UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04777
MFS SERIES TRUST I
(Exact name of registrant as specified in charter)
111 Huntington Avenue, Boston, Massachusetts 02199
(Address of principal executive offices) (Zip code)
Christopher R. Bohane
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, Massachusetts 02199
(Name and address of agents for service)
Registrant’s telephone number, including area code: (617) 954-5000
Date of fiscal year end: August 31
Date of reporting period: February 28, 2021
| ITEM 1. | REPORTS TO STOCKHOLDERS. |
1(a):
Semiannual Report
February 28, 2021
MFS® Core Equity Fund
RGI-SEM
MFS® Core Equity Fund
CONTENTS
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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
LETTER FROM THE CEO
Dear Shareholders:
Markets have experienced dramatic swings since the coronavirus
pandemic brought the global economy to a standstill for several months early in 2020. The speedy development of vaccines and therapeutics brightened the economic and market outlook, but uncertainty remains as new variants of the virus appear and
questions persist over how fast vaccines can be made widely available. In the United States, political uncertainty eased after former Vice President Joe Biden won the presidential election and the Democrats gained control of a closely divided
Senate.
Global central banks have
taken aggressive steps to cushion the economic and market fallout related to the virus, and governments are deploying unprecedented levels of fiscal support. Having passed a $1.9 trillion stimulus package in March, the U.S. Congress is expected to
approve additional stimulus later this year, some of it focused on infrastructure. Along with extraordinary government expenditures, pent-up consumer demand could fuel a surge in economic activity as coronavirus restrictions are eased. Because of
this, markets anticipate at least temporary inflation pressures in the months ahead and have pushed up yields on global government bonds, resulting in ripple effects being felt across most financial markets. The measures already put in place have
helped build a supportive environment and are encouraging economic recovery; however, if markets disconnect from fundamentals, they can sow the seeds of instability. As such, recent dramatic increases in speculative retail trading bear
watching.
In the aftermath of the crisis, we could see
societal changes as households, businesses, and governments adjust to a new reality, and any such alterations could affect the investment landscape. For investors, events such as the COVID-19 outbreak demonstrate the importance of having a deep
understanding of company fundamentals, and we have built our global research platform to do just that.
At MFS®, we put our clients’ assets to work responsibly by carefully navigating the increasing complexity of global markets and economies. Guided by our
long-term philosophy and adhering to our commitment to sustainable investing, we tune out the noise and aim to uncover what we believe are the best, most durable investment opportunities in the market. Our unique global investment platform combines
collective expertise, long-term discipline, and thoughtful risk management to create sustainable value for investors.
Respectfully,
Michael W.
Roberge
Chief Executive Officer
MFS Investment Management
April 15, 2021
The opinions expressed in this letter are subject to change
and may not be relied upon for investment advice. No forecasts can be guaranteed.
1
Portfolio Composition
| (k) | The sectors set forth above and the associated portfolio composition are based on MFS’ own custom sector classification methodology. |
| (s) | Includes securities sold short. |
Cash & Cash
Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and
other assets and liabilities.
Percentages are
based on net assets as of February 28, 2021.
The portfolio is actively managed and current
holdings may be different.
2
Expense Table
Fund expenses borne by the shareholders during the period,
September 1, 2020 through February 28, 2021
September 1, 2020 through February 28, 2021
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 September 1, 2020 through February 28, 2021.
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 9/01/20 |
Ending
Account Value 2/28/21 |
Expenses
Paid During Period (p) 9/01/20-2/28/21 | |
| A | Actual | 0.94% | $1,000.00 | $1,098.44 | $4.89 |
| Hypothetical (h) | 0.94% | $1,000.00 | $1,020.13 | $4.71 | |
| B | Actual | 1.69% | $1,000.00 | $1,094.19 | $8.78 |
| Hypothetical (h) | 1.69% | $1,000.00 | $1,016.41 | $8.45 | |
| C | Actual | 1.69% | $1,000.00 | $1,094.47 | $8.78 |
| Hypothetical (h) | 1.69% | $1,000.00 | $1,016.41 | $8.45 | |
| I | Actual | 0.69% | $1,000.00 | $1,099.90 | $3.59 |
| Hypothetical (h) | 0.69% | $1,000.00 | $1,021.37 | $3.46 | |
| R1 | Actual | 1.69% | $1,000.00 | $1,094.32 | $8.78 |
| Hypothetical (h) | 1.69% | $1,000.00 | $1,016.41 | $8.45 | |
| R2 | Actual | 1.18% | $1,000.00 | $1,097.20 | $6.14 |
| Hypothetical (h) | 1.18% | $1,000.00 | $1,018.94 | $5.91 | |
| R3 | Actual | 0.94% | $1,000.00 | $1,098.39 | $4.89 |
| Hypothetical (h) | 0.94% | $1,000.00 | $1,020.13 | $4.71 | |
| R4 | Actual | 0.69% | $1,000.00 | $1,099.67 | $3.59 |
| Hypothetical (h) | 0.69% | $1,000.00 | $1,021.37 | $3.46 | |
| R6 | Actual | 0.60% | $1,000.00 | $1,100.24 | $3.12 |
| Hypothetical (h) | 0.60% | $1,000.00 | $1,021.82 | $3.01 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Notes to Expense Table
Expense ratios include 0.02% of investment related expenses
from short sales (See Note 2 of the Notes to Financial Statements). Each class with a Rule 12b-1 service fee is subject to a rebate of a portion of such fee. Such rebates are included in the expense ratios above. For Class R2, this rebate reduced
the expense ratio above by 0.01%. See Note 3 in the Notes to Financial Statements for additional information.
4
Portfolio of
Investments
2/28/21 (unaudited)
The Portfolio of Investments is a complete list of all
securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – 98.9% | ||||
| Aerospace – 2.0% | ||||
| Curtiss-Wright Corp. | 70,195 | $ 7,755,846 | ||
| Honeywell International, Inc. | 164,422 | 33,270,792 | ||
| L3Harris Technologies, Inc. | 65,250 | 11,869,627 | ||
| Northrop Grumman Corp. | 27,357 | 7,978,943 | ||
| Parsons Corp. (a) | 99,255 | 3,547,374 | ||
| Raytheon Technologies Corp. | 394,371 | 28,390,768 | ||
| Science Applications International Corp. | 54,748 | 4,715,445 | ||
| $97,528,795 | ||||
| Alcoholic Beverages – 0.3% | ||||
| Constellation Brands, Inc., “A” | 65,388 | $ 14,002,186 | ||
| Apparel Manufacturers – 0.3% | ||||
| Skechers USA, Inc., “A” (a) | 439,128 | $ 16,072,085 | ||
| Automotive – 1.4% | ||||
| Aptiv PLC (a) | 192,331 | $ 28,818,877 | ||
| LKQ Corp. (a) | 794,462 | 31,293,858 | ||
| Visteon Corp. (a) | 76,360 | 9,710,701 | ||
| $69,823,436 | ||||
| Biotechnology – 0.9% | ||||
| Illumina, Inc. (a) | 29,406 | $ 12,921,290 | ||
| Vertex Pharmaceuticals, Inc. (a) | 139,472 | 29,644,774 | ||
| $42,566,064 | ||||
| Broadcasting – 0.4% | ||||
| Netflix, Inc. (a) | 39,902 | $ 21,501,193 | ||
| Brokerage & Asset Managers – 1.6% | ||||
| Cboe Global Markets, Inc. | 171,878 | $ 17,009,047 | ||
| Charles Schwab Corp. | 583,729 | 36,027,754 | ||
| Invesco Ltd. | 1,015,091 | 22,758,340 | ||
| $75,795,141 | ||||
| Business Services – 2.3% | ||||
| Accenture PLC, “A” | 59,908 | $ 15,030,917 | ||
| Amdocs Ltd. | 143,258 | 10,860,389 | ||
| Clarivate PLC (a) | 647,910 | 14,739,952 | ||
| Fidelity National Information Services, Inc. | 158,951 | 21,935,238 | ||
| Fiserv, Inc. (a) | 163,969 | 18,917,104 | ||
| Global Payments, Inc. | 104,437 | 20,677,482 | ||
5
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Business Services – continued | ||||
| Proofpoint, Inc. (a) | 83,801 | $ 10,133,217 | ||
| $112,294,299 | ||||
| Cable TV – 1.1% | ||||
| Cable One, Inc. | 2,834 | $ 5,426,685 | ||
| Liberty Broadband Corp. (a) | 320,042 | 47,849,479 | ||
| $53,276,164 | ||||
| Chemicals – 0.4% | ||||
| Element Solutions, Inc. | 768,757 | $ 13,876,064 | ||
| FMC Corp. | 70,139 | 7,132,435 | ||
| $21,008,499 | ||||
| Computer Software – 10.5% | ||||
| Adobe Systems, Inc. (a) | 150,892 | $ 69,360,526 | ||
| Atlassian Corp. PLC, “A” (a) | 150,541 | 35,783,596 | ||
| Bumble, Inc., “A” (a) | 37,771 | 2,542,366 | ||
| Cadence Design Systems, Inc. (a) | 283,036 | 39,933,549 | ||
| Dragoneer Growth Opportunities Corp. (a) | 1,144,194 | 12,082,689 | ||
| Eventbrite, Inc. (a) | 785,165 | 15,601,228 | ||
| Everbridge, Inc. (a) | 126,193 | 19,336,553 | ||
| Microsoft Corp. | 1,089,993 | 253,292,573 | ||
| Ping Identity Holding Corp. (a) | 143,753 | 3,368,133 | ||
| salesforce.com, inc. (a) | 267,844 | 57,988,226 | ||
| $509,289,439 | ||||
| Computer Software - Systems – 7.9% | ||||
| Apple, Inc. (s) | 2,226,272 | $ 269,957,743 | ||
| EPAM Systems, Inc. (a) | 38,554 | 14,404,160 | ||
| ServiceNow, Inc. (a) | 59,682 | 31,837,960 | ||
| Square, Inc., “A” (a) | 89,111 | 20,498,203 | ||
| TransUnion | 274,215 | 23,091,645 | ||
| Zebra Technologies Corp., “A” (a) | 40,843 | 20,398,219 | ||
| $380,187,930 | ||||
| Construction – 1.7% | ||||
| AvalonBay Communities, Inc., REIT | 91,822 | $ 16,137,717 | ||
| AZEK Co. LLC (a) | 105,793 | 4,666,529 | ||
| D.R. Horton, Inc. | 47,897 | 3,681,842 | ||
| Masco Corp. | 308,864 | 16,437,742 | ||
| Otis Worldwide Corp. | 151,730 | 9,666,718 | ||
| Sherwin-Williams Co. | 22,830 | 15,532,162 | ||
| Vulcan Materials Co. | 90,751 | 15,154,510 | ||
| $81,277,220 | ||||
6
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Consumer Products – 1.4% | ||||
| Colgate-Palmolive Co. | 276,846 | $ 20,818,819 | ||
| International Flavors & Fragrances, Inc. | 56,437 | 7,647,778 | ||
| Kimberly-Clark Corp. | 130,573 | 16,756,433 | ||
| Procter & Gamble Co. | 166,669 | 20,588,622 | ||
| $65,811,652 | ||||
| Consumer Services – 1.0% | ||||
| Bright Horizons Family Solutions, Inc. (a) | 69,177 | $ 11,044,800 | ||
| Grand Canyon Education, Inc. (a) | 192,297 | 20,131,573 | ||
| Uber Technologies, Inc. (a) | 358,157 | 18,534,624 | ||
| $49,710,997 | ||||
| Containers – 0.3% | ||||
| Ball Corp. | 145,929 | $ 12,460,877 | ||
| Electrical Equipment – 1.2% | ||||
| AMETEK, Inc. | 108,906 | $ 12,847,641 | ||
| Amphenol Corp., “A” | 18,646 | 2,343,429 | ||
| Johnson Controls International PLC | 206,029 | 11,494,358 | ||
| Sensata Technologies Holding PLC (a) | 458,980 | 26,294,964 | ||
| TE Connectivity Ltd. | 53,284 | 6,928,519 | ||
| $59,908,911 | ||||
| Electronics – 4.8% | ||||
| Advanced Micro Devices (a) | 308,009 | $ 26,029,841 | ||
| Applied Materials, Inc. | 395,697 | 46,767,429 | ||
| Broadcom, Inc. | 46,752 | 21,967,362 | ||
| Intel Corp. | 508,872 | 30,929,240 | ||
| Lam Research Corp. | 44,263 | 25,105,531 | ||
| Monolithic Power Systems, Inc. | 30,510 | 11,426,605 | ||
| NXP Semiconductors N.V. | 138,191 | 25,226,767 | ||
| Silicon Laboratories, Inc. (a) | 29,483 | 4,591,682 | ||
| Texas Instruments, Inc. | 244,551 | 42,128,801 | ||
| $234,173,258 | ||||
| Energy - Independent – 1.0% | ||||
| ConocoPhillips | 300,566 | $ 15,632,438 | ||
| Diamondback Energy, Inc. | 141,553 | 9,806,792 | ||
| Pioneer Natural Resources Co. | 64,518 | 9,585,439 | ||
| Valero Energy Corp. | 141,185 | 10,868,421 | ||
| $45,893,090 | ||||
| Energy - Integrated – 0.9% | ||||
| Chevron Corp. | 412,776 | $ 41,277,600 | ||
7
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Engineering - Construction – 0.2% | ||||
| APi Group, Inc. (a) | 529,608 | $ 9,797,748 | ||
| Food & Beverages – 2.2% | ||||
| Archer Daniels Midland Co. | 240,706 | $ 13,619,146 | ||
| Coca-Cola Co. | 146,165 | 7,160,623 | ||
| Coca-Cola European Partners PLC | 138,952 | 7,079,604 | ||
| Hostess Brands, Inc. (a) | 469,740 | 6,759,559 | ||
| J.M. Smucker Co. | 60,085 | 6,729,520 | ||
| Mondelez International, Inc. | 515,684 | 27,413,761 | ||
| PepsiCo, Inc. | 272,352 | 35,185,155 | ||
| $103,947,368 | ||||
| Food & Drug Stores – 1.0% | ||||
| Wal-Mart Stores, Inc. | 385,274 | $ 50,054,798 | ||
| Gaming & Lodging – 0.7% | ||||
| Marriott International, Inc., “A” (a) | 118,074 | $ 17,483,217 | ||
| Penn National Gaming, Inc. (a) | 40,963 | 4,742,696 | ||
| Wyndham Hotels & Resorts, Inc. | 187,385 | 12,232,493 | ||
| $34,458,406 | ||||
| General Merchandise – 0.7% | ||||
| Dollar General Corp. | 172,636 | $ 32,626,478 | ||
| Health Maintenance Organizations – 1.5% | ||||
| Cigna Corp. | 208,986 | $ 43,866,161 | ||
| Humana, Inc. | 72,643 | 27,578,915 | ||
| $71,445,076 | ||||
| Insurance – 3.4% | ||||
| Aon PLC | 227,153 | $ 51,725,010 | ||
| Arthur J. Gallagher & Co. | 193,312 | 23,158,778 | ||
| Assurant, Inc. | 100,973 | 12,441,893 | ||
| Chubb Ltd. | 167,247 | 27,191,017 | ||
| Everest Re Group Ltd. | 32,078 | 7,756,781 | ||
| Hartford Financial Services Group, Inc. | 270,715 | 13,722,543 | ||
| MetLife, Inc. | 222,716 | 12,828,442 | ||
| Reinsurance Group of America, Inc. | 67,140 | 8,206,522 | ||
| Third Point Reinsurance Ltd. (a) | 579,229 | 5,913,928 | ||
| $162,944,914 | ||||
8
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Internet – 5.3% | ||||
| Airbnb, Inc., “A” (a) | 8,220 | $ 1,696,197 | ||
| Alphabet, Inc., “A” (a)(s) | 81,246 | 164,272,100 | ||
| Facebook, Inc., “A” (a) | 354,615 | 91,355,916 | ||
| $257,324,213 | ||||
| Leisure & Toys – 0.7% | ||||
| Electronic Arts, Inc. | 256,975 | $ 34,426,941 | ||
| Machinery & Tools – 2.1% | ||||
| Caterpillar, Inc. | 91,233 | $ 19,695,380 | ||
| Cummins, Inc. | 45,400 | 11,495,280 | ||
| Eaton Corp. PLC | 136,276 | 17,741,772 | ||
| IDEX Corp. | 38,646 | 7,542,540 | ||
| Ingersoll Rand, Inc. (a) | 249,787 | 11,575,130 | ||
| Roper Technologies, Inc. | 57,861 | 21,849,471 | ||
| Trane Technologies PLC | 80,419 | 12,323,407 | ||
| $102,222,980 | ||||
| Major Banks – 3.7% | ||||
| Bank of America Corp. | 2,073,752 | $ 71,979,932 | ||
| Goldman Sachs Group, Inc. | 194,362 | 62,094,772 | ||
| PNC Financial Services Group, Inc. | 268,634 | 45,227,220 | ||
| $179,301,924 | ||||
| Medical & Health Technology & Services – 2.1% | ||||
| ICON PLC (a) | 231,038 | $ 41,743,946 | ||
| IDEXX Laboratories, Inc. (a) | 6,624 | 3,445,606 | ||
| McKesson Corp. | 165,640 | 28,079,293 | ||
| Quest Diagnostics, Inc. | 151,270 | 17,485,299 | ||
| Signify Health, Inc., “A” (a) | 86,301 | 2,849,659 | ||
| Teladoc Health, Inc. (a) | 44,956 | 9,939,322 | ||
| $103,543,125 | ||||
| Medical Equipment – 4.2% | ||||
| Align Technology, Inc. (a) | 19,842 | $ 11,252,597 | ||
| Becton, Dickinson and Co. | 101,825 | 24,555,099 | ||
| Boston Scientific Corp. (a) | 820,201 | 31,807,395 | ||
| Danaher Corp. | 55,133 | 12,111,066 | ||
| Maravai Lifesciences Holdings, Inc., “A” (a) | 700,013 | 22,764,423 | ||
| Medtronic PLC | 436,423 | 51,048,398 | ||
| PerkinElmer, Inc. | 113,860 | 14,356,607 | ||
| STERIS PLC | 193,893 | 33,892,496 | ||
| $201,788,081 | ||||
9
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Natural Gas - Pipeline – 0.3% | ||||
| Cheniere Energy, Inc. (a) | 77,211 | $ 5,203,249 | ||
| Enterprise Products Partners LP | 401,464 | 8,559,213 | ||
| $13,762,462 | ||||
| Network & Telecom – 0.5% | ||||
| Equinix, Inc., REIT | 36,624 | $ 23,744,804 | ||
| Oil Services – 0.4% | ||||
| Cactus, Inc., “A” | 149,601 | $ 4,767,784 | ||
| ChampionX Corp. (a) | 727,449 | 15,472,840 | ||
| $20,240,624 | ||||
| Other Banks & Diversified Financials – 4.5% | ||||
| Bank OZK | 365,322 | $ 15,058,573 | ||
| Moody's Corp. | 59,230 | 16,281,735 | ||
| Northern Trust Corp. | 127,599 | 12,138,493 | ||
| SVB Financial Group (a) | 14,427 | 7,290,829 | ||
| Truist Financial Corp. | 676,569 | 38,537,370 | ||
| U.S. Bancorp | 510,033 | 25,501,650 | ||
| United Community Bank, Inc. | 137,216 | 4,536,361 | ||
| Visa, Inc., “A” | 402,334 | 85,451,718 | ||
| Zions Bancorp NA | 191,900 | 10,203,323 | ||
| $215,000,052 | ||||
| Pharmaceuticals – 5.4% | ||||
| Eli Lilly & Co. | 343,131 | $ 70,304,111 | ||
| Johnson & Johnson | 535,328 | 84,828,075 | ||
| Merck & Co., Inc. | 866,082 | 62,894,875 | ||
| Zoetis, Inc. | 267,356 | 41,504,345 | ||
| $259,531,406 | ||||
| Pollution Control – 0.3% | ||||
| GFL Environmental, Inc. | 321,848 | $ 9,983,725 | ||
| U.S. Ecology, Inc. (a) | 100,234 | 3,829,941 | ||
| $13,813,666 | ||||
| Printing & Publishing – 0.1% | ||||
| Warner Music Group Corp. | 136,533 | $ 4,842,825 | ||
| Railroad & Shipping – 1.2% | ||||
| Canadian Pacific Railway Ltd. | 86,454 | $ 30,782,811 | ||
| Kansas City Southern Co. | 136,284 | 28,938,545 | ||
| $59,721,356 | ||||
10
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Real Estate – 2.0% | ||||
| Broadstone Net Lease, Inc. | 506,665 | $ 9,165,570 | ||
| Empire State Realty Trust, REIT, “A” | 943,849 | 10,391,778 | ||
| EPR Properties, REIT | 854,107 | 38,588,554 | ||
| Extra Space Storage, Inc., REIT | 100,272 | 12,604,190 | ||
| Lexington Realty Trust, REIT | 564,068 | 6,046,809 | ||
| STORE Capital Corp., REIT | 450,712 | 15,071,809 | ||
| Sun Communities, Inc., REIT | 37,450 | 5,690,528 | ||
| $97,559,238 | ||||
| Restaurants – 1.5% | ||||
| Performance Food Group Co. (a) | 145,449 | $ 7,889,154 | ||
| Starbucks Corp. | 388,316 | 41,949,778 | ||
| Texas Roadhouse, Inc. | 111,071 | 10,094,132 | ||
| Wendy's Co. | 684,570 | 13,985,765 | ||
| $73,918,829 | ||||
| Specialty Chemicals – 1.7% | ||||
| Air Products & Chemicals, Inc. | 67,316 | $ 17,207,316 | ||
| Ashland Global Holdings, Inc. | 112,694 | 9,479,819 | ||
| Atotech, Ltd. (a) | 571,688 | 11,599,550 | ||
| Avient Corp. | 276,119 | 11,933,863 | ||
| Axalta Coating Systems Ltd. (a) | 349,271 | 9,549,069 | ||
| DuPont de Nemours, Inc. | 218,875 | 15,391,290 | ||
| Univar Solutions, Inc. (a) | 292,703 | 5,827,717 | ||
| $80,988,624 | ||||
| Specialty Stores – 6.6% | ||||
| Amazon.com, Inc. (a)(s) | 67,522 | $ 208,840,819 | ||
| AutoZone, Inc. (a) | 12,953 | 15,024,444 | ||
| Burlington Stores, Inc. (a) | 42,896 | 11,102,343 | ||
| Home Depot, Inc. | 160,228 | 41,393,301 | ||
| Petco Health & Wellness Co., Inc. (a) | 507,054 | 10,105,586 | ||
| Ross Stores, Inc. | 119,206 | 13,904,188 | ||
| Urban Outfitters, Inc. (a) | 495,073 | 16,782,975 | ||
| $317,153,656 | ||||
| Telecommunications - Wireless – 1.5% | ||||
| SBA Communications Corp., REIT | 107,750 | $ 27,490,258 | ||
| T-Mobile USA, Inc. (a) | 384,622 | 46,143,101 | ||
| $73,633,359 | ||||
| Telephone Services – 0.3% | ||||
| Verizon Communications, Inc. | 255,662 | $ 14,138,109 | ||
11
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Tobacco – 0.4% | ||||
| Philip Morris International, Inc. | 250,468 | $ 21,044,321 | ||
| Trucking – 0.4% | ||||
| Forward Air Corp. | 123,479 | $ 10,590,794 | ||
| J.B. Hunt Transport Services, Inc. | 49,260 | 7,234,816 | ||
| $17,825,610 | ||||
| Utilities - Electric Power – 2.6% | ||||
| American Electric Power Co., Inc. | 151,498 | $ 11,339,625 | ||
| CenterPoint Energy, Inc. | 402,236 | 7,819,468 | ||
| CenterPoint Energy, Inc. (PIPE) (a)(z) | 208,699 | 4,057,108 | ||
| DTE Energy Co. | 55,154 | 6,492,729 | ||
| Duke Energy Corp. | 91,122 | 7,799,132 | ||
| Evergy, Inc. | 153,435 | 8,228,719 | ||
| Exelon Corp. | 320,834 | 12,384,192 | ||
| NextEra Energy, Inc. | 434,370 | 31,917,508 | ||
| PG&E Corp. (a) | 1,012,564 | 10,642,048 | ||
| Pinnacle West Capital Corp. | 76,962 | 5,381,953 | ||
| Southern Co. | 166,081 | 9,420,114 | ||
| Xcel Energy, Inc. | 170,554 | 9,992,759 | ||
| $125,475,355 | ||||
| Total Common Stocks (Identified Cost, $3,305,617,437) | $4,780,135,184 | |||
| Investment Companies (h) – 1.4% | ||||
| Money Market Funds – 1.4% | ||||
| MFS Institutional Money Market Portfolio, 0.07% (v) (Identified Cost, $68,274,683) | 68,275,130 | $ 68,275,130 | ||
| Securities Sold Short – (0.5)% | ||||
| Medical & Health Technology & Services – (0.3)% | ||||
| Healthcare Services Group, Inc. | (585,375) | $ (16,653,919) | ||
| Telecommunications - Wireless – (0.1)% | ||||
| Crown Castle International Corp., REIT | (44,300) | $ (6,899,725) | ||
| Trucking – (0.1)% | ||||
| XPO Logistics, Inc. | (25,219) | $ (2,940,535) | ||
| Total
Securities Sold Short (Proceeds Received, $22,235,703) |
$ (26,494,179) | |||
| Other Assets, Less Liabilities – 0.2% | 10,313,582 | |||
| Net Assets – 100.0% | $4,832,229,717 | |||
| (a) | Non-income producing security. |
12
Portfolio of
Investments (unaudited) – continued
| (h) | An affiliated issuer, which may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $68,275,130 and $4,780,135,184, respectively. |
| (s) | Security or a portion of the security was pledged to cover collateral requirements for securities sold short. |
| (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. |
| (z) | Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities: |
| Restricted Securities | Acquisition
Date |
Cost | Value |
| CenterPoint Energy, Inc. (PIPE) | 5/07/20 | $3,355,880 | $4,057,108 |
| % of Net assets | 0.1% |
| The following abbreviations are used in this report and are defined: | |
| PIPE | Private Investment in Public Equity |
| REIT | Real Estate Investment Trust |
At February
28, 2021, the fund had cash collateral of $716,765 and other liquid securities with an aggregate value of $61,827,113 to cover any collateral or margin obligations for securities sold short. Restricted cash and/or deposits with brokers in the
Statement of Assets and Liabilities are comprised of cash collateral.
