Form N-CSRS MFS SERIES TRUST IX For: Apr 30
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E-mailUNITED 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 811-02464
MFS SERIES TRUST IX
(Exact name of registrant as specified in charter)
111 Huntington Avenue, Boston, Massachusetts 02199 (Address of principal executive offices) (Zip code)
Christopher R. Bohane
Massachusetts Financial Services Company
111Huntington Avenue Boston, Massachusetts 02199
(Name and address of agents for service)
Registrant’s telephone number, including area code: (617) 954-5000
Date of fiscal year end: October 31*
Date of reporting period: April 30, 2024
*This Form N-CSR pertains to the following series of the Registrant: MFS Inflation-Adjusted Bond Fund. The remaining series of the Registrant have fiscal year ends of April 30.
ITEM 1. REPORTS TO STOCKHOLDERS.
Item 1(a):
Semiannual Report
April 30, 2024
MFS® Inflation-Adjusted
Bond Fund
Bond Fund
IAB-SEM
MFS® Inflation-Adjusted
Bond Fund
Bond Fund
CONTENTS
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| 10 | |
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| 36 | |
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| 36 |
| back cover |
The report is prepared for the
general information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
NOT FDIC INSURED
• MAY LOSE VALUE • NO BANK GUARANTEE
Portfolio Composition - continued
| (a) | For all securities other than those specifically described below, ratings are assigned to underlying securities utilizing ratings from Moody’s, Fitch, and Standard & Poor’s rating agencies and applying the following hierarchy: If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. 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. The fund may or may not have held all of these instruments on this date. The fund is not rated by these agencies.
| (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 due to the interest rate move. The Average Duration calculation reflects the impact of the equivalent exposure of derivative positions, if any. |
| (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. |
| (m) | In determining each instrument’s effective maturity for purposes of calculating the fund’s dollar-weighted average effective maturity, MFS uses the instrument’s stated maturity or, if applicable, an earlier date on which MFS believes it is probable that a maturity-shortening feature (such as a put, pre-refunding or prepayment) will cause the instrument to be repaid. Such an earlier date can be substantially shorter than the instrument’s stated maturity. |
| (q) | For purposes of this presentation, Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions and may be negative. |
| (v) | For purposes of this presentation, market value of fixed income and/or equity derivatives, if any, is included in 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.
Percentages are based on net assets
as of April 30, 2024.
The portfolio is actively managed
and current holdings may be different.
2
Expense Table
Fund expenses borne by the
shareholders during the period,
November 1, 2023 through April 30, 2024
November 1, 2023 through April 30, 2024
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 November 1, 2023 through April 30, 2024.
Actual Expenses
The first line for each share class
in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over
the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled
“Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for
Comparison Purposes
The second line for each share class
in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information
to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown
in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line for each share class in the table is useful in
comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
3
Expense Table - continued
| Share Class | Annualized Expense Ratio | Beginning Account Value 11/01/23 | Ending Account Value 4/30/24 | Expenses Paid During Period (p) 11/01/23-4/30/24 | |
| A | Actual | 0.64% | $1,000.00 | $1,039.91 | $3.25 |
| Hypothetical (h) | 0.64% | $1,000.00 | $1,021.68 | $3.22 | |
| B | Actual | 1.39% | $1,000.00 | $1,037.24 | $7.04 |
| Hypothetical (h) | 1.39% | $1,000.00 | $1,017.95 | $6.97 | |
| C | Actual | 1.49% | $1,000.00 | $1,035.88 | $7.54 |
| Hypothetical (h) | 1.49% | $1,000.00 | $1,017.45 | $7.47 | |
| I | Actual | 0.49% | $1,000.00 | $1,041.88 | $2.49 |
| Hypothetical (h) | 0.49% | $1,000.00 | $1,022.43 | $2.46 | |
| R1 | Actual | 1.49% | $1,000.00 | $1,035.87 | $7.54 |
| Hypothetical (h) | 1.49% | $1,000.00 | $1,017.45 | $7.47 | |
| R2 | Actual | 0.99% | $1,000.00 | $1,038.39 | $5.02 |
| Hypothetical (h) | 0.99% | $1,000.00 | $1,019.94 | $4.97 | |
| R3 | Actual | 0.74% | $1,000.00 | $1,040.55 | $3.75 |
| Hypothetical (h) | 0.74% | $1,000.00 | $1,021.18 | $3.72 | |
| R4 | Actual | 0.49% | $1,000.00 | $1,041.93 | $2.49 |
| Hypothetical (h) | 0.49% | $1,000.00 | $1,022.43 | $2.46 | |
| R6 | Actual | 0.41% | $1,000.00 | $1,040.99 | $2.08 |
| Hypothetical (h) | 0.41% | $1,000.00 | $1,022.82 | $2.06 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
4
Portfolio of Investments
4/30/24 (unaudited)
The Portfolio of Investments is a
complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | Shares/Par | Value ($) | ||
| Bonds – 98.3% | ||||
| Asset-Backed & Securitized – 1.9% | ||||
| 3650R Commercial Mortgage Trust, 2021-PF1, “XA”, 1.126%, 11/15/2054 (i) | $ | 14,595,911 | $671,587 | |
| AmeriCredit Automobile Receivables Trust, 2024-1, “A”, 5.61%, 1/12/2027 (n) | 1,534,849 | 1,532,163 | ||
| AREIT 2022-CRE6 Trust, “AS”, FLR, 6.98% (SOFR - 30 day + 1.65%), 1/20/2037 (n) | 2,462,500 | 2,423,760 | ||
| BBCMS Mortgage Trust, 2021-C10, “XA”, 1.404%, 7/15/2054 (i) | 13,180,888 | 827,689 | ||
