Inc., 2.25%, 11/15/2030 | | $ | 241,000 | 188,827 |
| QBE Insurance Group Ltd., 2.5% to 9/13/2028, FLR (GBP Government Yield - 5yr. + 2.061%) to 9/13/2038 | | GBP | 738,000 | 627,918 |
| | | | | $2,180,330 |
| International Market Quasi-Sovereign – 0.7% |
| Airport Authority Hong Kong, 3.25%, 1/12/2052 (n) | | $ | 817,000 | $536,103 |
| Caixa Geral de Depositos S.A. (Republic of Portugal), 5.75% to 10/31/2027, FLR (EUR Swap Rate - 1yr. + 2.75%) to 10/31/2028 | | EUR | 800,000 | 792,747 |
| Deutsche Bahn Finance GmbH (Federal Republic of Germany), 1.375%, 4/16/2040 | | | 195,000 | 131,728 |
| Deutsche Bahn Finance GmbH (Federal Republic of Germany), 0.625%, 12/08/2050 | | | 350,000 | 170,185 |
| Electricite de France S.A., 2.625% to 6/01/2028, FLR (EUR Swap Rate - 5yr. + 2.86%) to 6/01/2033, FLR (EUR Swap Rate - 5yr. + 3.11%) to 6/01/2048, FLR (EUR Swap Rate - 5yr. + 3.86%) to 12/29/2049 | | | 800,000 | 521,622 |
| Electricite de France S.A., 2.875% to 3/15/2027, FLR (EUR Swap Rate - 5yr. + 3.373%) to 3/15/2031, FLR (EUR Swap Rate - 5yr. + 3.623%) to 3/15/2047, FLR (EUR Swap Rate - 5yr. + 4.373%) to 3/15/2070 | | | 1,000,000 | 737,517 |
| Electricite de France S.A., 5.875% to 1/22/2029, FLR (GBP Swap Rate - 15yr. + 3.046%) to 1/22/2049, FLR (GBP Swap Rate - 15yr. + 3.796%) to 12/31/2165 | | GBP | 800,000 | 665,098 |
| ESB Finance DAC, 1%, 7/19/2034 | | EUR | 930,000 | 659,385 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| International Market Quasi-Sovereign – continued |
| Islandsbanki (Republic of Iceland), 0.75%, 3/25/2025 | | EUR | 790,000 | $687,049 |
| Kreditanstalt Fuer Wiederaufbau, 1.125%, 3/31/2037 | | | 3,388,000 | 2,599,529 |
| Landsbankinn Bank (Republic of Iceland), 0.375%, 5/23/2025 | | | 623,000 | 532,569 |
| Ontario Teachers' Cadillac Fairview Properties, 2.5%, 10/15/2031 (n) | | $ | 927,000 | 700,403 |
| RTE Reseau de Transport d'Electricite, 0.75%, 1/12/2034 | | EUR | 300,000 | 211,310 |
| | | | | $8,945,245 |
| International Market Sovereign – 8.4% |
| Commonwealth of Australia, 3.25%, 6/21/2039 | | AUD | 5,813,000 | $3,357,152 |
| Federal Republic of Germany, 1.7%, 8/15/2032 | | EUR | 17,100,000 | 16,226,458 |
| Government of Bermuda, 2.375%, 8/20/2030 (n) | | $ | 418,000 | 329,719 |
| Government of Bermuda, 5%, 7/15/2032 (n) | | | 1,331,000 | 1,233,219 |
| Government of Canada, 1.25%, 3/01/2027 | | CAD | 9,683,000 | 6,469,098 |
| Government of Canada, 2%, 6/01/2032 | | | 4,750,000 | 3,123,142 |
| Government of Japan, 1.7%, 3/20/2032 | | JPY | 1,187,500,000 | 9,038,800 |
| Government of Japan, 1.7%, 6/20/2033 | | | 1,053,000,000 | 8,043,080 |
| Government of Japan, 2.3%, 3/20/2040 | | | 658,550,000 | 5,392,054 |
| Government of Japan, 1.7%, 6/20/2044 | | | 1,722,950,000 | 12,862,075 |
| Government of Japan, 0.3%, 6/20/2046 | | | 626,650,000 | 3,427,600 |
| Government of New Zealand, 1.5%, 5/15/2031 | | NZD | 8,631,000 | 4,061,370 |
| Kingdom of Belgium, 0.4%, 6/22/2040 | | EUR | 6,247,000 | 3,884,428 |
| Kingdom of Spain, 1.25%, 10/31/2030 | | | 7,984,000 | 6,934,418 |
| Kingdom of Spain, 2.55%, 10/31/2032 | | | 6,290,000 | 5,856,591 |
| Kingdom of Spain, 1%, 10/31/2050 | | | 940,000 | 503,122 |
| Republic of Cyprus, 0%, 2/09/2026 | | | 1,882,000 | 1,673,961 |
| Republic of Cyprus, 0.625%, 1/21/2030 | | | 2,249,000 | 1,737,822 |
| Republic of Cyprus, 0.95%, 1/20/2032 | | | 7,695,000 | 5,765,582 |
| Republic of France, 0.75%, 5/25/2053 | | | 4,638,000 | 2,539,939 |
| Republic of Iceland, 5%, 11/15/2028 | | ISK | 306,046,000 | 1,978,466 |
| United Kingdom Treasury, 1.25%, 10/22/2041 | | GBP | 9,414,000 | 7,053,084 |
| United Kingdom Treasury, 1.25%, 7/31/2051 | | | 4,425,000 | 2,937,173 |
| | | | | $114,428,353 |
| Local Authorities – 0.4% |
| City of Oslo, 2.17%, 5/18/2029 | | NOK | 15,000,000 | $1,247,380 |
| Province of Alberta, 4.5%, 12/01/2040 | | CAD | 710,000 | 525,661 |
| Province of British Columbia, 2.95%, 6/18/2050 | | | 600,000 | 342,837 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Local Authorities – continued |
| Province of Ontario, 1.9%, 12/02/2051 | | CAD | 6,144,000 | $2,703,928 |
| | | | | $4,819,806 |
| Machinery & Tools – 0.1% |
| CNH Industrial Capital LLC, 1.875%, 1/15/2026 | | $ | 1,156,000 | $1,017,735 |
| Major Banks – 1.8% |
| Australia and New Zealand Banking Group Ltd., 2.57% to 11/25/2030, FLR (CMT - 5yr. + 1.7%) to 11/25/2035 (n) | | $ | 1,034,000 | $720,124 |
| Bank of America Corp., 3.366% to 1/23/2025, FLR (LIBOR - 3mo. + 0.81%) to 1/23/2026 | | | 1,469,000 | 1,384,570 |
| Bank of America Corp., 3.419% to 12/20/2027, FLR (LIBOR - 3mo. + 1.04%) to 12/20/2028 | | | 1,125,000 | 993,104 |
| Bank of America Corp., 0.694%, 3/22/2031 | | EUR | 610,000 | 458,413 |
| Bank of America Corp., 2.687% to 4/22/2031, FLR (SOFR - 1 day + 1.32%) to 4/22/2032 | | $ | 2,876,000 | 2,222,725 |
| BNP Paribas S.A., 4.625% to 1/12/2027, FLR (CMT - 5yr. + 3.196%) to 1/12/2027 (n) | | | 1,150,000 | 880,321 |
| Commonwealth Bank of Australia, 2.688%, 3/11/2031 (n) | | | 1,471,000 | 1,065,054 |
| Credit Suisse AG (London), 2.125%, 5/31/2024 | | EUR | 730,000 | 682,083 |
| Goldman Sachs Group, Inc., 2.383% to 7/21/2031, FLR (SOFR - 1 day + 1.248%) to 7/21/2032 | | $ | 1,981,000 | 1,474,170 |
| Goldman Sachs Group, Inc., 3.436% to 2/24/2042, FLR (SOFR - 1 day + 1.632%) to 2/24/2043 | | | 362,000 | 246,449 |
| HSBC Holdings PLC, 2.099% to 6/04/2025, FLR (SOFR - 1 day + 1.929%) to 6/04/2026 | | | 1,029,000 | 905,074 |
| HSBC Holdings PLC, 4.375%, 11/23/2026 | | | 510,000 | 463,105 |
| JPMorgan Chase & Co., 1.47%, 9/22/2027 | | | 581,000 | 488,108 |
| JPMorgan Chase & Co., 1.953% to 2/04/2031, FLR (SOFR - 1 day + 1.065%) to 2/04/2032 | | | 732,000 | 536,182 |
| JPMorgan Chase & Co., 3.109% to 4/22/2050, FLR (SOFR + 2.44%) to 4/22/2051 | | | 677,000 | 422,605 |
| Mitsubishi UFJ Financial Group, Inc., 1.412%, 7/17/2025 | | | 2,681,000 | 2,393,195 |
| Mitsubishi UFJ Financial Group, Inc., 2.494% to 10/13/2031, FLR (CMT - 1yr. + 0.97%) to 10/13/2032 | | | 484,000 | 356,382 |
| Morgan Stanley, 3.125%, 7/27/2026 | | | 534,000 | 487,320 |
| Morgan Stanley, 1.593% to 5/04/2026, FLR (SOFR - 1 day + 0.879%) to 5/04/2027 | | | 2,003,000 | 1,714,077 |
| Morgan Stanley, 3.622% to 4/01/2030, FLR (SOFR - 1 day + 3.12%) to 4/01/2031 | | | 522,000 | 443,842 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Major Banks – continued |
| Natwest Group PLC, 5.125%, 12/31/2068 | | GBP | 820,000 | $737,020 |
| Standard Chartered PLC, 0.8% to 11/17/2028, FLR (EUR Swap Rate - 1yr. + 0.85%) to 11/17/2029 | | EUR | 630,000 | 483,132 |
| Toronto Dominion Bank, 4.108%, 6/08/2027 | | $ | 999,000 | 935,711 |
| UBS Group AG, 2.746% to 2/11/2032, FLR (CMT - 1yr. + 1.1%) to 2/11/2033 (n) | | | 1,622,000 | 1,167,122 |
| Unicaja Banco S.A., 1%, 12/01/2026 | | EUR | 700,000 | 604,232 |
| UniCredit S.p.A., 2.569% to 9/22/2025, FLR (CMT - 1yr. + 2.3%) to 9/22/2026 (n) | | $ | 1,030,000 | 883,236 |
| UniCredit S.p.A., 0.925% to 1/28/2027, FLR (EURIBOR - 3mo. + 0.85%) to 1/18/2028 | | EUR | 850,000 | 706,990 |
| Wells Fargo & Co., 3.35% to 3/02/2032, FLR (SOFR - 1 day + 1.5%) to 3/02/2033 | | $ | 1,150,000 | 927,069 |
| Wells Fargo & Co., 3.9%, 5/01/2045 | | | 316,000 | 228,634 |
| | | | | $25,010,049 |
| Medical & Health Technology & Services – 0.4% |
| Alcon, Inc., 3.8%, 9/23/2049 (n) | | $ | 231,000 | $158,979 |
| Becton, Dickinson and Co., 4.298%, 8/22/2032 | | | 326,000 | 294,934 |
| HCA, Inc., 5.125%, 6/15/2039 | | | 399,000 | 330,467 |
| Laboratory Corp. of America Holdings, 3.6%, 2/01/2025 | | | 1,075,000 | 1,029,894 |
| Laboratory Corp. of America Holdings, 4.7%, 2/01/2045 | | | 567,000 | 459,121 |
| Memorial Sloan-Kettering Cancer Center, 2.955%, 1/01/2050 | | | 670,000 | 416,956 |
| New York Society for the Relief of the Ruptured & Crippled, 2.667%, 10/01/2050 | | | 1,300,000 | 738,419 |
| ProMedica Toledo Hospital, “B”, AGM, 6.015%, 11/15/2048 | | | 590,000 | 516,312 |
| Thermo Fisher Scientific Finance I B.V., 2%, 10/18/2051 | | EUR | 630,000 | 393,419 |
| Thermo Fisher Scientific, Inc., 1.75%, 10/15/2028 | | $ | 1,119,000 | 928,832 |
| | | | | $5,267,333 |
| Metals & Mining – 0.3% |
| Anglo American Capital PLC, 5.625%, 4/01/2030 (n) | | $ | 1,815,000 | $1,712,892 |
| Anglo American Capital PLC, 4.75%, 9/21/2032 | | EUR | 380,000 | 358,354 |
| Glencore Capital Finance DAC, 1.125%, 3/10/2028 | | | 1,060,000 | 851,636 |
| Glencore Funding LLC, 2.85%, 4/27/2031 (n) | | $ | 1,032,000 | 798,877 |
| | | | | $3,721,759 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Midstream – 0.2% |
| Galaxy Pipeline Assets Bidco Ltd., 2.16%, 3/31/2034 (n) | | $ | 1,012,503 | $824,379 |
| Sabine Pass Liquefaction LLC, 4.2%, 3/15/2028 | | | 1,216,000 | 1,108,793 |
| Targa Resources Corp., 4.2%, 2/01/2033 | | | 107,000 | 89,325 |
| Targa Resources Corp., 4.95%, 4/15/2052 | | | 649,000 | 486,969 |
| | | | | $2,509,466 |
| Mortgage-Backed – 3.8% | |
| Fannie Mae, 4.5%, 3/01/2025 - 2/01/2046 | | $ | 3,263,012 | $3,137,063 |
| Fannie Mae, 5.5%, 1/01/2037 | | | 12,354 | 12,660 |
| Fannie Mae, 6%, 9/01/2037 - 6/01/2038 | | | 127,630 | 130,791 |
| Fannie Mae, 5%, 4/01/2040 - 8/01/2040 | | | 886,499 | 882,548 |
| Fannie Mae, 4%, 11/01/2040 - 2/01/2041 | | | 989,797 | 924,407 |
| Fannie Mae, 3.5%, 5/01/2043 - 12/01/2046 | | | 1,536,541 | 1,379,875 |
| Fannie Mae, UMBS, 2.5%, 4/01/2037 - 5/01/2052 | | | 5,554,788 | 4,622,025 |
| Fannie Mae, UMBS, 2%, 7/01/2037 - 7/01/2052 | | | 3,274,187 | 2,660,335 |