See Notes to Financial Statements
13
Financial Statements
Statement of Assets and Liabilities
At 2/28/21 (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, $3,305,617,437) | $4,780,135,184 |
| Investments in affiliated issuers, at value (identified cost, $68,274,683) | 68,275,130 |
| Cash | 2,200,135 |
| Deposits with brokers for | |
| Securities sold short | 716,765 |
| Receivables for | |
| Investments sold | 660,051 |
| Fund shares sold | 12,802,343 |
| Interest and dividends | 5,353,761 |
| Other assets | 76,702 |
| Total assets | $4,870,220,071 |
| Liabilities | |
| Payables for | |
| Dividends on securities sold short | $120,734 |
| Securities sold short, at value (proceeds received, $22,235,703) | 26,494,179 |
| Investments purchased | 6,086,130 |
| Fund shares reacquired | 3,666,599 |
| Payable to affiliates | |
| Investment adviser | 280,501 |
| Administrative services fee | 5,871 |
| Shareholder servicing costs | 1,049,635 |
| Distribution and service fees | 74,132 |
| Payable for independent Trustees' compensation | 8,562 |
| Accrued expenses and other liabilities | 204,011 |
| Total liabilities | $37,990,354 |
| Net assets | $4,832,229,717 |
| Net assets consist of | |
| Paid-in capital | $3,183,282,002 |
| Total distributable earnings (loss) | 1,648,947,715 |
| Net assets | $4,832,229,717 |
| Shares of beneficial interest outstanding | 113,156,764 |
14
Statement of Assets and
Liabilities (unaudited) – continued
| Net assets | Shares
outstanding |
Net
asset value per share (a) | |
| Class A | $1,984,507,089 | 47,778,292 | $41.54 |
| Class B | 23,717,354 | 661,001 | 35.88 |
| Class C | 124,883,604 | 3,535,933 | 35.32 |
| Class I | 1,016,681,384 | 22,998,919 | 44.21 |
| Class R1 | 3,455,096 | 97,683 | 35.37 |
| Class R2 | 18,817,391 | 465,082 | 40.46 |
| Class R3 | 71,047,682 | 1,715,949 | 41.40 |
| Class R4 | 39,352,544 | 938,196 | 41.94 |
| Class R6 | 1,549,767,573 | 34,965,709 | 44.32 |
| (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 $44.07 [100 / 94.25 x $41.54]. 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
15
Financial Statements
Statement of Operations
Six months ended 2/28/21 (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 | |
| Dividends | $27,150,589 |
| Other | 129,634 |
| Dividends from affiliated issuers | 19,348 |
| Income on securities loaned | 18 |
| Foreign taxes withheld | (54,975) |
| Total investment income | $27,244,614 |
| Expenses | |
| Management fee | $12,109,683 |
| Distribution and service fees | 3,277,141 |
| Shareholder servicing costs | 1,872,724 |
| Administrative services fee | 267,428 |
| Independent Trustees' compensation | 23,734 |
| Custodian fee | 66,247 |
| Shareholder communications | 102,316 |
| Audit and tax fees | 29,970 |
| Legal fees | 14,978 |
| Dividend and interest expense on securities sold short | 518,157 |
| Interest expense and fees | 9,377 |
| Miscellaneous | 172,400 |
| Total expenses | $18,464,155 |
| Reduction of expenses by investment adviser and distributor | (253,051) |
| Net expenses | $18,211,104 |
| Net investment income (loss) | $9,033,510 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $183,541,124 |
| Affiliated issuers | 1,159 |
| Foreign currency | 352 |
| Net realized gain (loss) | $183,542,635 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $244,825,479 |
| Affiliated issuers | (1,160) |
| Securities sold short | (4,845,505) |
| Net unrealized gain (loss) | $239,978,814 |
| Net realized and unrealized gain (loss) | $423,521,449 |
| Change in net assets from operations | $432,554,959 |
See Notes to Financial
Statements
16
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 | |
| 2/28/21
(unaudited) |
8/31/20 | |
| Change in net assets | ||
| From operations | ||
| Net investment income (loss) | $9,033,510 | $23,072,077 |
| Net realized gain (loss) | 183,542,635 | 55,195,544 |
| Net unrealized gain (loss) | 239,978,814 | 632,077,913 |
| Change in net assets from operations | $432,554,959 | $710,345,534 |
| Total distributions to shareholders | $(74,503,092) | $(63,849,497) |
| Change in net assets from fund share transactions | $94,431,439 | $925,656,630 |
| Total change in net assets | $452,483,306 | $1,572,152,667 |
| Net assets | ||
| At beginning of period | 4,379,746,411 | 2,807,593,744 |
| At end of period | $4,832,229,717 | $4,379,746,411 |
See Notes to Financial
Statements
17
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 | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $38.41 | $32.45 | $34.18 | $30.46 | $26.72 | $27.19 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.05 | $0.19 | $0.20 | $0.20 | $0.18(c) | $0.18 |
| Net realized and unrealized gain (loss) | 3.70 | 6.41 | 1.05 | 5.63 | 4.53 | 2.08 |
| Total from investment operations | $3.75 | $6.60 | $1.25 | $5.83 | $4.71 | $2.26 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.15) | $(0.15) | $(0.16) | $(0.17) | $(0.16) | $(0.14) |
| From net realized gain | (0.47) | (0.49) | (2.82) | (1.94) | (0.81) | (2.59) |
| Total distributions declared to shareholders | $(0.62) | $(0.64) | $(2.98) | $(2.11) | $(0.97) | $(2.73) |
| Net asset value, end of period (x) | $41.54 | $38.41 | $32.45 | $34.18 | $30.46 | $26.72 |
| Total return (%) (r)(s)(t)(x) | 9.84(n) | 20.59 | 4.94 | 19.89 | 18.11(c) | 9.09 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.96(a) | 0.97 | 1.00 | 1.00 | 1.03(c) | 1.07 |
| Expenses after expense reductions (f) | 0.94(a) | 0.96 | 0.98 | 0.99 | 1.01(c) | 1.05 |
| Net investment income (loss) | 0.27(a) | 0.56 | 0.65 | 0.62 | 0.63(c) | 0.70 |
| Portfolio turnover | 21(n) | 46 | 39 | 42 | 46 | 68 |
| Net assets at end of period (000 omitted) | $1,984,507 | $1,960,597 | $1,373,524 | $1,184,976 | $992,736 | $959,812 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 0.92(a) | 0.93 | 0.96 | 0.97 | 1.00(c) | 1.04 |
See Notes to Financial
Statements
18
Financial
Highlights – continued
| Class B |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $33.24 | $28.23 | $30.19 | $27.17 | $23.96 | $24.70 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.08) | $(0.05) | $(0.03) | $(0.04) | $(0.03)(c) | $(0.02) |
| Net realized and unrealized gain (loss) | 3.19 | 5.55 | 0.89 | 5.00 | 4.05 | 1.87 |
| Total from investment operations | $3.11 | $5.50 | $0.86 | $4.96 | $4.02 | $1.85 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $— | $— | $— | $— | $— |
| From net realized gain | (0.47) | (0.49) | (2.82) | (1.94) | (0.81) | (2.59) |
| Total distributions declared to shareholders | $(0.47) | $(0.49) | $(2.82) | $(1.94) | $(0.81) | $(2.59) |
| Net asset value, end of period (x) | $35.88 | $33.24 | $28.23 | $30.19 | $27.17 | $23.96 |
| Total return (%) (r)(s)(t)(x) | 9.42(n) | 19.69 | 4.16 | 19.01 | 17.21(c) | 8.24 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.70(a) | 1.72 | 1.75 | 1.75 | 1.78(c) | 1.82 |
| Expenses after expense reductions (f) | 1.69(a) | 1.71 | 1.73 | 1.74 | 1.77(c) | 1.81 |
| Net investment income (loss) | (0.48)(a) | (0.18) | (0.11) | (0.14) | (0.12)(c) | (0.07) |
| Portfolio turnover | 21(n) | 46 | 39 | 42 | 46 | 68 |
| Net assets at end of period (000 omitted) | $23,717 | $25,018 | $22,759 | $26,993 | $27,139 | $30,324 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 1.67(a) | 1.68 | 1.71 | 1.72 | 1.75(c) | 1.79 |
See Notes to Financial
Statements
19
Financial
Highlights – continued
| Class C |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $32.72 | $27.86 | $29.84 | $26.88 | $23.71 | $24.47 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.08) | $(0.05) | $(0.03) | $(0.05) | $(0.03)(c) | $(0.01) |
| Net realized and unrealized gain (loss) | 3.15 | 5.46 | 0.87 | 4.95 | 4.01 | 1.84 |
| Total from investment operations | $3.07 | $5.41 | $0.84 | $4.90 | $3.98 | $1.83 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.06) | $— | $— | $— | $— |
| From net realized gain | (0.47) | (0.49) | (2.82) | (1.94) | (0.81) | (2.59) |
| Total distributions declared to shareholders | $(0.47) | $(0.55) | $(2.82) | $(1.94) | $(0.81) | $(2.59) |
| Net asset value, end of period (x) | $35.32 | $32.72 | $27.86 | $29.84 | $26.88 | $23.71 |
| Total return (%) (r)(s)(t)(x) | 9.45(n) | 19.66 | 4.14 | 18.98 | 17.22(c) | 8.24 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.70(a) | 1.72 | 1.75 | 1.75 | 1.78(c) | 1.82 |
| Expenses after expense reductions (f) | 1.69(a) | 1.71 | 1.74 | 1.74 | 1.77(c) | 1.81 |
| Net investment income (loss) | (0.48)(a) | (0.18) | (0.10) | (0.17) | (0.12)(c) | (0.05) |
| Portfolio turnover | 21(n) | 46 | 39 | 42 | 46 | 68 |
| Net assets at end of period (000 omitted) | $124,884 | $128,709 | $72,093 | $56,413 | $89,946 | $89,160 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 1.67(a) | 1.69 | 1.71 | 1.72 | 1.75(c) | 1.79 |
See Notes to Financial
Statements
20
Financial
Highlights – continued
| Class I |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $40.87 | $34.47 | $36.12 | $32.07 | $28.10 | $28.44 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.11 | $0.29 | $0.30 | $0.30 | $0.26(c) | $0.29 |
| Net realized and unrealized gain (loss) | 3.94 | 6.82 | 1.11 | 5.93 | 4.76 | 2.15 |
| Total from investment operations | $4.05 | $7.11 | $1.41 | $6.23 | $5.02 | $2.44 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.24) | $(0.22) | $(0.24) | $(0.24) | $(0.24) | $(0.19) |
| From net realized gain | (0.47) | (0.49) | (2.82) | (1.94) | (0.81) | (2.59) |
| Total distributions declared to shareholders | $(0.71) | $(0.71) | $(3.06) | $(2.18) | $(1.05) | $(2.78) |
| Net asset value, end of period (x) | $44.21 | $40.87 | $34.47 | $36.12 | $32.07 | $28.10 |
| Total return (%) (r)(s)(t)(x) | 9.99(n) | 20.89 | 5.17 | 20.21 | 18.38(c) | 9.36 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.71(a) | 0.72 | 0.75 | 0.75 | 0.78(c) | 0.81 |
| Expenses after expense reductions (f) | 0.69(a) | 0.71 | 0.74 | 0.74 | 0.77(c) | 0.80 |
| Net investment income (loss) | 0.51(a) | 0.81 | 0.90 | 0.88 | 0.88(c) | 1.07 |
| Portfolio turnover | 21(n) | 46 | 39 | 42 | 46 | 68 |
| Net assets at end of period (000 omitted) | $1,016,681 | $841,296 | $467,860 | $246,779 | $122,055 | $61,739 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 0.67(a) | 0.69 | 0.72 | 0.73 | 0.75(c) | 0.79 |
See Notes to Financial
Statements
21
Financial
Highlights – continued
| Class R1 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $32.77 | $27.84 | $29.82 | $26.86 | $23.70 | $24.45 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.08) | $(0.06) | $(0.03) | $(0.04) | $(0.03)(c) | $(0.02) |
| Net realized and unrealized gain (loss) | 3.15 | 5.48 | 0.87 | 4.94 | 4.00 | 1.86 |
| Total from investment operations | $3.07 | $5.42 | $0.84 | $4.90 | $3.97 | $1.84 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $— | $— | $— | $— | $— |
| From net realized gain | (0.47) | (0.49) | (2.82) | (1.94) | (0.81) | (2.59) |
| Total distributions declared to shareholders | $(0.47) | $(0.49) | $(2.82) | $(1.94) | $(0.81) | $(2.59) |
| Net asset value, end of period (x) | $35.37 | $32.77 | $27.84 | $29.82 | $26.86 | $23.70 |
| Total return (%) (r)(s)(t)(x) | 9.43(n) | 19.68 | 4.14 | 19.00 | 17.19(c) | 8.29 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.70(a) | 1.72 | 1.75 | 1.75 | 1.78(c) | 1.82 |
| Expenses after expense reductions (f) | 1.69(a) | 1.71 | 1.74 | 1.74 | 1.77(c) | 1.81 |
| Net investment income (loss) | (0.49)(a) | (0.20) | (0.11) | (0.14) | (0.13)(c) | (0.09) |
| Portfolio turnover | 21(n) | 46 | 39 | 42 | 46 | 68 |
| Net assets at end of period (000 omitted) | $3,455 | $3,816 | $3,186 | $3,448 | $3,103 | $2,935 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 1.67(a) | 1.69 | 1.71 | 1.73 | 1.75(c) | 1.80 |
See Notes to Financial
Statements
22
Financial
Highlights – continued
| Class R2 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $37.40 | $31.61 | $33.33 | $29.75 | $26.12 | $26.62 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.01 | $0.10 | $0.12 | $0.11 | $0.10(c) | $0.11 |
| Net realized and unrealized gain (loss) | 3.60 | 6.24 | 1.02 | 5.50 | 4.43 | 2.04 |
| Total from investment operations | $3.61 | $6.34 | $1.14 | $5.61 | $4.53 | $2.15 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.08) | $(0.06) | $(0.04) | $(0.09) | $(0.09) | $(0.06) |
| From net realized gain | (0.47) | (0.49) | (2.82) | (1.94) | (0.81) | (2.59) |
| Total distributions declared to shareholders | $(0.55) | $(0.55) | $(2.86) | $(2.03) | $(0.90) | $(2.65) |
| Net asset value, end of period (x) | $40.46 | $37.40 | $31.61 | $33.33 | $29.75 | $26.12 |
| Total return (%) (r)(s)(t)(x) | 9.72(n) | 20.28 | 4.66 | 19.61 | 17.80(c) | 8.82 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.21(a) | 1.22 | 1.25 | 1.25 | 1.28(c) | 1.32 |
| Expenses after expense reductions (f) | 1.18(a) | 1.20 | 1.23 | 1.24 | 1.27(c) | 1.31 |
| Net investment income (loss) | 0.03(a) | 0.31 | 0.39 | 0.35 | 0.38(c) | 0.46 |
| Portfolio turnover | 21(n) | 46 | 39 | 42 | 46 | 68 |
| Net assets at end of period (000 omitted) | $18,817 | $17,335 | $13,416 | $15,202 | $16,508 | $15,932 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 1.16(a) | 1.17 | 1.20 | 1.22 | 1.25(c) | 1.29 |
See Notes to Financial
Statements
23
Financial
Highlights – continued
| Class R3 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $38.29 | $32.36 | $34.11 | $30.33 | $26.61 | $27.10 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.05 | $0.19 | $0.20 | $0.20 | $0.17(c) | $0.18 |
| Net realized and unrealized gain (loss) | 3.69 | 6.38 | 1.04 | 5.61 | 4.52 | 2.06 |
| Total from investment operations | $3.74 | $6.57 | $1.24 | $5.81 | $4.69 | $2.24 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.16) | $(0.15) | $(0.17) | $(0.09) | $(0.16) | $(0.14) |
| From net realized gain | (0.47) | (0.49) | (2.82) | (1.94) | (0.81) | (2.59) |
| Total distributions declared to shareholders | $(0.63) | $(0.64) | $(2.99) | $(2.03) | $(0.97) | $(2.73) |
| Net asset value, end of period (x) | $41.40 | $38.29 | $32.36 | $34.11 | $30.33 | $26.61 |
| Total return (%) (r)(s)(t)(x) | 9.84(n) | 20.56 | 4.91 | 19.91 | 18.10(c) | 9.06 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.96(a) | 0.97 | 1.00 | 1.00 | 1.02(c) | 1.07 |
| Expenses after expense reductions (f) | 0.94(a) | 0.96 | 0.99 | 0.99 | 1.02(c) | 1.06 |
| Net investment income (loss) | 0.26(a) | 0.56 | 0.64 | 0.61 | 0.62(c) | 0.71 |
| Portfolio turnover | 21(n) | 46 | 39 | 42 | 46 | 68 |
| Net assets at end of period (000 omitted) | $71,048 | $63,347 | $42,199 | $34,916 | $28,075 | $77,217 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 0.92(a) | 0.94 | 0.96 | 0.98 | 1.00(c) | 1.04 |
See Notes to Financial
Statements
24
Financial
Highlights – continued
| Class R4 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $38.81 | $32.76 | $34.48 | $30.71 | $26.93 | $27.39 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.10 | $0.27 | $0.28 | $0.28 | $0.25(c) | $0.23 |
| Net realized and unrealized gain (loss) | 3.74 | 6.48 | 1.05 | 5.67 | 4.57 | 2.11 |
| Total from investment operations | $3.84 | $6.75 | $1.33 | $5.95 | $4.82 | $2.34 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.24) | $(0.21) | $(0.23) | $(0.24) | $(0.23) | $(0.21) |
| From net realized gain | (0.47) | (0.49) | (2.82) | (1.94) | (0.81) | (2.59) |
| Total distributions declared to shareholders | $(0.71) | $(0.70) | $(3.05) | $(2.18) | $(1.04) | $(2.80) |
| Net asset value, end of period (x) | $41.94 | $38.81 | $32.76 | $34.48 | $30.71 | $26.93 |
| Total return (%) (r)(s)(t)(x) | 9.97(n) | 20.88 | 5.18 | 20.18 | 18.40(c) | 9.36 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.71(a) | 0.72 | 0.75 | 0.75 | 0.78(c) | 0.82 |
| Expenses after expense reductions (f) | 0.69(a) | 0.71 | 0.74 | 0.74 | 0.77(c) | 0.81 |
| Net investment income (loss) | 0.52(a) | 0.80 | 0.89 | 0.86 | 0.87(c) | 0.90 |
| Portfolio turnover | 21(n) | 46 | 39 | 42 | 46 | 68 |
| Net assets at end of period (000 omitted) | $39,353 | $35,770 | $29,218 | $27,707 | $22,494 | $15,799 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 0.67(a) | 0.69 | 0.71 | 0.73 | 0.76(c) | 0.79 |
See Notes to Financial
Statements
25
Financial
Highlights – continued
| Class R6 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $40.98 | $34.55 | $36.18 | $32.12 | $28.13 | $28.49 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.13 | $0.32 | $0.32 | $0.32 | $0.29(c) | $0.58 |
| Net realized and unrealized gain (loss) | 3.95 | 6.83 | 1.13 | 5.95 | 4.77 | 1.89 |
| Total from investment operations | $4.08 | $7.15 | $1.45 | $6.27 | $5.06 | $2.47 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.27) | $(0.23) | $(0.26) | $(0.27) | $(0.26) | $(0.24) |
| From net realized gain | (0.47) | (0.49) | (2.82) | (1.94) | (0.81) | (2.59) |
| Total distributions declared to shareholders | $(0.74) | $(0.72) | $(3.08) | $(2.21) | $(1.07) | $(2.83) |
| Net asset value, end of period (x) | $44.32 | $40.98 | $34.55 | $36.18 | $32.12 | $28.13 |
| Total return (%) (r)(s)(t)(x) | 10.02(n) | 20.98 | 5.28 | 20.29 | 18.49(c) | 9.46 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.61(a) | 0.64 | 0.67 | 0.67 | 0.69(c) | 0.70 |
| Expenses after expense reductions (f) | 0.60(a) | 0.63 | 0.66 | 0.66 | 0.68(c) | 0.69 |
| Net investment income (loss) | 0.62(a) | 0.89 | 0.98 | 0.95 | 0.97(c) | 2.10 |
| Portfolio turnover | 21(n) | 46 | 39 | 42 | 46 | 68 |
| Net assets at end of period (000 omitted) | $1,549,768 | $1,303,858 | $783,340 | $577,588 | $393,153 | $300,078 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 0.57(a) | 0.60 | 0.63 | 0.65 | 0.66(c) | 0.68 |
| (a) | Annualized. |
| (c) | Amount reflects a one-time reimbursement of expenses by the custodian (or former custodian) without which net investment income and performance would be lower and expenses would be higher. |
| (d) | Per share data is based on average shares outstanding. |
| (f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
| (n) | Not annualized. |
| (r) | Certain expenses have been reduced without which performance would have been lower. |
| (s) | From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. Excluding the effect of the proceeds received from a non-recurring litigation settlement against Household International, Inc., the total return for the year ended August 31, 2017 would have been lower by approximately 0.85%. |
| (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
26
Notes to Financial
Statements
(unaudited)
(1) Business and Organization
MFS Core Equity Fund (the fund) is a diversified series of MFS
Series Trust I (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
The fund is an investment company and accordingly follows the
investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation
of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these
financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.
In March 2020, the FASB issued Accounting Standards Update
2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional, temporary relief with respect to the financial reporting of
contracts subject to certain types of modifications due to the planned discontinuation of certain tenors of the London Interbank Offered Rate (LIBOR) and other IBOR-based reference rates as of the end of 2021. The temporary relief provided by ASU
2020-04 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 on the fund's investments, derivatives,
debt and other contracts that will undergo reference rate-related modifications as a result of the reference rate reform.
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
— Equity securities, including restricted equity securities and equity securities sold short, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing
service. Equity securities, for which there were no sales reported that day, are generally valued at the
27
Notes to Financial
Statements (unaudited) - continued
last quoted daily bid quotation on their primary market or exchange as
provided by a third-party pricing service. Equity securities sold short, for which there were no sales reported that day, are generally valued at the last quoted daily ask quotation on their primary market or exchange as provided by a third-party
pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per
share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. 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, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign
currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.
The Board of Trustees has delegated primary responsibility for
determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market
quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and
procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from
third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the
investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the
exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s
net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party
pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the
issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on
the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance
that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's
assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair
value hierarchy is based on the lowest level of
28
Notes to Financial
Statements (unaudited) - continued
input that is significant to the fair value measurement. The fund's assessment
of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or
liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser's
own assumptions in determining the fair value of investments. The following is a summary of the levels used as of February 28, 2021 in valuing the fund's assets or liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | ||||
| United States | $4,634,921,721 | $4,057,108 | $— | $4,638,978,829 |
| Ireland | 41,743,946 | — | — | 41,743,946 |
| Canada | 40,766,536 | — | — | 40,766,536 |
| Netherlands | 25,226,767 | — | — | 25,226,767 |
| United Kingdom | 21,819,556 | — | — | 21,819,556 |
| China | 11,599,550 | — | — | 11,599,550 |
| Mutual Funds | 68,275,130 | — | — | 68,275,130 |
| Total | $4,844,353,206 | $4,057,108 | $— | $4,848,410,314 |
| Securities Sold Short | $(26,494,179) | $— | $— | $(26,494,179) |
For further information regarding
security characteristics, see the Portfolio of Investments.
Foreign Currency Translation
— Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated
receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign
exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that
results from fluctuations in foreign currency exchange rates is not separately disclosed.
Short Sales — The fund
entered into short sales whereby it sells a security it does not own in anticipation of a decline in the value of that security. The fund will realize a gain if the security price decreases and a loss if the security price increases between the date
of the short sale and the date on which the fund replaces the borrowed security. Losses from short sales can exceed the proceeds of the security sold; and they can also exceed the potential loss from an ordinary buy and sell transaction. The amount
of any premium, dividends, or interest the fund may be required to pay in connection with a short sale will be recognized as a fund expense. During the six months ended February 28, 2021, this expense amounted to $518,157. The fund segregates cash
or marketable securities in an amount that, when combined with the amount of proceeds from the short sale deposited with the broker, at least equals the current market value of the security sold short.
29
Notes to Financial
Statements (unaudited) - continued
Security Loans — Under
its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can
be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. The loans are
collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. On loans collateralized by cash, the cash collateral is invested in a money market fund.
The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. The lending agent provides the fund with indemnification against
Borrower default. In the event of Borrower default, the lending agent will, for the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the fund the market value of the
loaned securities. In return, the lending agent assumes the fund's rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent is responsible for the shortfall, but only to the
extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. A portion of the income generated upon investment of the collateral is remitted to the
Borrowers, and the remainder is allocated between the fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund and the lending
agent. Income from securities lending is separately reported in the Statement of Operations. The dividend and interest income earned on the securities loaned is accounted for in the same manner as other dividend and interest income. At February 28,
2021, there were no securities on loan or collateral outstanding.