| BBCMS Mortgage Trust, 2021-C9, “XA”, 1.727%, 2/15/2054 (i) | 7,991,793 | 626,721 | ||
| Benchmark 2021-B23 Mortgage Trust, “XA”, 1.372%, 2/15/2054 (i) | 25,321,960 | 1,453,450 | ||
| Benchmark 2021-B24 Mortgage Trust, “XA”, 1.263%, 3/15/2054 (i) | 15,434,148 | 784,181 | ||
| Benchmark 2021-B27 Mortgage Trust, “XA”, 1.374%, 7/15/2054 (i) | 20,875,843 | 1,204,139 | ||
| Benchmark 2021-B28 Mortgage Trust, “XA”, 1.382%, 8/15/2054 (i) | 25,220,968 | 1,574,855 | ||
| BSPDF 2021-FL1 Issuer Ltd., “AS”, FLR, 6.915% ((SOFR - 1mo. + 0.11448%) + 1.48%), 10/15/2036 (n) | 3,056,500 | 2,956,855 | ||
| Commercial Mortgage Pass-Through Certificates, 2021-BN31, “XA”, 1.402%, 2/15/2054 (i) | 19,192,831 | 1,235,922 | ||
| Dell Equipment Finance Trust, 2023-3, “A2”, 6.1%, 4/23/2029 (n) | 1,416,000 | 1,418,422 | ||
| Morgan Stanley Capital I Trust, 2021-L5, “XA”, 1.411%, 5/15/2054 (i) | 10,223,122 | 597,727 | ||
| Morgan Stanley Capital I Trust, 2021-L6, “XA”, 1.319%, 6/15/2054 (i) | 12,732,094 | 670,827 | ||
| Morgan Stanley Capital I Trust, 2021-L7, “XA”, 1.204%, 10/15/2054 (i) | 27,429,527 | 1,398,900 | ||
| PFP III 2021-8 Ltd., “AS”, FLR, 6.683% ((SOFR - 1mo. + 0.11448%) + 1.25%), 8/09/2037 (n) | 3,622,500 | 3,525,725 | ||
| SBNA Auto Lease Trust, 2024-A, “A2”, 5.45%, 1/20/2026 (n) | 1,979,000 | 1,974,729 | ||
| Wells Fargo Commercial Mortgage Trust, 2021-C60, “XA”, 1.646%, 8/15/2054 (i) | 9,362,777 | 682,521 | ||
| Westlake Automobile Receivables Trust, 2024-1A “A2B”, FLR, 5.9% (SOFR - 1mo. + 0.57%), 3/15/2027 (n) | 3,062,000 | 3,062,601 | ||
| $28,622,774 | ||||
| Consumer Services – 0.1% | ||||
| Conservation Fund, 3.474%, 12/15/2029 | $ | 1,438,000 | $1,273,396 | |
5
Portfolio of Investments (unaudited)
– continued
| Issuer | Shares/Par | Value ($) | ||
| Bonds – continued | ||||
| Industrial Revenue - Other – 0.0% | ||||
| Howard University, Washington D.C., AGM, 2.516%, 10/01/2025 | $ | 402,000 | $382,824 | |
| International Market Sovereign – 2.0% | ||||
| Republic of Italy, Inflation Linked Bond, 2.35%, 9/15/2035 | EUR | 26,175,426 | $29,792,627 | |
| Medical & Health Technology & Services – 0.2% | ||||
| ProMedica Toledo Hospital, “B”, AGM, 5.325%, 11/15/2028 | $ | 2,421,000 | $2,376,089 | |
| ProMedica Toledo Hospital, “B”, AGM, 5.75%, 11/15/2038 | 747,000 | 739,262 | ||
| $3,115,351 | ||||
| Mortgage-Backed – 1.3% | ||||
| Freddie Mac, 5.956%, 8/25/2029 | $ | 6,098,473 | $6,118,610 | |
| Freddie Mac, 5.996%, 9/25/2029 | 2,244,332 | 2,252,244 | ||
| Freddie Mac, 1.915%, 4/25/2030 (i) | 3,519,182 | 314,213 | ||
| Freddie Mac, 1.769%, 5/25/2030 (i) | 6,326,494 | 533,772 | ||
| Freddie Mac, 1.481%, 6/25/2030 (i) | 9,780,586 | 637,641 | ||
| Freddie Mac, 1.262%, 9/25/2030 (i) | 3,529,812 | 217,172 | ||
| Freddie Mac, 0.418%, 1/25/2031 (i) | 29,737,714 | 492,879 | ||
| Freddie Mac, 0.627%, 1/25/2031 (i) | 54,980,294 | 1,689,627 | ||
| Freddie Mac, 0.872%, 1/25/2031 (i) | 11,388,256 | 498,276 | ||
| Freddie Mac, 1.026%, 1/25/2031 (i) | 8,529,316 | 438,699 | ||
| Freddie Mac, 0.61%, 3/25/2031 (i) | 36,311,915 | 990,226 | ||
| Freddie Mac, 1.324%, 5/25/2031 (i) | 4,421,663 | 305,662 | ||
| Freddie Mac, 1.039%, 7/25/2031 (i) | 7,521,262 | 423,140 | ||
| Freddie Mac, 0.632%, 9/25/2031 (i) | 32,486,236 | 1,038,228 | ||
| Freddie Mac, 0.955%, 9/25/2031 (i) | 9,783,880 | 487,384 | ||
| Freddie Mac, 0.441%, 11/25/2031 (i) | 49,721,062 | 1,107,224 | ||
| Freddie Mac, 0.596%, 12/25/2031 (i) | 50,485,813 | 1,549,344 | ||
| Freddie Mac, 0.665%, 12/25/2031 (i) | 8,215,224 | 283,447 | ||
| $19,377,788 | ||||
| Municipals – 1.1% | ||||
| Chicago, IL, Transit Authority Sales Tax Receipts Refunding Rev., Taxable, “B”, 2.064%, 12/01/2024 | $ | 523,000 | $512,571 | |
| Colorado Health Facilities Authority Rev., Taxable (Covenant Living Communities and Services), “B”, 2.8%, 12/01/2026 | 715,000 | 668,464 | ||
| Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Taxable, “B”, 3%, 6/01/2046 | 2,400,000 | 2,193,651 | ||
| Massachusetts Educational Financing Authority, Education Loan Rev., Taxable, Issue M, “A”, 2.641%, 7/01/2037 | 7,455,000 | 6,548,253 | ||
| Michigan Finance Authority Student Loan Asset-Backed Rev., Taxable, “A-1A”, 1.3%, 7/25/2061 | 1,426,919 | 1,331,386 | ||
6
Portfolio of Investments (unaudited)
– continued
| Issuer | Shares/Par | Value ($) | ||
| Bonds – continued | ||||
| Municipals – continued | ||||
| Michigan Finance Authority Tobacco Settlement Asset-Backed Rev., Taxable (2006 Sold Tobacco Receipts), “A-1”, 2.326%, 6/01/2030 | $ | 312,762 | $304,920 | |
| New Jersey Turnpike Authority, Turnpike Rev., Taxable, “B”, 1.047%, 1/01/2026 | 745,000 | 695,611 | ||
| Philadelphia, PA, School District, Taxable, “A”, AGM, 5.995%, 9/01/2030 | 1,925,000 | 1,978,626 | ||
| West Virginia Tobacco Settlement Financing Authority Asset-Backed Refunding, Taxable, “A-1”, 1.497%, 6/01/2024 | 1,020,000 | 1,015,919 | ||
| West Virginia Tobacco Settlement Financing Authority Asset-Backed Refunding, Taxable, “A-1”, 1.647%, 6/01/2025 | 835,000 | 796,758 | ||
| $16,046,159 | ||||
| U.S. Treasury Inflation Protected Securities – 91.7% | ||||
| U.S. Treasury Bonds, 3.625%, 4/15/2028 | $ | 62,278,109 | $65,182,451 | |
| U.S. Treasury Bonds, 1.125%, 1/15/2033 | 33,702,230 | 30,648,547 | ||
| U.S. Treasury Bonds, 0.75%, 2/15/2042 | 133,998,735 | 101,539,298 | ||
| U.S. Treasury Bonds, 0.625%, 2/15/2043 | 35,656,874 | 25,940,711 | ||
| U.S. Treasury Bonds, 0.75%, 2/15/2045 | 58,045,581 | 42,017,396 | ||
| U.S. Treasury Bonds, 1%, 2/15/2048 | 21,575,954 | 15,914,509 | ||
| U.S. Treasury Bonds, 0.125%, 2/15/2051 | 14,309,241 | 7,903,957 | ||
| U.S. Treasury Bonds, 0.125%, 2/15/2052 | 48,632,277 | 26,352,818 | ||
| U.S. Treasury Bonds, 2.125%, 2/15/2054 | 2,391,370 | 2,244,751 | ||
| U.S. Treasury Notes, 0.625%, 1/15/2026 (f) | 118,551,353 | 114,628,051 | ||