| Fannie Mae, UMBS, 3%, 12/01/2051 - 8/01/2052 | | | 3,523,692 | 3,002,404 |
| Fannie Mae, UMBS, 3.5%, 6/01/2052 - 7/01/2052 | | | 998,016 | 878,166 |
| Freddie Mac, 1.367%, 3/25/2027 (i) | | | 1,523,000 | 77,076 |
| Freddie Mac, 3.224%, 3/25/2027 | | | 4,500,000 | 4,221,697 |
| Freddie Mac, 3.194%, 7/25/2027 | | | 3,914,000 | 3,650,652 |
| Freddie Mac, 3.286%, 11/25/2027 | | | 2,576,000 | 2,401,433 |
| Freddie Mac, 1.8%, 4/25/2030 (i) | | | 3,170,226 | 337,514 |
| Freddie Mac, 1.868%, 4/25/2030 (i) | | | 2,614,093 | 287,572 |
| Freddie Mac, 1.663%, 5/25/2030 (i) | | | 3,298,344 | 328,504 |
| Freddie Mac, 1.798%, 5/25/2030 (i) | | | 7,375,798 | 790,509 |
| Freddie Mac, 1.342%, 6/25/2030 (i) | | | 3,056,884 | 250,240 |
| Freddie Mac, 1.6%, 8/25/2030 (i) | | | 2,713,457 | 265,568 |
| Freddie Mac, 1.169%, 9/25/2030 (i) | | | 1,752,322 | 127,598 |
| Freddie Mac, 1.081%, 11/25/2030 (i) | | | 3,594,105 | 247,301 |
| Freddie Mac, 0.329%, 1/25/2031 (i) | | | 13,673,905 | 276,046 |
| Freddie Mac, 0.517%, 3/25/2031 (i) | | | 16,756,624 | 544,218 |
| Freddie Mac, 0.938%, 7/25/2031 (i) | | | 3,177,082 | 205,097 |
| Freddie Mac, 0.536%, 9/25/2031 (i) | | | 13,281,588 | 508,434 |
| Freddie Mac, 0.855%, 9/25/2031 (i) | | | 4,021,884 | 237,648 |
| Freddie Mac, 0.567%, 12/25/2031 (i) | | | 3,294,996 | 130,865 |
| Freddie Mac, 5.5%, 7/01/2037 | | | 23,318 | 23,936 |
| Freddie Mac, 4.5%, 12/01/2039 - 5/01/2042 | | | 1,005,075 | 973,893 |
| Freddie Mac, 5%, 7/01/2041 | | | 365,478 | 366,541 |
| Freddie Mac, UMBS, 2%, 4/01/2037 - 5/01/2052 | | | 1,777,124 | 1,443,345 |
| Freddie Mac, UMBS, 3.5%, 1/01/2047 - 9/01/2052 | | | 2,038,631 | 1,808,545 |
| Freddie Mac, UMBS, 3%, 6/01/2050 - 7/01/2052 | | | 732,383 | 624,268 |
| Freddie Mac, UMBS, 2.5%, 10/01/2051 - 6/01/2052 | | | 6,192,249 | 5,083,630 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Mortgage-Backed – continued | |
| Freddie Mac, UMBS, 4%, 5/01/2052 | | $ | 146,213 | $133,462 |
| Freddie Mac, UMBS, 5%, 9/01/2052 | | | 24,716 | 23,854 |
| Ginnie Mae, 5%, 5/15/2040 - 9/20/2052 | | | 268,306 | 265,112 |
| Ginnie Mae, 3.5%, 6/20/2043 - 10/20/2052 | | | 1,149,247 | 1,042,129 |
| Ginnie Mae, 2.5%, 8/20/2051 - 5/20/2052 | | | 1,991,850 | 1,692,221 |
| Ginnie Mae, 3%, 10/20/2051 - 6/20/2052 | | | 1,468,440 | 1,282,309 |
| Ginnie Mae, 2%, 1/20/2052 | | | 906,054 | 746,263 |
| Ginnie Mae, 4%, 9/20/2052 - 10/20/2052 | | | 1,482,534 | 1,367,706 |
| Ginnie Mae, 4.5%, 9/20/2052 | | | 324,342 | 307,743 |
| Ginnie Mae, TBA, 3%, 11/15/2052 | | | 575,000 | 500,475 |
| Ginnie Mae, TBA, 3.5%, 11/15/2052 | | | 650,000 | 581,692 |
| Ginnie Mae, TBA, 5%, 11/15/2052 | | | 350,000 | 340,443 |
| UMBS, TBA, 2%, 11/25/2052 | | | 575,000 | 452,992 |
| UMBS, TBA, 5.5%, 11/25/2052 - 12/25/2052 | | | 425,000 | 418,764 |
| UMBS, TBA, 6%, 11/25/2052 - 12/25/2052 | | | 175,000 | 175,547 |
| | | | | $52,173,116 |
| Municipals – 0.6% |
| Colorado Housing & Finance Authority Rev., Single Family Mortgage Class I, Taxable, “D-1”, GNMA, 5%, 11/01/2047 | | $ | 750,000 | $738,500 |
| Connecticut Higher Education Supplemental Loan Authority Rev. Taxable (Chesla Loan Program), “C”, 4.668%, 11/15/2034 | | | 1,200,000 | 1,084,802 |
| Iowa Student Loan Liquidity Corp. Rev., Taxable, “A”, 5.08%, 12/01/2039 | | | 1,045,000 | 924,994 |
| Massachusetts Educational Financing Authority, Education Loan Rev., Taxable, “A”, 4.949%, 7/01/2038 | | | 1,815,000 | 1,674,032 |
| Massachusetts Educational Financing Authority, Education Loan Subordinate Rev., Taxable, “A”, 2.641%, 7/01/2037 | | | 1,235,000 | 1,071,214 |
| Michigan Finance Authority Hospital Rev., Taxable (Trinity Health Credit Group), 3.384%, 12/01/2040 | | | 945,000 | 699,655 |
| Minnesota Housing Finance Agency, Residential Housing, Taxable, “G”, 4.337%, 1/01/2047 | | | 1,005,000 | 962,398 |
| New Jersey Economic Development Authority State Pension Funding Rev., Taxable, “A”, NPFG, 7.425%, 2/15/2029 | | | 801,000 | 851,667 |
| Oklahoma Development Finance Authority, Health System Rev., Taxable (OU Medicine Project), “C”, AGM, 4.65%, 8/15/2030 | | | 992,000 | 858,374 |
| | | | | $8,865,636 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Natural Gas - Distribution – 0.1% |
| Boston Gas Co., 3.15%, 8/01/2027 (n) | | $ | 857,000 | $754,170 |
| Infraestructura Energética Nova S.A.B. de C.V., 4.875%, 1/14/2048 | | | 710,000 | 483,608 |
| | | | | $1,237,778 |
| Natural Gas - Pipeline – 0.1% |
| APT Pipelines Ltd., 0.75%, 3/15/2029 | | EUR | 970,000 | $749,372 |
| APT Pipelines Ltd., 2.5%, 3/15/2036 | | GBP | 850,000 | 607,522 |
| | | | | $1,356,894 |
| Network & Telecom – 0.1% |
| AT&T, Inc., 3.5%, 9/15/2053 | | $ | 246,000 | $157,890 |
| Orange S.A., 3.25%, 1/15/2032 | | GBP | 700,000 | 691,234 |
| Verizon Communications, Inc., 2.55%, 3/21/2031 | | $ | 1,057,000 | 835,266 |
| Verizon Communications, Inc., 3.55%, 3/22/2051 | | | 584,000 | 394,199 |
| | | | | $2,078,589 |
| Oils – 0.1% |
| Neste Oyj, 0.75%, 3/25/2028 | | EUR | 1,000,000 | $833,966 |
| Phillips 66, 4.875%, 11/15/2044 | | $ | 568,000 | 484,656 |
| | | | | $1,318,622 |
| Other Banks & Diversified Financials – 0.6% |
| Arion Banki HF, 4.875%, 12/21/2024 | | EUR | 1,080,000 | $1,034,414 |
| Bank Hapoalim B.M., 3.255% to 1/21/2027, FLR (CMT - 5yr. + 2.155%) to 1/21/2032 (n) | | $ | 702,000 | 573,885 |
| Banque Federative du Credit Mutuel S.A., 1.125%, 11/19/2031 | | EUR | 600,000 | 423,210 |
| Belfius Bank S.A., 1.25% to 4/06/2029, FLR (EUR Swap Rate - 5yr. + 1.3%) to 4/06/2034 | | | 400,000 | 298,214 |
| BPCE S.A., 2.277% to 1/20/2031, FLR (SOFR - 1 day + 1.312%) to 1/20/2032 (n) | | $ | 960,000 | 677,358 |
| CaixaBank S.A., 3.75%, 9/07/2029 | | EUR | 600,000 | 575,379 |
| Commerzbank AG, 4.625%, 3/21/2028 | | | 600,000 | 570,394 |
| Deutsche Bank AG, 1.875% to 2/23/2027, FLR (EURIBOR - 3mo. + 1.38%) to 2/23/2028 | | | 200,000 | 167,487 |
| Deutsche Bank AG, 3.25% to 5/24/2027, FLR (EURIBOR - 3mo. + 1.93%) to 5/24/2028 | | | 200,000 | 177,017 |
| Deutsche Bank AG, 1.375% to 2/17/2031, FLR (EURIBOR - 3mo. + 1.5%) to 2/17/2032 | | | 400,000 | 274,418 |
| Deutsche Bank AG, 4%, 6/24/2032 | | | 200,000 | 173,003 |
| Deutsche Bank AG, 4%, 6/24/2032 | | | 500,000 | 432,508 |
| Groupe BPCE S.A., 4.5%, 3/15/2025 (n) | | $ | 950,000 | 891,742 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Other Banks & Diversified Financials – continued |
| Groupe des Assurances du Credit Mutuel, 1.85% to 4/21/2032, FLR (EURIBOR - 3mo. + 2.65%) to 4/21/2042 | | EUR | 700,000 | $487,701 |
| Intesa Sanpaolo S.p.A., 2.625%, 3/11/2036 | | GBP | 1,080,000 | 757,861 |
| Macquarie Group Ltd., 4.08%, 5/31/2029 | | | 640,000 | 636,075 |
| Virgin Money UK PLC, 5.125% to 12/11/2025, FLR (GBP Government Yield - 5yr. + 5.25%) to 12/11/2030 | | | 650,000 | 676,121 |
| | | | | $8,826,787 |
| Pollution Control – 0.0% |
| Waste Connections, Inc., 4.2%, 1/15/2033 | | $ | 195,000 | $176,344 |
| Printing & Publishing – 0.0% |
| Informa PLC, 3.125%, 7/05/2026 | | GBP | 448,000 | $456,065 |
| Railroad & Shipping – 0.1% |
| Canadian Pacific Railway Co., 2.45%, 12/02/2031 | | $ | 386,000 | $306,227 |
| Wabtec Transportation Netherlands B.V., 1.25%, 12/03/2027 | | EUR | 1,469,000 | 1,187,238 |
| | | | | $1,493,465 |
| Real Estate - Office – 0.1% |
| Corporate Office Property LP, REIT, 2.25%, 3/15/2026 | | $ | 675,000 | $584,933 |
| Corporate Office Property LP, REIT, 2%, 1/15/2029 | | | 425,000 | 317,002 |
| Corporate Office Property LP, REIT, 2.75%, 4/15/2031 | | | 868,000 | 627,184 |
| | | | | $1,529,119 |
| Real Estate - Other – 0.2% |
| EPR Properties, REIT, 3.6%, 11/15/2031 | | $ | 725,000 | $489,446 |
| Lexington Realty Trust Co., 2.7%, 9/15/2030 | | | 881,000 | 674,220 |
| SEGRO Capital S.à r.l., 0.5%, 9/22/2031 | | EUR | 670,000 | 430,322 |
| W.P. Carey, Inc., REIT, 2.4%, 2/01/2031 | | $ | 1,296,000 | 973,200 |
| | | | | $2,567,188 |
| Real Estate - Retail – 0.2% |
| Brixmor Operating Partnership LP, REIT, 4.05%, 7/01/2030 | | $ | 877,000 | $727,509 |
| Hammerson Ireland Finance Designated Activity Co., 1.75%, 6/03/2027 | | EUR | 662,000 | 466,197 |
| Regency Centers Corp., 3.7%, 6/15/2030 | | $ | 286,000 | 241,466 |
| Spirit Realty, LP, REIT, 3.2%, 1/15/2027 | | | 531,000 | 459,872 |
| STORE Capital Corp., REIT, 2.7%, 12/01/2031 | | | 949,000 | 717,514 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Real Estate - Retail – continued |
| Unibail-Rodamco, REIT, 2.125% to 10/25/2023, FLR (EUR Swap Rate - 5yr. + 1.675%) to 10/25/2028, FLR (EUR Swap Rate - 5yr. + 1.925%) to, 10/25/2043 FLR (EUR Swap Rate - 5yr. + 2.675%) to 10/25/2070 | | EUR | 800,000 | $683,869 |
| | | | | $3,296,427 |
| Retailers – 0.1% |
| AutoZone, Inc., 4.75%, 8/01/2032 | | $ | 326,000 | $303,010 |
| Home Depot, Inc., 4.875%, 2/15/2044 | | | 496,000 | 441,855 |
| | | | | $744,865 |
| Specialty Chemicals – 0.0% |
| International Flavors & Fragrances, Inc., 1.832%, 10/15/2027 (n) | | $ | 699,000 | $569,967 |
| Specialty Stores – 0.1% |
| DICK'S Sporting Goods, 3.15%, 1/15/2032 | | $ | 994,000 | $754,487 |
| Supermarkets – 0.0% |
| Auchan Holding S.A., 3.25%, 7/23/2027 | | EUR | 500,000 | $445,552 |
| Supranational – 0.2% |
| Corporacion Andina de Fomento, 1.625%, 9/23/2025 | | $ | 1,020,000 | $928,251 |
| International Bank for Reconstruction and Development, 4.25%, 6/24/2025 | | AUD | 440,000 | 282,472 |
| West African Development Bank, 4.7%, 10/22/2031 | | $ | 1,033,000 | 779,047 |
| West African Development Bank, 2.75%, 1/22/2033 | | EUR | 1,200,000 | 825,529 |