Indemnifications — Under
the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters
into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet
occurred.
Investment Transactions and Income — Investment transactions are recorded on the trade date. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed
of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend payments received in additional securities are recorded on the ex-dividend date in an amount equal to the value of the security on such date.
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.
30
Notes to Financial
Statements (unaudited) - continued
Tax Matters and Distributions
— The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal
income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state
tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in
accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be
subject to capital gains tax imposed by those countries.
Distributions to shareholders are recorded on the ex-dividend
date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted
for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in
different periods for financial statement and tax purposes will reverse at some time in the future.
Book/tax differences primarily relate to wash sale loss
deferrals, treating a portion of the proceeds from redemptions as a distribution for tax purposes, and partnership adjustments.
The tax character of distributions made during the current
period will be determined at fiscal year end. The tax character of distributions declared to shareholders for the last fiscal year is as follows:
| Year
ended 8/31/20 | |
| Ordinary income (including any short-term capital gains) | $21,649,474 |
| Long-term capital gains | 42,200,023 |
| Total distributions | $63,849,497 |
The federal tax cost and the tax
basis components of distributable earnings were as follows:
| As of 2/28/21 | |
| Cost of investments | $3,390,646,991 |
| Gross appreciation | 1,502,260,750 |
| Gross depreciation | (44,497,427) |
| Net unrealized appreciation (depreciation) | $1,457,763,323 |
| As of 8/31/20 | |
| Undistributed ordinary income | 21,993,163 |
| Undistributed long-term capital gain | 52,103,555 |
| Other temporary differences | 2,772,439 |
| Net unrealized appreciation (depreciation) | 1,214,026,691 |
The aggregate cost above includes
prior fiscal year end tax adjustments, if applicable.
31
Notes to Financial
Statements (unaudited) - continued
Multiple Classes of Shares of Beneficial Interest — The fund offers multiple classes of shares, which differ in their respective distribution and service fees. The fund's income, realized and unrealized gain (loss), and common expenses are allocated to
shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B shares will convert to Class A
shares approximately eight years after purchase. In addition, 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 2/28/21 |
Year
ended 8/31/20 | ||
| Class A | $30,040,189 | $29,982,091 | |
| Class B | 331,454 | 475,008 | |
| Class C | 1,808,146 | 2,151,200 | |
| Class I | 15,698,076 | 11,488,721 | |
| Class R1 | 46,383 | 53,754 | |
| Class R2 | 249,807 | 241,357 | |
| Class R3 | 1,071,678 | 966,738 | |
| Class R4 | 669,489 | 613,572 | |
| Class R6 | 24,587,870 | 17,877,056 | |
| Total | $74,503,092 | $63,849,497 |
(3) Transactions with
Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid
monthly at the following annual rates based on the fund's average daily net assets:
| Up to $500 million | 0.65% |
| In excess of $500 million and up to $2.5 billion | 0.55% |
| In excess of $2.5 billion and up to $5 billion | 0.50% |
| In excess of $5 billion and up to $10 billion | 0.47% |
| In excess of $10 billion | 0.45% |
MFS has agreed in writing to reduce
its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund's Board of Trustees. For the six months ended February 28, 2021, this management fee reduction amounted to $249,480, which is
included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.53% of the fund's average daily net assets.
Distributor — MFS Fund
Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $215,993 for the six months ended February 28, 2021, 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.
32
Notes to Financial
Statements (unaudited) - continued
The fund's distribution plan provides that the fund will pay
MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee
paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.
Distribution Plan Fee Table:
| Distribution
Fee Rate (d) |
Service
Fee Rate (d) |
Total
Distribution Plan (d) |
Annual
Effective Rate (e) |
Distribution
and Service Fee | |
| Class A | — | 0.25% | 0.25% | 0.25% | $ 2,392,959 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 119,518 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 619,703 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 17,113 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.49% | 44,312 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 83,536 |
| Total Distribution and Service Fees | $3,277,141 |
| (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 February 28, 2021 based on each class's average daily net assets.MFD has voluntarily agreed to rebate a portion of each class's 0.25% service fee attributable to accounts for which there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates' seed money. For the six months ended February 28, 2021, this rebate amounted to $2,312, $117, $35, and $1,107 for Class A, Class B, Class C, and Class R2, respectively, and is included in the reduction of total expenses in the Statement of Operations. |
Certain Class A shares are subject to a contingent deferred
sales charge (CDSC) in the event of a shareholder redemption within 18 months of purchase. Class B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. Class C shares are subject to a CDSC in the event
of a shareholder redemption within 12 months of purchase. All contingent deferred sales charges are paid to MFD and during the six months ended February 28, 2021, were as follows:
| Amount | |
| Class A | $5,430 |
| Class B | 7,452 |
| Class C | 9,425 |
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 February 28, 2021, the fee was $233,858, which equated to 0.0104% 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
33
Notes to Financial
Statements (unaudited) - continued
providers. Class R6 shares do not incur sub-accounting fees. For the six
months ended February 28, 2021, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $1,638,866.
Administrator — MFS
provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund reimburses MFS the costs incurred to provide these services. The fund is
charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.0119% of the fund's average
daily net assets.
Trustees’ and
Officers’ Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not
pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or
directors of MFS, MFD, and MFSC.
Prior to December
31, 2001, the fund had an unfunded defined benefit plan (“DB plan”) for independent Trustees. As of December 31, 2001, the Board took action to terminate the DB plan with respect to then-current and any future independent Trustees, such
that the DB plan covers only certain of those former independent Trustees who retired on or before December 31, 2001. The DB plan resulted in a net decrease in pension expense of $909 and is included in “Independent Trustees’
compensation” in the Statement of Operations for the six months ended February 28, 2021. The liability for deferred retirement benefits payable to those former independent Trustees under the DB plan amounted to $5,046 at February 28, 2021, and
is included in “Payable for independent Trustees’ compensation” in the Statement of Assets and Liabilities.
Other — The fund invests
in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a management fee to MFS but does incur investment and
operating costs.
The fund is permitted to engage
in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) pursuant to a policy adopted by the Board of Trustees. This policy has been designed to ensure that
cross-trades conducted by the fund comply with Rule 17a-7 under the Investment Company Act of 1940. During the six months ended February 28, 2021, the fund engaged in purchase transactions pursuant to this policy, which amounted to $1,635,631.
The adviser has voluntarily undertaken to reimburse the fund
from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the six months ended February 28, 2021, this reimbursement
amounted to $126,678, which is included in “Other” income in the Statement of Operations.
34
Notes to Financial
Statements (unaudited) - continued
(4) Portfolio Securities
For the six months ended February 28, 2021, purchases and sales
of investments, other than short sales, and short-term obligations, aggregated $957,376,209 and $961,700,240, respectively.
(5) Shares of Beneficial Interest
The fund's Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Shares sold | |||||
| Class A | 4,323,121 | $170,302,226 | 13,359,125 | $444,546,994 | |
| Class B | 5,944 | 201,728 | 16,015 | 461,171 | |
| Class C | 456,875 | 15,244,957 | 1,193,239 | 33,789,506 | |
| Class I | 5,145,527 | 216,963,373 | 13,643,490 | 483,212,574 | |
| Class R1 | 9,993 | 346,112 | 30,228 | 886,683 | |
| Class R2 | 73,826 | 2,856,635 | 168,747 | 5,517,683 | |
| Class R3 | 248,544 | 9,680,766 | 676,288 | 22,617,465 | |
| Class R4 | 90,179 | 3,534,738 | 235,013 | 7,871,251 | |
| Class R6 | 6,445,856 | 272,667,250 | 13,853,751 | 492,297,297 | |
| 16,799,865 | $691,797,785 | 43,175,896 | $1,491,200,624 | ||
| Shares
issued in connection with acquisition of MFS Equity Opportunities Fund |
|||||
| Class A | 3,575,449 | $118,383,117 | |||
| Class B | 246,884 | 7,102,850 | |||
| Class C | 1,200,588 | 34,084,698 | |||
| Class I | 1,634,666 | 57,523,902 | |||
| Class R1 | 3,682 | 104,467 | |||
| Class R2 | 15,173 | 489,189 | |||
| Class R3 | 23,823 | 786,385 | |||
| Class R4 | 22,752 | 760,839 | |||
| Class R6 | 229,660 | 8,100,125 | |||
| 6,952,677 | $227,335,572 | ||||
35
Notes to Financial
Statements (unaudited) - continued
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Shares
issued to shareholders in reinvestment of distributions |
|||||
| Class A | 724,147 | $28,994,863 | 856,833 | $28,952,375 | |
| Class B | 9,268 | 321,121 | 15,738 | 462,711 | |
| Class C | 49,935 | 1,703,281 | 69,056 | 1,999,170 | |
| Class I | 348,791 | 14,855,003 | 301,669 | 10,829,902 | |
| Class R1 | 1,358 | 46,383 | 1,854 | 53,754 | |
| Class R2 | 6,393 | 249,513 | 7,179 | 236,698 | |
| Class R3 | 26,846 | 1,071,678 | 28,695 | 966,738 | |
| Class R4 | 16,273 | 657,586 | 17,867 | 609,088 | |
| Class R6 | 556,640 | 23,768,523 | 467,693 | 16,822,916 | |
| 1,739,651 | $71,667,951 | 1,766,584 | $60,933,352 | ||
| Shares reacquired | |||||
| Class A | (8,317,017) | $(325,225,643) | (9,074,188) | $(303,186,936) | |
| Class B | (106,944) | (3,642,433) | (332,169) | (9,544,617) | |
| Class C | (904,279) | (30,301,347) | (1,117,261) | (31,515,132) | |
| Class I | (3,079,657) | (130,191,643) | (8,568,077) | (289,832,177) | |
| Class R1 | (30,120) | (1,010,275) | (33,748) | (977,923) | |
| Class R2 | (78,597) | (3,061,959) | (152,091) | (4,969,187) | |
| Class R3 | (213,722) | (8,442,122) | (378,685) | (12,555,878) | |
| Class R4 | (89,903) | (3,573,397) | (245,862) | (8,245,405) | |
| Class R6 | (3,853,698) | (163,585,478) | (5,407,667) | (192,985,663) | |
| (16,673,937) | $(669,034,297) | (25,309,748) | $(853,812,918) | ||
| Net change | |||||
| Class A | (3,269,749) | $(125,928,554) | 8,717,219 | $288,695,550 | |
| Class B | (91,732) | (3,119,584) | (53,532) | (1,517,885) | |
| Class C | (397,469) | (13,353,109) | 1,345,622 | 38,358,242 | |
| Class I | 2,414,661 | 101,626,733 | 7,011,748 | 261,734,201 | |
| Class R1 | (18,769) | (617,780) | 2,016 | 66,981 | |
| Class R2 | 1,622 | 44,189 | 39,008 | 1,274,383 | |
| Class R3 | 61,668 | 2,310,322 | 350,121 | 11,814,710 | |
| Class R4 | 16,549 | 618,927 | 29,770 | 995,773 | |
| Class R6 | 3,148,798 | 132,850,295 | 9,143,437 | 324,234,675 | |
| 1,865,579 | $94,431,439 | 26,585,409 | $925,656,630 | ||
Effective June 1, 2019, purchases of
the fund’s Class B shares are closed to new and existing investors subject to certain exceptions. Please see the fund’s prospectus for details.
36
Notes to Financial
Statements (unaudited) - continued
(6) Line of Credit
The fund and certain other funds managed by MFS participate in
a $1.25 billion unsecured committed line of credit of which $1 billion is reserved for use by the fund and certain other 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 one month LIBOR, the Federal Funds Effective Rate and the Overnight Bank Funding Rate, 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. 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 February 28, 2021, the
fund’s commitment fee and interest expense were $9,377 and $0, respectively, and are included in “Interest expense and fees” in the Statement of Operations.
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund
owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
| Affiliated Issuers | Beginning
Value |
Purchases | Sales
Proceeds |
Realized
Gain (Loss) |
Change
in Unrealized Appreciation or Depreciation |
Ending
Value |
| MFS Institutional Money Market Portfolio | $44,904,141 | $382,304,681 | $358,933,691 | $1,159 | $(1,160) | $68,275,130 |
| Affiliated Issuers | Dividend
Income |
Capital
Gain Distributions |
| MFS Institutional Money Market Portfolio | $19,348 | $— |
(8) Acquisitions
At close of business on October 25, 2019, the MFS Core Equity
Fund with net assets of approximately $2,981,074,655, acquired all of the assets and liabilities of MFS Equity Opportunities Fund. The purpose of the transaction was to provide shareholders of MFS Equity Opportunities Fund the opportunity to
participate in a larger combined portfolio with a similar investment objective and similar investment policies and strategies. The acquisition was accomplished by a tax-free exchange of approximately 6,952,677 shares of the fund (valued at
approximately $227,335,572) for all of the assets and liabilities of MFS Equity Opportunities Fund. MFS Equity Opportunities Fund then distributed the shares of the fund that MFS Equity Opportunities Fund received from the fund to its shareholders.
MFS Equity Opportunities Fund’s investments on that date were valued at approximately $227,592,285 with a cost basis of approximately $222,463,162. For financial reporting purposes, assets received and shares issued by the fund were recorded
at fair value; however, the cost basis of the investments
37
Notes to Financial
Statements (unaudited) - continued
received from MFS Equity Opportunities Fund were carried forward to align
ongoing reporting of the fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.
(9) Impacts of COVID-19
The pandemic related to the global spread of novel coronavirus
disease (COVID-19), which was first detected in December 2019, has resulted in significant disruptions to global business activity and the global economy, as well as the economies of individual countries, the financial performance of individual
companies and sectors, and the securities and commodities markets in general. Multiple surges in cases globally, the availability and widespread adoption of vaccines, and the emergence of variant strains of the virus continue to create uncertainty
as to the future and long-term impacts resulting from the pandemic including impacts to the prices and liquidity of the fund's investments and the fund's performance.
38
Proxy
Voting Policies and Information
MFS votes proxies on
behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s
Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with
the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A
shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the
“Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
From time to time, MFS may post important information about the
fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at
mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an
investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), 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.
39
Semiannual Report
February 28, 2021
MFS® Low Volatility Global
Equity Fund
Equity Fund
LVO-SEM
MFS® Low Volatility Global
Equity Fund
Equity Fund
CONTENTS
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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
LETTER FROM THE CEO
Dear Shareholders:
Markets have experienced dramatic swings since the coronavirus
pandemic brought the global economy to a standstill for several months early in 2020. The speedy development of vaccines and therapeutics brightened the economic and market outlook, but uncertainty remains as new variants of the virus appear and
questions persist over how fast vaccines can be made widely available. In the United States, political uncertainty eased after former Vice President Joe Biden won the presidential election and the Democrats gained control of a closely divided
Senate.
Global central banks have
taken aggressive steps to cushion the economic and market fallout related to the virus, and governments are deploying unprecedented levels of fiscal support. Having passed a $1.9 trillion stimulus package in March, the U.S. Congress is expected to
approve additional stimulus later this year, some of it focused on infrastructure. Along with extraordinary government expenditures, pent-up consumer demand could fuel a surge in economic activity as coronavirus restrictions are eased. Because of
this, markets anticipate at least temporary inflation pressures in the months ahead and have pushed up yields on global government bonds, resulting in ripple effects being felt across most financial markets. The measures already put in place have
helped build a supportive environment and are encouraging economic recovery; however, if markets disconnect from fundamentals, they can sow the seeds of instability. As such, recent dramatic increases in speculative retail trading bear
watching.
In the aftermath of the crisis, we could see
societal changes as households, businesses, and governments adjust to a new reality, and any such alterations could affect the investment landscape. For investors, events such as the COVID-19 outbreak demonstrate the importance of having a deep
understanding of company fundamentals, and we have built our global research platform to do just that.
At MFS®, we put our clients’ assets to work responsibly by carefully navigating the increasing complexity of global markets and economies. Guided by our
long-term philosophy and adhering to our commitment to sustainable investing, we tune out the noise and aim to uncover what we believe are the best, most durable investment opportunities in the market. Our unique global investment platform combines
collective expertise, long-term discipline, and thoughtful risk management to create sustainable value for investors.
Respectfully,
Michael W.
Roberge
Chief Executive Officer
MFS Investment Management
April 15, 2021
The opinions expressed in this letter are subject to change
and may not be relied upon for investment advice. No forecasts can be guaranteed.
1
Portfolio Composition -
continued
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
| (x) | Represents the portfolio’s exposure to issuer countries as a percentage of a portfolio’s net assets. For purposes of this presentation, United States includes Cash & Cash Equivalents. |
| (y) | Represents the portfolio’s exposure to a particular currency as a percentage of a portfolio's net assets. For purposes of this presentation, United States Dollar includes Cash & Cash Equivalents. |
Cash & Cash Equivalents includes any cash, investments in
money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Percentages are based on net assets as of February 28,
2021.
The portfolio is actively managed and current
holdings may be different.
3
Expense Table
Fund expenses borne by the shareholders during the period,
September 1, 2020 through February 28, 2021
September 1, 2020 through February 28, 2021
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 September 1, 2020 through February 28, 2021.
Actual Expenses
The first line for each share class in the following table
provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000
(for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during
this period.
Hypothetical Example for Comparison
Purposes
The second line for each share class in the
following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual
return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to
highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
4
Expense Table -
continued
| Share
Class |
Annualized
Expense Ratio |
Beginning
Account Value 9/01/20 |
Ending
Account Value 2/28/21 |
Expenses
Paid During Period (p) 9/01/20-2/28/21 | |
| A | Actual | 0.99% | $1,000.00 | $1,050.06 | $5.03 |
| Hypothetical (h) | 0.99% | $1,000.00 | $1,019.89 | $4.96 | |
| B | Actual | 1.74% | $1,000.00 | $1,046.56 | $8.83 |
| Hypothetical (h) | 1.74% | $1,000.00 | $1,016.17 | $8.70 | |
| C | Actual | 1.74% | $1,000.00 | $1,046.79 | $8.83 |
| Hypothetical (h) | 1.74% | $1,000.00 | $1,016.17 | $8.70 | |
| I | Actual | 0.74% | $1,000.00 | $1,052.04 | $3.77 |
| Hypothetical (h) | 0.74% | $1,000.00 | $1,021.12 | $3.71 | |
| R1 | Actual | 1.74% | $1,000.00 | $1,047.24 | $8.83 |
| Hypothetical (h) | 1.74% | $1,000.00 | $1,016.17 | $8.70 | |
| R2 | Actual | 1.24% | $1,000.00 | $1,048.81 | $6.30 |
| Hypothetical (h) | 1.24% | $1,000.00 | $1,018.65 | $6.21 | |
| R3 | Actual | 0.99% | $1,000.00 | $1,050.01 | $5.03 |
| Hypothetical (h) | 0.99% | $1,000.00 | $1,019.89 | $4.96 | |
| R4 | Actual | 0.74% | $1,000.00 | $1,052.05 | $3.77 |
| Hypothetical (h) | 0.74% | $1,000.00 | $1,021.12 | $3.71 | |
| R6 | Actual | 0.66% | $1,000.00 | $1,052.48 | $3.36 |
| Hypothetical (h) | 0.66% | $1,000.00 | $1,021.52 | $3.31 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
5
Portfolio of
Investments
2/28/21 (unaudited)
The Portfolio of Investments is a complete list of all
securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – 99.5% | ||||
| Aerospace – 1.7% | ||||
| Lockheed Martin Corp. | 9,956 | $ 3,287,969 | ||
| Automotive – 0.9% | ||||
| USS Co. Ltd. | 85,600 | $ 1,668,871 | ||
| Biotechnology – 0.7% | ||||
| Vertex Pharmaceuticals, Inc. (a) | 6,806 | $ 1,446,615 | ||
| Brokerage & Asset Managers – 1.5% | ||||
| ASX Ltd. | 17,408 | $ 905,474 | ||
| IG Group Holdings PLC | 73,992 | 803,037 | ||
| Partners Group Holdings AG | 950 | 1,138,872 | ||
| $2,847,383 | ||||
| Business Services – 3.8% | ||||
| CGI, Inc. (a) | 16,985 | $ 1,267,591 | ||
| Eurofins Scientific SE (a) | 13,027 | 1,157,454 | ||
| Fiserv, Inc. (a) | 19,266 | 2,222,718 | ||
| Infosys Technologies Ltd., ADR | 163,810 | 2,804,427 | ||
| $7,452,190 | ||||
| Cable TV – 0.5% | ||||
| Comcast Corp., “A” | 16,904 | $ 891,179 | ||
| Computer Software – 5.0% | ||||
| Adobe Systems, Inc. (a) | 13,432 | $ 6,174,287 | ||
| Black Knight, Inc. (a) | 11,105 | 851,643 | ||
| Microsoft Corp. | 7,643 | 1,776,080 | ||
| Oracle Corp. | 14,339 | 925,009 | ||
| $9,727,019 | ||||
| Computer Software - Systems – 4.0% | ||||
| Constellation Software, Inc. | 1,792 | $ 2,320,222 | ||
| Fujitsu Ltd. | 9,700 | 1,397,739 | ||
| Hitachi Ltd. | 25,800 | 1,190,931 | ||
| NICE Systems Ltd., ADR (a) | 8,400 | 1,928,136 | ||
| Venture Corp. Ltd. | 63,600 | 910,948 | ||
| $7,747,976 | ||||
| Construction – 0.8% | ||||
| AvalonBay Communities, Inc., REIT | 9,423 | $ 1,656,092 | ||
6
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Consumer Products – 2.2% | ||||
| Kimberly-Clark Corp. | 13,501 | $ 1,732,583 | ||
| Procter & Gamble Co. | 20,134 | 2,487,153 | ||
| $4,219,736 | ||||
| Electronics – 5.6% | ||||
| Intel Corp. | 13,710 | $ 833,294 | ||
| Kyocera Corp. | 42,500 | 2,753,585 | ||
| Taiwan Semiconductor Manufacturing Co. Ltd., ADR | 57,964 | 7,299,986 | ||
| $10,886,865 | ||||
| Food & Beverages – 6.4% | ||||
| General Mills, Inc. | 58,139 | $ 3,198,226 | ||
| Mondelez International, Inc. | 30,591 | 1,626,218 | ||
| Nestle S.A. | 31,992 | 3,341,109 | ||
| PepsiCo, Inc. | 28,447 | 3,675,068 | ||
| Toyo Suisan Kaisha Ltd. | 13,800 | 587,758 | ||
| $12,428,379 | ||||
| Food & Drug Stores – 4.6% | ||||
| Seven & I Holdings Co. Ltd. | 68,300 | $ 2,608,483 | ||
| Sundrug Co. Ltd. | 19,000 | 716,107 | ||
| Tesco PLC | 186,637 | 584,531 | ||
| Wal-Mart Stores, Inc. | 12,296 | 1,597,496 | ||
| Wesfarmers Ltd. | 91,573 | 3,474,005 | ||
| $8,980,622 | ||||
| General Merchandise – 1.7% | ||||
| B&M European Value Retail S.A. | 99,267 | $ 755,664 | ||
| Dollar General Corp. | 13,534 | 2,557,791 | ||
| $3,313,455 | ||||
| Insurance – 2.3% | ||||
| Everest Re Group Ltd. | 13,702 | $ 3,313,280 | ||
| Zurich Insurance Group AG | 3,068 | 1,252,968 | ||
| $4,566,248 | ||||
| Internet – 1.8% | ||||