| U.S. Treasury Notes, 0.375%, 1/15/2027 | 56,292,108 | 53,242,337 | ||
| U.S. Treasury Notes, 0.375%, 7/15/2027 | 89,737,666 | 84,500,625 | ||
| U.S. Treasury Notes, 0.5%, 1/15/2028 | 55,444,844 | 51,788,051 | ||
| U.S. Treasury Notes, 0.875%, 1/15/2029 (f) | 260,539,397 | 244,300,182 | ||
| U.S. Treasury Notes, 0.125%, 7/15/2030 | 174,372,934 | 153,705,093 | ||
| U.S. Treasury Notes, 0.125%, 1/15/2031 | 135,774,176 | 117,966,033 | ||
| U.S. Treasury Notes, 0.125%, 1/15/2032 | 204,327,636 | 173,716,454 | ||
| U.S. Treasury Notes, 1.375%, 7/15/2033 | 61,517,889 | 57,110,208 | ||
| $1,368,701,472 | ||||
| Total Bonds (Identified Cost, $1,619,299,772) | $1,467,312,391 | |||
| Investment Companies (h) – 2.3% | ||||
| Money Market Funds – 2.3% | ||||
| MFS Institutional Money Market Portfolio, 5.38% (v) (Identified Cost, $34,773,627) | 34,772,753 | $34,772,753 | ||
| Other Assets, Less Liabilities – (0.6)% | (8,861,444) | |||
| Net Assets – 100.0% | $1,493,223,700 | |||
7
Portfolio of Investments (unaudited)
– continued
| (f) | All or a portion of the security has been segregated as collateral for open futures contracts and cleared swap agreements. | |||
| (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 $34,772,753 and $1,467,312,391, 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 $16,894,255, representing 1.1% of net assets. | |||
| (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: | |
| AGM | Assured Guaranty Municipal |
| 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. |
| SOFR | Secured Overnight Financing Rate |
| USA-CPI-U | Consumer Price Index - Urban Consumers |
| 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: | |
| EUR | Euro |
Derivative Contracts at 4/30/24
| Forward Foreign Currency Exchange Contracts | ||||||
| Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||
| Liability Derivatives | ||||||
| USD | 29,516,569 | EUR | 27,618,927 | Morgan Stanley Capital Services, Inc. | 7/19/2024 | $(55,962) |
| Futures Contracts | ||||||
| Description | Long/ Short | Currency | Contracts | Notional Amount | Expiration Date | Value/Unrealized Appreciation (Depreciation) |
| Asset Derivatives | ||||||
| Interest Rate Futures | ||||||
| U.S. Treasury Bond 30 yr | Short | USD | 25 | $2,845,313 | June – 2024 | $124,125 |
| U.S. Treasury Note 5 yr | Short | USD | 730 | 76,461,797 | June – 2024 | 877,077 |
| U.S. Treasury Ultra Note 10 yr | Short | USD | 170 | 18,737,187 | June – 2024 | 577,027 |
| $1,578,229 | ||||||
| Liability Derivatives | ||||||
| Interest Rate Futures | ||||||
| U.S. Treasury Note 2 yr | Long | USD | 249 | $50,461,406 | June – 2024 | $(480,332) |
8
Portfolio of Investments (unaudited)
– continued
| Cleared 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 | |||
| Asset Derivatives | ||||||||||
| Interest Rate Swaps | ||||||||||
| 4/15/26 | USD | 40,400,000 | Centrally Cleared | USA-CPI-U / At Maturity | 2.637% / At Maturity | $4,280 | $— | $4,280 | ||
| 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 | |||
| Asset Derivatives | ||||||||||
| Interest Rate Swaps | ||||||||||
| 2/08/26 | USD | 79,900,000 | Merrill Lynch International | USA-CPI-U / At Maturity | 2.203% / At Maturity | $791,612 | $— | $791,612 | ||
| 3/19/26 | USD | 79,900,000 | Morgan Stanley Capital Services, Inc. | USA-CPI-U / At Maturity | 2.482% / At Maturity | 367,896 | — | 367,896 | ||
| $1,159,508 | $— | $1,159,508 | ||||||||
At April 30, 2024, the fund had
liquid securities with an aggregate value of $2,679,389 to cover any collateral or margin obligations for certain derivative contracts.
See Notes to Financial Statements
9
Financial Statements
Statement of Assets and
Liabilities
At 4/30/24 (unaudited)
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, $1,619,299,772) | $1,467,312,391 |
| Investments in affiliated issuers, at value (identified cost, $34,773,627) | 34,772,753 |
| Cash | 1,909 |
| Receivables for | |
| Net daily variation margin on open futures contracts | 312,436 |
| Fund shares sold | 211,213 |
| Interest | 2,994,345 |
| Uncleared swaps, at value | 1,159,508 |
| Other assets | 16,586 |
| Total assets | $1,506,781,141 |
| Liabilities | |
| Payables for | |
| Net daily variation margin on open cleared swap agreements | $19,876 |
| Forward foreign currency exchange contracts | 55,962 |
| Investments purchased | 12,385,390 |
| Fund shares reacquired | 943,352 |
| Payable to affiliates | |
| Investment adviser | 30,311 |
| Administrative services fee | 1,224 |
| Shareholder servicing costs | 24,184 |
| Distribution and service fees | 693 |
| Payable for independent Trustees' compensation | 4,002 |
| Accrued expenses and other liabilities | 92,447 |
| Total liabilities | $13,557,441 |
| Net assets | $1,493,223,700 |
| Net assets consist of | |
| Paid-in capital | $1,785,549,321 |
| Total distributable earnings (loss) | (292,325,621) |
| Net assets | $1,493,223,700 |
| Shares of beneficial interest outstanding | 167,177,654 |
10
Statement of Assets and Liabilities (unaudited) – continued
| Net assets | Shares outstanding | Net asset value per share (a) | |
| Class A | $57,518,605 | 6,467,554 | $8.89 |
| Class B | 216,607 | 24,533 | 8.83 |
| Class C | 2,845,168 | 322,805 | 8.81 |
| Class I | 5,664,991 | 636,525 | 8.90 |
| Class R1 | 608,191 | 69,250 | 8.78 |
| Class R2 | 333,108 | 37,551 | 8.87 |
| Class R3 | 723,979 | 81,431 | 8.89 |
| Class R4 | 87,387 | 9,822 | 8.90 |
| Class R6 | 1,425,225,664 | 159,528,183 | 8.93 |
| (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 $9.28 [100 / 95.75 x $8.89]. 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
11
Financial Statements
Statement of Operations
Six months ended 4/30/24
(unaudited)
This statement describes how much
your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.