| | | | | $2,815,299 |
| Telecommunications - Wireless – 0.3% |
| American Tower Corp., REIT, 4%, 6/01/2025 | | $ | 553,000 | $528,933 |
| Crown Castle, Inc., REIT, 1.35%, 7/15/2025 | | | 501,000 | 447,521 |
| Crown Castle, Inc., REIT, 4.45%, 2/15/2026 | | | 957,000 | 916,128 |
| Rogers Communications, Inc., 3.8%, 3/15/2032 (n) | | | 765,000 | 651,315 |
| T-Mobile USA, Inc., 3.875%, 4/15/2030 | | | 1,004,000 | 888,137 |
| Vodafone Group PLC, 3.375%, 8/08/2049 | | GBP | 860,000 | 689,129 |
| | | | | $4,121,163 |
| Telephone Services – 0.1% |
| TELUS Corp., 2.85%, 11/13/2031 | | CAD | 1,775,000 | $1,059,502 |
| Tobacco – 0.1% |
| B.A.T. Capital Corp., 2.125%, 8/15/2025 | | GBP | 860,000 | $880,566 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Transportation - Services – 0.2% |
| ERAC USA Finance LLC, 7%, 10/15/2037 (n) | | $ | 537,000 | $548,471 |
| Holding d'Infrastructures de Transport, 1.475%, 1/18/2031 | | EUR | 800,000 | 596,085 |
| Triton International Ltd., 3.15%, 6/15/2031 (n) | | $ | 769,000 | 567,060 |
| Vinci S.A., 3.75%, 4/10/2029 (n) | | | 1,334,000 | 1,199,433 |
| | | | | $2,911,049 |
| U.S. Government Agencies and Equivalents – 0.0% |
| Small Business Administration, 5.31%, 5/01/2027 | | $ | 36,266 | $35,694 |
| Small Business Administration, 2.22%, 3/01/2033 | | | 266,547 | 238,156 |
| | | | | $273,850 |
| U.S. Treasury Obligations – 2.4% |
| U.S. Treasury Bill, 0%, 8/10/2023 | | $ | 2,900,000 | $2,803,000 |
| U.S. Treasury Bonds, 1.125%, 8/15/2040 (f) | | | 24,787,000 | 14,669,837 |
| U.S. Treasury Bonds, 2.375%, 11/15/2049 | | | 11,794,000 | 8,242,440 |
| U.S. Treasury Notes, 2.375%, 5/15/2029 (f) | | | 8,655,700 | 7,748,204 |
| | | | | $33,463,481 |
| Utilities - Electric Power – 0.9% |
| American Electric Power Co., Inc., 2.3%, 3/01/2030 | | $ | 1,460,000 | $1,150,247 |
| Bruce Power LP, 2.68%, 12/21/2028 | | CAD | 1,600,000 | 1,029,997 |
| Duke Energy Corp., 3.75%, 9/01/2046 | | $ | 910,000 | 625,349 |
| Enel Americas S.A., 4%, 10/25/2026 | | | 3,133,000 | 2,896,736 |
| Enel Finance International N.V., 2.25%, 7/12/2031 (n) | | | 580,000 | 393,488 |
| Enel Finance International N.V., 4.75%, 5/25/2047 (n) | | | 456,000 | 304,911 |
| Enel S.p.A., 2.25% to 3/10/2027, FLR (EUR Swap Rate - 5yr. + 2.679%) to 3/10/2032, FLR (EUR Swap Rate - 5yr. + 2.929%) to 3/10/2047, FLR (EUR Swap Rate - 5yr. + 3.679%) to 3/10/2070 | | EUR | 645,000 | 512,391 |
| Enel S.p.A., 1.875%, 3/08/2170 | | | 1,025,000 | 673,575 |
| Evergy, Inc., 2.9%, 9/15/2029 | | $ | 1,246,000 | 1,028,994 |
| Jersey Central Power & Light Co., 2.75%, 3/01/2032 (n) | | | 758,000 | 589,815 |
| National Grid Electricity Transmission PLC, 2%, 4/17/2040 | | GBP | 820,000 | 545,264 |
| NextEra Energy Capital Holdings, Inc., 3.55%, 5/01/2027 | | $ | 351,000 | 323,132 |
| Southern California Edison Co., 3.65%, 2/01/2050 | | | 478,000 | 319,561 |
| Virginia Electric & Power Co., 3.5%, 3/15/2027 | | | 1,800,000 | 1,676,151 |
| Xcel Energy, Inc., 4.6%, 6/01/2032 | | | 351,000 | 323,277 |
| | | | | $12,392,888 |
| Total Bonds (Identified Cost, $605,358,426) | | $507,259,722 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Preferred Stocks – 0.7% |
| Computer Software - Systems – 0.1% | | | | |
| Samsung Electronics Co. Ltd. | | 23,569 | $880,131 |
| Consumer Products – 0.5% | | | | |
| Henkel AG & Co. KGaA | | 110,144 | $6,942,441 |
| Metals & Mining – 0.1% | | | | |
| Gerdau S.A. | | 242,800 | $1,210,357 |
| Total Preferred Stocks (Identified Cost, $8,145,137) | | $9,032,929 |
| Convertible Preferred Stocks – 0.1% |
| Medical Equipment – 0.1% | |
| Boston Scientific Corp., 5.5% (Identified Cost, $1,472,916) | | 13,573 | $1,493,573 |
| Investment Companies (h) – 2.6% |
| Money Market Funds – 2.6% | |
| MFS Institutional Money Market Portfolio, 3.02% (v) (Identified Cost, $35,382,603) | | | 35,384,108 | $35,384,108 |
Portfolio of Investments – continued
| Underlying/Expiration Date/Exercise Price | Put/Call | Counterparty | Notional
Amount | Par Amount/
Number of
Contracts | Value ($) |
| Purchased Options – 0.0% | |
| Market Index Securities – 0.0% | |
| iTraxx Europe Crossover Series 38 Index Credit Default Swap-Fund pays 5%, Fund receives notional amount upon a defined credit event of an index constituent – November 2022 @ EUR 600 | Call | BNP Paribas S.A. | $ 6,720,711 | EUR 6,910,000 | $131,852 |
| iTraxx Europe Crossover Series 38 Index Credit Default Swap-Fund pays 5%, Fund receives notional amount upon a defined credit event of an index constituent – February 2023 @ EUR 90 | Call | Merrill Lynch International | 41,954,071 | EUR 42,680,000 | 56,089 |
Total Purchased Options
(Premiums Paid, $133,725) | | $187,941 |
| | | | | |
| Written Options (see table below) – (0.0)% | |
| (Premiums Received, $41,818) | $(1,660) |
|
|
| Other Assets, Less Liabilities – 0.2% | | 2,567,225 |
| Net Assets – 100.0% | $1,365,914,743 |
| (a) | Non-income producing security. | | | |
| (f) | All or a portion of the security has been segregated as collateral for open futures contracts. | | | |
| (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 $35,384,108 and $1,327,965,070, respectively. | | | |
| (i) | Interest only security for which the fund receives interest on notional principal (Par amount). Par amount shown is the notional principal and does not reflect the cost of the security. | | | |
| (n) | Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $70,259,809, representing 5.1% of net assets. | | | |
| (u) | The security was valued using significant unobservable inputs and is considered level 3 under the fair value hierarchy. For further information about the fund’s level 3 holdings, please see Note 2 in the Notes to Financial Statements. | | | |
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 |
| AGM | Assured Guaranty Municipal |
| CLO | Collateralized Loan Obligation |
| CMT | Constant Maturity Treasury |
| EURIBOR | Euro Interbank Offered Rate |
| FLR | Floating Rate. Interest rate resets periodically based on the parenthetically disclosed reference rate plus a spread (if any). The period-end rate reported may not be the current rate. All reference rates are USD unless otherwise noted. |
| GDR | Global Depositary Receipt |
| GNMA | Government National Mortgage Assn. |
| ICE | Intercontinental Exchange |
| IEU | International Equity Unit |
| LIBOR | London Interbank Offered Rate |
| NPFG | National Public Finance Guarantee Corp. |
| PCL | Public Company Limited |
| REIT | Real Estate Investment Trust |
| SOFR | Secured Overnight Financing Rate |
| TBA | To Be Announced |
| UMBS | Uniform Mortgage-Backed Security |
| 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: |
| AUD | Australian Dollar |
| CAD | Canadian Dollar |
| CHF | Swiss Franc |
| CLP | Chilean Peso |
| CNH | Chinese Yuan Renminbi (Offshore) |
| CNY | China Yuan Renminbi |
| COP | Colombian Peso |
| CZK | Czech Koruna |
| DKK | Danish Krone |
| EUR | Euro |
| GBP | British Pound |
| HUF | Hungarian Forint |
| IDR | Indonesian Rupiah |
| ILS | Israeli Shekel |
| ISK | Iceland Krona |
| JPY | Japanese Yen |
| KRW | South Korean Won |
| MXN | Mexican Peso |
| NOK | Norwegian Krone |
| NZD | New Zealand Dollar |
| PLN | Polish Zloty |
| SEK | Swedish Krona |
| SGD | Singapore Dollar |
| THB | Thai Baht |
| TWD | Taiwan Dollar |
| UYU | Uruguayan Peso |
Portfolio of Investments – continued
Derivative Contracts at 10/31/22
| Written Options |
| Underlying | Put/
Call | Counterparty | Par Amount/
Number of
Contracts | Notional
Amount | Exercise
Price | Expiration
Date | Value |
| Liability Derivatives |
| Market Index Securities | | | |
| iTraxx Europe Crossover Series 38 Index Credit Default Swap-Fund pays 5%, Fund receives notional amount upon a defined credit event of an index constituent | Put | BNP Paribas S.A. | EUR (4,580,000) | $(4,454,538) | EUR 800.00 | November – 2022 | $(1,660) |
| Forward Foreign Currency Exchange Contracts |
Currency
Purchased | Currency
Sold | Counterparty | Settlement
Date | Unrealized
Appreciation
(Depreciation) |
| Asset Derivatives |
| AUD | 5,835,967 | USD | 3,671,169 | State Street Bank Corp. | 1/20/2023 | $72,134 |
| CAD | 24,626,114 | USD | 17,896,846 | HSBC Bank | 1/20/2023 | 199,398 |
| CLP | 224,477,733 | USD | 236,337 | Citibank N.A. | 11/08/2022 | 1,424 |
| DKK | 8,708,598 | USD | 1,147,424 | Deutsche Bank AG | 1/20/2023 | 16,798 |
| EUR | 3,313,921 | USD | 3,274,097 | Brown Brothers Harriman | 1/20/2023 | 23,237 |
| EUR | 20,679 | USD | 20,502 | Deutsche Bank AG | 1/20/2023 | 73 |
| EUR | 31,164,737 | USD | 30,688,851 | HSBC Bank | 1/20/2023 | 319,902 |
| EUR | 431,914 | USD | 423,013 | HSBC Bank | 1/30/2023 | 7,052 |
| EUR | 844,598 | USD | 838,493 | JPMorgan Chase Bank N.A. | 1/20/2023 | 1,877 |
| GBP | 146,583 | USD | 166,616 | Brown Brothers Harriman | 1/20/2023 | 1,960 |
| GBP | 7,220,977 | USD | 8,213,020 | Goldman Sachs International | 1/20/2023 | 91,364 |
| GBP | 7,807,427 | USD | 8,773,707 | Morgan Stanley Capital Services, Inc. | 1/20/2023 | 205,115 |
| GBP | 817,751 | USD | 920,427 | NatWest Markets PLC | 1/20/2023 | 20,016 |
| HUF | 162,983,000 | USD | 377,748 | UBS AG | 1/20/2023 | 6,433 |
| ILS | 3,400,000 | USD | 968,466 | Brown Brothers Harriman | 1/19/2023 | 632 |
| JPY | 177,433,471 | USD | 1,199,406 | Deutsche Bank AG | 1/20/2023 | 6,850 |
| JPY | 3,451,129,472 | USD | 23,414,950 | State Street Bank Corp. | 1/20/2023 | 47,043 |