| Alphabet, Inc., “A” (a) | 1,228 | $ 2,482,905 | ||
| Alphabet, Inc., “C” (a) | 465 | 947,140 | ||
| $3,430,045 | ||||
7
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Leisure & Toys – 4.6% | ||||
| Activision Blizzard, Inc. | 26,076 | $ 2,493,126 | ||
| Electronic Arts, Inc. | 28,377 | 3,801,667 | ||
| SEGA SAMMY Holdings, Inc. | 48,500 | 813,983 | ||
| Take-Two Interactive Software, Inc. (a) | 10,190 | 1,879,647 | ||
| $8,988,423 | ||||
| Major Banks – 6.0% | ||||
| Bank of Nova Scotia | 15,504 | $ 903,728 | ||
| BOC Hong Kong Holdings Ltd. | 974,000 | 3,239,781 | ||
| DBS Group Holdings Ltd. | 78,200 | 1,549,969 | ||
| JPMorgan Chase & Co. | 17,989 | 2,647,441 | ||
| PNC Financial Services Group, Inc. | 9,837 | 1,656,157 | ||
| Royal Bank of Canada | 21,217 | 1,805,355 | ||
| $11,802,431 | ||||
| Medical & Health Technology & Services – 1.2% | ||||
| McKesson Corp. | 9,452 | $ 1,602,303 | ||
| Quest Diagnostics, Inc. | 6,652 | 768,905 | ||
| $2,371,208 | ||||
| Medical Equipment – 3.0% | ||||
| DiaSorin SpA | 3,833 | $ 751,053 | ||
| Medtronic PLC | 12,873 | 1,505,755 | ||
| Terumo Corp. | 98,100 | 3,659,988 | ||
| $5,916,796 | ||||
| Natural Gas - Distribution – 1.5% | ||||
| Italgas S.p.A. | 332,049 | $ 1,955,895 | ||
| Tokyo Gas Co. Ltd. | 45,700 | 944,053 | ||
| $2,899,948 | ||||
| Other Banks & Diversified Financials – 1.1% | ||||
| U.S. Bancorp | 43,493 | $ 2,174,650 | ||
| Pharmaceuticals – 11.2% | ||||
| Eli Lilly & Co. | 13,162 | $ 2,696,762 | ||
| Johnson & Johnson | 35,667 | 5,651,793 | ||
| Merck & Co., Inc. | 33,662 | 2,444,535 | ||
| Novartis AG | 11,245 | 966,577 | ||
| Novo Nordisk A.S., “B” | 47,708 | 3,390,076 | ||
| Pfizer, Inc. | 29,115 | 975,061 | ||
| Roche Holding AG | 17,595 | 5,763,129 | ||
| $21,887,933 | ||||
8
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Pollution Control – 1.2% | ||||
| Waste Connections, Inc. | 25,013 | $ 2,443,520 | ||
| Precious Metals & Minerals – 1.8% | ||||
| Barrick Gold Corp. | 39,865 | $ 743,984 | ||
| Franco-Nevada Corp. | 26,572 | 2,845,121 | ||
| $3,589,105 | ||||
| Railroad & Shipping – 1.5% | ||||
| Canadian National Railway Co. | 16,701 | $ 1,825,753 | ||
| Kansas City Southern Co. | 5,707 | 1,211,825 | ||
| $3,037,578 | ||||
| Real Estate – 4.1% | ||||
| Grand City Properties S.A. | 130,516 | $ 3,203,024 | ||
| Life Storage, Inc., REIT | 17,523 | 1,470,180 | ||
| Public Storage, Inc., REIT | 5,522 | 1,291,817 | ||
| Sun Communities, Inc., REIT | 13,904 | 2,112,713 | ||
| $8,077,734 | ||||
| Restaurants – 3.1% | ||||
| McDonald's Corp. | 10,104 | $ 2,082,839 | ||
| Starbucks Corp. | 36,913 | 3,987,711 | ||
| $6,070,550 | ||||
| Specialty Chemicals – 1.3% | ||||
| Symrise AG | 21,716 | $ 2,534,205 | ||
| Specialty Stores – 1.1% | ||||
| ABC-MART, Inc. | 20,700 | $ 1,187,203 | ||
| Target Corp. | 4,814 | 883,080 | ||
| $2,070,283 | ||||
| Telecommunications - Wireless – 3.0% | ||||
| KDDI Corp. | 137,000 | $ 4,228,435 | ||
| PLDT, Inc. | 64,665 | 1,716,581 | ||
| $5,945,016 | ||||
| Telephone Services – 3.6% | ||||
| HKT Trust and HKT Ltd. | 1,639,000 | $ 2,227,186 | ||
| TELUS Corp. | 163,624 | 3,279,025 | ||
| Verizon Communications, Inc. | 29,506 | 1,631,682 | ||
| $7,137,893 | ||||
| Tobacco – 0.7% | ||||
| Japan Tobacco, Inc. | 80,700 | $ 1,462,957 | ||
9
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Trucking – 0.4% | ||||
| Knight-Swift Transportation Holdings, Inc. | 17,164 | $ 741,485 | ||
| Utilities - Electric Power – 5.6% | ||||
| American Electric Power Co., Inc. | 22,433 | $ 1,679,110 | ||
| Avangrid, Inc. | 25,292 | 1,157,362 | ||
| CEZ A.S. (Czech Republic) | 38,210 | 931,876 | ||
| CLP Holdings Ltd. | 342,000 | 3,335,585 | ||
| Duke Energy Corp. | 8,519 | 729,141 | ||
| Evergy, Inc. | 15,918 | 853,682 | ||
| Xcel Energy, Inc. | 37,669 | 2,207,027 | ||
| $10,893,783 | ||||
| Total Common Stocks (Identified Cost, $147,703,883) | $ 194,596,142 | |||
| Investment Companies (h) – 0.0% | ||||
| Money Market Funds – 0.0% | ||||
| MFS Institutional Money Market Portfolio, 0.07% (v) (Identified Cost, $17) | 17 | $ 17 | ||
| Other Assets, Less Liabilities – 0.5% | 983,400 | |||
| Net Assets – 100.0% | $ 195,579,559 | |||
| (a) | Non-income producing security. | |||
| (h) | An affiliated issuer, which may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $17 and $194,596,142, respectively. | |||
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. |
| The following abbreviations are used in this report and are defined: | |
| ADR | American Depositary Receipt |
| REIT | Real Estate Investment Trust |
See Notes to
Financial Statements
10
Financial Statements
Statement of Assets and Liabilities
At 2/28/21 (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, $147,703,883) | $194,596,142 |
| Investments in affiliated issuers, at value (identified cost, $17) | 17 |
| Foreign currency, at value (identified cost, $174,538) | 173,459 |
| Receivables for | |
| Investments sold | 6,733,680 |
| Fund shares sold | 426,425 |
| Interest and dividends | 606,281 |
| Other assets | 42,278 |
| Total assets | $202,578,282 |
| Liabilities | |
| Payable to custodian | $6,148,673 |
| Payables for | |
| Fund shares reacquired | 752,997 |
| Payable to affiliates | |
| Investment adviser | 5,246 |
| Administrative services fee | 393 |
| Shareholder servicing costs | 29,961 |
| Distribution and service fees | 1,046 |
| Payable for independent Trustees' compensation | 559 |
| Accrued expenses and other liabilities | 59,848 |
| Total liabilities | $6,998,723 |
| Net assets | $195,579,559 |
| Net assets consist of | |
| Paid-in capital | $149,107,289 |
| Total distributable earnings (loss) | 46,472,270 |
| Net assets | $195,579,559 |
| Shares of beneficial interest outstanding | 13,213,423 |
11
Statement of Assets and
Liabilities (unaudited) – continued
| Net assets | Shares
outstanding |
Net
asset value per share (a) | |
| Class A | $22,996,715 | 1,553,495 | $14.80 |
| Class B | 415,648 | 28,299 | 14.69 |
| Class C | 2,977,042 | 203,024 | 14.66 |
| Class I | 94,075,093 | 6,351,999 | 14.81 |
| Class R1 | 125,860 | 8,534 | 14.75 |
| Class R2 | 228,850 | 15,459 | 14.80 |
| Class R3 | 83,795 | 5,653 | 14.82 |
| Class R4 | 79,150 | 5,344 | 14.81 |
| Class R6 | 74,597,406 | 5,041,616 | 14.80 |
| (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 $15.70 [100 / 94.25 x $14.80]. 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
12
Financial Statements
Statement of Operations
Six months ended 2/28/21 (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 | |
| Dividends | $2,152,090 |
| Other | 6,139 |
| Income on securities loaned | 2,145 |
| Dividends from affiliated issuers | 313 |
| Foreign taxes withheld | (84,272) |
| Total investment income | $2,076,415 |
| Expenses | |
| Management fee | $593,421 |
| Distribution and service fees | 48,038 |
| Shareholder servicing costs | 57,493 |
| Administrative services fee | 19,026 |
| Independent Trustees' compensation | 3,606 |
| Custodian fee | 26,179 |
| Shareholder communications | 10,262 |
| Audit and tax fees | 28,903 |
| Legal fees | 946 |
| Registration fees | 64,517 |
| Miscellaneous | 16,577 |
| Total expenses | $868,968 |
| Reduction of expenses by investment adviser | (53,328) |
| Net expenses | $815,640 |
| Net investment income (loss) | $1,260,775 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $10,352,077 |
| Foreign currency | 2,246 |
| Net realized gain (loss) | $10,354,323 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $179,225 |
| Translation of assets and liabilities in foreign currencies | (1,081) |
| Net unrealized gain (loss) | $178,144 |
| Net realized and unrealized gain (loss) | $10,532,467 |
| Change in net assets from operations | $11,793,242 |
See Notes to Financial
Statements
13
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 | |
| 2/28/21
(unaudited) |
8/31/20 | |
| Change in net assets | ||
| From operations | ||
| Net investment income (loss) | $1,260,775 | $4,302,589 |
| Net realized gain (loss) | 10,354,323 | (7,796,341) |
| Net unrealized gain (loss) | 178,144 | 11,738,072 |
| Change in net assets from operations | $11,793,242 | $8,244,320 |
| Total distributions to shareholders | $(1,541,907) | $(6,496,439) |
| Change in net assets from fund share transactions | $(33,749,714) | $(2,060,144) |
| Total change in net assets | $(23,498,379) | $(312,263) |
| Net assets | ||
| At beginning of period | 219,077,938 | 219,390,201 |
| At end of period | $195,579,559 | $219,077,938 |
See Notes to Financial
Statements
14
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 | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $14.18 | $13.92 | $13.73 | $12.82 | $11.87 | $10.75 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.07 | $0.23 | $0.25 | $0.23 | $0.19 | $0.18 |
| Net realized and unrealized gain (loss) | 0.63 | 0.39 | 0.56 | 0.92 | 0.91 | 1.11 |
| Total from investment operations | $0.70 | $0.62 | $0.81 | $1.15 | $1.10 | $1.29 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.08) | $(0.27) | $(0.23) | $(0.24) | $(0.15) | $(0.17) |
| From net realized gain | — | (0.09) | (0.39) | — | — | — |
| Total distributions declared to shareholders | $(0.08) | $(0.36) | $(0.62) | $(0.24) | $(0.15) | $(0.17) |
| Net asset value, end of period (x) | $14.80 | $14.18 | $13.92 | $13.73 | $12.82 | $11.87 |
| Total return (%) (r)(s)(t)(x) | 5.01(n) | 4.60 | 6.38 | 9.09 | 9.36 | 12.12 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.04(a) | 1.05 | 1.05 | 1.06 | 1.23 | 1.51 |
| Expenses after expense reductions (f) | 0.99(a) | 0.99 | 0.98 | 0.97 | 1.17 | 1.19 |
| Net investment income (loss) | 0.94(a)(l) | 1.68 | 1.86 | 1.75 | 1.55 | 1.56 |
| Portfolio turnover | 16(n) | 43 | 65 | 41 | 24 | 28 |
| Net assets at end of period (000 omitted) | $22,997 | $23,494 | $19,981 | $9,102 | $9,215 | $7,473 |
See Notes to Financial
Statements
15
Financial
Highlights – continued
| Class B |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $14.08 | $13.82 | $13.63 | $12.73 | $11.79 | $10.70 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.01 | $0.12 | $0.14 | $0.13 | $0.09 | $0.07 |
| Net realized and unrealized gain (loss) | 0.64 | 0.40 | 0.57 | 0.91 | 0.91 | 1.12 |
| Total from investment operations | $0.65 | $0.52 | $0.71 | $1.04 | $1.00 | $1.19 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.04) | $(0.17) | $(0.13) | $(0.14) | $(0.06) | $(0.10) |
| From net realized gain | — | (0.09) | (0.39) | — | — | — |
| Total distributions declared to shareholders | $(0.04) | $(0.26) | $(0.52) | $(0.14) | $(0.06) | $(0.10) |
| Net asset value, end of period (x) | $14.69 | $14.08 | $13.82 | $13.63 | $12.73 | $11.79 |
| Total return (%) (r)(s)(t)(x) | 4.66(n) | 3.81 | 5.60 | 8.25 | 8.48 | 11.16 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.79(a) | 1.80 | 1.79 | 1.81 | 1.98 | 2.33 |
| Expenses after expense reductions (f) | 1.74(a) | 1.75 | 1.74 | 1.74 | 1.96 | 1.98 |
| Net investment income (loss) | 0.19(a)(l) | 0.88 | 1.03 | 1.02 | 0.73 | 0.65 |
| Portfolio turnover | 16(n) | 43 | 65 | 41 | 24 | 28 |
| Net assets at end of period (000 omitted) | $416 | $410 | $410 | $380 | $350 | $341 |
See Notes to Financial
Statements
16
Financial
Highlights – continued
| Class C |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $14.05 | $13.80 | $13.62 | $12.71 | $11.78 | $10.69 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.01 | $0.12 | $0.14 | $0.13 | $0.09 | $0.08 |
| Net realized and unrealized gain (loss) | 0.64 | 0.39 | 0.57 | 0.92 | 0.91 | 1.11 |
| Total from investment operations | $0.65 | $0.51 | $0.71 | $1.05 | $1.00 | $1.19 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.04) | $(0.17) | $(0.14) | $(0.14) | $(0.07) | $(0.10) |
| From net realized gain | — | (0.09) | (0.39) | — | — | — |
| Total distributions declared to shareholders | $(0.04) | $(0.26) | $(0.53) | $(0.14) | $(0.07) | $(0.10) |
| Net asset value, end of period (x) | $14.66 | $14.05 | $13.80 | $13.62 | $12.71 | $11.78 |
| Total return (%) (r)(s)(t)(x) | 4.68(n) | 3.77 | 5.57 | 8.28 | 8.49 | 11.22 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.79(a) | 1.80 | 1.80 | 1.81 | 1.98 | 2.23 |
| Expenses after expense reductions (f) | 1.74(a) | 1.75 | 1.74 | 1.74 | 1.96 | 1.99 |
| Net investment income (loss) | 0.20(a)(l) | 0.90 | 1.02 | 1.01 | 0.76 | 0.74 |
| Portfolio turnover | 16(n) | 43 | 65 | 41 | 24 | 28 |
| Net assets at end of period (000 omitted) | $2,977 | $3,261 | $2,876 | $1,773 | $1,924 | $1,554 |
See Notes to Financial
Statements
17
Financial
Highlights – continued
| Class I |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $14.18 | $13.92 | $13.73 | $12.82 | $11.87 | $10.76 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.09 | $0.26 | $0.28 | $0.27 | $0.23 | $0.21 |
| Net realized and unrealized gain (loss) | 0.64 | 0.39 | 0.56 | 0.91 | 0.90 | 1.10 |
| Total from investment operations | $0.73 | $0.65 | $0.84 | $1.18 | $1.13 | $1.31 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.10) | $(0.30) | $(0.26) | $(0.27) | $(0.18) | $(0.20) |
| From net realized gain | — | (0.09) | (0.39) | — | — | — |
| Total distributions declared to shareholders | $(0.10) | $(0.39) | $(0.65) | $(0.27) | $(0.18) | $(0.20) |
| Net asset value, end of period (x) | $14.81 | $14.18 | $13.92 | $13.73 | $12.82 | $11.87 |
| Total return (%) (r)(s)(t)(x) | 5.20(n) | 4.85 | 6.61 | 9.34 | 9.59 | 12.34 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.79(a) | 0.80 | 0.79 | 0.81 | 0.94 | 1.17 |
| Expenses after expense reductions (f) | 0.74(a) | 0.75 | 0.74 | 0.74 | 0.90 | 0.98 |
| Net investment income (loss) | 1.19(a)(l) | 1.88 | 2.09 | 2.03 | 1.87 | 1.86 |
| Portfolio turnover | 16(n) | 43 | 65 | 41 | 24 | 28 |
| Net assets at end of period (000 omitted) | $94,075 | $106,849 | $118,907 | $114,259 | $97,952 | $10,669 |
See Notes to Financial
Statements
18
Financial
Highlights – continued
| Class R1 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $14.13 | $13.88 | $13.69 | $12.78 | $11.84 | $10.70 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.01 | $0.12 | $0.14 | $0.14 | $0.09 | $0.08 |
| Net realized and unrealized gain (loss) | 0.65 | 0.39 | 0.58 | 0.91 | 0.91 | 1.12 |
| Total from investment operations | $0.66 | $0.51 | $0.72 | $1.05 | $1.00 | $1.20 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.04) | $(0.17) | $(0.14) | $(0.14) | $(0.06) | $(0.06) |
| From net realized gain | — | (0.09) | (0.39) | — | — | — |
| Total distributions declared to shareholders | $(0.04) | $(0.26) | $(0.53) | $(0.14) | $(0.06) | $(0.06) |
| Net asset value, end of period (x) | $14.75 | $14.13 | $13.88 | $13.69 | $12.78 | $11.84 |
| Total return (%) (r)(s)(t)(x) | 4.72(n) | 3.74 | 5.61 | 8.29 | 8.47 | 11.24 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.79(a) | 1.80 | 1.79 | 1.81 | 1.98 | 2.31 |
| Expenses after expense reductions (f) | 1.74(a) | 1.75 | 1.74 | 1.74 | 1.96 | 1.99 |
| Net investment income (loss) | 0.18(a)(l) | 0.90 | 1.03 | 1.03 | 0.75 | 0.69 |
| Portfolio turnover | 16(n) | 43 | 65 | 41 | 24 | 28 |
| Net assets at end of period (000 omitted) | $126 | $109 | $96 | $74 | $68 | $56 |
See Notes to Financial
Statements
19
Financial
Highlights – continued
| Class R2 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $14.18 | $13.92 | $13.73 | $12.81 | $11.87 | $10.74 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.05 | $0.19 | $0.21 | $0.20 | $0.15 | $0.13 |
| Net realized and unrealized gain (loss) | 0.64 | 0.40 | 0.57 | 0.92 | 0.90 | 1.13 |
| Total from investment operations | $0.69 | $0.59 | $0.78 | $1.12 | $1.05 | $1.26 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.07) | $(0.24) | $(0.20) | $(0.20) | $(0.11) | $(0.13) |
| From net realized gain | — | (0.09) | (0.39) | — | — | — |
| Total distributions declared to shareholders | $(0.07) | $(0.33) | $(0.59) | $(0.20) | $(0.11) | $(0.13) |
| Net asset value, end of period (x) | $14.80 | $14.18 | $13.92 | $13.73 | $12.81 | $11.87 |
| Total return (%) (r)(s)(t)(x) | 4.88(n) | 4.33 | 6.09 | 8.87 | 8.94 | 11.83 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.29(a) | 1.30 | 1.29 | 1.31 | 1.49 | 1.79 |
| Expenses after expense reductions (f) | 1.24(a) | 1.25 | 1.24 | 1.24 | 1.47 | 1.49 |
| Net investment income (loss) | 0.73(a)(l) | 1.37 | 1.53 | 1.52 | 1.24 | 1.20 |
| Portfolio turnover | 16(n) | 43 | 65 | 41 | 24 | 28 |
| Net assets at end of period (000 omitted) | $229 | $170 | $75 | $66 | $61 | $72 |
See Notes to Financial
Statements
20
Financial
Highlights – continued
| Class R3 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $14.20 | $13.94 | $13.74 | $12.82 | $11.88 | $10.76 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.07 | $0.23 | $0.24 | $0.22 | $0.19 | $0.16 |
| Net realized and unrealized gain (loss) | 0.63 | 0.39 | 0.58 | 0.93 | 0.90 | 1.12 |
| Total from investment operations | $0.70 | $0.62 | $0.82 | $1.15 | $1.09 | $1.28 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.08) | $(0.27) | $(0.23) | $(0.23) | $(0.15) | $(0.16) |
| From net realized gain | — | (0.09) | (0.39) | — | — | — |
| Total distributions declared to shareholders | $(0.08) | $(0.36) | $(0.62) | $(0.23) | $(0.15) | $(0.16) |
| Net asset value, end of period (x) | $14.82 | $14.20 | $13.94 | $13.74 | $12.82 | $11.88 |
| Total return (%) (r)(s)(t)(x) | 5.00(n) | 4.58 | 6.42 | 9.11 | 9.24 | 12.05 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.04(a) | 1.05 | 1.04 | 1.05 | 1.21 | 1.56 |
| Expenses after expense reductions (f) | 0.99(a) | 1.00 | 0.99 | 0.99 | 1.18 | 1.24 |
| Net investment income (loss) | 0.95(a)(l) | 1.65 | 1.78 | 1.69 | 1.55 | 1.44 |
| Portfolio turnover | 16(n) | 43 | 65 | 41 | 24 | 28 |
| Net assets at end of period (000 omitted) | $84 | $79 | $71 | $67 | $151 | $56 |
See Notes to Financial
Statements
21
Financial
Highlights – continued
| Class R4 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $14.18 | $13.92 | $13.73 | $12.82 | $11.87 | $10.76 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.09 | $0.26 | $0.27 | $0.27 | $0.21 | $0.19 |
| Net realized and unrealized gain (loss) | 0.64 | 0.39 | 0.57 | 0.91 | 0.92 | 1.12 |
| Total from investment operations | $0.73 | $0.65 | $0.84 | $1.18 | $1.13 | $1.31 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.10) | $(0.30) | $(0.26) | $(0.27) | $(0.18) | $(0.20) |
| From net realized gain | — | (0.09) | (0.39) | — | — | — |
| Total distributions declared to shareholders | $(0.10) | $(0.39) | $(0.65) | $(0.27) | $(0.18) | $(0.20) |
| Net asset value, end of period (x) | $14.81 | $14.18 | $13.92 | $13.73 | $12.82 | $11.87 |
| Total return (%) (r)(s)(t)(x) | 5.21(n) | 4.85 | 6.61 | 9.34 | 9.58 | 12.32 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.79(a) | 0.81 | 0.79 | 0.81 | 0.98 | 1.31 |
| Expenses after expense reductions (f) | 0.74(a) | 0.75 | 0.74 | 0.74 | 0.96 | 0.99 |
| Net investment income (loss) | 1.19(a)(l) | 1.89 | 2.03 | 2.02 | 1.74 | 1.69 |
| Portfolio turnover | 16(n) | 43 | 65 | 41 | 24 | 28 |
| Net assets at end of period (000 omitted) | $79 | $75 | $72 | $67 | $62 | $56 |
See Notes to Financial
Statements
22
Financial
Highlights – continued
| Class R6 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $14.17 | $13.91 | $13.72 | $12.81 | $11.86 | $10.76 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.09 | $0.27 | $0.28 | $0.27 | $0.21 | $0.20 |
| Net realized and unrealized gain (loss) | 0.65 | 0.40 | 0.57 | 0.92 | 0.92 | 1.11 |
| Total from investment operations | $0.74 | $0.67 | $0.85 | $1.19 | $1.13 | $1.31 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.11) | $(0.32) | $(0.27) | $(0.28) | $(0.18) | $(0.21) |
| From net realized gain | — | (0.09) | (0.39) | — | — | — |
| Total distributions declared to shareholders | $(0.11) | $(0.41) | $(0.66) | $(0.28) | $(0.18) | $(0.21) |
| Net asset value, end of period (x) | $14.80 | $14.17 | $13.91 | $13.72 | $12.81 | $11.86 |
| Total return (%) (r)(s)(t)(x) | 5.25(n) | 4.94 | 6.68 | 9.42 | 9.63 | 12.37 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.71(a) | 0.73 | 0.72 | 0.74 | 0.94 | 1.21 |
| Expenses after expense reductions (f) | 0.66(a) | 0.67 | 0.67 | 0.67 | 0.92 | 0.93 |
| Net investment income (loss) | 1.25(a)(l) | 2.01 | 2.11 | 2.08 | 1.77 | 1.76 |
| Portfolio turnover | 16(n) | 43 | 65 | 41 | 24 | 28 |
| Net assets at end of period (000 omitted) | $74,597 | $84,631 | $76,901 | $69,385 | $68,569 | $45,799 |
| (a) | Annualized. |
| (d) | Per share data is based on average shares outstanding. |
| (f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
| (l) | Recognition of net investment income by the fund may be affected by the timing of the declaration of dividends by companies in which the fund invests and the actual annual net investment income ratio may differ. |
| (n) | Not annualized. |
| (r) | Certain expenses have been reduced without which performance would have been lower. |
| (s) | From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. |
| (t) | Total returns do not include any applicable sales charges. |
| (x) | The net asset values 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
23
Notes to Financial
Statements
(unaudited)
(1) Business and Organization
MFS Low Volatility Global Equity Fund (the fund) is a
diversified series of MFS Series Trust I (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
The fund is an investment company and accordingly follows the
investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation
of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these
financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests in foreign
securities. Investments in foreign securities are vulnerable to the effects of changes in the relative values of the local currency and the U.S. dollar and to the effects of changes in each country’s market, economic, industrial, political,
regulatory, geopolitical, environmental, public health, and other conditions.
In March 2020, the FASB issued Accounting Standards Update
2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional, temporary relief with respect to the financial reporting of
contracts subject to certain types of modifications due to the planned discontinuation of certain tenors of the London Interbank Offered Rate (LIBOR) and other IBOR-based reference rates as of the end of 2021. The temporary relief provided by ASU
2020-04 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 on the fund's investments, derivatives,
debt and other contracts that will undergo reference rate-related modifications as a result of the reference rate reform.
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.
24
Notes to Financial
Statements (unaudited) - continued
Investment Valuations
— Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which
there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days
or less may be valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. 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, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by
a third-party pricing service.
The Board of
Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If
the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under
the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair
value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the
exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not
resume prior to the close of the exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the
determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser
generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and
financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset
value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same
investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's
assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases,
25
Notes to Financial
Statements (unaudited) - continued
an investment's level within the fair value hierarchy is based on the lowest
level of input that is significant to the fair value measurement. The fund's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.
Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and
credit risk). Level 3 includes unobservable inputs, which may include the adviser's own assumptions in determining the fair value of investments. The following is a summary of the levels used as of February 28, 2021 in valuing the fund's assets or
liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | ||||
| United States | $96,020,202 | $— | $— | $96,020,202 |
| Japan | 7,971,968 | 15,248,125 | — | 23,220,093 |
| Canada | 17,434,299 | — | — | 17,434,299 |
| Switzerland | 12,462,655 | — | — | 12,462,655 |
| Hong Kong | 8,802,552 | — | — | 8,802,552 |
| Taiwan | 7,299,986 | — | — | 7,299,986 |
| Germany | 5,737,229 | — | — | 5,737,229 |
| Australia | 905,474 | 3,474,005 | — | 4,379,479 |
| Denmark | 3,390,076 | — | — | 3,390,076 |
| Other Countries | 13,388,654 | 2,460,917 | — | 15,849,571 |
| Mutual Funds | 17 | — | — | 17 |
| Total | $173,413,112 | $21,183,047 | $— | $194,596,159 |
For further information regarding
security characteristics, see the Portfolio of Investments.