| Net investment income (loss) | |
| Income | |
| Interest | $25,666,967 |
| Dividends from affiliated issuers | 822,760 |
| Total investment income | $26,489,727 |
| Expenses | |
| Management fee | $3,351,785 |
| Distribution and service fees | 103,882 |
| Shareholder servicing costs | 51,568 |
| Administrative services fee | 110,766 |
| Independent Trustees' compensation | 13,534 |
| Custodian fee | 44,790 |
| Shareholder communications | 9,524 |
| Audit and tax fees | 28,318 |
| Legal fees | 4,114 |
| Miscellaneous | 100,084 |
| Total expenses | $3,818,365 |
| Reduction of expenses by investment adviser and distributor | (627,100) |
| Net expenses | $3,191,265 |
| Net investment income (loss) | $23,298,462 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $(8,898,995) |
| Affiliated issuers | (3,510) |
| Futures contracts | 4,493,361 |
| Foreign currency | 577,937 |
| Net realized gain (loss) | $(3,831,207) |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $37,966,697 |
| Affiliated issuers | (2,062) |
| Futures contracts | 769,544 |
| Swap agreements | 1,163,788 |
| Forward foreign currency exchange contracts | (55,962) |
| Translation of assets and liabilities in foreign currencies | (816) |
| Net unrealized gain (loss) | $39,841,189 |
| Net realized and unrealized gain (loss) | $36,009,982 |
| Change in net assets from operations | $59,308,444 |
See Notes to Financial Statements
12
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.
| Six months ended | Year ended | |
| 4/30/24 (unaudited) | 10/31/23 | |
| Change in net assets | ||
| From operations | ||
| Net investment income (loss) | $23,298,462 | $60,564,234 |
| Net realized gain (loss) | (3,831,207) | (86,346,493) |
| Net unrealized gain (loss) | 39,841,189 | (12,240,412) |
| Change in net assets from operations | $59,308,444 | $(38,022,671) |
| Total distributions to shareholders | $(22,884,226) | $(76,500,340) |
| Change in net assets from fund share transactions | $35,946,789 | $30,358,525 |
| Total change in net assets | $72,371,007 | $(84,164,486) |
| Net assets | ||
| At beginning of period | 1,420,852,693 | 1,505,017,179 |
| At end of period | $1,493,223,700 | $1,420,852,693 |
See Notes to Financial Statements
13
Financial Statements
Financial Highlights
The financial highlights table is
intended to help you understand the fund's financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the
table represent the rate 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 | Six months ended | Year ended | ||||
| 4/30/24 (unaudited) | 10/31/23 | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | |
| Net asset value, beginning of period | $8.67 | $9.36 | $11.46 | $11.20 | $10.46 | $9.83 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.12 | $0.34 | $0.63 | $0.40 | $0.12 | $0.17 |
| Net realized and unrealized gain (loss) | 0.23 | (0.58) | (1.92) | 0.21 | 0.75 | 0.69 |
| Total from investment operations | $0.35 | $(0.24) | $(1.29) | $0.61 | $0.87 | $0.86 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.13) | $(0.45) | $(0.81) | $(0.35) | $(0.13) | $(0.23) |
| Net asset value, end of period (x) | $8.89 | $8.67 | $9.36 | $11.46 | $11.20 | $10.46 |
| Total return (%) (r)(s)(t)(x) | 3.99(n) | (2.75) | (11.79) | 5.48 | 8.42 | 8.80 |
| Ratios (%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions | 0.82(a) | 0.82 | 0.81 | 0.87 | 0.93 | 0.95 |
| Expenses after expense reductions | 0.64(a) | 0.64 | 0.64 | 0.66 | 0.76 | 0.80 |
| Net investment income (loss) | 2.76(a)(l) | 3.70 | 6.02 | 3.55 | 1.11 | 1.69 |
| Portfolio turnover | 10(n) | 43 | 86 | 57 | 36 | 38 |
| Net assets at end of period (000 omitted) | $57,519 | $75,213 | $117,619 | $114,091 | $65,862 | $46,796 |
See Notes to Financial Statements
14
Financial Highlights – continued
| Class B | Six months ended | Year ended | ||||
| 4/30/24 (unaudited) | 10/31/23 | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | |
| Net asset value, beginning of period | $8.60 | $9.29 | $11.37 | $11.13 | $10.42 | $9.79 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.09 | $0.26 | $0.54 | $0.28 | $0.02 | $0.09 |
| Net realized and unrealized gain (loss) | 0.23 | (0.57) | (1.90) | 0.23 | 0.77 | 0.69 |
| Total from investment operations | $0.32 | $(0.31) | $(1.36) | $0.51 | $0.79 | $0.78 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.09) | $(0.38) | $(0.72) | $(0.27) | $(0.08) | $(0.15) |
| Net asset value, end of period (x) | $8.83 | $8.60 | $9.29 | $11.37 | $11.13 | $10.42 |
| Total return (%) (r)(s)(t)(x) | 3.72(n) | (3.51) | (12.47) | 4.62 | 7.65 | 8.03 |
| Ratios (%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions | 1.57(a) | 1.57 | 1.56 | 1.62 | 1.69 | 1.70 |
| Expenses after expense reductions | 1.39(a) | 1.39 | 1.38 | 1.41 | 1.53 | 1.55 |
| Net investment income (loss) | 1.99(a)(l) | 2.82 | 5.12 | 2.51 | 0.21 | 0.91 |
| Portfolio turnover | 10(n) | 43 | 86 | 57 | 36 | 38 |
| Net assets at end of period (000 omitted) | $217 | $271 | $568 | $1,085 | $1,454 | $3,404 |
| Class C | Six months ended | Year ended | ||||
| 4/30/24 (unaudited) | 10/31/23 | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | |
| Net asset value, beginning of period | $8.59 | $9.28 | $11.37 | $11.13 | $10.42 | $9.79 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.09 | $0.26 | $0.54 | $0.28 | $0.02 | $0.08 |
| Net realized and unrealized gain (loss) | 0.22 | (0.58) | (1.91) | 0.22 | 0.77 | 0.69 |
| Total from investment operations | $0.31 | $(0.32) | $(1.37) | $0.50 | $0.79 | $0.77 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.09) | $(0.37) | $(0.72) | $(0.26) | $(0.08) | $(0.14) |
| Net asset value, end of period (x) | $8.81 | $8.59 | $9.28 | $11.37 | $11.13 | $10.42 |
| Total return (%) (r)(s)(t)(x) | 3.59(n) | (3.60) | (12.54) | 4.52 | 7.58 | 7.92 |
| Ratios (%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions | 1.57(a) | 1.57 | 1.56 | 1.62 | 1.68 | 1.70 |
| Expenses after expense reductions | 1.49(a) | 1.49 | 1.49 | 1.51 | 1.62 | 1.65 |
| Net investment income (loss) | 2.06(a)(l) | 2.80 | 5.19 | 2.50 | 0.17 | 0.76 |
| Portfolio turnover | 10(n) | 43 | 86 | 57 | 36 | 38 |
| Net assets at end of period (000 omitted) | $2,845 | $3,287 | $5,412 | $6,115 | $4,771 | $5,374 |
See Notes to Financial Statements
15
Financial Highlights – continued
| Class I | Six months ended | Year ended | ||||
| 4/30/24 (unaudited) | 10/31/23 | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | |
| Net asset value, beginning of period | $8.67 | $9.37 | $11.48 | $11.22 | $10.47 | $9.84 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.13 | $0.35 | $0.68 | $0.46 | $0.15 | $0.17 |
| Net realized and unrealized gain (loss) | 0.24 | (0.59) | (1.97) | 0.16(g) | 0.74 | 0.70 |
| Total from investment operations | $0.37 | $(0.24) | $(1.29) | $0.62 | $0.89 | $0.87 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.14) | $(0.46) | $(0.82) | $(0.36) | $(0.14) | $(0.24) |
| Net asset value, end of period (x) | $8.90 | $8.67 | $9.37 | $11.48 | $11.22 | $10.47 |
| Total return (%) (r)(s)(t)(x) | 4.19(n) | (2.75) | (11.73) | 5.60 | 8.61 | 8.96 |
| Ratios (%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions | 0.57(a) | 0.57 | 0.56 | 0.62 | 0.68 | 0.70 |