| KRW | 18,882,690,175 | USD | 13,221,321 | Barclays Bank PLC | 11/07/2022 | 34,063 |
| MXN | 12,615,941 | USD | 616,907 | HSBC Bank | 1/20/2023 | 10,571 |
| MXN | 16,046,795 | USD | 778,614 | JPMorgan Chase Bank N.A. | 3/15/2023 | 11,346 |
| NOK | 999,461 | USD | 94,422 | Brown Brothers Harriman | 1/20/2023 | 1,989 |
| NZD | 14,382,910 | USD | 8,157,720 | BNP Paribas S.A. | 1/20/2023 | 215,048 |
| NZD | 2,621,777 | USD | 1,519,035 | Brown Brothers Harriman | 1/20/2023 | 7,189 |
| NZD | 4,451,722 | USD | 2,535,747 | HSBC Bank | 1/20/2023 | 55,748 |
Portfolio of Investments – continued
| Forward Foreign Currency Exchange Contracts - continued |
Currency
Purchased | Currency
Sold | Counterparty | Settlement
Date | Unrealized
Appreciation
(Depreciation) |
| Asset Derivatives - continued |
| NZD | 17,177,119 | USD | 9,768,713 | State Street Bank Corp. | 1/20/2023 | $230,656 |
| PLN | 4,899,803 | USD | 981,767 | HSBC Bank | 1/20/2023 | 29,208 |
| SEK | 23,035,551 | USD | 2,067,545 | Deutsche Bank AG | 1/20/2023 | 33,007 |
| SGD | 17,252,342 | USD | 12,116,769 | State Street Bank Corp. | 1/20/2023 | 78,602 |
| THB | 68,750,000 | USD | 1,812,769 | JPMorgan Chase Bank N.A. | 1/17/2023 | 5,411 |
| USD | 6,517,727 | CAD | 8,825,590 | Goldman Sachs International | 1/20/2023 | 32,333 |
| USD | 267,390 | CAD | 363,507 | HSBC Bank | 1/20/2023 | 270 |
| USD | 199,864 | EUR | 197,054 | Brown Brothers Harriman | 1/20/2023 | 3,797 |
| USD | 1,408,722 | EUR | 1,406,664 | Deutsche Bank AG | 1/20/2023 | 9,099 |
| USD | 497,716 | EUR | 496,040 | HSBC Bank | 1/20/2023 | 4,158 |
| USD | 1,533,660 | EUR | 1,512,429 | State Street Bank Corp. | 1/20/2023 | 28,802 |
| USD | 322,154 | JPY | 47,044,162 | Deutsche Bank AG | 1/20/2023 | 2,332 |
| USD | 1,738,284 | JPY | 252,049,032 | NatWest Markets PLC | 1/20/2023 | 24,765 |
| USD | 1,908,934 | KRW | 2,713,550,000 | Barclays Bank PLC | 1/13/2023 | 41 |
| USD | 2,808,941 | KRW | 3,782,519,325 | Barclays Bank PLC | 11/07/2022 | 153,665 |
| USD | 11,685,178 | KRW | 15,100,170,850 | Citibank N.A. | 11/07/2022 | 1,085,069 |
| USD | 7,408,600 | KRW | 10,517,767,309 | Merrill Lynch International | 1/25/2023 | 5,943 |
| USD | 2,434,458 | TWD | 76,247,221 | Barclays Bank PLC | 1/13/2023 | 52,092 |
| USD | 3,166,303 | TWD | 97,348,000 | Barclays Bank PLC | 11/08/2022 | 144,035 |
| | | | | | | $3,280,547 |
| Liability Derivatives |
| AUD | 4,148,915 | USD | 2,692,366 | Merrill Lynch International | 1/20/2023 | $(31,171) |
| CHF | 2,505,890 | USD | 2,542,846 | NatWest Markets PLC | 1/20/2023 | (15,473) |
| CLP | 2,443,589,438 | USD | 2,721,146 | Merrill Lynch International | 11/08/2022 | (132,955) |
| CNH | 27,194,000 | USD | 3,792,748 | Citibank N.A. | 1/20/2023 | (67,610) |
| CNH | 1,542,380 | USD | 215,333 | HSBC Bank | 1/20/2023 | (4,053) |
| COP | 1,548,655,025 | USD | 314,626 | Goldman Sachs International | 11/25/2022 | (2,328) |
| CZK | 74,393,329 | USD | 3,043,441 | Goldman Sachs International | 1/20/2023 | (54,324) |
| EUR | 589,348 | USD | 591,825 | Deutsche Bank AG | 1/20/2023 | (5,427) |
| EUR | 1,970,547 | USD | 1,985,097 | HSBC Bank | 1/20/2023 | (24,412) |
| EUR | 527,908 | USD | 527,919 | JPMorgan Chase Bank N.A. | 1/20/2023 | (2,654) |
| EUR | 553,698 | USD | 554,353 | State Street Bank Corp. | 1/20/2023 | (3,426) |
| GBP | 416,483 | USD | 483,594 | HSBC Bank | 1/20/2023 | (4,624) |
| IDR | 41,290,358,660 | USD | 2,761,343 | Barclays Bank PLC | 11/09/2022 | (114,372) |
| JPY | 219,874,291 | USD | 1,516,022 | Citibank N.A. | 1/20/2023 | (21,239) |
| JPY | 52,267,417 | USD | 361,090 | UBS AG | 1/20/2023 | (5,758) |
| NOK | 3,305,520 | USD | 321,874 | Brown Brothers Harriman | 1/20/2023 | (3,015) |
| USD | 2,550,931 | AUD | 4,091,899 | State Street Bank Corp. | 1/20/2023 | (73,693) |
| USD | 524,380 | CAD | 713,626 | Citibank N.A. | 1/20/2023 | (21) |
| USD | 294,792 | CAD | 403,854 | Deutsche Bank AG | 1/20/2023 | (1,976) |
| USD | 3,492,368 | CAD | 4,792,037 | HSBC Bank | 1/20/2023 | (29,011) |
| USD | 10,920,806 | CAD | 15,054,488 | JPMorgan Chase Bank N.A. | 1/20/2023 | (141,828) |
| USD | 2,492,863 | CLP | 2,437,396,561 | Goldman Sachs International | 11/08/2022 | (88,769) |
| USD | 4,976,463 | CZK | 124,958,993 | Deutsche Bank AG | 1/20/2023 | (44,377) |
| USD | 12,673,594 | EUR | 12,847,057 | HSBC Bank | 1/20/2023 | (109,162) |
Portfolio of Investments – continued
| Forward Foreign Currency Exchange Contracts - continued |
Currency
Purchased | Currency
Sold | Counterparty | Settlement
Date | Unrealized
Appreciation
(Depreciation) |
| Liability Derivatives - continued |
| USD | 769,910 | EUR | 779,718 | JPMorgan Chase Bank N.A. | 1/20/2023 | $(5,904) |
| USD | 12,170,080 | EUR | 12,412,103 | State Street Bank Corp. | 1/20/2023 | (179,900) |
| USD | 2,860,653 | EUR | 2,905,620 | UBS AG | 1/20/2023 | (30,424) |
| USD | 187,007 | GBP | 167,242 | Deutsche Bank AG | 1/30/2023 | (5,378) |
| USD | 1,539,213 | GBP | 1,369,656 | HSBC Bank | 1/20/2023 | (35,941) |
| USD | 3,112,752 | GBP | 2,725,223 | Morgan Stanley Capital Services, Inc. | 1/20/2023 | (21,353) |
| USD | 21,874,194 | GBP | 19,426,120 | State Street Bank Corp. | 1/20/2023 | (466,543) |
| USD | 943,169 | JPY | 139,687,328 | Morgan Stanley Capital Services, Inc. | 1/20/2023 | (6,474) |
| USD | 13,253,801 | KRW | 18,882,690,175 | Barclays Bank PLC | 2/02/2023 | (40,878) |
| USD | 1,139,854 | NOK | 12,070,874 | Citibank N.A. | 1/20/2023 | (24,534) |
| USD | 21,144,536 | NZD | 37,246,624 | State Street Bank Corp. | 1/20/2023 | (537,956) |
| | | | | | | $(2,336,963) |
| Futures Contracts |
| Description | Long/
Short | Currency | Contracts | Notional
Amount | Expiration
Date | Value/Unrealized
Appreciation
(Depreciation) |
| Asset Derivatives |
| Interest Rate Futures | | |
| Canadian Treasury Bond 5 yr | Short | CAD | 219 | $17,983,286 | December – 2022 | $58,145 |
| Euro-Bobl 5 yr | Short | EUR | 128 | 15,137,776 | December – 2022 | 328,922 |
| Euro-BTP 10yr | Short | EUR | 126 | 14,276,161 | December – 2022 | 277,811 |
| Euro-Bund 10 yr | Long | EUR | 80 | 10,945,066 | December – 2022 | 96,080 |
| Euro-Schatz 2 yr | Short | EUR | 136 | 14,372,278 | December – 2022 | 93,214 |
| Long Gilt 10 yr | Short | GBP | 67 | 7,847,220 | December – 2022 | 581,365 |
| U.S. Treasury Bond | Short | USD | 64 | 7,712,000 | December – 2022 | 963,763 |
| U.S. Treasury Note 5 yr | Short | USD | 506 | 53,936,437 | December – 2022 | 2,343,746 |
| U.S. Treasury Ultra Note 10 yr | Short | USD | 200 | 23,196,875 | December – 2022 | 903,799 |
| | | | | | | $5,646,845 |
| Liability Derivatives |
| Interest Rate Futures | | |
| Canadian Treasury Bond 10 yr | Long | CAD | 298 | $26,911,543 | December – 2022 | $(259,597) |
| Euro-Buxl 30 yr | Long | EUR | 61 | 8,694,050 | December – 2022 | (790,264) |
| U.S. Treasury Note 10 yr | Long | USD | 175 | 19,353,906 | December – 2022 | (1,169,506) |
| U.S. Treasury Note 2 yr | Long | USD | 167 | 34,131,930 | December – 2022 | (169,303) |
| U.S. Treasury Ultra Bond | Long | USD | 22 | 2,808,437 | December – 2022 | (46,800) |
| | | | | | | $(2,435,470) |
Portfolio of Investments – continued
| Uncleared Swap Agreements |
Maturity
Date | Notional
Amount | Counterparty | Cash Flows
to Receive/
Frequency | Cash Flows
to Pay/
Frequency | Unrealized
Appreciation
(Depreciation) | | Net Unamortized
Upfront Payments
(Receipts) | | Value |
| Liability Derivatives | | | | | |
| Credit Default Swaps | | | | | |
| 6/20/27 | EUR | 850,000 | BNP Paribas S.A. | 1.00%/Quarterly | (1) | $11,808 | | $(74,276) | | $(62,467) |
| 12/20/27 | EUR | 830,000 | Barclays Bank PLC | 1.00%/Quarterly | (2) | 11,798 | | (20,532) | | (8,734) |
| 12/20/31 | EUR | 1,140,000 | Barclays Bank PLC | 1.00%/Quarterly | (3) | (48,271) | | 11,458 | | (36,814) |
| | | | | | | $(24,665) | | $(83,350) | | $(108,015) |
| (1) | Fund, as protection seller, to pay notional amount upon a defined credit event by Unibail Rodamc Westfield SE, 1.375%, 3/9/26, a BBB+ rated bond. The fund entered into the contract to gain issuer exposure. |
| (2) | Fund, as protection seller, to pay notional amount upon a defined credit event by Airbus SE, 2.375%, 4/2/24, an A rated bond. The fund entered into the contract to gain issuer exposure. |
| (3) | Fund, as protection seller, to pay notional amount upon a defined credit event by Daimler Finance North America LLC, 1.4%, 1/12/24, an A- rated bond. The fund entered into the contract to gain issuer exposure. |
The credit ratings presented here are an indicator of the current payment/performance risk of the related swap agreement, the reference obligation for which may be either a single security or, in the case of a credit default swap index, a basket of securities issued by corporate or sovereign issuers. Ratings are assigned to each reference security, including each individual security within a reference basket of 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. If none of the 3 rating agencies above assign a rating, but the security is rated by DBRS Morningstar, than the DBRS Morningstar rating is assigned. If none of the 4 rating agencies listed above rate the security, but the security is rated by the Kroll Bond Rating Agency (KBRA), then the KBRA rating is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). The ratings for a credit default swap index are calculated by MFS as a weighted average of the external credit ratings of the individual securities that compose the index’s reference basket of securities.