Foreign Currency Translation
— Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated
receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign
exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that
results from fluctuations in foreign currency exchange rates is not separately disclosed.
Security Loans — Under
its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can
be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. The loans are
collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. On loans collateralized by cash, the cash collateral is invested in a money market fund.
The market value of the loaned securities is determined at the close of business of the fund and any additional required
26
Notes to Financial
Statements (unaudited) - continued
collateral is delivered to the fund on the next business day. The lending
agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent will, for the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially
impracticable, pay the fund the market value of the loaned securities. In return, the lending agent assumes the fund's rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending
agent is responsible for the shortfall, but only to the extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. A portion of the income generated upon
investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is
allocated between the fund and the lending agent. Income from securities lending is separately reported in the Statement of Operations. The dividend and interest income earned on the securities loaned is accounted for in the same manner as other
dividend and interest income. At February 28, 2021, there were no securities on loan or collateral outstanding.
Indemnifications — Under
the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters
into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet
occurred.
Investment Transactions and Income — Investment transactions are recorded on the trade date. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed
of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend payments received in additional securities are recorded on the ex-dividend date in an amount equal to the value of the security on such date.
The fund may receive proceeds from litigation settlements. Any
proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund.
Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Tax Matters and Distributions
— The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal
income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state
tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in
accordance with the
27
Notes to Financial
Statements (unaudited) - continued
applicable foreign tax law. Foreign income taxes may be withheld by certain
countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be subject to capital gains tax imposed by those countries.
Distributions to shareholders are recorded on the ex-dividend
date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted
for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in
different periods for financial statement and tax purposes will reverse at some time in the future.
Book/tax differences primarily relate to passive foreign
investment companies and wash sale loss deferrals.
The
tax character of distributions made during the current period will be determined at fiscal year end. The tax character of distributions declared to shareholders for the last fiscal year is as follows:
| Year
ended 8/31/20 | |
| Ordinary income (including any short-term capital gains) | $5,680,426 |
| Long-term capital gains | 816,013 |
| Total distributions | $6,496,439 |
The federal tax cost and the tax
basis components of distributable earnings were as follows:
| As of 2/28/21 | |
| Cost of investments | $150,634,079 |
| Gross appreciation | 45,588,473 |
| Gross depreciation | (1,626,393) |
| Net unrealized appreciation (depreciation) | $ 43,962,080 |
| As of 8/31/20 | |
| Undistributed ordinary income | 482,886 |
| Post-October capital loss deferral | (8,100,922) |
| Other temporary differences | 3,696 |
| Net unrealized appreciation (depreciation) | 43,835,275 |
The aggregate cost above includes
prior fiscal year end tax adjustments, if applicable.
Multiple Classes of Shares of Beneficial Interest — The fund offers multiple classes of shares, which differ in their respective distribution and service fees. The fund's income, realized and unrealized gain (loss), and common expenses are allocated to
shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B shares will convert to Class A
shares approximately eight years after purchase. In addition, Class C shares will convert to
28
Notes to Financial
Statements (unaudited) - continued
Class A shares approximately eight years after purchase. The fund’s
distributions declared to shareholders as reported in the Statements of Changes in Net Assets are presented by class as follows:
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||
| Class A | $138,465 | $588,994 | |
| Class B | 1,219 | 7,651 | |
| Class C | 10,573 | 58,613 | |
| Class I | 745,244 | 3,250,779 | |
| Class R1 | 358 | 1,913 | |
| Class R2 | 801 | 3,488 | |
| Class R3 | 471 | 1,965 | |
| Class R4 | 537 | 2,062 | |
| Class R6 | 644,239 | 2,580,974 | |
| Total | $1,541,907 | $6,496,439 |
(3) Transactions with
Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid
monthly at the following annual rates based on the fund's average daily net assets:
| Up to $1 billion | 0.55% |
| In excess of $1 billion and up to $2.5 billion | 0.525% |
| In excess of $2.5 billion | 0.50% |
MFS has agreed in writing to reduce
its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund's Board of Trustees. For the six months ended February 28, 2021, this management fee reduction amounted to $11,971, which is
included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.54% of the fund's average daily net assets.
The investment adviser has agreed in writing to pay a portion
of the fund’s total annual operating expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, and investment-related expenses, such that total fund operating expenses do not exceed the following rates
annually of each class’s average daily net assets:
| Classes | ||||||||
| A | B | C | I | R1 | R2 | R3 | R4 | R6 |
| 0.99% | 1.74% | 1.74% | 0.74% | 1.74% | 1.24% | 0.99% | 0.74% | 0.68% |
This written agreement will continue
until modified by the fund’s Board of Trustees, but such agreement will continue at least until December 31, 2021. For the six months ended February 28, 2021, this reduction amounted to $41,357, which is included in the reduction of total
expenses in the Statement of Operations.
29
Notes to Financial
Statements (unaudited) - continued
Distributor — MFS Fund
Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $1,666 for the six months ended February 28, 2021, as its portion of the initial sales charge on sales of Class A shares of the fund.
The Board of Trustees has adopted a distribution plan for
certain share classes pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund's distribution plan provides that the fund will pay
MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee
paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.
Distribution Plan Fee Table:
| Distribution
Fee Rate (d) |
Service
Fee Rate (d) |
Total
Distribution Plan (d) |
Annual
Effective Rate (e) |
Distribution
and Service Fee | |
| Class A | — | 0.25% | 0.25% | 0.25% | $ 29,254 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 2,058 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 15,569 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 601 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 454 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 102 |
| Total Distribution and Service Fees | $48,038 |
| (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 February 28, 2021 based on each class's average daily net assets.MFD has voluntarily agreed to rebate a portion of each class's 0.25% service fee attributable to accounts for which there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates' seed money. There were no service fee rebates for the six months ended February 28, 2021. |
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 February 28, 2021, were as follows:
| Amount | |
| Class A | $1 |
| Class B | 123 |
| Class C | 120 |
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
30
Notes to Financial
Statements (unaudited) - continued
six months ended February 28, 2021, the fee was $3,341, which equated to
0.0031% 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 February 28, 2021, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $54,152.
Administrator — MFS
provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund reimburses MFS the costs incurred to provide these services. The fund is
charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.0176% of the fund's average
daily net assets.
Trustees’ and
Officers’ Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not
pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or
directors of MFS, MFD, and MFSC.
Other — The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a
management fee to MFS but does incur investment and operating costs.
At February 28, 2021, MFS held approximately 60% and 93% of the
outstanding shares of Class R1 and Class R3, respectively, and 100% of the outstanding shares of Class R4.
The adviser has voluntarily undertaken to reimburse the fund
from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the six months ended February 28, 2021, this reimbursement
amounted to $6,096, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the six months ended February 28, 2021, purchases and sales
of investments, other than short-term obligations, aggregated $33,390,196 and $65,751,200, respectively.
31
Notes to Financial
Statements (unaudited) - continued
(5) Shares of Beneficial Interest
The fund's Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Shares sold | |||||
| Class A | 122,469 | $1,784,179 | 930,481 | $12,771,654 | |
| Class C | 27,445 | 393,103 | 58,784 | 784,363 | |
| Class I | 494,758 | 7,196,695 | 4,136,645 | 56,160,916 | |
| Class R1 | 799 | 11,423 | 640 | 8,848 | |
| Class R2 | 3,484 | 52,169 | 6,481 | 90,999 | |
| Class R3 | 20 | 280 | 360 | 5,139 | |
| Class R6 | 382,437 | 5,528,693 | 2,541,691 | 35,247,721 | |
| 1,031,412 | $14,966,542 | 7,675,082 | $105,069,640 | ||
| Shares
issued to shareholders in reinvestment of distributions |
|||||
| Class A | 10,013 | $138,277 | 43,084 | $588,562 | |
| Class B | 90 | 1,219 | 556 | 7,651 | |
| Class C | 771 | 10,407 | 4,196 | 57,613 | |
| Class I | 43,711 | 605,662 | 199,782 | 2,735,681 | |
| Class R1 | 26 | 358 | 139 | 1,913 | |
| Class R2 | 58 | 801 | 255 | 3,488 | |
| Class R3 | 34 | 471 | 143 | 1,965 | |
| Class R4 | 39 | 537 | 151 | 2,062 | |
| Class R6 | 44,794 | 621,436 | 178,952 | 2,438,265 | |
| 99,536 | $1,379,168 | 427,258 | $5,837,200 | ||
| Shares reacquired | |||||
| Class A | (236,314) | $(3,459,911) | (751,868) | $(10,081,404) | |
| Class B | (908) | (13,228) | (1,112) | (14,669) | |
| Class C | (57,188) | (829,163) | (39,396) | (512,171) | |
| Class I | (1,720,502) | (25,403,836) | (5,342,595) | (72,181,862) | |
| Class R1 | (2) | (32) | (15) | (212) | |
| Class R2 | (51) | (732) | (181) | (2,255) | |
| Class R3 | (1) | (8) | (1) | (14) | |
| Class R6 | (1,358,878) | (20,388,514) | (2,275,250) | (30,174,397) | |
| (3,373,844) | $(50,095,424) | (8,410,418) | $(112,966,984) | ||
32
Notes to Financial
Statements (unaudited) - continued
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Net change | |||||
| Class A | (103,832) | $(1,537,455) | 221,697 | $3,278,812 | |
| Class B | (818) | (12,009) | (556) | (7,018) | |
| Class C | (28,972) | (425,653) | 23,584 | 329,805 | |
| Class I | (1,182,033) | (17,601,479) | (1,006,168) | (13,285,265) | |
| Class R1 | 823 | 11,749 | 764 | 10,549 | |
| Class R2 | 3,491 | 52,238 | 6,555 | 92,232 | |
| Class R3 | 53 | 743 | 502 | 7,090 | |
| Class R4 | 39 | 537 | 151 | 2,062 | |
| Class R6 | (931,647) | (14,238,385) | 445,393 | 7,511,589 | |
| (2,242,896) | $(33,749,714) | (308,078) | $(2,060,144) | ||
Effective June 1, 2019, purchases of
the fund’s Class B shares are closed to new and existing investors subject to certain exceptions. Please see the fund’s prospectus for details.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in
a $1.25 billion unsecured committed line of credit of which $1 billion is reserved for use by the fund and certain other 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 one month LIBOR, the Federal Funds Effective Rate and the Overnight Bank Funding Rate, 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. 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 February 28, 2021, the
fund’s commitment fee and interest expense were $530 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 | $289,769 | $11,542,461 | $11,832,213 | $— | $— | $17 |
33
Notes to Financial
Statements (unaudited) - continued
| Affiliated Issuers | Dividend
Income |
Capital
Gain Distributions |
| MFS Institutional Money Market Portfolio | $313 | $— |
(8) Impacts of COVID-19
The pandemic related to the global spread of novel coronavirus
disease (COVID-19), which was first detected in December 2019, has resulted in significant disruptions to global business activity and the global economy, as well as the economies of individual countries, the financial performance of individual
companies and sectors, and the securities and commodities markets in general. Multiple surges in cases globally, the availability and widespread adoption of vaccines, and the emergence of variant strains of the virus continue to create uncertainty
as to the future and long-term impacts resulting from the pandemic including impacts to the prices and liquidity of the fund's investments and the fund's performance.
34
Proxy
Voting Policies and Information
MFS votes proxies on
behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s
Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with
the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A
shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the
“Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
From time to time, MFS may post important information about the
fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at
mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an
investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), 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.
35
Semiannual Report
February 28, 2021
MFS® Low Volatility
Equity Fund
Equity Fund
LVU-SEM
MFS® Low Volatility
Equity Fund
Equity Fund
CONTENTS
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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
LETTER FROM THE CEO
Dear Shareholders:
Markets have experienced dramatic swings since the coronavirus
pandemic brought the global economy to a standstill for several months early in 2020. The speedy development of vaccines and therapeutics brightened the economic and market outlook, but uncertainty remains as new variants of the virus appear and
questions persist over how fast vaccines can be made widely available. In the United States, political uncertainty eased after former Vice President Joe Biden won the presidential election and the Democrats gained control of a closely divided
Senate.
Global central banks have
taken aggressive steps to cushion the economic and market fallout related to the virus, and governments are deploying unprecedented levels of fiscal support. Having passed a $1.9 trillion stimulus package in March, the U.S. Congress is expected to
approve additional stimulus later this year, some of it focused on infrastructure. Along with extraordinary government expenditures, pent-up consumer demand could fuel a surge in economic activity as coronavirus restrictions are eased. Because of
this, markets anticipate at least temporary inflation pressures in the months ahead and have pushed up yields on global government bonds, resulting in ripple effects being felt across most financial markets. The measures already put in place have
helped build a supportive environment and are encouraging economic recovery; however, if markets disconnect from fundamentals, they can sow the seeds of instability. As such, recent dramatic increases in speculative retail trading bear
watching.
In the aftermath of the crisis, we could see
societal changes as households, businesses, and governments adjust to a new reality, and any such alterations could affect the investment landscape. For investors, events such as the COVID-19 outbreak demonstrate the importance of having a deep
understanding of company fundamentals, and we have built our global research platform to do just that.
At MFS®, we put our clients’ assets to work responsibly by carefully navigating the increasing complexity of global markets and economies. Guided by our
long-term philosophy and adhering to our commitment to sustainable investing, we tune out the noise and aim to uncover what we believe are the best, most durable investment opportunities in the market. Our unique global investment platform combines
collective expertise, long-term discipline, and thoughtful risk management to create sustainable value for investors.
Respectfully,
Michael W.
Roberge
Chief Executive Officer
MFS Investment Management
April 15, 2021
The opinions expressed in this letter are subject to change
and may not be relied upon for investment advice. No forecasts can be guaranteed.
1
Portfolio Composition
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
Cash & Cash Equivalents includes any cash,
investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and
liabilities.
Percentages are based on net
assets as of February 28, 2021.
The portfolio
is actively managed and current holdings may be different.
2
Expense Table
Fund expenses borne by the shareholders during the period,
September 1, 2020 through February 28, 2021
September 1, 2020 through February 28, 2021
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 September 1, 2020 through February 28, 2021.
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 9/01/20 |
Ending
Account Value 2/28/21 |
Expenses
Paid During Period (p) 9/01/20-2/28/21 | |
| A | Actual | 0.89% | $1,000.00 | $1,069.83 | $4.57 |
| Hypothetical (h) | 0.89% | $1,000.00 | $1,020.38 | $4.46 | |
| B | Actual | 1.64% | $1,000.00 | $1,065.96 | $8.40 |
| Hypothetical (h) | 1.64% | $1,000.00 | $1,016.66 | $8.20 | |
| C | Actual | 1.64% | $1,000.00 | $1,065.70 | $8.40 |
| Hypothetical (h) | 1.64% | $1,000.00 | $1,016.66 | $8.20 | |
| I | Actual | 0.64% | $1,000.00 | $1,070.99 | $3.29 |
| Hypothetical (h) | 0.64% | $1,000.00 | $1,021.62 | $3.21 | |
| R1 | Actual | 1.64% | $1,000.00 | $1,065.73 | $8.40 |
| Hypothetical (h) | 1.64% | $1,000.00 | $1,016.66 | $8.20 | |
| R2 | Actual | 1.14% | $1,000.00 | $1,068.20 | $5.85 |
| Hypothetical (h) | 1.14% | $1,000.00 | $1,019.14 | $5.71 | |
| R3 | Actual | 0.89% | $1,000.00 | $1,069.60 | $4.57 |
| Hypothetical (h) | 0.89% | $1,000.00 | $1,020.38 | $4.46 | |
| R4 | Actual | 0.64% | $1,000.00 | $1,070.97 | $3.29 |
| Hypothetical (h) | 0.64% | $1,000.00 | $1,021.62 | $3.21 | |
| R6 | Actual | 0.55% | $1,000.00 | $1,071.41 | $2.82 |
| Hypothetical (h) | 0.55% | $1,000.00 | $1,022.07 | $2.76 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
4
Portfolio of
Investments
2/28/21 (unaudited)
The Portfolio of Investments is a complete list of all
securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – 99.6% | ||||
| Aerospace – 1.9% | ||||
| CACI International, Inc., “A” (a) | 16,440 | $ 3,638,829 | ||
| Honeywell International, Inc. | 12,777 | 2,585,426 | ||
| Lockheed Martin Corp. | 7,591 | 2,506,928 | ||
| Northrop Grumman Corp. | 8,303 | 2,421,653 | ||
| $11,152,836 | ||||
| Business Services – 7.0% | ||||
| Accenture PLC, “A” | 12,189 | $ 3,058,220 | ||
| Amdocs Ltd. | 180,444 | 13,679,460 | ||
| CoStar Group, Inc. (a) | 10,434 | 8,595,112 | ||
| Fidelity National Information Services, Inc. | 18,981 | 2,619,378 | ||
| Fiserv, Inc. (a) | 20,369 | 2,349,971 | ||
| FleetCor Technologies, Inc. (a) | 8,577 | 2,378,488 | ||
| Global Payments, Inc. | 28,842 | 5,710,428 | ||
| Verisk Analytics, Inc., “A” | 15,599 | 2,555,896 | ||
| $40,946,953 | ||||
| Cable TV – 3.8% | ||||
| Cable One, Inc. | 4,586 | $ 8,781,502 | ||
| Charter Communications, Inc., “A” (a) | 12,812 | 7,859,137 | ||
| Comcast Corp., “A” | 102,709 | 5,414,819 | ||
| $22,055,458 | ||||
| Computer Software – 8.4% | ||||
| Adobe Systems, Inc. (a) | 36,855 | $ 16,941,138 | ||
| Atlassian Corp. PLC, “A” (a) | 33,198 | 7,891,165 | ||
| Microsoft Corp. | 89,841 | 20,877,251 | ||
| Oracle Corp. | 47,579 | 3,069,321 | ||
| $48,778,875 | ||||
| Computer Software - Systems – 1.7% | ||||
| Apple, Inc. | 42,968 | $ 5,210,300 | ||
| EPAM Systems, Inc. (a) | 12,407 | 4,635,379 | ||
| $9,845,679 | ||||
| Construction – 1.3% | ||||
| AvalonBay Communities, Inc., REIT | 19,305 | $ 3,392,853 | ||
| Mid-America Apartment Communities, Inc., REIT | 28,534 | 3,844,386 | ||
| $7,237,239 | ||||
5
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Consumer Products – 1.6% | ||||
| Procter & Gamble Co. | 76,626 | $ 9,465,610 | ||
| Electrical Equipment – 2.9% | ||||
| AMETEK, Inc. | 25,224 | $ 2,975,675 | ||
| Johnson Controls International PLC | 88,079 | 4,913,927 | ||
| TE Connectivity Ltd. | 67,316 | 8,753,100 | ||
| $16,642,702 | ||||
| Electronics – 1.5% | ||||
| Texas Instruments, Inc. | 49,833 | $ 8,584,731 | ||
| Food & Beverages – 5.6% | ||||
| General Mills, Inc. | 114,548 | $ 6,301,285 | ||
| Ingredion, Inc. | 83,141 | 7,499,318 | ||
| J.M. Smucker Co. | 23,148 | 2,592,576 | ||
| Mondelez International, Inc. | 65,373 | 3,475,229 | ||
| PepsiCo, Inc. | 96,388 | 12,452,366 | ||
| $32,320,774 | ||||
| Food & Drug Stores – 1.4% | ||||
| Wal-Mart Stores, Inc. | 63,321 | $ 8,226,664 | ||
| Insurance – 6.1% | ||||
| Allstate Corp. | 49,119 | $ 5,236,085 | ||
| Aon PLC | 30,248 | 6,887,772 | ||
| Chubb Ltd. | 37,026 | 6,019,687 | ||
| Everest Re Group Ltd. | 35,722 | 8,637,937 | ||
| MetLife, Inc. | 155,088 | 8,933,069 | ||
| $35,714,550 | ||||
| Internet – 5.2% | ||||
| Alphabet, Inc., “A” (a) | 9,089 | $ 18,377,140 | ||
| Alphabet, Inc., “C” (a) | 4,253 | 8,662,766 | ||
| Facebook, Inc., “A” (a) | 12,726 | 3,278,472 | ||
| $30,318,378 | ||||
| Leisure & Toys – 0.5% | ||||
| Electronic Arts, Inc. | 19,605 | $ 2,626,482 | ||
| Machinery & Tools – 2.6% | ||||
| Eaton Corp. PLC | 77,583 | $ 10,100,531 | ||
| Illinois Tool Works, Inc. | 12,999 | 2,628,138 | ||
| Roper Technologies, Inc. | 6,588 | 2,487,760 | ||
| $15,216,429 | ||||
6
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Major Banks – 0.8% | ||||
| PNC Financial Services Group, Inc. | 27,448 | $ 4,621,145 | ||
| Medical & Health Technology & Services – 0.7% | ||||
| McKesson Corp. | 25,248 | $ 4,280,041 | ||
| Medical Equipment – 6.0% | ||||
| Danaher Corp. | 58,181 | $ 12,780,620 | ||
| Medtronic PLC | 75,617 | 8,844,921 | ||
| STERIS PLC | 59,236 | 10,354,453 | ||
| Thermo Fisher Scientific, Inc. | 6,931 | 3,119,504 | ||
| $35,099,498 | ||||
| Natural Gas - Distribution – 0.4% | ||||
| Sempra Energy | 21,814 | $ 2,529,988 | ||
| Network & Telecom – 0.4% | ||||
| Motorola Solutions, Inc. | 14,664 | $ 2,573,239 | ||
| Other Banks & Diversified Financials – 4.0% | ||||
| Mastercard, Inc., “A” | 34,661 | $ 12,264,795 | ||
| S&P Global, Inc. | 9,655 | 3,179,971 | ||
| U.S. Bancorp | 71,442 | 3,572,100 | ||
| Visa, Inc., “A” | 20,314 | 4,314,490 | ||
| $23,331,356 | ||||
| Pharmaceuticals – 10.3% | ||||
| AbbVie, Inc. | 24,683 | $ 2,659,347 | ||
| Eli Lilly & Co. | 102,263 | 20,952,666 | ||
| Johnson & Johnson | 97,850 | 15,505,311 | ||
| Merck & Co., Inc. | 113,236 | 8,223,198 | ||
| Pfizer, Inc. | 227,102 | 7,605,646 | ||
| Zoetis, Inc. | 33,062 | 5,132,545 | ||
| $60,078,713 | ||||
| Pollution Control – 3.2% | ||||
| Republic Services, Inc. | 23,444 | $ 2,088,626 | ||
| Waste Connections, Inc. | 118,720 | 11,597,757 | ||
| Waste Management, Inc. | 42,645 | 4,728,904 | ||
| $18,415,287 | ||||
| Precious Metals & Minerals – 0.5% | ||||
| Newmont Corp. | 48,461 | $ 2,635,309 | ||
7
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Real Estate – 3.3% | ||||
| Extra Space Storage, Inc., REIT | 21,296 | $ 2,676,907 | ||
| Public Storage, Inc., REIT | 20,344 | 4,759,276 | ||
| STAG Industrial, Inc., REIT | 105,606 | 3,331,869 | ||
| Sun Communities, Inc., REIT | 14,909 | 2,265,423 | ||
| W.P. Carey, Inc., REIT | 89,945 | 6,164,830 | ||
| $19,198,305 | ||||
| Restaurants – 2.9% | ||||
| McDonald's Corp. | 12,512 | $ 2,579,224 | ||
| Starbucks Corp. | 132,349 | 14,297,662 | ||
| $16,876,886 | ||||
| Specialty Chemicals – 0.6% | ||||
| Ecolab, Inc. | 16,299 | $ 3,412,359 | ||
| Specialty Stores – 5.6% | ||||
| Amazon.com, Inc. (a) | 3,256 | $ 10,070,580 | ||
| Costco Wholesale Corp. | 39,450 | 13,057,950 | ||
| Target Corp. | 50,422 | 9,249,412 | ||
| $32,377,942 | ||||
| Telecommunications - Wireless – 2.2% | ||||
| T-Mobile USA, Inc. (a) | 107,317 | $ 12,874,820 | ||
| Telephone Services – 0.7% | ||||
| Verizon Communications, Inc. | 70,884 | $ 3,919,885 | ||
| Trucking – 0.9% | ||||
| Expeditors International of Washington, Inc. | 26,833 | $ 2,464,343 | ||
| Old Dominion Freight Line, Inc. | 12,873 | 2,764,734 | ||
| $5,229,077 | ||||
| Utilities - Electric Power – 5.6% | ||||
| American Electric Power Co., Inc. | 32,789 | $ 2,454,257 | ||
| DTE Energy Co. | 22,378 | 2,634,338 | ||
| Duke Energy Corp. | 56,668 | 4,850,214 | ||
| Evergy, Inc. | 59,178 | 3,173,716 | ||
| Exelon Corp. | 85,905 | 3,315,933 | ||
| NextEra Energy, Inc. | 137,180 | 10,079,986 | ||
| Xcel Energy, Inc. | 108,098 | 6,333,462 | ||
| $32,841,906 | ||||
| Total Common Stocks (Identified Cost, $444,082,446) | $579,429,116 | |||
8
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Investment Companies (h) – 0.2% | ||||
| Money Market Funds – 0.2% | ||||
| MFS Institutional Money Market Portfolio, 0.07% (v) (Identified Cost, $1,362,462) | 1,362,462 | $ 1,362,462 | ||
| Other Assets, Less Liabilities – 0.2% | 1,242,766 | |||