| Expenses after expense reductions | 0.49(a) | 0.49 | 0.49 | 0.51 | 0.61 | 0.65 |
| Net investment income (loss) | 2.85(a)(l) | 3.80 | 6.48 | 4.03 | 1.34 | 1.72 |
| Portfolio turnover | 10(n) | 43 | 86 | 57 | 36 | 38 |
| Net assets at end of period (000 omitted) | $5,665 | $7,428 | $22,796 | $13,708 | $5,633 | $4,503 |
| Class R1 | Six months ended | Year ended | ||||
| 4/30/24 (unaudited) | 10/31/23 | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | |
| Net asset value, beginning of period | $8.56 | $9.25 | $11.34 | $11.10 | $10.41 | $9.78 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.09 | $0.27 | $0.53 | $0.29 | $0.02 | $0.09 |
| Net realized and unrealized gain (loss) | 0.22 | (0.58) | (1.90) | 0.21 | 0.75 | 0.68 |
| Total from investment operations | $0.31 | $(0.31) | $(1.37) | $0.50 | $0.77 | $0.77 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.09) | $(0.38) | $(0.72) | $(0.26) | $(0.08) | $(0.14) |
| Net asset value, end of period (x) | $8.78 | $8.56 | $9.25 | $11.34 | $11.10 | $10.41 |
| Total return (%) (r)(s)(t)(x) | 3.59(n) | (3.56) | (12.55) | 4.55 | 7.40 | 7.93 |
| Ratios (%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions | 1.57(a) | 1.57 | 1.56 | 1.62 | 1.68 | 1.70 |
| Expenses after expense reductions | 1.49(a) | 1.49 | 1.49 | 1.51 | 1.61 | 1.65 |
| Net investment income (loss) | 1.96(a)(l) | 2.91 | 5.08 | 2.56 | 0.20 | 0.86 |
| Portfolio turnover | 10(n) | 43 | 86 | 57 | 36 | 38 |
| Net assets at end of period (000 omitted) | $608 | $624 | $874 | $837 | $454 | $332 |
See Notes to Financial Statements
16
Financial Highlights – continued
| Class R2 | Six months ended | Year ended | ||||
| 4/30/24 (unaudited) | 10/31/23 | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | |
| Net asset value, beginning of period | $8.65 | $9.33 | $11.43 | $11.18 | $10.45 | $9.82 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.13 | $0.31 | $0.57 | $0.35 | $0.08 | $0.14 |
| Net realized and unrealized gain (loss) | 0.20 | (0.58) | (1.90) | 0.21 | 0.76 | 0.68 |
| Total from investment operations | $0.33 | $(0.27) | $(1.33) | $0.56 | $0.84 | $0.82 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.11) | $(0.41) | $(0.77) | $(0.31) | $(0.11) | $(0.19) |
| Net asset value, end of period (x) | $8.87 | $8.65 | $9.33 | $11.43 | $11.18 | $10.45 |
| Total return (%) (r)(s)(t)(x) | 3.84(n) | (3.05) | (12.15) | 5.07 | 8.08 | 8.43 |
| Ratios (%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions | 1.07(a) | 1.07 | 1.06 | 1.12 | 1.18 | 1.20 |
| Expenses after expense reductions | 0.99(a) | 0.99 | 0.99 | 1.01 | 1.11 | 1.15 |
| Net investment income (loss) | 2.88(a)(l) | 3.31 | 5.46 | 3.11 | 0.71 | 1.34 |
| Portfolio turnover | 10(n) | 43 | 86 | 57 | 36 | 38 |
| Net assets at end of period (000 omitted) | $333 | $251 | $589 | $686 | $586 | $643 |
| Class R3 | Six months ended | Year ended | ||||
| 4/30/24 (unaudited) | 10/31/23 | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | |
| Net asset value, beginning of period | $8.66 | $9.35 | $11.45 | $11.20 | $10.46 | $9.83 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.12 | $0.30 | $0.62 | $0.37 | $0.10 | $0.16 |
| Net realized and unrealized gain (loss) | 0.23 | (0.55) | (1.92) | 0.22 | 0.76 | 0.69 |
| Total from investment operations | $0.35 | $(0.25) | $(1.30) | $0.59 | $0.86 | $0.85 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.12) | $(0.44) | $(0.80) | $(0.34) | $(0.12) | $(0.22) |
| Net asset value, end of period (x) | $8.89 | $8.66 | $9.35 | $11.45 | $11.20 | $10.46 |
| Total return (%) (r)(s)(t)(x) | 4.05(n) | (2.87) | (11.90) | 5.30 | 8.35 | 8.70 |
| Ratios (%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions | 0.82(a) | 0.82 | 0.81 | 0.87 | 0.93 | 0.95 |
| Expenses after expense reductions | 0.74(a) | 0.74 | 0.74 | 0.76 | 0.86 | 0.90 |
| Net investment income (loss) | 2.71(a)(l) | 3.20 | 5.83 | 3.25 | 0.96 | 1.57 |
| Portfolio turnover | 10(n) | 43 | 86 | 57 | 36 | 38 |
| Net assets at end of period (000 omitted) | $724 | $850 | $1,516 | $2,128 | $1,609 | $1,590 |
See Notes to Financial Statements
17
Financial Highlights – continued
| Class R4 | Six months ended | Year ended | ||||
| 4/30/24 (unaudited) | 10/31/23 | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | |
| Net asset value, beginning of period | $8.67 | $9.36 | $11.46 | $11.20 | $10.45 | $9.83 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.14 | $0.36 | $0.63 | $0.42 | $0.13 | $0.16 |
| Net realized and unrealized gain (loss) | 0.23 | (0.58) | (1.91) | 0.20 | 0.76 | 0.70 |
| Total from investment operations | $0.37 | $(0.22) | $(1.28) | $0.62 | $0.89 | $0.86 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.14) | $(0.47) | $(0.82) | $(0.36) | $(0.14) | $(0.24) |
| Net asset value, end of period (x) | $8.90 | $8.67 | $9.36 | $11.46 | $11.20 | $10.45 |
| Total return (%) (r)(s)(t)(x) | 4.19(n) | (2.59) | (11.66) | 5.60 | 8.63 | 8.86 |
| Ratios (%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions | 0.57(a) | 0.57 | 0.56 | 0.62 | 0.68 | 0.70 |
| Expenses after expense reductions | 0.49(a) | 0.49 | 0.48 | 0.51 | 0.62 | 0.65 |
| Net investment income (loss) | 3.07(a)(l) | 3.94 | 6.00 | 3.68 | 1.22 | 1.58 |
| Portfolio turnover | 10(n) | 43 | 86 | 57 | 36 | 38 |
| Net assets at end of period (000 omitted) | $87 | $83 | $84 | $91 | $87 | $90 |
| Class R6 | Six months ended | Year ended | ||||
| 4/30/24 (unaudited) | 10/31/23 | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | |
| Net asset value, beginning of period | $8.71 | $9.40 | $11.51 | $11.24 | $10.49 | $9.86 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.14 | $0.37 | $0.64 | $0.42 | $0.15 | $0.20 |
| Net realized and unrealized gain (loss) | 0.22 | (0.59) | (1.92) | 0.22 | 0.75 | 0.68 |
| Total from investment operations | $0.36 | $(0.22) | $(1.28) | $0.64 | $0.90 | $0.88 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.14) | $(0.47) | $(0.83) | $(0.37) | $(0.15) | $(0.25) |
| Net asset value, end of period (x) | $8.93 | $8.71 | $9.40 | $11.51 | $11.24 | $10.49 |
| Total return (%) (r)(s)(t)(x) | 4.10(n) | (2.50) | (11.62) | 5.74 | 8.66 | 9.03 |
| Ratios (%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions | 0.49(a) | 0.49 | 0.48 | 0.55 | 0.60 | 0.62 |
| Expenses after expense reductions | 0.41(a) | 0.41 | 0.41 | 0.44 | 0.53 | 0.57 |
| Net investment income (loss) | 3.15(a)(l) | 4.01 | 6.07 | 3.71 | 1.34 | 1.95 |
| Portfolio turnover | 10(n) | 43 | 86 | 57 | 36 | 38 |
| Net assets at end of period (000 omitted) | $1,425,226 | $1,332,846 | $1,355,560 | $1,622,398 | $1,281,030 | $1,150,953 |
See Notes to Financial Statements
18
Financial Highlights – continued
| (a) | Annualized. |
| (d) | Per share data is based on average shares outstanding. |
| (g) | The per share amount varies from the net investment income and/or net realized and unrealized gain/loss for the period because of the timing of sales of fund shares and the per share amounts of realized and unrealized gains and losses and/or inflation/deflation adjustments at such time. |