At October 31, 2022, the fund had cash collateral of $210,000 and other liquid securities with an aggregate value of $3,710,569 to cover any collateral or margin obligations for 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 10/31/22
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, $1,222,025,273) | $1,327,965,070 |
| Investments in affiliated issuers, at value (identified cost, $35,382,603) | 35,384,108 |
| Cash | 1,080,159 |
| Foreign currency, at value (identified cost, $683,202) | 683,281 |
| Restricted cash for | |
| Forward foreign currency exchange contracts | 210,000 |
| Receivables for | |
| Forward foreign currency exchange contracts | 3,280,547 |
| Net daily variation margin on open futures contracts | 174,813 |
| Investments sold | 2,790,346 |
| TBA sale commitments | 456,023 |
| Fund shares sold | 725,874 |
| Interest and dividends | 8,891,485 |
| Other assets | 28 |
| Total assets | $1,381,641,734 |
| Liabilities | |
| Payables for | |
| Forward foreign currency exchange contracts | $2,336,963 |
| Investments purchased | 7,614,715 |
| TBA purchase commitments | 2,979,902 |
| Fund shares reacquired | 2,038,879 |
| Written options (premiums received, $41,818) | 1,660 |
| Uncleared swaps, at value (net of unamortized premiums received, $83,350) | 108,015 |
| Payable to affiliates | |
| Investment adviser | 43,500 |
| Administrative services fee | 2,338 |
| Shareholder servicing costs | 375,076 |
| Distribution and service fees | 26,777 |
| Payable for independent Trustees' compensation | 50 |
| Deferred country tax expense payable | 9,272 |
| Accrued expenses and other liabilities | 189,844 |
| Total liabilities | $15,726,991 |
| Net assets | $1,365,914,743 |
Statement of Assets and Liabilities – continued
| Net assets consist of | |
| Paid-in capital | $1,242,777,280 |
| Total distributable earnings (loss) | 123,137,463 |
| Net assets | $1,365,914,743 |
| Shares of beneficial interest outstanding | 88,230,166 |
| | Net assets | Shares
outstanding | Net asset value
per share (a) |
| Class A | $626,576,709 | 40,229,747 | $15.57 |
| Class B | 9,966,195 | 627,030 | 15.89 |
| Class C | 67,989,024 | 4,356,120 | 15.61 |
| Class I | 420,714,582 | 27,374,658 | 15.37 |
| Class R1 | 2,217,936 | 143,169 | 15.49 |
| Class R2 | 4,022,175 | 261,828 | 15.36 |
| Class R3 | 16,923,402 | 1,090,762 | 15.52 |
| Class R4 | 5,017,823 | 321,609 | 15.60 |
| Class R6 | 212,486,897 | 13,825,243 | 15.37 |
| (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 $16.52 [100 / 94.25 x $15.57]. 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 10/31/22
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 | $29,569,615 |
| Interest | 14,575,358 |
| Dividends from affiliated issuers | 315,293 |
| Other | 95,185 |
| Income on securities loaned | 14,018 |
| Foreign taxes withheld | (1,592,302) |
| Total investment income | $42,977,167 |
| Expenses | |
| Management fee | $12,195,478 |
| Distribution and service fees | 2,950,917 |
| Shareholder servicing costs | 1,497,404 |
| Administrative services fee | 252,235 |
| Independent Trustees' compensation | 24,582 |
| Custodian fee | 275,087 |
| Shareholder communications | 139,764 |
| Audit and tax fees | 86,093 |
| Legal fees | 6,779 |
| Miscellaneous | 240,284 |
| Total expenses | $17,668,623 |
| Fees paid indirectly | (54,319) |
| Reduction of expenses by investment adviser and distributor | (1,446,044) |
| Net expenses | $16,168,260 |
| Net investment income (loss) | $26,808,907 |
Statement of Operations – continued
| Realized and unrealized gain (loss) |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers (net of $19,552 country tax) | $4,461,491 |
| Affiliated issuers | (885) |
| Written options | 22,173 |
| Futures contracts | 12,376,085 |
| Swap agreements | (74,466) |
| Forward foreign currency exchange contracts | (7,246,372) |
| Foreign currency | (785,894) |
| Net realized gain (loss) | $8,752,132 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers (net of $3,037 decrease in deferred country tax) | $(291,796,190) |
| Affiliated issuers | (212) |
| Written options | 40,158 |
| Futures contracts | 1,057,544 |
| Swap agreements | (24,665) |
| Forward foreign currency exchange contracts | 1,860,763 |
| Translation of assets and liabilities in foreign currencies | (450,778) |
| Net unrealized gain (loss) | $(289,313,380) |
| Net realized and unrealized gain (loss) | $(280,561,248) |
| Change in net assets from operations | $(253,752,341) |
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 |
| | 10/31/22 | 10/31/21 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $26,808,907 | $23,918,866 |
| Net realized gain (loss) | 8,752,132 | 168,413,931 |
| Net unrealized gain (loss) | (289,313,380) | 130,474,754 |
| Change in net assets from operations | $(253,752,341) | $322,807,551 |
| Total distributions to shareholders | $(158,295,050) | $(127,898,152) |
| Change in net assets from fund share transactions | $(58,826,426) | $(8,865,770) |
| Total change in net assets | $(470,873,817) | $186,043,629 |
| Net assets | | |
| At beginning of period | 1,836,788,560 | 1,650,744,931 |
| At end of period | $1,365,914,743 | $1,836,788,560 |
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 |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $19.98 | $17.90 | $18.51 | $17.02 | $18.08 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.27 | $0.24 | $0.22 | $0.30 | $0.27 |
| Net realized and unrealized gain (loss) | (2.96) | 3.22 | (0.03) | 1.70 | (0.81) |
| Total from investment operations | $(2.69) | $3.46 | $0.19 | $2.00 | $(0.54) |
| Less distributions declared to shareholders |
| From net investment income | $(0.09) | $(0.35) | $(0.29) | $(0.23) | $(0.28) |
| From net realized gain | (1.63) | (1.03) | (0.51) | (0.28) | (0.24) |
| Total distributions declared to shareholders | $(1.72) | $(1.38) | $(0.80) | $(0.51) | $(0.52) |
| Net asset value, end of period (x) | $15.57 | $19.98 | $17.90 | $18.51 | $17.02 |
| Total return (%) (r)(s)(t)(x) | (14.80) | 19.88 | 1.00 | 12.03 | (3.12) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.18 | 1.16 | 1.17 | 1.16 | 1.15 |
| Expenses after expense reductions (f) | 1.09 | 1.09 | 1.09 | 1.09 | 1.09 |
| Net investment income (loss) | 1.59 | 1.24 | 1.26 | 1.70 | 1.48 |
| Portfolio turnover | 70 | 94 | 89 | 65 | 52 |
| Net assets at end of period (000 omitted) | $626,577 | $810,477 | $698,352 | $754,092 | $731,699 |
See Notes to Financial Statements
Financial Highlights – continued
| Class B | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $20.45 | $18.29 | $18.88 | $17.34 | $18.41 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.14 | $0.10 | $0.09 | $0.17 | $0.13 |
| Net realized and unrealized gain (loss) | (3.03) | 3.29 | (0.03) | 1.73 | (0.83) |
| Total from investment operations | $(2.89) | $3.39 | $0.06 | $1.90 | $(0.70) |
| Less distributions declared to shareholders |
| From net investment income | $(0.04) | $(0.20) | $(0.14) | $(0.08) | $(0.13) |
| From net realized gain | (1.63) | (1.03) | (0.51) | (0.28) | (0.24) |
| Total distributions declared to shareholders | $(1.67) | $(1.23) | $(0.65) | $(0.36) | $(0.37) |
| Net asset value, end of period (x) | $15.89 | $20.45 | $18.29 | $18.88 | $17.34 |
| Total return (%) (r)(s)(t)(x) | (15.43) | 18.96 | 0.26 | 11.21 | (3.90) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.93 | 1.91 | 1.92 | 1.91 | 1.90 |
| Expenses after expense reductions (f) | 1.84 | 1.84 | 1.84 | 1.84 | 1.84 |
| Net investment income (loss) | 0.80 | 0.49 | 0.51 | 0.96 | 0.72 |
| Portfolio turnover | 70 | 94 | 89 | 65 | 52 |
| Net assets at end of period (000 omitted) | $9,966 | $17,638 | $19,630 | $28,393 | $36,088 |
| Class C | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $20.12 | $18.01 | $18.60 | $17.10 | $18.15 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.14 | $0.10 | $0.09 | $0.17 | $0.13 |
| Net realized and unrealized gain (loss) | (2.98) | 3.24 | (0.03) | 1.70 | (0.80) |
| Total from investment operations | $(2.84) | $3.34 | $0.06 | $1.87 | $(0.67) |
| Less distributions declared to shareholders |
| From net investment income | $(0.04) | $(0.20) | $(0.14) | $(0.09) | $(0.14) |
| From net realized gain | (1.63) | (1.03) | (0.51) | (0.28) | (0.24) |
| Total distributions declared to shareholders | $(1.67) | $(1.23) | $(0.65) | $(0.37) | $(0.38) |
| Net asset value, end of period (x) | $15.61 | $20.12 | $18.01 | $18.60 | $17.10 |
| Total return (%) (r)(s)(t)(x) | (15.43) | 19.00 | 0.28 | 11.14 | (3.81) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.93 | 1.91 | 1.92 | 1.91 | 1.90 |
| Expenses after expense reductions (f) | 1.84 | 1.84 | 1.84 | 1.84 | 1.84 |
| Net investment income (loss) | 0.81 | 0.49 | 0.52 | 0.96 | 0.72 |
| Portfolio turnover | 70 | 94 | 89 | 65 | 52 |
| Net assets at end of period (000 omitted) | $67,989 | $116,520 | $144,961 | $211,090 | $255,464 |
See Notes to Financial Statements
Financial Highlights – continued
| Class I | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $19.75 | $17.70 | $18.31 | $16.85 | $17.91 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.31 | $0.29 | $0.27 | $0.34 | $0.31 |
| Net realized and unrealized gain (loss) | (2.93) | 3.19 | (0.04) | 1.67 | (0.81) |
| Total from investment operations | $(2.62) | $3.48 | $0.23 | $2.01 | $(0.50) |
| Less distributions declared to shareholders |
| From net investment income | $(0.13) | $(0.40) | $(0.33) | $(0.27) | $(0.32) |
| From net realized gain | (1.63) | (1.03) | (0.51) | (0.28) | (0.24) |
| Total distributions declared to shareholders | $(1.76) | $(1.43) | $(0.84) | $(0.55) | $(0.56) |
| Net asset value, end of period (x) | $15.37 | $19.75 | $17.70 | $18.31 | $16.85 |
| Total return (%) (r)(s)(t)(x) | (14.59) | 20.23 | 1.27 | 12.26 | (2.90) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 0.93 | 0.91 | 0.92 | 0.91 | 0.90 |
| Expenses after expense reductions (f) | 0.84 | 0.84 | 0.84 | 0.84 | 0.84 |
| Net investment income (loss) | 1.83 | 1.49 | 1.50 | 1.94 | 1.75 |
| Portfolio turnover | 70 | 94 | 89 | 65 | 52 |
| Net assets at end of period (000 omitted) | $420,715 | $597,469 | $524,907 | $569,767 | $667,895 |
| Class R1 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $19.98 | $17.90 | $18.51 | $17.02 | $18.08 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.15 | $0.10 | $0.09 | $0.17 | $0.12 |
| Net realized and unrealized gain (loss) | (2.97) | 3.22 | (0.03) | 1.69 | (0.80) |
| Total from investment operations | $(2.82) | $3.32 | $0.06 | $1.86 | $(0.68) |
| Less distributions declared to shareholders |
| From net investment income | $(0.04) | $(0.21) | $(0.16) | $(0.09) | $(0.14) |
| From net realized gain | (1.63) | (1.03) | (0.51) | (0.28) | (0.24) |
| Total distributions declared to shareholders | $(1.67) | $(1.24) | $(0.67) | $(0.37) | $(0.38) |
| Net asset value, end of period (x) | $15.49 | $19.98 | $17.90 | $18.51 | $17.02 |
| Total return (%) (r)(s)(t)(x) | (15.43) | 18.99 | 0.23 | 11.18 | (3.84) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.93 | 1.91 | 1.92 | 1.91 | 1.90 |
| Expenses after expense reductions (f) | 1.84 | 1.84 | 1.84 | 1.84 | 1.84 |
| Net investment income (loss) | 0.87 | 0.49 | 0.51 | 0.96 | 0.65 |
| Portfolio turnover | 70 | 94 | 89 | 65 | 52 |
| Net assets at end of period (000 omitted) | $2,218 | $2,432 | $2,396 | $2,483 | $2,352 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R2 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $19.76 | $17.71 | $18.31 | $16.84 | $17.89 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.23 | $0.19 | $0.18 | $0.25 | $0.22 |
| Net realized and unrealized gain (loss) | (2.93) | 3.19 | (0.04) | 1.68 | (0.80) |
| Total from investment operations | $(2.70) | $3.38 | $0.14 | $1.93 | $(0.58) |
| Less distributions declared to shareholders |
| From net investment income | $(0.07) | $(0.30) | $(0.23) | $(0.18) | $(0.23) |
| From net realized gain | (1.63) | (1.03) | (0.51) | (0.28) | (0.24) |
| Total distributions declared to shareholders | $(1.70) | $(1.33) | $(0.74) | $(0.46) | $(0.47) |
| Net asset value, end of period (x) | $15.36 | $19.76 | $17.71 | $18.31 | $16.84 |
| Total return (%) (r)(s)(t)(x) | (14.98) | 19.61 | 0.75 | 11.74 | (3.37) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.43 | 1.41 | 1.42 | 1.41 | 1.40 |
| Expenses after expense reductions (f) | 1.34 | 1.34 | 1.34 | 1.34 | 1.34 |
| Net investment income (loss) | 1.35 | 0.99 | 1.00 | 1.44 | 1.21 |
| Portfolio turnover | 70 | 94 | 89 | 65 | 52 |
| Net assets at end of period (000 omitted) | $4,022 | $5,047 | $4,997 | $11,286 | $13,788 |
| Class R3 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $19.92 | $17.85 | $18.45 | $16.97 | $18.03 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.27 | $0.24 | $0.22 | $0.30 | $0.26 |
| Net realized and unrealized gain (loss) | (2.95) | 3.21 | (0.02) | 1.69 | (0.80) |
| Total from investment operations | $(2.68) | $3.45 | $0.20 | $1.99 | $(0.54) |
| Less distributions declared to shareholders |
| From net investment income | $(0.09) | $(0.35) | $(0.29) | $(0.23) | $(0.28) |
| From net realized gain | (1.63) | (1.03) | (0.51) | (0.28) | (0.24) |
| Total distributions declared to shareholders | $(1.72) | $(1.38) | $(0.80) | $(0.51) | $(0.52) |
| Net asset value, end of period (x) | $15.52 | $19.92 | $17.85 | $18.45 | $16.97 |
| Total return (%) (r)(s)(t)(x) | (14.78) | 19.88 | 1.05 | 12.01 | (3.14) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 1.18 | 1.16 | 1.17 | 1.16 | 1.15 |
| Expenses after expense reductions (f) | 1.09 | 1.09 | 1.09 | 1.09 | 1.09 |
| Net investment income (loss) | 1.59 | 1.24 | 1.25 | 1.69 | 1.47 |
| Portfolio turnover | 70 | 94 | 89 | 65 | 52 |
| Net assets at end of period (000 omitted) | $16,923 | $19,529 | $19,799 | $20,300 | $18,795 |
See Notes to Financial Statements
Financial Highlights – continued
| Class R4 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $20.02 | $17.93 | $18.54 | $17.05 | $18.11 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.32 | $0.29 | $0.27 | $0.34 | $0.31 |
| Net realized and unrealized gain (loss) | (2.98) | 3.23 | (0.04) | 1.70 | (0.81) |
| Total from investment operations | $(2.66) | $3.52 | $0.23 | $2.04 | $(0.50) |
| Less distributions declared to shareholders |
| From net investment income | $(0.13) | $(0.40) | $(0.33) | $(0.27) | $(0.32) |
| From net realized gain | (1.63) | (1.03) | (0.51) | (0.28) | (0.24) |
| Total distributions declared to shareholders | $(1.76) | $(1.43) | $(0.84) | $(0.55) | $(0.56) |
| Net asset value, end of period (x) | $15.60 | $20.02 | $17.93 | $18.54 | $17.05 |
| Total return (%) (r)(s)(t)(x) | (14.59) | 20.19 | 1.25 | 12.30 | (2.87) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 0.93 | 0.91 | 0.92 | 0.91 | 0.90 |
| Expenses after expense reductions (f) | 0.84 | 0.84 | 0.84 | 0.84 | 0.84 |
| Net investment income (loss) | 1.88 | 1.50 | 1.51 | 1.95 | 1.71 |
| Portfolio turnover | 70 | 94 | 89 | 65 | 52 |
| Net assets at end of period (000 omitted) | $5,018 | $6,058 | $6,461 | $7,570 | $7,514 |
| Class R6 | Year ended |
| | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | 10/31/18 |
| Net asset value, beginning of period | $19.75 | $17.71 | $18.32 | $16.85 | $17.91 |
| Income (loss) from investment operations |
| Net investment income (loss) (d) | $0.33 | $0.31 | $0.28 | $0.35 | $0.33 |
| Net realized and unrealized gain (loss) | (2.93) | 3.18 | (0.03) | 1.69 | (0.81) |
| Total from investment operations | $(2.60) | $3.49 | $0.25 | $2.04 | $(0.48) |
| Less distributions declared to shareholders |
| From net investment income | $(0.15) | $(0.42) | $(0.35) | $(0.29) | $(0.34) |
| From net realized gain | (1.63) | (1.03) | (0.51) | (0.28) | (0.24) |
| Total distributions declared to shareholders | $(1.78) | $(1.45) | $(0.86) | $(0.57) | $(0.58) |
| Net asset value, end of period (x) | $15.37 | $19.75 | $17.71 | $18.32 | $16.85 |
| Total return (%) (r)(s)(t)(x) | (14.50) | 20.26 | 1.36 | 12.44 | (2.82) |
Ratios (%) (to average net assets)
and Supplemental data: |
| Expenses before expense reductions (f) | 0.84 | 0.82 | 0.83 | 0.82 | 0.81 |
| Expenses after expense reductions (f) | 0.75 | 0.75 | 0.75 | 0.75 | 0.75 |
| Net investment income (loss) | 1.94 | 1.58 | 1.60 | 2.03 | 1.83 |
| Portfolio turnover | 70 | 94 | 89 | 65 | 52 |
| Net assets at end of period (000 omitted) | $212,487 | $261,619 | $229,244 | $230,324 | $363,364 |
See Notes to Financial Statements
Financial Highlights – continued
| (d) | Per share data is based on average shares outstanding. |
| (f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. See Note 2 in the Notes to Financial Statements for additional information. |
| (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 Global Total Return Fund (the fund) is a diversified series of MFS Series Trust VI (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.