| Net Assets – 100.0% | $582,034,344 | |||
| (a) | Non-income producing security. | |||
| (h) | An affiliated issuer, which may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $1,362,462 and $579,429,116, respectively. | |||
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. |
| The following abbreviations are used in this report and are defined: | |
| REIT | Real Estate Investment Trust |
See Notes to
Financial Statements
9
Financial Statements
Statement of Assets and Liabilities
At 2/28/21 (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, $444,082,446) | $579,429,116 |
| Investments in affiliated issuers, at value (identified cost, $1,362,462) | 1,362,462 |
| Receivables for | |
| Fund shares sold | 1,892,095 |
| Dividends | 806,901 |
| Other assets | 52,492 |
| Total assets | $583,543,066 |
| Liabilities | |
| Payables for | |
| Fund shares reacquired | $1,273,148 |
| Payable to affiliates | |
| Investment adviser | 22,743 |
| Administrative services fee | 918 |
| Shareholder servicing costs | 138,223 |
| Distribution and service fees | 7,303 |
| Payable for independent Trustees' compensation | 937 |
| Accrued expenses and other liabilities | 65,450 |
| Total liabilities | $1,508,722 |
| Net assets | $582,034,344 |
| Net assets consist of | |
| Paid-in capital | $457,496,957 |
| Total distributable earnings (loss) | 124,537,387 |
| Net assets | $582,034,344 |
| Shares of beneficial interest outstanding | 31,575,576 |
10
Statement of Assets and
Liabilities (unaudited) – continued
| Net assets | Shares
outstanding |
Net
asset value per share (a) | |
| Class A | $138,334,735 | 7,511,946 | $18.42 |
| Class B | 2,168,149 | 117,912 | 18.39 |
| Class C | 28,239,897 | 1,542,029 | 18.31 |
| Class I | 335,793,489 | 18,206,868 | 18.44 |
| Class R1 | 578,416 | 31,402 | 18.42 |
| Class R2 | 583,830 | 31,569 | 18.49 |
| Class R3 | 616,812 | 33,380 | 18.48 |
| Class R4 | 86,892 | 4,707 | 18.46 |
| Class R6 | 75,632,124 | 4,095,763 | 18.47 |
| (a) | Maximum offering price per share was equal to the net asset value per share for all share classes, except for Class A, for which the maximum offering price per share was $19.54 [100 / 94.25 x $18.42]. 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 2/28/21 (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 | |
| Dividends | $5,786,825 |
| Other | 7,012 |
| Dividends from affiliated issuers | 1,375 |
| Foreign taxes withheld | (4,661) |
| Total investment income | $5,790,551 |
| Expenses | |
| Management fee | $1,581,535 |
| Distribution and service fees | 330,162 |
| Shareholder servicing costs | 275,435 |
| Administrative services fee | 45,085 |
| Independent Trustees' compensation | 6,443 |
| Custodian fee | 18,361 |
| Shareholder communications | 24,182 |
| Audit and tax fees | 26,126 |
| Legal fees | 2,486 |
| Miscellaneous | 96,484 |
| Total expenses | $2,406,299 |
| Reduction of expenses by investment adviser and distributor | (84,457) |
| Net expenses | $2,321,842 |
| Net investment income (loss) | $3,468,709 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $17,090,938 |
| Foreign currency | (6) |
| Net realized gain (loss) | $17,090,932 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $24,931,661 |
| Net realized and unrealized gain (loss) | $42,022,593 |
| Change in net assets from operations | $45,491,302 |
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 | |
| 2/28/21
(unaudited) |
8/31/20 | |
| Change in net assets | ||
| From operations | ||
| Net investment income (loss) | $3,468,709 | $7,186,729 |
| Net realized gain (loss) | 17,090,932 | (27,671,446) |
| Net unrealized gain (loss) | 24,931,661 | 71,118,695 |
| Change in net assets from operations | $45,491,302 | $50,633,978 |
| Total distributions to shareholders | $(4,183,519) | $(7,089,150) |
| Change in net assets from fund share transactions | $(170,981,731) | $280,489,527 |
| Total change in net assets | $(129,673,948) | $324,034,355 |
| Net assets | ||
| At beginning of period | 711,708,292 | 387,673,937 |
| At end of period | $582,034,344 | $711,708,292 |
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 | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $17.32 | $16.28 | $15.05 | $13.77 | $12.56 | $11.12 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.08 | $0.18 | $0.18 | $0.18 | $0.16 | $0.15 |
| Net realized and unrealized gain (loss) | 1.12 | 1.04 | 1.68 | 1.47 | 1.23 | 1.49 |
| Total from investment operations | $1.20 | $1.22 | $1.86 | $1.65 | $1.39 | $1.64 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.10) | $(0.16) | $(0.17) | $(0.18) | $(0.15) | $(0.11) |
| From net realized gain | — | (0.02) | (0.46) | (0.19) | (0.03) | (0.09) |
| Total distributions declared to shareholders | $(0.10) | $(0.18) | $(0.63) | $(0.37) | $(0.18) | $(0.20) |
| Net asset value, end of period (x) | $18.42 | $17.32 | $16.28 | $15.05 | $13.77 | $12.56 |
| Total return (%) (r)(s)(t)(x) | 6.98(n) | 7.64 | 13.23 | 12.14 | 11.18 | 14.87 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.92(a) | 0.92 | 1.05 | 1.16 | 1.33 | 1.65 |
| Expenses after expense reductions (f) | 0.89(a) | 0.89 | 0.89 | 0.88 | 1.16 | 1.19 |
| Net investment income (loss) | 0.95(a) | 1.11 | 1.22 | 1.25 | 1.19 | 1.25 |
| Portfolio turnover | 8(n) | 34 | 28 | 30 | 36 | 38 |
| Net assets at end of period (000 omitted) | $138,335 | $135,199 | $85,022 | $41,177 | $39,568 | $29,508 |
See Notes to Financial
Statements
14
Financial
Highlights – continued
| Class B |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $17.29 | $16.25 | $15.02 | $13.74 | $12.53 | $11.10 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.02 | $0.06 | $0.07 | $0.07 | $0.06 | $0.06 |
| Net realized and unrealized gain (loss) | 1.12 | 1.03 | 1.68 | 1.47 | 1.23 | 1.48 |
| Total from investment operations | $1.14 | $1.09 | $1.75 | $1.54 | $1.29 | $1.54 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.04) | $(0.03) | $(0.06) | $(0.07) | $(0.05) | $(0.02) |
| From net realized gain | — | (0.02) | (0.46) | (0.19) | (0.03) | (0.09) |
| Total distributions declared to shareholders | $(0.04) | $(0.05) | $(0.52) | $(0.26) | $(0.08) | $(0.11) |
| Net asset value, end of period (x) | $18.39 | $17.29 | $16.25 | $15.02 | $13.74 | $12.53 |
| Total return (%) (r)(s)(t)(x) | 6.60(n) | 6.77 | 12.41 | 11.32 | 10.36 | 13.96 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.67(a) | 1.67 | 1.81 | 1.91 | 2.08 | 2.42 |
| Expenses after expense reductions (f) | 1.64(a) | 1.64 | 1.64 | 1.64 | 1.92 | 1.95 |
| Net investment income (loss) | 0.19(a) | 0.35 | 0.48 | 0.50 | 0.43 | 0.49 |
| Portfolio turnover | 8(n) | 34 | 28 | 30 | 36 | 38 |
| Net assets at end of period (000 omitted) | $2,168 | $2,198 | $2,558 | $2,211 | $2,081 | $1,885 |
See Notes to Financial
Statements
15
Financial
Highlights – continued
| Class C |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $17.22 | $16.20 | $14.98 | $13.70 | $12.50 | $11.09 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.02 | $0.06 | $0.07 | $0.07 | $0.06 | $0.06 |
| Net realized and unrealized gain (loss) | 1.11 | 1.03 | 1.67 | 1.48 | 1.23 | 1.48 |
| Total from investment operations | $1.13 | $1.09 | $1.74 | $1.55 | $1.29 | $1.54 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.04) | $(0.05) | $(0.06) | $(0.08) | $(0.06) | $(0.04) |
| From net realized gain | — | (0.02) | (0.46) | (0.19) | (0.03) | (0.09) |
| Total distributions declared to shareholders | $(0.04) | $(0.07) | $(0.52) | $(0.27) | $(0.09) | $(0.13) |
| Net asset value, end of period (x) | $18.31 | $17.22 | $16.20 | $14.98 | $13.70 | $12.50 |
| Total return (%) (r)(s)(t)(x) | 6.57(n) | 6.75 | 12.40 | 11.36 | 10.36 | 13.91 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.67(a) | 1.67 | 1.81 | 1.91 | 2.08 | 2.31 |
| Expenses after expense reductions (f) | 1.64(a) | 1.64 | 1.64 | 1.64 | 1.92 | 1.95 |
| Net investment income (loss) | 0.20(a) | 0.35 | 0.47 | 0.50 | 0.43 | 0.48 |
| Portfolio turnover | 8(n) | 34 | 28 | 30 | 36 | 38 |
| Net assets at end of period (000 omitted) | $28,240 | $29,429 | $21,859 | $13,942 | $12,422 | $9,977 |
See Notes to Financial
Statements
16
Financial
Highlights – continued
| Class I |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $17.34 | $16.31 | $15.07 | $13.78 | $12.57 | $11.14 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.10 | $0.22 | $0.23 | $0.21 | $0.19 | $0.18 |
| Net realized and unrealized gain (loss) | 1.12 | 1.03 | 1.68 | 1.49 | 1.23 | 1.48 |
| Total from investment operations | $1.22 | $1.25 | $1.91 | $1.70 | $1.42 | $1.66 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.12) | $(0.20) | $(0.21) | $(0.22) | $(0.18) | $(0.14) |
| From net realized gain | — | (0.02) | (0.46) | (0.19) | (0.03) | (0.09) |
| Total distributions declared to shareholders | $(0.12) | $(0.22) | $(0.67) | $(0.41) | $(0.21) | $(0.23) |
| Net asset value, end of period (x) | $18.44 | $17.34 | $16.31 | $15.07 | $13.78 | $12.57 |
| Total return (%) (r)(s)(t)(x) | 7.10(n) | 7.82 | 13.55 | 12.49 | 11.44 | 15.05 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.67(a) | 0.67 | 0.78 | 0.91 | 1.07 | 1.20 |
| Expenses after expense reductions (f) | 0.64(a) | 0.64 | 0.64 | 0.64 | 0.92 | 0.95 |
| Net investment income (loss) | 1.18(a) | 1.35 | 1.46 | 1.50 | 1.47 | 1.51 |
| Portfolio turnover | 8(n) | 34 | 28 | 30 | 36 | 38 |
| Net assets at end of period (000 omitted) | $335,793 | $464,428 | $246,245 | $30,751 | $21,814 | $16,123 |
See Notes to Financial
Statements
17
Financial
Highlights – continued
| Class R1 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $17.33 | $16.29 | $15.06 | $13.77 | $12.57 | $11.12 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.02 | $0.05 | $0.07 | $0.07 | $0.05 | $0.06 |
| Net realized and unrealized gain (loss) | 1.12 | 1.05 | 1.68 | 1.48 | 1.24 | 1.49 |
| Total from investment operations | $1.14 | $1.10 | $1.75 | $1.55 | $1.29 | $1.55 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.05) | $(0.04) | $(0.06) | $(0.07) | $(0.06) | $(0.01) |
| From net realized gain | — | (0.02) | (0.46) | (0.19) | (0.03) | (0.09) |
| Total distributions declared to shareholders | $(0.05) | $(0.06) | $(0.52) | $(0.26) | $(0.09) | $(0.10) |
| Net asset value, end of period (x) | $18.42 | $17.33 | $16.29 | $15.06 | $13.77 | $12.57 |
| Total return (%) (r)(s)(t)(x) | 6.57(n) | 6.79 | 12.37 | 11.36 | 10.33 | 13.96 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.67(a) | 1.67 | 1.81 | 1.91 | 2.07 | 2.56 |
| Expenses after expense reductions (f) | 1.64(a) | 1.64 | 1.64 | 1.64 | 1.91 | 1.95 |
| Net investment income (loss) | 0.17(a) | 0.34 | 0.48 | 0.49 | 0.41 | 0.48 |
| Portfolio turnover | 8(n) | 34 | 28 | 30 | 36 | 38 |
| Net assets at end of period (000 omitted) | $578 | $340 | $164 | $136 | $108 | $57 |
See Notes to Financial
Statements
18
Financial
Highlights – continued
| Class R2 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $17.39 | $16.36 | $15.12 | $13.83 | $12.61 | $11.13 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.06 | $0.14 | $0.15 | $0.14 | $0.12 | $0.12 |
| Net realized and unrealized gain (loss) | 1.12 | 1.04 | 1.68 | 1.49 | 1.25 | 1.49 |
| Total from investment operations | $1.18 | $1.18 | $1.83 | $1.63 | $1.37 | $1.61 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.08) | $(0.13) | $(0.13) | $(0.15) | $(0.12) | $(0.04) |
| From net realized gain | — | (0.02) | (0.46) | (0.19) | (0.03) | (0.09) |
| Total distributions declared to shareholders | $(0.08) | $(0.15) | $(0.59) | $(0.34) | $(0.15) | $(0.13) |
| Net asset value, end of period (x) | $18.49 | $17.39 | $16.36 | $15.12 | $13.83 | $12.61 |
| Total return (%) (r)(s)(t)(x) | 6.82(n) | 7.29 | 12.94 | 11.93 | 10.93 | 14.57 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.17(a) | 1.17 | 1.30 | 1.42 | 1.58 | 2.07 |
| Expenses after expense reductions (f) | 1.14(a) | 1.14 | 1.14 | 1.14 | 1.42 | 1.45 |
| Net investment income (loss) | 0.69(a) | 0.86 | 0.98 | 1.01 | 0.91 | 0.98 |
| Portfolio turnover | 8(n) | 34 | 28 | 30 | 36 | 38 |
| Net assets at end of period (000 omitted) | $584 | $531 | $368 | $156 | $74 | $53 |
See Notes to Financial
Statements
19
Financial
Highlights – continued
| Class R3 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $17.38 | $16.34 | $15.10 | $13.81 | $12.59 | $11.14 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.08 | $0.18 | $0.19 | $0.18 | $0.15 | $0.15 |
| Net realized and unrealized gain (loss) | 1.12 | 1.05 | 1.68 | 1.48 | 1.25 | 1.48 |
| Total from investment operations | $1.20 | $1.23 | $1.87 | $1.66 | $1.40 | $1.63 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.10) | $(0.17) | $(0.17) | $(0.18) | $(0.15) | $(0.09) |
| From net realized gain | — | (0.02) | (0.46) | (0.19) | (0.03) | (0.09) |
| Total distributions declared to shareholders | $(0.10) | $(0.19) | $(0.63) | $(0.37) | $(0.18) | $(0.18) |
| Net asset value, end of period (x) | $18.48 | $17.38 | $16.34 | $15.10 | $13.81 | $12.59 |
| Total return (%) (r)(s)(t)(x) | 6.96(n) | 7.65 | 13.24 | 12.18 | 11.22 | 14.72 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.92(a) | 0.93 | 1.05 | 1.16 | 1.33 | 1.82 |
| Expenses after expense reductions (f) | 0.89(a) | 0.89 | 0.89 | 0.89 | 1.17 | 1.20 |
| Net investment income (loss) | 0.94(a) | 1.15 | 1.22 | 1.25 | 1.18 | 1.23 |
| Portfolio turnover | 8(n) | 34 | 28 | 30 | 36 | 38 |
| Net assets at end of period (000 omitted) | $617 | $573 | $100 | $67 | $59 | $53 |
See Notes to Financial
Statements
20
Financial
Highlights – continued
| Class R4 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $17.36 | $16.32 | $15.08 | $13.79 | $12.58 | $11.14 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.11 | $0.22 | $0.22 | $0.21 | $0.19 | $0.17 |
| Net realized and unrealized gain (loss) | 1.12 | 1.04 | 1.69 | 1.49 | 1.23 | 1.49 |
| Total from investment operations | $1.23 | $1.26 | $1.91 | $1.70 | $1.42 | $1.66 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.13) | $(0.20) | $(0.21) | $(0.22) | $(0.18) | $(0.13) |
| From net realized gain | — | (0.02) | (0.46) | (0.19) | (0.03) | (0.09) |
| Total distributions declared to shareholders | $(0.13) | $(0.22) | $(0.67) | $(0.41) | $(0.21) | $(0.22) |
| Net asset value, end of period (x) | $18.46 | $17.36 | $16.32 | $15.08 | $13.79 | $12.58 |
| Total return (%) (r)(s)(t)(x) | 7.10(n) | 7.87 | 13.53 | 12.48 | 11.42 | 15.08 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.67(a) | 0.67 | 0.81 | 0.91 | 1.08 | 1.57 |
| Expenses after expense reductions (f) | 0.64(a) | 0.64 | 0.64 | 0.64 | 0.92 | 0.95 |
| Net investment income (loss) | 1.19(a) | 1.35 | 1.48 | 1.50 | 1.42 | 1.48 |
| Portfolio turnover | 8(n) | 34 | 28 | 30 | 36 | 38 |
| Net assets at end of period (000 omitted) | $87 | $81 | $75 | $66 | $59 | $53 |
See Notes to Financial
Statements
21
Financial
Highlights – continued
| Class R6 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $17.37 | $16.32 | $15.09 | $13.80 | $12.58 | $11.14 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.11 | $0.23 | $0.23 | $0.23 | $0.18 | $0.18 |
| Net realized and unrealized gain (loss) | 1.12 | 1.05 | 1.68 | 1.48 | 1.27 | 1.50 |
| Total from investment operations | $1.23 | $1.28 | $1.91 | $1.71 | $1.45 | $1.68 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.13) | $(0.21) | $(0.22) | $(0.23) | $(0.20) | $(0.15) |
| From net realized gain | — | (0.02) | (0.46) | (0.19) | (0.03) | (0.09) |
| Total distributions declared to shareholders | $(0.13) | $(0.23) | $(0.68) | $(0.42) | $(0.23) | $(0.24) |
| Net asset value, end of period (x) | $18.47 | $17.37 | $16.32 | $15.09 | $13.80 | $12.58 |
| Total return (%) (r)(s)(t)(x) | 7.14(n) | 8.02 | 13.56 | 12.57 | 11.61 | 15.21 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.58(a) | 0.59 | 0.71 | 0.82 | 0.97 | 1.36 |
| Expenses after expense reductions (f) | 0.55(a) | 0.56 | 0.56 | 0.54 | 0.78 | 0.88 |
| Net investment income (loss) | 1.29(a) | 1.45 | 1.53 | 1.60 | 1.38 | 1.53 |
| Portfolio turnover | 8(n) | 34 | 28 | 30 | 36 | 38 |
| Net assets at end of period (000 omitted) | $75,632 | $78,929 | $31,283 | $8,632 | $6,515 | $1,693 |
| (a) | Annualized. |
| (d) | Per share data is based on average shares outstanding. |
| (f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
| (n) | Not annualized. |
| (r) | Certain expenses have been reduced without which performance would have been lower. |
| (s) | From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. |
| (t) | Total returns do not include any applicable sales charges. |
| (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
22
Notes to Financial
Statements
(unaudited)
(1) Business and Organization
MFS Low Volatility Equity Fund (the fund) is a diversified
series of MFS Series Trust I (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
The fund is an investment company and accordingly follows the
investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation
of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these
financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.
In March 2020, the FASB issued Accounting Standards Update
2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional, temporary relief with respect to the financial reporting of
contracts subject to certain types of modifications due to the planned discontinuation of certain tenors of the London Interbank Offered Rate (LIBOR) and other IBOR-based reference rates as of the end of 2021. The temporary relief provided by ASU
2020-04 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 on the fund's investments, derivatives,
debt and other contracts that will undergo reference rate-related modifications as a result of the reference rate reform.
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
— Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which
there were no sales reported that day, are generally valued at the last quoted daily bid
23
Notes to Financial
Statements (unaudited) - continued
quotation on their primary market or exchange as provided by a third-party
pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per
share. 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, and other market data.
The Board of Trustees has delegated primary responsibility for
determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market
quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and
procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from
third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the
investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the
exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s
net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party
pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the
issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on
the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance
that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's
assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair
value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers
factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities,
interest rates, prepayment speed, and credit risk). Level 3 includes
24
Notes to Financial
Statements (unaudited) - continued
unobservable inputs, which may include the adviser's own assumptions in
determining the fair value of investments. The following is a summary of the levels used as of February 28, 2021 in valuing the fund's assets or liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities | $579,429,116 | $— | $— | $579,429,116 |
| Mutual Funds | 1,362,462 | — | — | 1,362,462 |
| Total | $580,791,578 | $— | $— | $580,791,578 |
For further information regarding
security characteristics, see the Portfolio of Investments.
Indemnifications — Under
the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters
into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet
occurred.
Investment Transactions and Income — Investment transactions are recorded on the trade date. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed
of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend payments received in additional securities are recorded on the ex-dividend date in an amount equal to the value of the security on such date.
The fund may receive proceeds from litigation settlements. Any
proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund.
Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Tax Matters and Distributions
— The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal
income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state
tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in
accordance with the 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
25
Notes to Financial
Statements (unaudited) - continued
asset value per share. Temporary differences which arise from recognizing
certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future.
Book/tax differences primarily relate to wash sale loss
deferrals.
The tax character of distributions made during
the current period will be determined at fiscal year end. The tax character of distributions declared to shareholders for the last fiscal year is as follows:
| Year
ended 8/31/20 | |
| Ordinary income (including any short-term capital gains) | $6,410,990 |
| Long-term capital gains | 678,160 |
| Total distributions | $7,089,150 |
The federal tax cost and the tax
basis components of distributable earnings were as follows:
| As of 2/28/21 | |
| Cost of investments | $451,923,959 |
| Gross appreciation | 132,242,721 |
| Gross depreciation | (3,375,102) |
| Net unrealized appreciation (depreciation) | $128,867,619 |
| As of 8/31/20 | |
| Undistributed ordinary income | 1,448,103 |
| Capital loss carryforwards | (22,312,778) |
| Net unrealized appreciation (depreciation) | 104,094,279 |
The aggregate cost above includes
prior fiscal year end tax adjustments, if applicable.
As
of August 31, 2020, 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 | $(22,312,778) |
Multiple Classes of Shares of
Beneficial Interest — The fund offers multiple classes of shares, which differ in their respective distribution and service fees. The fund's income, realized and unrealized gain (loss), and common expenses are
allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B shares will convert
to Class A shares approximately eight years after purchase. In addition, Class C shares will convert to
26
Notes to Financial
Statements (unaudited) - continued
Class A shares approximately eight years after purchase. The fund’s
distributions declared to shareholders as reported in the Statements of Changes in Net Assets are presented by class as follows:
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||
| Class A | $800,000 | $1,259,540 | |
| Class B | 4,711 | 8,076 | |
| Class C | 67,219 | 114,106 | |
| Class I | 2,717,541 | 4,857,764 | |
| Class R1 | 1,078 | 898 | |
| Class R2 | 2,540 | 3,903 | |
| Class R3 | 3,472 | 4,643 | |
| Class R4 | 587 | 1,014 | |
| Class R6 | 586,371 | 839,206 | |
| Total | $4,183,519 | $7,089,150 |
(3) Transactions with
Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid
monthly at the following annual rates based on the fund's average daily net assets:
| Up to $1 billion | 0.50% |
| In excess of $1 billion and up to $2.5 billion | 0.475% |
| In excess of $2.5 billion | 0.45% |
MFS has agreed in writing to reduce
its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund's Board of Trustees. For the six months ended February 28, 2021, this management fee reduction amounted to $35,120, which is
included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.49% of the fund's average daily net assets.
The investment adviser has agreed in writing to pay a portion
of the fund’s total annual operating expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, and investment-related expenses, such that total fund operating expenses do not exceed the following rates
annually of each class’s average daily net assets:
| Classes | ||||||||
| A | B | C | I | R1 | R2 | R3 | R4 | R6 |
| 0.89% | 1.64% | 1.64% | 0.64% | 1.64% | 1.14% | 0.89% | 0.64% | 0.57% |
This written agreement will continue
until modified by the fund’s Board of Trustees, but such agreement will continue at least until December 31, 2021. For the six months ended February 28, 2021, this reduction amounted to $49,313, which is included in the reduction of total
expenses in the Statement of Operations.
27
Notes to Financial
Statements (unaudited) - continued
Distributor — MFS Fund
Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $24,480 for the six months ended February 28, 2021, as its portion of the initial sales charge on sales of Class A shares of the fund.
The Board of Trustees has adopted a distribution plan for
certain share classes pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund's distribution plan provides that the fund will pay
MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee
paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.
Distribution Plan Fee Table:
| Distribution
Fee Rate (d) |
Service
Fee Rate (d) |
Total
Distribution Plan (d) |
Annual
Effective Rate (e) |
Distribution
and Service Fee | |
| Class A | — | 0.25% | 0.25% | 0.25% | $ 170,435 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 10,678 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 144,819 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 2,105 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 1,384 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 741 |
| Total Distribution and Service Fees | $330,162 |
| (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 February 28, 2021 based on each class's average daily net assets.MFD has voluntarily agreed to rebate a portion of each class's 0.25% service fee attributable to accounts for which there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates' seed money. For the six months ended February 28, 2021, this rebate amounted to $24 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 February 28, 2021, were as follows:
| Amount | |
| Class A | $615 |
| Class B | 651 |
| Class C | 982 |
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
28
Notes to Financial
Statements (unaudited) - continued
determined periodically under the supervision of the fund's Board of Trustees.