| (l) | Recognition of net investment income by the fund may be affected by inflation/deflation adjustments through period end and the actual annual net investment income ratio may differ. |
| (n) | Not annualized. |
| (r) | Certain expenses have been reduced without which performance would have been lower. |
| (s) | From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. |
| (t) | Total returns do not include any applicable sales charges. |
| (x) | The net asset values 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
19
Notes to Financial Statements
(unaudited)
(1) Business and
Organization
MFS Inflation-Adjusted Bond
Fund (the fund) is a diversified series of MFS Series Trust IX (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as
an open-end management investment company.
The fund is an investment company
and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment
Companies.
(2) Significant Accounting
Policies
General — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s
Statement of Assets and Liabilities through the date that the financial statements were issued.
Balance Sheet Offsetting — The fund's accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International
Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and
Liabilities across transactions between the fund and the applicable counterparty. The fund's right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which
a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note
under the captions for each of the fund’s in-scope financial instruments and transactions.
Investment Valuations — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as
the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of
1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for
an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy
and procedures, 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. Futures contracts are generally valued at last posted
20
Notes to Financial
Statements (unaudited) - continued
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.
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. 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
21
Notes to Financial
Statements (unaudited) - continued
the fair value of investments. Other financial
instruments are derivative instruments, such as futures contracts, forward foreign currency exchange contracts, and swap agreements. The following is a summary of the levels used as of April 30, 2024 in valuing the
fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| U.S. Treasury Bonds & U.S. Government Agencies & Equivalents | $— | $1,368,701,472 | $— | $1,368,701,472 |
| Non - U.S. Sovereign Debt | — | 29,792,627 | — | 29,792,627 |
| Municipal Bonds | — | 16,046,159 | — | 16,046,159 |
| U.S. Corporate Bonds | — | 4,771,571 | — | 4,771,571 |
| Residential Mortgage-Backed Securities | — | 19,377,788 | — | 19,377,788 |
| Commercial Mortgage-Backed Securities | — | 17,678,004 | — | 17,678,004 |
| Asset-Backed Securities (including CDOs) | — | 10,944,770 | — | 10,944,770 |
| Mutual Funds | 34,772,753 | — | — | 34,772,753 |
| Total | $34,772,753 | $1,467,312,391 | $— | $1,502,085,144 |
| Other Financial Instruments | ||||
| Futures Contracts – Assets | $1,578,229 | $— | $— | $1,578,229 |
| Futures Contracts – Liabilities | (480,332) | — | — | (480,332) |
| Forward Foreign Currency Exchange Contracts – Liabilities | — | (55,962) | — | (55,962) |
| Swap Agreements – Assets | — | 1,163,788 | — | 1,163,788 |
For further information regarding
security characteristics, see the Portfolio of Investments.
Inflation-Adjusted Debt
Securities — The fund invests in inflation-adjusted debt securities issued by the U.S. Treasury. The fund 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
22
Notes to Financial
Statements (unaudited) - continued
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 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 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 April 30, 2024 as reported in the Statement of Assets and Liabilities:
| Fair Value (a) | |||
| Risk | Derivative Contracts | Asset Derivatives | Liability Derivatives |
| Interest Rate | Futures Contracts | $1,578,229 | $(480,332) |
| Foreign Exchange | Forward Foreign Currency Exchange Contracts | — | (55,962) |
| Interest Rate | Cleared Swap Agreements | 4,280 | — |
| Interest Rate | Uncleared Swap Agreements | 1,159,508 | — |
| Total | $2,742,017 | $(536,294) | |
| (a) | Values presented in this table for futures contracts and cleared swap agreements correspond to the values reported in the Portfolio of Investments. Only the current day net variation margin for futures contracts and cleared swap agreements 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 six months ended April 30, 2024 as reported in the Statement of Operations:
| Risk | Futures Contracts |
| Interest Rate | $4,493,361 |
23
Notes to Financial
Statements (unaudited) - continued
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 six months ended April 30, 2024 as reported in the Statement of Operations:
| Risk | Futures Contracts | Swap Agreements | Forward Foreign Currency Exchange Contracts |
| Interest Rate | $769,544 | $1,163,788 | $— |
| Foreign Exchange | — | — | (55,962) |
| Total | $769,544 | $1,163,788 | $(55,962) |
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.
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.
24
Notes to Financial
Statements (unaudited) - 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”).
25
Notes to Financial
Statements (unaudited) - 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 interest rate
swap agreements in order to manage its exposure to interest rate fluctuations. Interest rate swap agreements involve the periodic exchange of cash flows, between the fund and a counterparty, based on the
difference between two interest rates applied to a notional principal amount. The two interest rates exchanged may either be a fixed rate and a floating rate or two floating rates based on different indices.
The fund entered into inflation swap
agreements in order to manage its exposure to inflation risk. Inflation swap agreements involve the periodic exchange of cash flows, between the fund and a counterparty, based on the difference between two rates
applied to a notional principal amount. The two rates exchanged are generally a fixed rate and a floating rate based on an inflation index.
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.
26
Notes to Financial
Statements (unaudited) - continued
Investment Transactions and
Income — Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. Interest payments received in additional securities are recorded on the ex-interest date in an amount equal to the value of the security on such date. 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.
Investment transactions are recorded
on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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.
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
27
Notes to Financial
Statements (unaudited) - continued
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 amortization and accretion of debt securities and wash sale loss deferrals.