In June 2022, the FASB issued Accounting Standards Update 2022-03, Fair Value Measurement (Topic 820) – Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which affects all entities that have investments in equity securities measured at fair value that are subject to contractual sale restrictions. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is a characteristic of the reporting entity holding the equity security rather than a characteristic of the asset and, therefore, is not considered in measuring the fair value of the equity security. The fund decided to early adopt ASU 2022-03 effective as of June 30, 2022 as the guidance in ASU 2022-03 was consistent with the fund’s existing practices for fair value measurement.
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.
Notes to Financial Statements - continued
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. Effective September 8, 2022, and 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. Debt instruments and floating rate loans, including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less 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. Futures contracts are generally valued at last posted settlement price on their primary exchange as provided by a third-party pricing service. Futures contracts for which there were no trades that day for a particular position are generally valued at the closing bid quotation on their primary exchange as provided by a third-party pricing service.
Forward foreign currency exchange contracts are generally valued at the mean of bid and asked prices for the time period interpolated from rates provided by a third-party pricing service for proximate time periods. Swap agreements are generally valued using valuations provided by a third-party pricing service, which for cleared swaps includes an evaluation of any trading activity at the clearinghouses. 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
Notes to Financial Statements - continued
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. Other financial instruments are derivative instruments, such as futures contracts, forward foreign currency exchange contracts, swap agreements, and written options. The following is a summary of the levels used as of October 31, 2022 in valuing the fund's assets and liabilities:
Notes to Financial Statements - continued
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | | | | |
| United States | $486,974,514 | $— | $— | $486,974,514 |
| United Kingdom | 51,791,902 | — | — | 51,791,902 |
| Switzerland | 49,530,610 | — | — | 49,530,610 |
| Japan | 24,548,281 | 22,769,932 | — | 47,318,213 |
| France | 38,951,581 | — | — | 38,951,581 |
| Canada | 28,342,075 | — | — | 28,342,075 |
| Germany | 24,475,669 | — | — | 24,475,669 |
| Netherlands | 14,337,663 | — | — | 14,337,663 |
| China | 10,361,952 | 1,448,563 | — | 11,810,515 |
| Other Countries | 47,602,894 | 19,381,771 | 0 | 66,984,665 |
| U.S. Treasury Bonds & U.S. Government Agencies & Equivalents | — | 33,737,331 | — | 33,737,331 |
| Non - U.S. Sovereign Debt | — | 214,370,134 | — | 214,370,134 |
| Municipal Bonds | — | 8,865,636 | — | 8,865,636 |
| U.S. Corporate Bonds | — | 67,216,929 | — | 67,216,929 |
| Residential Mortgage-Backed Securities | — | 52,173,116 | — | 52,173,116 |
| Commercial Mortgage-Backed Securities | — | 17,693,709 | — | 17,693,709 |
| Asset-Backed Securities (including CDOs) | — | 27,423,505 | — | 27,423,505 |
| Foreign Bonds | — | 85,967,303 | — | 85,967,303 |
| Mutual Funds | 35,384,108 | — | — | 35,384,108 |
| Total | $812,301,249 | $551,047,929 | $0 | $1,363,349,178 |
| Other Financial Instruments | | | | |
| Futures Contracts – Assets | $5,646,845 | $— | $— | $5,646,845 |
| Futures Contracts – Liabilities | (2,435,470) | — | — | (2,435,470) |
| Forward Foreign Currency Exchange Contracts – Assets | — | 3,280,547 | — | 3,280,547 |
| Forward Foreign Currency Exchange Contracts – Liabilities | — | (2,336,963) | — | (2,336,963) |
| Swap Agreements – Liabilities | — | (108,015) | — | (108,015) |
| Written Options - Liabilities | — | (1,660) | — | (1,660) |
For further information regarding security characteristics, see the Portfolio of Investments.
Notes to Financial Statements - continued
The following is a reconciliation of level 3 assets for which significant unobservable inputs were used to determine fair value. The table presents the activity of level 3 securities held at the beginning and the end of the period.
| | Equity
Securities |
| Balance as of 10/31/21 | $— |
| Transfers into level 3 | 0 |
| Balance as of 10/31/22 | $0 |
At October 31, 2022, the fund held two level 3 securities.
Inflation-Adjusted Debt Securities — The fund invests in inflation-adjusted debt securities issued by the U.S. Treasury. The fund also invests in inflation-adjusted debt securities issued by U.S. Government agencies and instrumentalities other than the U.S. Treasury and by other entities such as U.S. and foreign corporations and foreign governments. The principal value of these debt securities is adjusted through income according to changes in the Consumer Price Index or another general price or wage index. These debt securities typically pay a fixed rate of interest, but this fixed rate is applied to the inflation-adjusted principal amount. The principal paid at maturity of the debt security is typically equal to the inflation-adjusted principal amount, or the security’s original par value, whichever is greater. Other types of inflation-adjusted securities may use other methods to adjust for other measures of inflation.
Foreign Currency Translation — Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
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.
The derivative instruments used by the fund during the period were written options, purchased options, futures contracts, forward foreign currency exchange contracts, and swap agreements. 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. The fund may be unable to promptly close out a futures position in instances where the daily fluctuation in the price for that type of future exceeds the
Notes to Financial Statements - continued
daily limit set by the exchange. The fund's period end derivatives, as presented in the Portfolio of Investments and the associated Derivative Contract tables, generally are indicative of the volume of its derivative activity during the period.
The following table presents, by major type of derivative contract, the fair value, on a gross basis, of the asset and liability components of derivatives held by the fund at October 31, 2022 as reported in the Statement of Assets and Liabilities:
| | | Fair Value (a) |
| Risk | Derivative Contracts | Asset Derivatives | Liability Derivatives |
| Interest Rate | Futures Contracts | $5,646,845 | $(2,435,470) |
| Foreign Exchange | Forward Foreign Currency Exchange Contracts | 3,280,547 | (2,336,963) |
| Credit | Purchased Option Contracts | 187,941 | — |
| Credit | Written Option Contracts | — | (1,660) |
| Credit | Uncleared Swap Agreements | — | (108,015) |
| Total | | $9,115,333 | $(4,882,108) |
| (a) | The value of purchased options outstanding is included in investments in unaffiliated issuers, at value, within the Statement of Assets and Liabilities. Values presented in this table for futures contracts correspond to the values reported in the Portfolio of Investments. Only the current day net variation margin for futures contracts is reported separately within the Statement of Assets and Liabilities. |
The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the year ended October 31, 2022 as reported in the Statement of Operations:
| Risk | Futures
Contracts | Swap
Agreements | Forward Foreign
Currency
Exchange
Contracts | Unaffiliated Issuers
(Purchased
Options) | Written
Options |
| Interest Rate | $12,376,085 | $(42,261) | $— | $1,791,495 | $— |
| Foreign Exchange | — | — | (7,246,372) | (157,729) | — |
| Credit | — | (32,205) | — | (17,481) | 22,173 |
| Total | $12,376,085 | $(74,466) | $(7,246,372) | $1,616,285 | $22,173 |
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 October 31, 2022 as reported in the Statement of Operations:
| Risk | Futures
Contracts | Swap
Agreements | Forward Foreign
Currency
Exchange
Contracts | Unaffiliated Issuers
(Purchased
Options) | Written
Options |
| Interest Rate | $1,057,544 | $— | $— | $(1,285,432) | $— |
| Foreign Exchange | — | — | 1,860,763 | — | — |
| Credit | — | (24,665) | — | 54,216 | 40,158 |
| Total | $1,057,544 | $(24,665) | $1,860,763 | $(1,231,216) | $40,158 |
Notes to Financial Statements - continued
Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain, but not all, uncleared derivatives, the fund attempts to reduce its exposure to counterparty credit risk whenever possible by entering into an ISDA Master Agreement on a bilateral basis. The ISDA Master Agreement gives each party to the agreement the right to terminate all transactions traded under such agreement if there is a specified deterioration in the credit quality of the other party. Upon an event of default or a termination of the ISDA Master Agreement, the non-defaulting party has the right to close out all transactions traded under such agreement and to net amounts owed under each agreement to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the ISDA Master Agreement could result in a reduction of the fund's credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any.
Collateral and margin requirements differ by type of derivative. For cleared derivatives (e.g., futures contracts, cleared swaps, and exchange-traded options), margin requirements are set by the clearing broker and the clearing house and collateral, in the form of cash or securities, is posted by the fund directly with the clearing broker. Collateral terms are counterparty agreement specific for uncleared derivatives (e.g., forward foreign currency exchange contracts, uncleared swap agreements, and uncleared options) and collateral, in the form of cash and securities, is held in segregated accounts with the fund's custodian in connection with these agreements. For derivatives traded under an ISDA Master Agreement, which contains a credit support annex, the collateral requirements are netted across all transactions traded under such counterparty-specific agreement and an amount is posted from one party to the other to collateralize such obligations. Cash that has been segregated or delivered to cover the fund's collateral or margin obligations under derivative contracts, if any, will be reported separately in the Statement of Assets and Liabilities as restricted cash for uncleared derivatives and/or deposits with brokers for cleared derivatives. Securities pledged as collateral or margin for the same purpose, if any, are noted in the Portfolio of Investments. The fund may be required to make payments of interest on uncovered collateral or margin obligations with the broker. Any such payments are included in “Miscellaneous” expense in the Statement of Operations.
Written Options — In exchange for a premium, the fund wrote call options on securities for which it anticipated the price would decline and also wrote put options on securities for which it anticipated the price would increase. At the time the option was written, the fund believed the premium received exceeded the potential loss that could result from adverse price changes in the options’ underlying securities. In a written option, the fund as the option writer grants the buyer the right to purchase from, or sell to, the fund a specified number of shares or units of a particular security, currency or index at a specified price within a specified period of time.