For the six months ended February 28, 2021, the fee was $11,285, which equated to 0.0036% 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 February 28, 2021, these out-of-pocket expenses, sub-accounting and other
shareholder servicing costs amounted to $264,150.
Administrator — MFS
provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund reimburses MFS the costs incurred to provide these services. The fund is
charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.0142% of the fund's average
daily net assets.
Trustees’ and
Officers’ Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not
pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or
directors of MFS, MFD, and MFSC.
Other — The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a
management fee to MFS but does incur investment and operating costs.
On September 16, 2019, MFS purchased 867 shares of Class I for
an aggregate amount of $14,162.
At February 28, 2021, MFS
held approximately 100% of the outstanding shares of Class R4.
The adviser has voluntarily undertaken to reimburse the fund
from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the six months ended February 28, 2021, this reimbursement
amounted to $6,933, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the six months ended February 28, 2021, purchases and sales
of investments, other than short-term obligations, aggregated $48,606,808 and $218,632,914, respectively.
29
Notes to Financial
Statements (unaudited) - continued
(5) Shares of Beneficial Interest
The fund's Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Shares sold | |||||
| Class A | 669,386 | $12,019,675 | 4,468,100 | $71,643,199 | |
| Class B | 781 | 14,181 | 3,641 | 59,763 | |
| Class C | 73,363 | 1,314,040 | 728,406 | 11,722,623 | |
| Class I | 4,200,205 | 74,412,081 | 21,568,779 | 344,288,587 | |
| Class R1 | 13,045 | 239,326 | 10,062 | 164,912 | |
| Class R2 | 940 | 17,025 | 11,025 | 176,500 | |
| Class R3 | 813 | 14,699 | 31,934 | 539,974 | |
| Class R4 | 7 | 123 | 1 | 12 | |
| Class R6 | 582,603 | 10,385,582 | 3,871,893 | 61,898,410 | |
| 5,541,143 | $98,416,732 | 30,693,841 | $490,493,980 | ||
| Shares
issued to shareholders in reinvestment of distributions |
|||||
| Class A | 45,548 | $799,451 | 80,918 | $1,257,661 | |
| Class B | 263 | 4,711 | 504 | 8,040 | |
| Class C | 3,757 | 67,173 | 7,205 | 114,052 | |
| Class I | 156,534 | 2,715,666 | 311,665 | 4,854,910 | |
| Class R1 | 60 | 1,078 | 57 | 898 | |
| Class R2 | 143 | 2,540 | 249 | 3,903 | |
| Class R3 | 197 | 3,472 | 303 | 4,643 | |
| Class R4 | 33 | 587 | 65 | 1,014 | |
| Class R6 | 32,256 | 565,230 | 51,280 | 790,978 | |
| 238,791 | $4,159,908 | 452,246 | $7,036,099 | ||
| Shares reacquired | |||||
| Class A | (1,009,199) | $(18,162,401) | (1,963,811) | $(30,771,313) | |
| Class B | (10,213) | (175,369) | (34,460) | (530,783) | |
| Class C | (243,611) | (4,382,404) | (376,716) | (5,835,567) | |
| Class I | (12,928,829) | (231,693,030) | (10,203,475) | (159,682,355) | |
| Class R1 | (1,314) | (22,476) | (567) | (7,918) | |
| Class R2 | (58) | (1,076) | (3,224) | (51,662) | |
| Class R3 | (627) | (11,574) | (5,364) | (80,611) | |
| Class R6 | (1,064,062) | (19,110,041) | (1,294,460) | (20,080,343) | |
| (15,257,913) | $(273,558,371) | (13,882,077) | $(217,040,552) | ||
30
Notes to Financial
Statements (unaudited) - continued
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Net change | |||||
| Class A | (294,265) | $(5,343,275) | 2,585,207 | $42,129,547 | |
| Class B | (9,169) | (156,477) | (30,315) | (462,980) | |
| Class C | (166,491) | (3,001,191) | 358,895 | 6,001,108 | |
| Class I | (8,572,090) | (154,565,283) | 11,676,969 | 189,461,142 | |
| Class R1 | 11,791 | 217,928 | 9,552 | 157,892 | |
| Class R2 | 1,025 | 18,489 | 8,050 | 128,741 | |
| Class R3 | 383 | 6,597 | 26,873 | 464,006 | |
| Class R4 | 40 | 710 | 66 | 1,026 | |
| Class R6 | (449,203) | (8,159,229) | 2,628,713 | 42,609,045 | |
| (9,477,979) | $(170,981,731) | 17,264,010 | $280,489,527 | ||
Effective June 1, 2019, purchases of
the fund’s Class B shares are closed to new and existing investors subject to certain exceptions. Please see the fund’s prospectus for details.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in
a $1.25 billion unsecured committed line of credit of which $1 billion is reserved for use by the fund and certain other 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 one month LIBOR, the Federal Funds Effective Rate and the Overnight Bank Funding Rate, 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. 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 February 28, 2021, the
fund’s commitment fee and interest expense were $1,508 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund
owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
| Affiliated Issuers | Beginning
Value |
Purchases | Sales
Proceeds |
Realized
Gain (Loss) |
Change
in Unrealized Appreciation or Depreciation |
Ending
Value |
| MFS Institutional Money Market Portfolio | $3,082,282 | $43,351,152 | $45,070,972 | $— | $— | $1,362,462 |
31
Notes to Financial
Statements (unaudited) - continued
| Affiliated Issuers | Dividend
Income |
Capital
Gain Distributions |
| MFS Institutional Money Market Portfolio | $1,375 | $— |
(8) Impacts of COVID-19
The pandemic related to the global spread of novel coronavirus
disease (COVID-19), which was first detected in December 2019, has resulted in significant disruptions to global business activity and the global economy, as well as the economies of individual countries, the financial performance of individual
companies and sectors, and the securities and commodities markets in general. Multiple surges in cases globally, the availability and widespread adoption of vaccines, and the emergence of variant strains of the virus continue to create uncertainty
as to the future and long-term impacts resulting from the pandemic including impacts to the prices and liquidity of the fund's investments and the fund's performance.
32
Proxy
Voting Policies and Information
MFS votes proxies on
behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s
Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with
the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A
shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the
“Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
From time to time, MFS may post important information about the
fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at
mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an
investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), 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.
33
Semiannual Report
February 28, 2021
MFS® New Discovery Fund
NDF-SEM
MFS® New Discovery Fund
CONTENTS
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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
LETTER FROM THE CEO
Dear Shareholders:
Markets have experienced dramatic swings since the coronavirus
pandemic brought the global economy to a standstill for several months early in 2020. The speedy development of vaccines and therapeutics brightened the economic and market outlook, but uncertainty remains as new variants of the virus appear and
questions persist over how fast vaccines can be made widely available. In the United States, political uncertainty eased after former Vice President Joe Biden won the presidential election and the Democrats gained control of a closely divided
Senate.
Global central banks have
taken aggressive steps to cushion the economic and market fallout related to the virus, and governments are deploying unprecedented levels of fiscal support. Having passed a $1.9 trillion stimulus package in March, the U.S. Congress is expected to
approve additional stimulus later this year, some of it focused on infrastructure. Along with extraordinary government expenditures, pent-up consumer demand could fuel a surge in economic activity as coronavirus restrictions are eased. Because of
this, markets anticipate at least temporary inflation pressures in the months ahead and have pushed up yields on global government bonds, resulting in ripple effects being felt across most financial markets. The measures already put in place have
helped build a supportive environment and are encouraging economic recovery; however, if markets disconnect from fundamentals, they can sow the seeds of instability. As such, recent dramatic increases in speculative retail trading bear
watching.
In the aftermath of the crisis, we could see
societal changes as households, businesses, and governments adjust to a new reality, and any such alterations could affect the investment landscape. For investors, events such as the COVID-19 outbreak demonstrate the importance of having a deep
understanding of company fundamentals, and we have built our global research platform to do just that.
At MFS®, we put our clients’ assets to work responsibly by carefully navigating the increasing complexity of global markets and economies. Guided by our
long-term philosophy and adhering to our commitment to sustainable investing, we tune out the noise and aim to uncover what we believe are the best, most durable investment opportunities in the market. Our unique global investment platform combines
collective expertise, long-term discipline, and thoughtful risk management to create sustainable value for investors.
Respectfully,
Michael W.
Roberge
Chief Executive Officer
MFS Investment Management
April 15, 2021
The opinions expressed in this letter are subject to change
and may not be relied upon for investment advice. No forecasts can be guaranteed.
1
Portfolio Composition
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
Cash & Cash Equivalents includes any cash,
investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and
liabilities.
Percentages are based on net
assets as of February 28, 2021.
The portfolio
is actively managed and current holdings may be different.
2
Expense Table
Fund expenses borne by the shareholders during the period,
September 1, 2020 through February 28, 2021
September 1, 2020 through February 28, 2021
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 September 1, 2020 through February 28, 2021.
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 9/01/20 |
Ending
Account Value 2/28/21 |
Expenses
Paid During Period (p) 9/01/20-2/28/21 | |
| A | Actual | 1.24% | $1,000.00 | $1,279.97 | $7.01 |
| Hypothetical (h) | 1.24% | $1,000.00 | $1,018.65 | $6.21 | |
| B | Actual | 1.99% | $1,000.00 | $1,275.03 | $11.23 |
| Hypothetical (h) | 1.99% | $1,000.00 | $1,014.93 | $9.94 | |
| C | Actual | 2.00% | $1,000.00 | $1,275.07 | $11.28 |
| Hypothetical (h) | 2.00% | $1,000.00 | $1,014.88 | $9.99 | |
| I | Actual | 0.99% | $1,000.00 | $1,281.43 | $5.60 |
| Hypothetical (h) | 0.99% | $1,000.00 | $1,019.89 | $4.96 | |
| R1 | Actual | 1.99% | $1,000.00 | $1,275.16 | $11.23 |
| Hypothetical (h) | 1.99% | $1,000.00 | $1,014.93 | $9.94 | |
| R2 | Actual | 1.49% | $1,000.00 | $1,278.24 | $8.42 |
| Hypothetical (h) | 1.49% | $1,000.00 | $1,017.41 | $7.45 | |
| R3 | Actual | 1.24% | $1,000.00 | $1,279.81 | $7.01 |
| Hypothetical (h) | 1.24% | $1,000.00 | $1,018.65 | $6.21 | |
| R4 | Actual | 0.99% | $1,000.00 | $1,281.56 | $5.60 |
| Hypothetical (h) | 0.99% | $1,000.00 | $1,019.89 | $4.96 | |
| R6 | Actual | 0.88% | $1,000.00 | $1,282.31 | $4.98 |
| Hypothetical (h) | 0.88% | $1,000.00 | $1,020.43 | $4.41 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
4
Portfolio of
Investments
2/28/21 (unaudited)
The Portfolio of Investments is a complete list of all
securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – 97.4% | ||||
| Aerospace – 2.6% | ||||
| CACI International, Inc., “A” (a) | 248,616 | $ 55,028,665 | ||
| Kratos Defense & Security Solutions, Inc. (a) | 657,079 | 18,069,673 | ||
| $73,098,338 | ||||
| Apparel Manufacturers – 1.4% | ||||
| Skechers USA, Inc., “A” (a) | 1,103,322 | $ 40,381,585 | ||
| Automotive – 0.6% | ||||
| Visteon Corp. (a) | 136,621 | $ 17,374,093 | ||
| Biotechnology – 6.4% | ||||
| Abcam PLC | 961,208 | $ 22,712,070 | ||
| Adaptive Biotechnologies Corp. (a) | 260,789 | 14,752,834 | ||
| AlloVir, Inc. (a) | 404,016 | 14,770,825 | ||
| Amicus Therapeutics, Inc. (a) | 842,470 | 10,345,532 | ||
| Berkeley Lights, Inc. (a) | 96,861 | 6,002,476 | ||
| BioAtla, Inc. (a) | 325,151 | 17,265,518 | ||
| BioXcel Therapeutics, Inc. (a) | 189,484 | 10,158,237 | ||
| BridgeBio Pharma, Inc. (a) | 324,014 | 22,901,309 | ||
| Immunocore Holdings PLC, ADR (a) | 65,377 | 3,161,632 | ||
| Morphosys AG, ADR (a) | 446,764 | 11,102,085 | ||
| Neurocrine Biosciences, Inc. (a) | 95,139 | 10,418,672 | ||
| Prelude Therapeutics, Inc. (a) | 184,450 | 11,496,768 | ||
| Sana Biotechnology, Inc. (a) | 326,615 | 10,040,145 | ||
| Seer, Inc. (a) | 105,356 | 5,081,320 | ||
| Twist Bioscience Corp. (a) | 64,906 | 8,933,662 | ||
| $179,143,085 | ||||
| Brokerage & Asset Managers – 4.5% | ||||
| Focus Financial Partners, “A” (a) | 903,978 | $ 42,496,006 | ||
| GCM Grosvenor, Inc. | 647,372 | 8,059,781 | ||
| Grosvenor Capital Management LLC (a)(n) | 1,262,527 | 15,718,461 | ||
| Hamilton Lane, Inc., “A” | 232,551 | 20,790,060 | ||
| TMX Group Ltd. | 171,059 | 16,330,314 | ||
| WisdomTree Investments, Inc. | 4,323,861 | 22,916,463 | ||
| $126,311,085 | ||||
| Business Services – 10.1% | ||||
| Endava PLC, ADR (a) | 147,143 | $ 13,014,798 | ||
| EVO Payments, Inc., “A” (a) | 1,019,221 | 25,949,367 | ||
| ExlService Holdings, Inc. (a) | 401,060 | 33,937,697 | ||
5
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Business Services – continued | ||||
| Keywords Studios PLC (a) | 936,456 | $ 32,799,418 | ||
| Nuvei Corp. (a) | 834,499 | 43,435,673 | ||
| Proofpoint, Inc. (a) | 233,819 | 28,273,394 | ||
| Stamps.com, Inc. (a) | 203,290 | 36,984,550 | ||
| TriNet Group, Inc. (a) | 359,246 | 28,836,676 | ||
| WNS (Holdings) Ltd., ADR (a) | 553,724 | 41,368,720 | ||
| $284,600,293 | ||||
| Chemicals – 1.1% | ||||
| Ingevity Corp. (a) | 431,623 | $ 29,989,166 | ||
| Computer Software – 10.6% | ||||
| 8x8, Inc. (a) | 1,016,135 | $ 34,761,978 | ||
| Asana, Inc. (a) | 557,427 | 19,303,697 | ||
| Avalara, Inc. (a) | 114,917 | 18,035,074 | ||
| Everbridge, Inc. (a) | 258,791 | 39,654,545 | ||
| nCino, Inc. (a) | 152,876 | 10,453,661 | ||
| Open Lending Corp., “A” (a) | 747,616 | 28,588,836 | ||
| Pagerduty, Inc. (a) | 470,649 | 21,056,836 | ||
| Paylocity Holding Corp. (a) | 92,802 | 17,742,815 | ||
| Ping Identity Holding Corp. (a) | 1,245,040 | 29,171,287 | ||
| VERTEX, Inc. (a) | 1,102,980 | 33,916,635 | ||
| Viant Technology, Inc., “A” (a) | 563,804 | 27,959,040 | ||
| Zendesk, Inc. (a) | 119,990 | 17,535,339 | ||
| $298,179,743 | ||||
| Computer Software - Systems – 4.0% | ||||
| Five9, Inc. (a) | 101,949 | $ 18,885,033 | ||
| Q2 Holdings, Inc. (a) | 400,940 | 48,866,567 | ||
| Rapid7, Inc. (a) | 606,149 | 46,212,800 | ||
| $113,964,400 | ||||
| Construction – 2.8% | ||||
| AZEK Co. LLC (a) | 721,398 | $ 31,820,865 | ||
| Summit Materials, Inc., “A” (a) | 901,373 | 24,977,046 | ||
| Trex Co., Inc. (a) | 245,581 | 22,505,043 | ||
| $79,302,954 | ||||
| Consumer Services – 1.3% | ||||
| Boyd Group Services, Inc. | 101,496 | $ 16,795,570 | ||
| Bright Horizons Family Solutions, Inc. (a) | 56,341 | 8,995,404 | ||
| MakeMyTrip Ltd. (a) | 339,226 | 11,381,033 | ||
| $37,172,007 | ||||
6
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Containers – 1.2% | ||||
| Gerresheimer AG | 339,958 | $ 35,111,111 | ||
| Electrical Equipment – 3.7% | ||||
| Advanced Drainage Systems, Inc. | 115,994 | $ 12,761,660 | ||
| Generac Holdings, Inc. (a) | 133,664 | 44,050,308 | ||
| Littlefuse, Inc. | 65,147 | 16,952,552 | ||
| Sensata Technologies Holding PLC (a) | 534,409 | 30,616,292 | ||
| $104,380,812 | ||||
| Electronics – 4.6% | ||||
| Advanced Energy Industries, Inc. | 437,971 | $ 45,746,071 | ||
| Array Technologies, Inc. (a) | 893,087 | 33,115,666 | ||
| Shoals Technologies Group, Inc. (a) | 703,538 | 22,949,409 | ||
| Silicon Laboratories, Inc. (a) | 174,870 | 27,234,254 | ||
| $129,045,400 | ||||
| Entertainment – 1.1% | ||||
| Manchester United PLC, “A” | 1,569,880 | $ 29,623,636 | ||
| Food & Beverages – 0.2% | ||||
| Laird Superfood, Inc. (a)(l) | 128,596 | $ 5,075,684 | ||
| Food & Drug Stores – 0.7% | ||||
| Grocery Outlet Holding Corp. (a) | 567,068 | $ 20,408,777 | ||
| Gaming & Lodging – 0.6% | ||||
| Penn National Gaming, Inc. (a) | 146,010 | $ 16,905,038 | ||
| General Merchandise – 0.5% | ||||
| Ollie's Bargain Outlet Holdings, Inc. (a) | 154,663 | $ 12,787,537 | ||
| Insurance – 0.9% | ||||
| Metromile, Inc. (a) | 1,684,811 | $ 25,263,741 | ||
| Leisure & Toys – 1.6% | ||||
| Malibu Boats, Inc., “A” (a) | 417,725 | $ 31,137,222 | ||
| Thule Group AB | 359,849 | 15,043,605 | ||
| $46,180,827 | ||||
| Machinery & Tools – 1.4% | ||||
| Hydrofarm Holdings Group, Inc. (a) | 15,042 | $ 954,866 | ||
| Ritchie Bros. Auctioneers, Inc. | 702,267 | 38,147,144 | ||
| $39,102,010 | ||||
7
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Medical & Health Technology & Services – 7.2% | ||||
| Certara, Inc. (a) | 624,634 | $ 21,643,568 | ||
| Charles River Laboratories International, Inc. (a) | 105,231 | 30,110,798 | ||
| Guardant Health, Inc. (a) | 87,006 | 12,805,543 | ||
| Health Catalyst, Inc. (a) | 234,097 | 11,351,364 | ||
| HealthEquity, Inc. (a) | 275,943 | 22,723,906 | ||
| ICON PLC (a) | 134,171 | 24,242,016 | ||
| PRA Health Sciences, Inc. (a) | 469,885 | 69,265,748 | ||
| Schrodinger, Inc. (a) | 113,808 | 11,663,044 | ||
| $203,805,987 | ||||
| Medical Equipment – 4.7% | ||||
| Acutus Medical, Inc. (a) | 602,374 | $ 12,505,284 | ||
| Bio-Techne Corp. | 50,978 | 18,438,233 | ||
| Maravai Lifesciences Holdings, Inc., “A” (a) | 885,618 | 28,800,297 | ||
| Merit Medical Systems, Inc. (a) | 400,024 | 22,289,337 | ||
| Nevro Corp. (a) | 89,361 | 14,760,650 | ||
| OptiNose, Inc. (a) | 1,169,386 | 4,537,218 | ||
| Outset Medical, Inc. (a) | 251,898 | 12,542,002 | ||
| PerkinElmer, Inc. | 77,668 | 9,793,158 | ||
| Silk Road Medical, Inc. (a) | 187,403 | 10,264,062 | ||
| $133,930,241 | ||||
| Network & Telecom – 3.1% | ||||
| CoreSite Realty Corp., REIT | 309,726 | $ 37,696,751 | ||
| QTS Realty Trust, Inc., REIT, “A” | 801,433 | 49,785,018 | ||
| $87,481,769 | ||||
| Other Banks & Diversified Financials – 5.2% | ||||
| Bank OZK | 329,168 | $ 13,568,305 | ||
| dMY Technology Group, Inc. II (a)(h)(l) | 1,588,189 | 30,239,118 | ||
| FTAC Olympus Acquisition Corp. (a) | 1,981,168 | 23,377,782 | ||
| Hudson Executive Investment Corp., “A” (a) | 931,885 | 10,008,445 | ||
| Prosperity Bancshares, Inc. | 309,180 | 22,715,455 | ||
| TPG Pace Tech Opportunities Corp. (a) | 2,069,027 | 22,076,518 | ||
| TS Innovation Acquisitions Corp. (a)(h) | 1,920,578 | 24,813,868 | ||
| $146,799,491 | ||||
| Pharmaceuticals – 2.7% | ||||
| Annexon, Inc. (a) | 491,626 | $ 14,311,233 | ||
| Collegium Pharmaceutical, Inc. (a) | 372,496 | 8,787,181 | ||
| Harmony Biosciences Holdings (a) | 389,916 | 13,830,320 | ||
| Orchard RX Ltd., ADR (a) | 329,462 | 2,296,350 | ||
| SpringWorks Therapeutics, Inc. (a) | 260,790 | 22,440,979 | ||
8
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Pharmaceuticals – continued | ||||
| Turning Point Therapeutics, Inc. (a) | 122,516 | $ 14,445,862 | ||
| $76,111,925 | ||||
| Pollution Control – 1.1% | ||||
| GFL Environmental, Inc. | 1,009,079 | $ 31,301,631 | ||
| Railroad & Shipping – 0.1% | ||||
| StealthGas, Inc. (a) | 1,033,327 | $ 2,738,316 | ||
| Real Estate – 2.7% | ||||
| Big Yellow Group PLC, REIT | 1,284,237 | $ 20,307,410 | ||
| Industrial Logistics Properties Trust, REIT | 929,145 | 19,762,914 | ||
| STAG Industrial, Inc., REIT | 1,128,179 | 35,594,047 | ||
| $75,664,371 | ||||
| Specialty Chemicals – 2.0% | ||||
| Axalta Coating Systems Ltd. (a) | 1,070,941 | $ 29,279,527 | ||
| Ferro Corp. (a) | 1,736,590 | 27,559,683 | ||
| $56,839,210 | ||||
| Specialty Stores – 3.6% | ||||
| Leslie's, Inc. (a) | 2,173,634 | $ 52,775,834 | ||
| Petco Health & Wellness Co., Inc. (a) | 1,319,655 | 26,300,724 | ||
| Vroom, Inc. (a) | 523,316 | 23,156,733 | ||
| $102,233,291 | ||||
| Trucking – 3.1% | ||||
| CryoPort, Inc. (a) | 568,401 | $ 33,785,755 | ||
| Knight-Swift Transportation Holdings, Inc. | 665,004 | 28,728,173 | ||
| Schneider National, Inc. | 1,076,087 | 24,889,892 | ||
| $87,403,820 | ||||
| Total Common Stocks (Identified Cost, $1,913,894,036) | $2,747,711,374 | |||
| Investment Companies (h) – 3.4% | ||||
| Money Market Funds – 3.4% | ||||
| MFS Institutional Money Market Portfolio, 0.07% (v) (Identified Cost, $94,108,749) | 94,113,300 | $ 94,113,300 | ||
| Collateral for Securities Loaned – 0.5% | ||||
| State Street Navigator Securities Lending Government Money Market Portfolio, 0.05% (j) (Identified Cost, $14,082,613) | 14,082,613 | $ 14,082,613 | ||
| Other Assets, Less Liabilities – (1.3)% | (35,824,798) | |||
| Net Assets – 100.0% | $2,820,082,489 | |||
9
Portfolio of
Investments (unaudited) – continued
| (a) | Non-income producing security. | |||
| (h) | An affiliated issuer, which may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $149,166,286 and $2,706,741,001, respectively. | |||
| (j) | The rate quoted is the annualized seven-day yield of the fund at period end. | |||
| (l) | A portion of this security is on loan. See Note 2 for additional information. | |||
| (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 $15,718,461, representing 0.6% 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: | |
| ADR | American Depositary Receipt |
| REIT | Real Estate Investment Trust |
See Notes to
Financial Statements
10
Financial Statements
Statement of Assets and Liabilities
At 2/28/21 (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, including $14,190,973 of securities on loan (identified cost, $1,872,734,498) | $2,706,741,001 |
| Investments in affiliated issuers, at value (identified cost, $149,350,900) | 149,166,286 |
| Foreign currency, at value (identified cost, $3,663) | 3,610 |
| Receivables for | |
| Investments sold | 19,643,572 |
| Fund shares sold | 9,710,276 |
| Interest and dividends | 626,716 |
| Other assets | 46,041 |
| Total assets | $2,885,937,502 |
| Liabilities | |
| Payables for | |
| Investments purchased | $47,799,172 |
| Fund shares reacquired | 2,869,695 |
| Collateral for securities loaned, at value | 14,082,613 |
| Payable to affiliates | |
| Investment adviser | 255,827 |
| Administrative services fee | 3,984 |
| Shareholder servicing costs | 649,251 |
| Distribution and service fees | 42,996 |
| Payable for independent Trustees' compensation | 1,811 |
| Accrued expenses and other liabilities | 149,664 |
| Total liabilities | $65,855,013 |
| Net assets | $2,820,082,489 |
| Net assets consist of | |
| Paid-in capital | $1,795,903,335 |
| Total distributable earnings (loss) | 1,024,179,154 |
| Net assets | $2,820,082,489 |
| Shares of beneficial interest outstanding | 70,430,086 |
11
Statement of Assets and
Liabilities (unaudited) – continued
| Net assets | Shares
outstanding |
Net
asset value per share (a) | |
| Class A | $1,021,652,331 | 27,418,536 | $37.26 |
| Class B | 17,979,275 | 697,846 | 25.76 |
| Class C | 58,687,322 | 2,269,889 | 25.85 |
| Class I | 474,403,159 | 10,899,663 | 43.52 |
| Class R1 | 5,502,664 | 216,393 | 25.43 |
| Class R2 | 34,433,591 | 1,023,683 | 33.64 |
| Class R3 | 122,830,856 | 3,302,954 | 37.19 |
| Class R4 | 25,266,157 | 623,829 | 40.50 |
| Class R6 | 1,059,327,134 | 23,977,293 | 44.18 |
| (a) | Maximum offering price per share was equal to the net asset value per share for all share classes, except for Class A, for which the maximum offering price per share was $39.53 [100 / 94.25 x $37.26]. 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
12
Financial Statements
Statement of Operations
Six months ended 2/28/21 (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 | |
| Dividends | $6,822,264 |
| Other | 151,151 |
| Income on securities loaned | 97,919 |
| Dividends from affiliated issuers | 48,060 |
| Foreign taxes withheld | (98,589) |
| Total investment income | $7,020,805 |
| Expenses | |
| Management fee | $10,343,287 |
| Distribution and service fees | 1,727,759 |
| Shareholder servicing costs | 1,033,586 |
| Administrative services fee | 158,261 |
| Independent Trustees' compensation | 16,548 |
| Custodian fee | 61,061 |
| Shareholder communications | 73,492 |
| Audit and tax fees | 30,060 |
| Legal fees | 7,212 |
| Miscellaneous | 139,156 |
| Total expenses | $13,590,422 |
| Reduction of expenses by investment adviser and distributor | (137,093) |
| Net expenses | $13,453,329 |
| Net investment income (loss) | $(6,432,524) |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $337,657,343 |
| Foreign currency | 14,382 |
| Net realized gain (loss) | $337,671,725 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $273,074,129 |
| Affiliated issuers | (189,164) |
| Translation of assets and liabilities in foreign currencies | 97 |
| Net unrealized gain (loss) | $272,885,062 |
| Net realized and unrealized gain (loss) | $610,556,787 |
| Change in net assets from operations | $604,124,263 |
See Notes to Financial
Statements