The tax character of distributions
made during the current period will be determined at fiscal year end. The tax character of distributions declared to shareholders for the last fiscal year is as follows:
| Year ended 10/31/23 | |
| Ordinary income (including any short-term capital gains) | $76,500,340 |
The federal tax cost and the tax
basis components of distributable earnings were as follows:
| As of 4/30/24 | |
| Cost of investments | $1,672,520,168 |
| Gross appreciation | 3,101 |
| Gross depreciation | (170,438,125) |
| Net unrealized appreciation (depreciation) | $(170,435,024) |
| As of 10/31/23 | |
| Undistributed ordinary income | 13,070,782 |
| Capital loss carryforwards | (134,173,752) |
| Net unrealized appreciation (depreciation) | (207,646,869) |
The aggregate cost above includes
prior fiscal year end tax adjustments, if applicable.
As of October 31, 2023, the fund had
capital loss carryforwards available to offset future realized gains. These net capital losses may be carried forward indefinitely and their character is retained as short-term and/or long-term losses. Such losses are
characterized as follows:
| Short-Term | $(57,530,635) |
| Long-Term | (76,643,117) |
| Total | $(134,173,752) |
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
28
Notes to Financial
Statements (unaudited) - 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:
| Six months ended 4/30/24 | Year ended 10/31/23 | |
| Class A | $1,020,581 | $4,871,060 |
| Class B | 2,815 | 18,853 |
| Class C | 33,029 | 181,330 |
| Class I | 104,556 | 1,019,068 |
| Class R1 | 6,292 | 35,495 |
| Class R2 | 3,414 | 21,582 |
| Class R3 | 10,570 | 56,978 |
| Class R4 | 1,310 | 4,347 |
| Class R6 | 21,701,659 | 70,291,627 |
| Total | $22,884,226 | $76,500,340 |
(3) Transactions with
Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates based on the fund's average daily net assets:
| Up to $1 billion | 0.50% |
| In excess of $1 billion and up to $2.5 billion | 0.35% |
| In excess of $2.5 billion and up to $5 billion | 0.30% |
| In excess of $5 billion | 0.29% |
The investment adviser has agreed in
writing to reduce its management fee to 0.40% of the fund’s average daily net assets annually up to $1 billion. This written agreement will continue until modified by the fund’s Board of Trustees, but such
agreement will continue at least until February 28, 2025. For the six months ended April 30, 2024, this management fee reduction amounted to $497,268, which is included in the reduction of total expenses in the
Statement of Operations. MFS has also agreed in writing to reduce its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund's Board of Trustees. MFS has
also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees,
but such agreement will continue at least until February 28, 2025. For the six months ended April 30, 2024, this management fee reduction amounted to $96,615, which is included in the reduction of total expenses in
the Statement of Operations. The management fee incurred for the six months ended April 30, 2024 was equivalent to an annual effective rate of 0.37% of the fund's average daily net assets.
The investment adviser has agreed in
writing to pay a portion of the fund’s total annual operating expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, certain tax reclaim recovery expenses (including
contingency fees and
29
Notes to Financial
Statements (unaudited) - continued
closing agreement expenses), and investment-related
expenses, such that total fund operating expenses do not exceed the following rates annually of each class’s average daily net assets:
| Classes | ||||||||
| A | B | C | I | R1 | R2 | R3 | R4 | R6 |
| 0.67% | 1.42% | 1.52% | 0.52% | 1.52% | 1.02% | 0.77% | 0.52% | 0.44% |
This written agreement will continue
until modified by the fund’s Board of Trustees, but such agreement will continue at least until February 28, 2025. For the six months ended April 30, 2024, the fund’s actual operating expenses did not
exceed the limit and therefore, the investment adviser did not pay any portion of the fund’s expenses related to this agreement.
Distributor — MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $252 for the six months ended April 30, 2024, as its portion of the initial sales
charge on sales of Class A shares of the fund.
The Board of Trustees has adopted a
distribution plan for certain share classes pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund's distribution plan
provides that the fund will pay MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee
paid to MFD and another component of the plan is a service fee paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. The distribution and service
fees are computed daily and paid monthly.
Distribution Plan Fee Table:
| Distribution Fee Rate (d) | Service Fee Rate (d) | Total Distribution Plan (d) | Annual Effective Rate (e) | Distribution and Service Fee | |
| Class A | — | 0.25% | 0.25% | 0.15% | $ 82,726 |
| Class B | 0.75% | 0.25% | 1.00% | 0.90% | 1,227 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 15,070 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 3,154 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 718 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 987 |
| Total Distribution and Service Fees | $103,882 |
| (d) | In accordance with the distribution plan for certain classes, the fund pays distribution and/or service fees equal to these annual percentage rates of each class’s average daily net assets. The distribution and service fee rates disclosed by class represent the current rates in effect at the end of the reporting period. Any rate changes, if applicable, are detailed below. |
| (e) | The annual effective rates represent actual fees incurred under the distribution plan for the six months ended April 30, 2024 based on each class’s average daily net assets. 0.10% of the Class A and Class B service fee is currently being waived under a written waiver arrangement. For the six months ended April 30, 2024, this waiver amounted to $33,090 and $123, respectively, and is included in the reduction of total expenses in the Statement of Operations. These written waiver agreements will continue until modified by the fund’s Board of Trustees, but such agreements will continue at least until February 28, 2025. MFD has voluntarily agreed to rebate a portion of each class’s 0.25% service fee attributable to |
30
Notes to Financial
Statements (unaudited) - continued
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 six months ended April 30, 2024, this rebate amounted to $4 for Class A, 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 six months ended April 30,
2024, were as follows:
| Amount | |
| Class A | $1,035 |
| Class B | 128 |
| Class C | — |
Shareholder Servicing Agent — MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent calculated as a percentage of the
average daily net assets of the fund as determined periodically under the supervision of the fund's Board of Trustees. For the six months ended April 30, 2024, the fee was $13,138, which equated to 0.0018% 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 six months ended April 30, 2024, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to
$38,430.
Administrator — MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the
fund reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee is
computed daily and paid monthly. The administrative services fee incurred for the six months ended April 30, 2024 was equivalent to an annual effective rate of 0.0149% of the fund's average daily net
assets.
Trustees’ and Officers’
Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons.
Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers
of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money
market fund does not pay a management fee to MFS but does incur investment and operating costs.
At April 30, 2024, MFS held
approximately 65% of the outstanding shares of Class R4.