The premium received is initially recorded as a liability in the Statement of Assets and Liabilities. The option is subsequently marked-to-market daily with the difference between the premium received and the market value of the written option being recorded as unrealized appreciation or depreciation. When a written option expires, the fund realizes a gain equal to the amount of the premium received. The difference between the premium received and the amount paid on effecting a closing transaction
Notes to Financial Statements - continued
is considered a realized gain or loss. When a written call option is exercised, the premium received is offset against the proceeds to determine the realized gain or loss. When a written put option is exercised, the premium reduces the cost basis of the security purchased by the fund.
At the initiation of the written option contract, for exchange traded options, the fund is required to deposit securities or cash as collateral with the custodian for the benefit of the broker or directly with the clearing broker, based on the type of option. For uncleared options, the fund may post collateral subject to the terms of an ISDA Master Agreement as generally described above if the market value of the options contract moves against it. The fund, as writer of an option, may have no control over whether the underlying securities may be sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the securities underlying the written option. Losses from writing options can exceed the premium received and can exceed the potential loss from an ordinary buy and sell transaction. Although the fund’s market risk may be significant, the maximum counterparty credit risk to the fund is equal to the market value of any collateral posted to the broker. For 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.
Purchased Options — The fund purchased call and put options for a premium. Purchased call and put options entitle the holder to buy and sell a specified number of shares or units of a particular security, currency or index at a specified price at a specified date or within a specified period of time. Purchasing call options may hedge against an anticipated increase in the dollar cost of securities or currency to be acquired or increase the fund’s exposure to an underlying instrument. 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 call option, the premium paid is added to the cost of the security or financial instrument purchased. 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.
Futures Contracts — The fund entered into futures contracts which may be used to hedge against or obtain broad market exposure, interest rate exposure, currency exposure, or to manage duration. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.
Notes to Financial Statements - continued
Upon entering into a futures contract, the fund is required to deposit with the broker, either in cash or securities, an initial margin in an amount equal to a specified percentage of the notional amount of the contract. Subsequent payments (variation margin) are made or received by the fund each day, depending on the daily fluctuations in the value of the contract, and are recorded for financial statement purposes as unrealized gain or loss by the fund until the contract is closed or expires at which point the gain or loss on futures contracts is realized.
The fund bears the risk of interest rates, exchange rates or securities prices moving unexpectedly, in which case, the fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. While futures contracts may present less counterparty risk to the fund since the contracts are exchange traded and the exchange’s clearinghouse guarantees payments to the broker, there is still counterparty credit risk due to the insolvency of the broker. The fund’s maximum risk of loss due to counterparty credit risk is equal to the margin posted by the fund to the broker plus any gains or minus any losses on the outstanding futures contracts.
Forward Foreign Currency Exchange Contracts — The fund entered into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. These contracts may be used to hedge the fund’s currency risk or for non-hedging purposes. For hedging purposes, the fund may enter into contracts to deliver or receive foreign currency that the fund will receive from or use in its normal investment activities. The fund may also use contracts to hedge against declines in the value of foreign currency denominated securities due to unfavorable exchange rate movements. For non-hedging purposes, the fund may enter into contracts with the intent of changing the relative exposure of the fund��s portfolio of securities to different currencies to take advantage of anticipated exchange rate changes.
Forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any unrealized gains or losses are recorded as a receivable or payable for forward foreign currency exchange contracts until the contract settlement date. On contract settlement date, any gain or loss on the contract is recorded as realized gains or losses on forward foreign currency exchange contracts.
Risks may arise upon entering into these contracts from unanticipated movements in the value of the contract and from the potential inability of counterparties to meet the terms of their contracts. Generally, the fund’s maximum risk due to counterparty credit risk is the unrealized gain on the contract due to the use of Continuous Linked Settlement, a multicurrency cash settlement system for the centralized settlement of foreign transactions. 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.
Swap Agreements — The fund entered into swap agreements which generally involve a periodic exchange of cash payments on a net basis, at specified intervals or upon the occurrence of specified events, between the fund and a counterparty. Certain swap agreements may be entered into as a bilateral contract (“uncleared swaps”) while others are required to be centrally cleared (“cleared swaps”).
Notes to Financial Statements - continued
Both cleared and uncleared swap agreements are marked to market daily. The value of uncleared swap agreements is reported in the Statement of Assets and Liabilities as “Uncleared swaps, at value” which includes any related interest accruals to be paid or received by the fund. For cleared swaps, payments (variation margin) are made or received by the fund each day, depending on the daily fluctuations in the value of the cleared swap, such that only the current day net receivable or payable for variation margin is reported in the Statement of Assets and Liabilities.
For both cleared and uncleared swaps, premiums paid or received at the inception of the agreements are amortized over the term of the agreement as realized gain or loss on swap agreements in the Statement of Operations. The periodic exchange of net cash payments, as well as any liquidation payment received or made upon early termination, are recorded as a realized gain or loss on swap agreements in the Statement of Operations. The change in unrealized appreciation or depreciation on swap agreements in the Statement of Operations reflects the aggregate change over the reporting period in the value of swaps net of any unamortized premiums paid or received.
Risks related to swap agreements include the possible lack of a liquid market, unfavorable market and interest rate movements of the underlying instrument and the failure of the counterparty to perform under the terms of the agreements. The fund's maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the contract's remaining life, to the extent that the amount is positive. To address counterparty risk, uncleared swap agreements are limited to only highly-rated counterparties. Risk is further reduced by having an ISDA Master Agreement (“ISDA”) between the fund and the counterparty 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. The fund's counterparty risk due to cleared swaps is mitigated by the fact that the clearinghouse is the true counterparty to the transaction and the regulatory requirement safeguards in the event of a clearing broker bankruptcy.
The fund entered into credit default swap agreements in order to manage its exposure to the market or certain sectors of the market, to reduce its credit risk exposure to defaults of corporate and sovereign issuers or to create exposure to corporate or sovereign issuers to which it is not otherwise exposed. A credit default swap’s reference obligation may be either a single security or a basket of securities issued by corporate or sovereign issuers. At the inception of the agreement, the protection buyer may make an upfront payment to or receive an upfront payment from the protection seller. Over the term of the agreement, the protection buyer will make a series of periodic payments to the protection seller based on a fixed percentage applied to the agreement’s notional amount in exchange for a promise from the protection seller to make a specific payment should a defined credit event occur with respect to the reference obligation. Although agreement-specific, credit events generally consist of a combination of the following: bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. If a defined credit event occurs, the protection buyer will either (i) receive from the protection seller an amount equal to the agreement’s notional amount and deliver the reference obligation (i.e., physical settlement) or (ii) receive from the protection seller a net settlement of cash equal to the agreement’s notional amount less the recovery value of the reference obligation. Upon determination of the final price for the reference obligation (or upon
Notes to Financial Statements - continued
delivery of the reference obligation in the case of physical settlement), the difference between the recovery value of the reference obligation and the agreement’s notional amount is recorded as realized gain or loss on swap agreements in the Statement of Operations.
Credit default swap agreements are considered to have credit-risk-related contingent features since they trigger payment by the protection seller to the protection buyer upon the occurrence of a defined credit event. The aggregate fair value of credit default swap agreements in a net liability position as of October 31, 2022 is disclosed in the footnotes to the Portfolio of Investments. The maximum amount of future, undiscounted payments that the fund, as protection seller, could be required to make is equal to the swap agreement’s notional amount. The protection seller’s payment obligation would be offset to the extent of the value of the agreement’s deliverable obligation. If a defined credit event had occurred as of October 31, 2022, the swap agreement's credit-risk-related contingent features would have been triggered and, for those swap agreements in a net liability position for which the fund is the protection seller, the fund in order to settle these swap agreements would have been required to either (1) pay the swap agreement’s notional value of EUR 2,820,000 less the value of the agreements’ related deliverable obligations as decided through an ISDA auction or (2) pay the notional value of the swap agreements in return for physical receipt of the deliverable obligations. The fund’s maximum risk of loss from counterparty risk, either as the protection seller or as the protection buyer, is the fair value of the agreement.
Security Loans — Under its Securities Lending Agency Agreement with the fund, JPMorgan Chase and Co., 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 October 31, 2022, there were no securities on loan or collateral outstanding.
Notes to Financial Statements - continued
Indemnifications — Under the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.
Investment Transactions and Income — Investment transactions are recorded on the trade date. Some securities may be purchased or sold on an extended settlement basis, which means that the receipt or delivery of the securities by the fund and related payments occur at a future date, usually beyond the customary settlement period.
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. 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. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted upward or downward based on the rate of inflation. Interest is accrued based on the principal amount, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation-indexed bond is generally recorded as an increase or decrease in interest income, respectively, even though the adjusted principal is not received until maturity.
The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
The fund invests a significant portion of its assets in asset-backed and/or mortgage-backed securities. For these securities, the value of the debt instrument also depends on the credit quality and adequacy of the underlying assets or collateral as well as whether there is a security interest in the underlying assets or collateral. Enforcing rights, if any, against the underlying assets or collateral may be difficult. U.S. Government securities not supported as to the payment of principal or interest by the U.S. Treasury, such as those issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, are subject to greater credit risk than are U.S. Government securities supported by the U.S. Treasury, such as those issued by Ginnie Mae.
The fund may purchase or sell mortgage-backed securities on a “To Be Announced” (TBA) basis. A TBA transaction is subject to extended settlement and typically does not designate the actual security to be delivered, but instead includes an approximate principal amount. The price of the TBA security and the date that it will be settled are fixed at the time the transaction is negotiated. The value of the security varies with market fluctuations and no interest accrues to the fund until settlement takes place. TBA purchase and sale commitments are held at carrying amount, which approximates fair value and are categorized as level 2 within the fair value hierarchy and included in
Notes to Financial Statements - continued
TBA purchase and TBA sale commitments in the Statement of Assets and Liabilities. Losses may arise as a result of changes in the value of the TBA investment prior to settlement date or due to counterparty non-performance. At the time that it enters into a TBA transaction, the fund is required to have sufficient cash and/or liquid securities to cover its commitments.
The fund may also enter into mortgage dollar rolls, typically TBA dollar rolls, in which the fund sells TBA mortgage-backed securities to financial institutions and simultaneously agrees to repurchase similar (same issuer, type and coupon) securities at a later date at an agreed-upon price. During the period between the sale and repurchase, the fund will not be entitled to receive interest and principal payments on the securities sold. The fund accounts for dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. Dollar roll transactions involve the risk that the market value of the securities that the fund is required to purchase may decline below the agreed upon repurchase price of those securities.
To mitigate the counterparty credit risk on TBA transactions, mortgage dollar rolls, and other types of forward settling mortgage-backed and asset-backed security transactions, the fund whenever possible enters into a Master Securities Forward Transaction Agreement (“MSFTA”) on a bilateral basis with each of the counterparties with whom it undertakes a significant volume of transactions. The MSFTA gives each party to the agreement the right to terminate all transactions traded under such agreement if there is a specified deterioration in the credit quality of the other party. Upon an event of default or a termination of the MSFTA, the non-defaulting party has the right to close out all transactions traded under such agreement and to net amounts owed under each transaction to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the MSFTA could result in a reduction of the fund's credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any.
For mortgage-backed and asset-backed securities traded under a MSFTA, the collateral and margining requirements are contract specific. Collateral amounts across all transactions traded under such agreement are netted and an amount is posted from one party to the other to collateralize such obligations. Cash that has been pledged to cover the fund's collateral or margin obligations under a MSFTA, if any, will be reported separately on the Statement of Assets and Liabilities as restricted cash. Securities pledged as collateral or margin for the same purpose, if any, are noted in the Portfolio of Investments.
Fees Paid Indirectly — The fund's custody fee may be reduced by a credit earned under an arrangement that measures the value of U.S. dollars deposited with the custodian by the fund. The amount of the credit, for the year ended October 31, 2022, is shown as a reduction of total expenses in the Statement of Operations.
Tax Matters and Distributions — The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in accordance with the
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, amortization and accretion of debt securities, treating a portion of the proceeds from redemptions as a distribution for tax purposes, wash sale loss deferrals and derivative transactions.
The tax character of distributions declared to shareholders for the last two fiscal years is as follows:
| | Year ended
10/31/22 | Year ended
10/31/21 |
| Ordinary income (including any short-term capital gains) | $17,459,790 | $35,867,262 |
| Long-term capital gains | 140,835,260 | 92,030,890 |
| Total distributions | $158,295,050 | $127,898,152 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 10/31/22 | |
| Cost of investments | $1,275,993,175 |
| Gross appreciation | 238,294,651 |
| Gross depreciation | (146,893,364) |
| Net unrealized appreciation (depreciation) | $91,401,287 |
| Undistributed long-term capital gain | 32,028,636 |
| Other temporary differences | (292,460) |
| Total distributable earnings (loss) | $123,137,463 |
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
10/31/22 | | Year
ended
10/31/21 |
| Class A | $68,656,802 | | $53,672,718 |
| Class B | 1,395,204 | | 1,273,029 |
| Class C | 9,401,182 | | 9,445,301 |
| Class I | 52,489,854 | | 42,285,015 |
| Class R1 | 202,464 | | 164,770 |
| Class R2 | 431,823 | | 361,052 |
| Class R3 | 1,760,140 | | 1,519,960 |
| Class R4 | 513,036 | | 497,220 |
| Class R6 | 23,444,545 | | 18,679,087 |
| Total | $158,295,050 | | $127,898,152 |
(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 | 0.84% |
| In excess of $500 million and 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. Effective March 1, 2022, 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 February 29, 2024. For the year ended October 31, 2022, this management fee reduction amounted to $225,160, which is included in the reduction of total expenses in the Statement of Operations.
The management fee incurred for the year ended October 31, 2022 was equivalent to an annual effective rate of 0.75% of the fund's average daily net assets.
For the period from November 1, 2021 through July 31, 2022, the investment adviser had 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 did not exceed the following rates annually of each class’s average daily net assets:
| | | | | Classes | | | | |
| A | B | C | I | R1 | R2 | R3 | R4 | R6 |
| 1.09% | 1.84% | 1.84% | 0.84% | 1.84% | 1.34% | 1.09% | 0.84% | 0.78% |
Notes to Financial Statements - continued
This written agreement terminated on July 31, 2022. For the period from November 1, 2021 through July 31, 2022, this reduction amounted to $916,347 which is included in the reduction of total expenses in the Statement of Operations.
Effective August 1, 2022, 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 |
| 1.09% | 1.84% | 1.84% | 0.84% | 1.84% | 1.34% | 1.09% | 0.84% | 0.77% |
This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until February 29, 2024. For the period from August 1, 2022 through October 31, 2022, this reduction amounted to $304,034, 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 $46,386 for the year ended October 31, 2022, as its portion of the initial sales charge on sales of Class A shares of the fund.
The Board of Trustees has adopted a distribution plan for certain share classes pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund's distribution plan provides that the fund will pay MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.
Distribution Plan Fee Table:
| | Distribution
Fee Rate (d) | Service
Fee Rate (d) | Total
Distribution
Plan (d) | Annual
Effective
Rate (e) | Distribution
and Service
Fee |
| Class A | — | 0.25% | 0.25% | 0.25% | $ 1,798,163 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 137,343 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 924,664 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 23,303 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 22,807 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 44,637 |
| Total Distribution and Service Fees | | | | | $2,950,917 |
| (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 October 31, 2022 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 |
Notes to Financial Statements - continued
accounts attributable to MFS or its affiliates' seed money. For the year ended October 31, 2022, this rebate amounted to $498 and $5 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 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 October 31, 2022, were as follows:
| | Amount |
| Class A | $12,461 |
| Class B | 5,276 |
| Class C | 3,889 |
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 October 31, 2022, the fee was $152,541, which equated to 0.0095% 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 October 31, 2022, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $1,344,863.
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 incurred for the year ended October 31, 2022 was equivalent to an annual effective rate of 0.0157% of the fund's average daily net assets.
Trustees’ and Officers’ Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration 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.
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
Notes to Financial Statements - continued
Investment Company Act of 1940. During the year ended October 31, 2022, the fund engaged in purchase and sale transactions pursuant to this policy, which amounted to $193,988 and $1,903,265, respectively. The sales transactions resulted in net realized gains (losses) of $6,136.
(4) Portfolio Securities
For the year ended October 31, 2022, purchases and sales of investments, other than purchased options and short-term obligations, were as follows:
| | Purchases | Sales |
| U.S. Government securities | $266,724,907 | $283,998,315 |
| Non-U.S. Government securities | 830,482,795 | 972,852,457 |
(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
10/31/22 | | Year ended
10/31/21 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Class A | 3,771,994 | $64,677,221 | | 4,373,697 | $84,778,727 |
| Class B | 5,507 | 102,053 | | 4,856 | 93,924 |
| Class C | 255,357 | 4,527,459 | | 374,840 | 7,327,015 |
| Class I | 5,139,242 | 86,292,529 | | 5,299,816 | 101,702,117 |
| Class R1 | 21,398 | 367,881 | | 10,650 | 208,208 |
| Class R2 | 63,108 | 1,068,831 | | 41,301 | 792,127 |
| Class R3 | 444,377 | 7,751,250 | | 152,610 | 2,961,078 |
| Class R4 | 83,054 | 1,432,904 | | 70,946 | 1,392,577 |
| Class R6 | 2,700,201 | 46,303,733 | | 2,836,265 | 54,659,503 |
| | 12,484,238 | $212,523,861 | | 13,164,981 | $253,915,276 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Class A | 3,412,193 | $62,646,092 | | 2,617,171 | $49,281,894 |
| Class B | 69,343 | 1,307,804 | | 61,966 | 1,190,152 |
| Class C | 481,998 | 8,926,539 | | 456,350 | 8,622,444 |
| Class I | 2,495,468 | 45,091,003 | | 1,946,797 | 36,241,395 |
| Class R1 | 11,016 | 202,464 | | 8,773 | 164,770 |
| Class R2 | 21,167 | 383,969 | | 16,877 | 313,997 |
| Class R3 | 96,252 | 1,760,140 | | 81,087 | 1,519,960 |
| Class R4 | 27,897 | 511,648 | | 26,086 | 491,887 |
| Class R6 | 1,113,319 | 20,094,105 | | 855,542 | 15,932,843 |
| | 7,728,653 | $140,923,764 | | 6,070,649 | $113,759,342 |
Notes to Financial Statements - continued
| | Year ended
10/31/22 | | Year ended
10/31/21 |
| | Shares | Amount | | Shares | Amount |
| Shares reacquired | | | | | |
| Class A | (7,510,529) | $(128,190,321) | | (5,442,782) | $(105,840,131) |
| Class B | (310,164) | (5,425,742) | | (277,760) | (5,539,888) |
| Class C | (2,173,693) | (37,247,487) | | (3,088,516) | (60,085,012) |
| Class I | (10,519,208) | (175,966,814) | | (6,637,545) | (127,588,510) |
| Class R1 | (10,966) | (192,539) | | (31,518) | (612,574) |
| Class R2 | (77,871) | (1,314,763) | | (84,828) | (1,629,465) |
| Class R3 | (430,455) | (7,576,772) | | (362,528) | (6,909,193) |
| Class R4 | (91,965) | (1,563,826) | | (154,759) | (3,027,858) |
| Class R6 | (3,235,658) | (54,795,787) | | (3,392,351) | (65,307,757) |
| | (24,360,509) | $(412,274,051) | | (19,472,587) | $(376,540,388) |
| Net change | | | | | |
| Class A | (326,342) | $(867,008) | | 1,548,086 | $28,220,490 |
| Class B | (235,314) | (4,015,885) | | (210,938) | (4,255,812) |
| Class C | (1,436,338) | (23,793,489) | | (2,257,326) | (44,135,553) |
| Class I | (2,884,498) | (44,583,282) | | 609,068 | 10,355,002 |
| Class R1 | 21,448 | 377,806 | | (12,095) | (239,596) |
| Class R2 | 6,404 | 138,037 | | (26,650) | (523,341) |
| Class R3 | 110,174 | 1,934,618 | | (128,831) | (2,428,155) |
| Class R4 | 18,986 | 380,726 | | (57,727) | (1,143,394) |
| Class R6 | 577,862 | 11,602,051 | | 299,456 | 5,284,589 |
| | (4,147,618) | $(58,826,426) | | (236,957) | $(8,865,770) |
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 16, 2023 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 October 31, 2022, the fund’s commitment fee and interest expense were $7,029 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 | $57,314,626 | $548,521,943 | $570,451,364 | $(885) | $(212) | $35,384,108 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $315,293 | $— |
(8) LIBOR Transition
Certain of the fund's investments, including investments in certain debt instruments and derivatives (if any), as well as borrowings by the fund and certain other contractual arrangements of the fund, may be based on the London Interbank Offered Rate (“LIBOR”). In 2017, the regulatory authority that oversees financial services firms in the United Kingdom announced plans to transition away from LIBOR by the end of 2021. In March 2021, the administrator of LIBOR announced the extension of the publication of the more commonly used U.S. dollar LIBOR settings to the end of June 2023. Although the full impacts of the transition away from LIBOR are not fully known, the transition may result in, among other things, an increase in volatility or illiquidity of the markets for instruments that currently rely on LIBOR to determine interest rates and this 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 will 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 those modified contracts as a continuation of the existing contracts. Management is still evaluating the impact to the fund of the June 30, 2023 planned discontinuation of the more commonly used U.S. dollar LIBOR settings.
(9) Russia and Ukraine Conflict
The fund invests in securities and/or derivative instruments that are economically tied to Russia and/or Ukraine. Escalation of the conflict between Russia and Ukraine in late February 2022 caused market volatility and disruption in the tradability of Russian securities, including closure of the local securities market, temporary restriction on securities sales by non-residents, and disruptions to clearance and payment systems. To the extent that the fund is unable to sell securities, whether due to market constraints
Notes to Financial Statements - continued
or to the sanctions imposed on Russia by the United States and other countries, those securities are considered illiquid and the value of those securities reflects their illiquid classification. Management continues to monitor these events and to evaluate the related impacts on fund performance.
Report of Independent Registered Public Accounting Firm
To the Shareholders of MFS Global Total Return Fund and the Board of Trustees of MFS Series Trust VI
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of MFS Global Total Return Fund (the “Fund”) (one of the funds constituting MFS Series Trust VI (the “Trust”)), including the portfolio of investments, as of October 31, 2022, 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 VI) at October 31, 2022, 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 October 31, 2022, 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
December 15, 2022
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of December 1, 2022, 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 TRUSTEES | | | | | | | | | | |
Michael W. Roberge (k)
(age 56) | | 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 71) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 68) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 67) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 67) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 61) | | 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 66) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 66) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 65) | | 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 48) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 54) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
John W. Clark, Jr. (k)
(age 55) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 54) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 55) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 49) | | 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 46) | | 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 43) | | 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 51) | | 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 40) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Counsel |
James O. Yost (k)
(age 62) | | 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 | JPMorgan Chase Bank, NA
4 Metrotech Center
New York, NY 11245 |
| 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) | |
Pilar Gomez-Bravo
Steven Gorham
Andy Li
Johnathan Munko
Henry Peabody
Jonathan Sage
David Shindler
Robert Spector
Erik Weisman | |
Board Review of Investment Advisory Agreement
MFS Global Total Return 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, 2022 (“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, 2021 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, 2021, 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 the one-year period and 3rd quintile for the three-year period ended December 31, 2021 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 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 were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate
Board Review of Investment Advisory Agreement - continued
and total expense ratio were each approximately at the Broadridge expense group median. The Trustees also noted that MFS has agreed to further reduce the expense limitation for Class R6 shares of the Fund effective August 1, 2022, which may not be changed without the Trustees’ approval.
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, $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, 2022.
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 2022 income tax forms in January 2023. 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 $158,294,000 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 24.51% of the ordinary income dividends paid during the fiscal 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).
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. |
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 Ernst & Young LLP ("E&Y") to serve as independent accountants to the 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 Fund ("MFS Related Entities").
For the fiscal years ended October 31, 2022 and 2021, audit fees billed to each Fund by E&Y were as follows:
Fees billed by E&Y: | | Audit Fees |
| 2022 | 2021 |
MFS Global Equity Fund | 56,811 | 53,941 |
MFS Global Total Return Fund | 66,294 | 62,939 |
MFS Utilities Fund | 51,953 | 49,332 |
Total | 175,058 | 166,212 |
For the fiscal years ended October 31, 2022 and 2021, fees billed by 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 E&Y: | | | Audit-Related | | Tax Fees2 | | All Other Fees3 |
| | | Fees1 | | | | | |
| 2022 | 2021 | 2022 | 2021 | 2022 | | 2021 |
To MFS Global Equity Fund | 0 | 0 | 632 | 10,256 | 591 | | 1,713 |
To MFS Global Total Return | 0 | 0 | 632 | 11,665 | 302 | | 1,412 |
Fund | | | | | | | | |
To MFS Utilities Fund | 0 | 0 | 632 | 9,456 | 523 | | 1,757 |
Total fees billed by E&Y | 0 | 0 | 1,896 | 31,377 | 1,416 | | 4,882 |
To above Funds | | | | | | | | |
| | | | | | |
Fees billed by E&Y: | | | Audit-Related | | Tax Fees2 | All Other Fees3 |
| | | Fees1 | | | | | |
| 2022 | | 2021 | 2022 | 2021 | 2022 | | 2021 |
To MFS and MFS Related Entities of | | | | | | | | |
MFS Global Equity Fund* | 662,511 | | 1,663,649 | 0 | 0 | 111,415 | | 110,620 |
To MFS and MFS Related Entities of | | | | | | | | |
MFS Global Total Return Fund* | 662,511 | | 1,663,649 | 0 | 0 | 111,415 | | 110,620 |
To MFS and MFS Related Entities of | | | | | | | | |
MFS Utilities Fund* | 662,511 | | 1,663,649 | 0 | 0 | 111,415 | | 110,620 |
Fees billed by E&Y: | Aggregate fees for non-audit services: | |
| 2022 | | 2021 |
To MFS Global Equity Fund, MFS and MFS Related Entities# | 905,579 | | 2,002,937 |
| | | |
To MFS Global Total Return Fund, MFS and MFS Related Entities# | 905,290 | | 2,004,047 |
| | | |
To MFS Utilities Fund, MFS and MFS Related Entities# | 905,511 | | 2,002,182 |
| | | |
*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 Fund (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 E&Y for non-audit services rendered to the Fund and for non-audit services rendered to MFS and the MFS Related Entities.
1The 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.
2The 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.
3The 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 Funds 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 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 VI
By (Signature and Title)*
/S/ DAVID L. DILORENZO
David L. DiLorenzo, President
Date: December 15, 2022
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: December 15, 2022
By (Signature and Title)*
/S/ JAMES O. YOST
James O. Yost, Treasurer (Principal Financial Officer and Accounting Officer)
Date: December 15, 2022
* Print name and title of each signing officer under his or her signature.