31
Notes to Financial
Statements (unaudited) - continued
(4) Portfolio Securities
For the six months ended April 30,
2024, purchases and sales of investments, other than short-term obligations, were as follows:
| Purchases | Sales | |
| U.S. Government securities | $133,913,846 | $135,820,432 |
| Non-U.S. Government securities | 36,546,507 | 5,604,617 |
(5) Shares of Beneficial
Interest
The fund's Declaration of Trust
permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
| Six months ended 4/30/24 | Year ended 10/31/23 | ||||
| Shares | Amount | Shares | Amount | ||
| Shares sold | |||||
| Class A | 160,104 | $1,438,151 | 961,629 | $8,984,272 | |
| Class B | — | — | 81 | 750 | |
| Class C | 24,181 | 214,612 | 69,503 | 647,559 | |
| Class I | 102,773 | 927,385 | 1,340,094 | 12,553,364 | |
| Class R1 | 2,455 | 21,999 | 3,717 | 34,126 | |
| Class R2 | 9,219 | 82,572 | 8,291 | 76,757 | |
| Class R3 | 6,773 | 60,970 | 13,355 | 124,765 | |
| Class R4 | 198 | 1,773 | 428 | 3,971 | |
| Class R6 | 7,086,852 | 64,064,268 | 14,991,789 | 139,034,717 | |
| 7,392,555 | $66,811,730 | 17,388,887 | $161,460,281 | ||
| Shares issued to shareholders in reinvestment of distributions | |||||
| Class A | 109,011 | $991,976 | 517,433 | $4,768,336 | |
| Class B | 311 | 2,815 | 2,008 | 18,420 | |
| Class C | 3,654 | 33,029 | 19,811 | 181,330 | |
| Class I | 11,379 | 103,540 | 109,543 | 1,015,245 | |
| Class R1 | 698 | 6,292 | 3,901 | 35,495 | |
| Class R2 | 360 | 3,266 | 2,272 | 20,962 | |
| Class R3 | 1,162 | 10,570 | 6,174 | 56,978 | |
| Class R4 | 144 | 1,310 | 473 | 4,347 | |
| Class R6 | 2,374,416 | 21,690,155 | 7,618,854 | 70,239,981 | |
| 2,501,135 | $22,842,953 | 8,280,469 | $76,341,094 | ||
32
Notes to Financial
Statements (unaudited) - continued
| Six months ended 4/30/24 | Year ended 10/31/23 | ||||
| Shares | Amount | Shares | Amount | ||
| Shares reacquired | |||||
| Class A | (2,479,769) | $(22,295,387) | (5,372,388) | $(49,776,843) | |
| Class B | (7,237) | (64,553) | (31,740) | (290,225) | |
| Class C | (87,711) | (782,514) | (290,096) | (2,675,596) | |
| Class I | (334,014) | (3,001,908) | (3,025,940) | (27,653,461) | |
| Class R1 | (6,812) | (60,394) | (29,210) | (259,627) | |
| Class R2 | (1,076) | (9,599) | (44,627) | (411,531) | |
| Class R3 | (24,654) | (220,971) | (83,449) | (779,542) | |
| Class R4 | (55) | (488) | (380) | (3,398) | |
| Class R6 | (3,021,503) | (27,272,080) | (13,772,903) | (125,592,627) | |
| (5,962,831) | $(53,707,894) | (22,650,733) | $(207,442,850) | ||
| Net change | |||||
| Class A | (2,210,654) | $(19,865,260) | (3,893,326) | $(36,024,235) | |
| Class B | (6,926) | (61,738) | (29,651) | (271,055) | |
| Class C | (59,876) | (534,873) | (200,782) | (1,846,707) | |
| Class I | (219,862) | (1,970,983) | (1,576,303) | (14,084,852) | |
| Class R1 | (3,659) | (32,103) | (21,592) | (190,006) | |
| Class R2 | 8,503 | 76,239 | (34,064) | (313,812) | |
| Class R3 | (16,719) | (149,431) | (63,920) | (597,799) | |
| Class R4 | 287 | 2,595 | 521 | 4,920 | |
| Class R6 | 6,439,765 | 58,482,343 | 8,837,740 | 83,682,071 | |
| 3,930,859 | $35,946,789 | 3,018,623 | $30,358,525 | ||
The fund is one of several mutual
funds in which certain MFS funds may invest. The MFS funds do not invest in the underlying funds for the purpose of exercising management or control. At the end of the period, the MFS Moderate Allocation
Fund, the MFS Conservative Allocation Fund, the MFS Growth Allocation Fund, the MFS Lifetime 2030 Fund, the MFS Lifetime Income Fund, the MFS Lifetime 2025 Fund, the MFS Lifetime 2035 Fund, the MFS Lifetime
2040 Fund, and the MFS Lifetime 2045 Fund were the owners of record of approximately 30%, 25%, 21%, 5%, 4%, 3%, 3%, 2%, and 1%, respectively, of the value of outstanding voting shares of the fund. In addition, the MFS
Lifetime 2050 Fund, the MFS Lifetime 2055 Fund, the MFS Lifetime 2060 Fund, and the MFS Lifetime 2065 Fund were each the owners of record of less than 1% of the value of outstanding voting shares of the fund.
Effective June 1, 2019, purchases of
the fund’s Class B shares were closed to new and existing investors subject to certain exceptions. Effective September 29, 2023, purchases of the fund's Class R1 and Class R2 shares were closed to new eligible
investors.
33
Notes to Financial
Statements (unaudited) - continued
(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 13, 2025 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 six months ended April 30, 2024, the fund’s commitment fee and interest expense were $3,626 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 | $23,839,200 | $120,057,141 | $109,118,016 | $(3,510) | $(2,062) | $34,772,753 |
| Affiliated Issuers | Dividend Income | Capital Gain Distributions |
| MFS Institutional Money Market Portfolio | $822,760 | $— |
34
Statement Regarding Liquidity Risk Management
Program
The fund has adopted and
implemented a liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The fund’s Board of Trustees (the “Board”)
has designated MFS as the administrator of the Program. The Program is reasonably designed to assess and manage the liquidity risk of the fund. Liquidity risk is the risk that the fund could not meet requests to
redeem shares issued by the fund without significant dilution of remaining investors' interests.
MFS provided a written report to the
Board for consideration at its March 2024 meeting that addressed the operation of the Program and provided an assessment of the adequacy and effectiveness of the Program during the period from January 1, 2023 to
December 31, 2023 (the “Covered Period”). The report concluded that during the Covered Period the Program had operated effectively in all material respects and had adequately and effectively been
implemented to assess and manage the fund’s liquidity risk. MFS also reported that there were no liquidity events that impacted the fund or its ability to timely meet redemptions without dilution to existing
shareholders during the Covered Period.
There can be no assurance that the
Program will achieve its objectives in the future. Further information on liquidity risk, and other principal risks to which an investment in the fund may be subject, can be found in the prospectus.
35
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 “Shareholder 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.
Provision of Financial
Reports and Summary Prospectuses
The fund produces financial reports
every six months and updates its summary prospectus and prospectus annually. To avoid sending duplicate copies of materials to households, only one copy of the fund’s annual and semiannual report and summary
prospectus may be mailed to shareholders having the same last name and residential address on the fund’s records. However, any shareholder may contact MFSC (please see back cover for address and telephone
number) to request that copies of these reports and summary prospectuses be sent personally to that shareholder.
36
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. David L. DiLorenzo (Principal Executive Officer) and James O. Yost (Principal Financial Officer) were the two persons covered by the Code prior to April 1, 2024. Beginning April 1, 2024, David L. DiLorenzo (Principal Executive Officer) and Kasey L. Phillips (Principal Financial Officer) are the two persons covered by the Code.
A copy of the Code is attached hereto as EX-99.COE.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the Registrant.
ITEM 6. INVESTMENTS
A schedule of investments for each series 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. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION.
Not Applicable.
ITEM 14. 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 IX
By (Signature and Title)*
/S/ DAVID L. DILORENZO
David L. DiLorenzo, President
Date: June 14, 2024
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: June 14, 2024
By (Signature and Title)*
/S/ KASEY L. PHILLIPS
Kasey L. Phillips, Treasurer (Principal Financial Officer and Accounting Officer) Date: June 14, 2024
* Print name and title of each signing officer under his or her signature.
ATTACHMENTS / EXHIBITS
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