13
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 | |
| 2/28/21
(unaudited) |
8/31/20 | |
| Change in net assets | ||
| From operations | ||
| Net investment income (loss) | $(6,432,524) | $(8,702,343) |
| Net realized gain (loss) | 337,671,725 | 131,368,209 |
| Net unrealized gain (loss) | 272,885,062 | 321,853,771 |
| Change in net assets from operations | $604,124,263 | $444,519,637 |
| Total distributions to shareholders | $(245,280,652) | $(114,138,919) |
| Change in net assets from fund share transactions | $381,594,427 | $317,806,445 |
| Total change in net assets | $740,438,038 | $648,187,163 |
| Net assets | ||
| At beginning of period | 2,079,644,451 | 1,431,457,288 |
| At end of period | $2,820,082,489 | $2,079,644,451 |
See Notes to Financial
Statements
14
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 | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $32.45 | $27.56 | $33.30 | $27.27 | $24.11 | $23.69 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.12) | $(0.18) | $(0.19) | $(0.23) | $(0.18)(c) | $(0.11) |
| Net realized and unrealized gain (loss) | 8.82 | 7.31 | 0.06(g) | 9.07 | 3.92 | 0.53 |
| Total from investment operations | $8.70 | $7.13 | $(0.13) | $8.84 | $3.74 | $0.42 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.89) | $(2.24) | $(5.61) | $(2.81) | $(0.58) | $— |
| Net asset value, end of period (x) | $37.26 | $32.45 | $27.56 | $33.30 | $27.27 | $24.11 |
| Total return (%) (r)(s)(t)(x) | 28.00(n) | 27.51 | 3.49 | 34.98 | 15.83(c) | 1.77 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.26(a) | 1.29 | 1.30 | 1.33 | 1.35(c) | 1.36 |
| Expenses after expense reductions (f) | 1.24(a) | 1.27 | 1.29 | 1.31 | 1.33(c) | 1.34 |
| Net investment income (loss) | (0.67)(a) | (0.66) | (0.70) | (0.80) | (0.70)(c) | (0.50) |
| Portfolio turnover | 40(n) | 64 | 69 | 67 | 53 | 49 |
| Net assets at end of period (000 omitted) | $1,021,652 | $755,202 | $549,660 | $525,698 | $394,878 | $400,997 |
See Notes to Financial
Statements
15
Financial
Highlights – continued
| Class B |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $23.55 | $20.72 | $26.86 | $22.65 | $20.27 | $20.07 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.18) | $(0.28) | $(0.30) | $(0.37) | $(0.30)(c) | $(0.24) |
| Net realized and unrealized gain (loss) | 6.28 | 5.35 | (0.23)(g) | 7.39 | 3.26 | 0.44 |
| Total from investment operations | $6.10 | $5.07 | $(0.53) | $7.02 | $2.96 | $0.20 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.89) | $(2.24) | $(5.61) | $(2.81) | $(0.58) | $— |
| Net asset value, end of period (x) | $25.76 | $23.55 | $20.72 | $26.86 | $22.65 | $20.27 |
| Total return (%) (r)(s)(t)(x) | 27.50(n) | 26.58 | 2.69 | 34.00 | 14.97(c) | 1.00 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 2.01(a) | 2.04 | 2.06 | 2.08 | 2.10(c) | 2.11 |
| Expenses after expense reductions (f) | 1.99(a) | 2.02 | 2.04 | 2.06 | 2.08(c) | 2.09 |
| Net investment income (loss) | (1.42)(a) | (1.40) | (1.45) | (1.55) | (1.45)(c) | (1.26) |
| Portfolio turnover | 40(n) | 64 | 69 | 67 | 53 | 49 |
| Net assets at end of period (000 omitted) | $17,979 | $16,502 | $18,708 | $23,424 | $20,143 | $22,906 |
| Class C |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $23.62 | $20.78 | $26.91 | $22.70 | $20.31 | $20.11 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.18) | $(0.28) | $(0.30) | $(0.37) | $(0.31)(c) | $(0.24) |
| Net realized and unrealized gain (loss) | 6.30 | 5.36 | (0.22)(g) | 7.39 | 3.28 | 0.44 |
| Total from investment operations | $6.12 | $5.08 | $(0.52) | $7.02 | $2.97 | $0.20 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.89) | $(2.24) | $(5.61) | $(2.81) | $(0.58) | $— |
| Net asset value, end of period (x) | $25.85 | $23.62 | $20.78 | $26.91 | $22.70 | $20.31 |
| Total return (%) (r)(s)(t)(x) | 27.51(n) | 26.55 | 2.72 | 33.92 | 14.99(c) | 0.99 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 2.01(a) | 2.04 | 2.05 | 2.08 | 2.10(c) | 2.11 |
| Expenses after expense reductions (f) | 2.00(a) | 2.03 | 2.04 | 2.07 | 2.09(c) | 2.09 |
| Net investment income (loss) | (1.40)(a) | (1.41) | (1.45) | (1.55) | (1.45)(c) | (1.27) |
| Portfolio turnover | 40(n) | 64 | 69 | 67 | 53 | 49 |
| Net assets at end of period (000 omitted) | $58,687 | $58,057 | $59,253 | $69,498 | $76,724 | $85,370 |
See Notes to Financial
Statements
16
Financial
Highlights – continued
| Class I |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $37.30 | $31.29 | $36.82 | $29.81 | $26.24 | $25.72 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.09) | $(0.14) | $(0.14) | $(0.18) | $(0.12)(c) | $(0.07) |
| Net realized and unrealized gain (loss) | 10.20 | 8.39 | 0.22(g) | 10.00 | 4.27 | 0.59 |
| Total from investment operations | $10.11 | $8.25 | $0.08 | $9.82 | $4.15 | $0.52 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.89) | $(2.24) | $(5.61) | $(2.81) | $(0.58) | $— |
| Net asset value, end of period (x) | $43.52 | $37.30 | $31.29 | $36.82 | $29.81 | $26.24 |
| Total return (%) (r)(s)(t)(x) | 28.14(n) | 27.83 | 3.76 | 35.31 | 16.12(c) | 2.02 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.01(a) | 1.04 | 1.05 | 1.08 | 1.10(c) | 1.12 |
| Expenses after expense reductions (f) | 0.99(a) | 1.03 | 1.05 | 1.07 | 1.09(c) | 1.09 |
| Net investment income (loss) | (0.43)(a) | (0.43) | (0.45) | (0.55) | (0.45)(c) | (0.30) |
| Portfolio turnover | 40(n) | 64 | 69 | 67 | 53 | 49 |
| Net assets at end of period (000 omitted) | $474,403 | $331,177 | $164,593 | $180,591 | $106,459 | $101,635 |
| Class R1 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $23.29 | $20.51 | $26.66 | $22.50 | $20.15 | $19.94 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.18) | $(0.28) | $(0.30) | $(0.37) | $(0.30)(c) | $(0.23) |
| Net realized and unrealized gain (loss) | 6.21 | 5.30 | (0.24)(g) | 7.34 | 3.23 | 0.44 |
| Total from investment operations | $6.03 | $5.02 | $(0.54) | $6.97 | $2.93 | $0.21 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.89) | $(2.24) | $(5.61) | $(2.81) | $(0.58) | $— |
| Net asset value, end of period (x) | $25.43 | $23.29 | $20.51 | $26.66 | $22.50 | $20.15 |
| Total return (%) (r)(s)(t)(x) | 27.52(n) | 26.61 | 2.67 | 34.01 | 14.91(c) | 1.05 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 2.01(a) | 2.04 | 2.05 | 2.08 | 2.10(c) | 2.11 |
| Expenses after expense reductions (f) | 1.99(a) | 2.03 | 2.05 | 2.07 | 2.09(c) | 2.09 |
| Net investment income (loss) | (1.42)(a) | (1.41) | (1.45) | (1.55) | (1.45)(c) | (1.26) |
| Portfolio turnover | 40(n) | 64 | 69 | 67 | 53 | 49 |
| Net assets at end of period (000 omitted) | $5,503 | $4,946 | $4,652 | $5,342 | $4,377 | $5,647 |
See Notes to Financial
Statements
17
Financial
Highlights – continued
| Class R2 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $29.65 | $25.42 | $31.31 | $25.85 | $22.95 | $22.60 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.15) | $(0.23) | $(0.24) | $(0.29) | $(0.23)(c) | $(0.17) |
| Net realized and unrealized gain (loss) | 8.03 | 6.70 | (0.04)(g) | 8.56 | 3.71 | 0.52 |
| Total from investment operations | $7.88 | $6.47 | $(0.28) | $8.27 | $3.48 | $0.35 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.89) | $(2.24) | $(5.61) | $(2.81) | $(0.58) | $— |
| Net asset value, end of period (x) | $33.64 | $29.65 | $25.42 | $31.31 | $25.85 | $22.95 |
| Total return (%) (r)(s)(t)(x) | 27.87(n) | 27.21 | 3.19 | 34.68 | 15.50(c) | 1.55 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.51(a) | 1.54 | 1.56 | 1.58 | 1.60(c) | 1.62 |
| Expenses after expense reductions (f) | 1.49(a) | 1.53 | 1.54 | 1.57 | 1.59(c) | 1.59 |
| Net investment income (loss) | (0.92)(a) | (0.90) | (0.95) | (1.05) | (0.95)(c) | (0.82) |
| Portfolio turnover | 40(n) | 64 | 69 | 67 | 53 | 49 |
| Net assets at end of period (000 omitted) | $34,434 | $30,149 | $32,381 | $36,272 | $29,130 | $35,890 |
| Class R3 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $32.39 | $27.51 | $33.26 | $27.24 | $24.09 | $23.67 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.12) | $(0.18) | $(0.19) | $(0.24) | $(0.17)(c) | $(0.12) |
| Net realized and unrealized gain (loss) | 8.81 | 7.30 | 0.05(g) | 9.07 | 3.90 | 0.54 |
| Total from investment operations | $8.69 | $7.12 | $(0.14) | $8.83 | $3.73 | $0.42 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.89) | $(2.24) | $(5.61) | $(2.81) | $(0.58) | $— |
| Net asset value, end of period (x) | $37.19 | $32.39 | $27.51 | $33.26 | $27.24 | $24.09 |
| Total return (%) (r)(s)(t)(x) | 28.02(n) | 27.52 | 3.45 | 34.98 | 15.81(c) | 1.77 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.25(a) | 1.29 | 1.30 | 1.33 | 1.35(c) | 1.37 |
| Expenses after expense reductions (f) | 1.24(a) | 1.28 | 1.30 | 1.32 | 1.34(c) | 1.34 |
| Net investment income (loss) | (0.67)(a) | (0.67) | (0.70) | (0.80) | (0.70)(c) | (0.55) |
| Portfolio turnover | 40(n) | 64 | 69 | 67 | 53 | 49 |
| Net assets at end of period (000 omitted) | $122,831 | $71,489 | $52,559 | $50,895 | $42,346 | $57,593 |
See Notes to Financial
Statements
18
Financial
Highlights – continued
| Class R4 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $34.94 | $29.44 | $35.05 | $28.48 | $25.09 | $24.60 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.08) | $(0.13) | $(0.13) | $(0.15) | $(0.12)(c) | $(0.07) |
| Net realized and unrealized gain (loss) | 9.53 | 7.87 | 0.13(g) | 9.53 | 4.09 | 0.56 |
| Total from investment operations | $9.45 | $7.74 | $0.00(w) | $9.38 | $3.97 | $0.49 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.89) | $(2.24) | $(5.61) | $(2.81) | $(0.58) | $— |
| Net asset value, end of period (x) | $40.50 | $34.94 | $29.44 | $35.05 | $28.48 | $25.09 |
| Total return (%) (r)(s)(t)(x) | 28.16(n) | 27.84 | 3.72 | 35.42 | 16.14(c) | 1.99 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.01(a) | 1.04 | 1.05 | 1.08 | 1.10(c) | 1.12 |
| Expenses after expense reductions (f) | 0.99(a) | 1.03 | 1.05 | 1.07 | 1.09(c) | 1.09 |
| Net investment income (loss) | (0.43)(a) | (0.43) | (0.45) | (0.51) | (0.45)(c) | (0.32) |
| Portfolio turnover | 40(n) | 64 | 69 | 67 | 53 | 49 |
| Net assets at end of period (000 omitted) | $25,266 | $16,509 | $8,384 | $10,612 | $83,186 | $91,974 |
| Class R6 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $37.79 | $31.64 | $37.13 | $30.01 | $26.38 | $25.83 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.07) | $(0.10) | $(0.11) | $(0.14) | $(0.09)(c) | $(0.03) |
| Net realized and unrealized gain (loss) | 10.35 | 8.49 | 0.23(g) | 10.07 | 4.30 | 0.58 |
| Total from investment operations | $10.28 | $8.39 | $0.12 | $9.93 | $4.21 | $0.55 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.89) | $(2.24) | $(5.61) | $(2.81) | $(0.58) | $— |
| Net asset value, end of period (x) | $44.18 | $37.79 | $31.64 | $37.13 | $30.01 | $26.38 |
| Total return (%) (r)(s)(t)(x) | 28.23(n) | 27.97 | 3.85 | 35.45 | 16.26(c) | 2.13 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.90(a) | 0.94 | 0.96 | 0.97 | 0.98(c) | 0.99 |
| Expenses after expense reductions (f) | 0.88(a) | 0.92 | 0.95 | 0.96 | 0.97(c) | 0.97 |
| Net investment income (loss) | (0.31)(a) | (0.32) | (0.35) | (0.44) | (0.34)(c) | (0.11) |
| Portfolio turnover | 40(n) | 64 | 69 | 67 | 53 | 49 |
| Net assets at end of period (000 omitted) | $1,059,327 | $795,613 | $541,266 | $477,818 | $385,440 | $320,645 |
See Notes to Financial Statements
19
Financial
Highlights – continued
| (a) | Annualized. |
| (c) | Amount reflects a one-time reimbursement of expenses by the custodian (or former custodian) without which net investment income and performance would be lower and expenses would be higher. |
| (d) | Per share data is based on average shares outstanding. |
| (f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
| (g) | The per share amount varies from the net realized and unrealized gain/loss for the period because of the timing of sales of fund shares and the per share amount of realized and unrealized gains and losses at such time. |
| (n) | Not annualized. |
| (r) | Certain expenses have been reduced without which performance would have been lower. |
| (s) | From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. |
| (t) | Total returns do not include any applicable sales charges. |
| (w) | Per share amount was less than $0.01. |
| (x) | The net asset values 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
20
Notes to Financial
Statements
(unaudited)
(1) Business and Organization
MFS New Discovery Fund (the fund) is a diversified series of
MFS Series Trust I (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
The fund is an investment company and accordingly follows the
investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation
of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these
financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund will generally focus on
securities of small size companies which may be more volatile than those of larger companies. The fund invests in foreign securities. Investments in foreign securities are vulnerable to the effects of changes in the relative values of the local
currency and the U.S. dollar and to the effects of changes in each country’s market, economic, industrial, political, regulatory, geopolitical, environmental, public health, and other conditions.
In March 2020, the FASB issued Accounting Standards Update
2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional, temporary relief with respect to the financial reporting of
contracts subject to certain types of modifications due to the planned discontinuation of certain tenors of the London Interbank Offered Rate (LIBOR) and other IBOR-based reference rates as of the end of 2021. The temporary relief provided by ASU
2020-04 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 on the fund's investments, derivatives,
debt and other contracts that will undergo reference rate-related modifications as a result of the reference rate reform.
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.
21
Notes to Financial
Statements (unaudited) - continued
Investment Valuations
— Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which
there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days
or less may be valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. 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, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by
a third-party pricing service.
The Board of
Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If
the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under
the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair
value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the
exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not
resume prior to the close of the exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the
determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser
generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and
financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset
value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same
investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's
assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases,
22
Notes to Financial
Statements (unaudited) - continued
an investment's level within the fair value hierarchy is based on the lowest
level of input that is significant to the fair value measurement. The fund's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.
Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and
credit risk). Level 3 includes unobservable inputs, which may include the adviser's own assumptions in determining the fair value of investments. The following is a summary of the levels used as of February 28, 2021 in valuing the fund's assets or
liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | ||||
| United States | $2,321,080,381 | $15,718,461 | $— | $2,336,798,842 |
| Canada | 146,010,332 | — | — | 146,010,332 |
| United Kingdom | 123,915,314 | — | — | 123,915,314 |
| India | 52,749,753 | — | — | 52,749,753 |
| Germany | 46,213,196 | — | — | 46,213,196 |
| Ireland | 24,242,016 | — | — | 24,242,016 |
| Sweden | 15,043,605 | — | — | 15,043,605 |
| Greece | 2,738,316 | — | — | 2,738,316 |
| Mutual Funds | 108,195,913 | — | — | 108,195,913 |
| Total | $2,840,188,826 | $15,718,461 | $— | $2,855,907,287 |
For further information regarding
security characteristics, see the Portfolio of Investments.
The following is a reconciliation of level 3 assets for which
significant unobservable inputs were used to determine fair value. The table presents the activity of level 3 securities held at the beginning and the end of the period.
| Equity
Securities | |
| Balance as of 8/31/20 | $11,970,842 |
| Change in unrealized appreciation or depreciation | 3,747,619 |
| Transfers out of level 3 | (15,718,461) |
| Balance as of 2/28/21 | $— |
Foreign Currency Translation — Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting
date for foreign denominated receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and
losses attributable to foreign exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains
and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
23
Notes to Financial
Statements (unaudited) - continued
Security Loans — Under
its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can
be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. The loans are
collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. On loans collateralized by cash, the cash collateral is invested in a money market fund.
The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. The lending agent provides the fund with indemnification against
Borrower default. In the event of Borrower default, the lending agent will, for the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the fund the market value of the
loaned securities. In return, the lending agent assumes the fund's rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent is responsible for the shortfall, but only to the
extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. At period end, the fund had investment securities on loan, all of which were classified as
equity securities in the fund's Portfolio of Investments, with a fair value of $14,190,973. The fair value of the fund's investment securities on loan and a related liability of $14,082,613 for cash collateral received on securities loaned are both
presented gross in the Statement of Assets and Liabilities. The value of the fund's securities on loan net of the related collateral is $108,360 at period end. The liability for cash collateral for securities loaned is carried at fair value, which
is categorized as level 2 within the fair value hierarchy. A portion of the income generated upon investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending agent. On loans
collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund and the lending agent. Income from securities lending is separately reported in the Statement of Operations.
The dividend and interest income earned on the securities loaned is accounted for in the same manner as other dividend and interest income.
Indemnifications — Under
the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters
into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet
occurred.
Investment Transactions and Income — Investment transactions are recorded on the trade date. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed
of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend payments received in additional securities are recorded on the ex-dividend date in an amount equal to the value of the security on such date.
24
Notes to Financial
Statements (unaudited) - continued
The fund may receive proceeds from litigation settlements. Any
proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund.
Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Tax Matters and Distributions
— The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal
income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state
tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in
accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be
subject to capital gains tax imposed by those countries.
Distributions to shareholders are recorded on the ex-dividend
date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted
for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in
different periods for financial statement and tax purposes will reverse at some time in the future.
Book/tax differences primarily relate to passive foreign
investment companies, wash sale loss deferrals, and treating a portion of the proceeds from redemptions as a distribution for tax purposes.
The tax character of distributions made during the current
period will be determined at fiscal year end. The tax character of distributions declared to shareholders for the last fiscal year is as follows:
| Year
ended 8/31/20 | |
| Ordinary income (including any short-term capital gains) | $38,500,065 |
| Long-term capital gains | 75,638,854 |
| Total distributions | $114,138,919 |
25
Notes to Financial
Statements (unaudited) - continued
The federal tax cost and the tax basis components of
distributable earnings were as follows:
| As of 2/28/21 | |
| Cost of investments | $2,040,305,792 |
| Gross appreciation | 856,976,661 |
| Gross depreciation | (41,375,166) |
| Net unrealized appreciation (depreciation) | $ 815,601,495 |
| As of 8/31/20 | |
| Undistributed ordinary income | 38,865,327 |
| Undistributed long-term capital gain | 83,739,633 |
| Other temporary differences | 14,053 |
| Net unrealized appreciation (depreciation) | 542,716,530 |
The aggregate cost above includes
prior fiscal year end tax adjustments, if applicable.
Multiple Classes of Shares of Beneficial Interest — The fund offers multiple classes of shares, which differ in their respective distribution and service fees. The fund's income, realized and unrealized gain (loss), and common expenses are allocated to
shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B shares will convert to Class A
shares approximately eight years after purchase. In addition, 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 2/28/21 |
Year
ended 8/31/20 | ||
| Class A | $92,576,529 | $45,480,404 | |
| Class B | 2,578,960 | 1,857,992 | |
| Class C | 9,212,244 | 5,934,396 | |
| Class I | 37,222,351 | 12,867,161 | |
| Class R1 | 726,956 | 463,207 | |
| Class R2 | 3,705,529 | 2,558,233 | |
| Class R3 | 11,238,415 | 4,552,802 | |
| Class R4 | 2,003,239 | 737,611 | |
| Class R6 | 86,016,429 | 39,687,113 | |
| Total | $245,280,652 | $114,138,919 |
26
Notes to Financial
Statements (unaudited) - continued
(3) Transactions with Affiliates
Investment Adviser — The
fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates
based on the fund's average daily net assets:
| Up to $1 billion | 0.90% |
| In excess of $1 billion and up to $2.5 billion | 0.80% |
| In excess of $2.5 billion and up to $5 billion | 0.75% |
| In excess of $5 billion | 0.70% |
MFS has agreed in writing to reduce
its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund's Board of Trustees. For the six months ended February 28, 2021, this management fee reduction amounted to $136,274, which is
included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.83% of the fund's average daily net assets.
Distributor — MFS Fund
Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $166,838 for the six months ended February 28, 2021, as its portion of the initial sales charge on sales of Class A shares of the fund.
The Board of Trustees has adopted a distribution plan for
certain share classes pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund's distribution plan provides that the fund will pay
MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee
paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.
Distribution Plan Fee Table:
| Distribution
Fee Rate (d) |
Service
Fee Rate (d) |
Total
Distribution Plan (d) |
Annual
Effective Rate (e) |
Distribution
and Service Fee | |
| Class A | — | 0.25% | 0.25% | 0.25% | $ 1,104,203 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 87,956 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 299,205 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 25,731 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 80,445 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 130,219 |
| Total Distribution and Service Fees | $1,727,759 |
| (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 February 28, 2021 based on each class's average daily net assets.MFD has voluntarily agreed to rebate a portion of each class's 0.25% service fee attributable to accounts for which there is no financial intermediary specified on the account except for |
27
Notes to Financial
Statements (unaudited) - continued
accounts attributable to MFS or its affiliates' seed money.
For the six months ended February 28, 2021, this rebate amounted to $650, $4, $15, and $150 for Class A, Class B, Class C, and Class R2, respectively, and is included in the reduction of total expenses in the Statement of Operations.
Certain Class A shares are subject to a contingent deferred
sales charge (CDSC) in the event of a shareholder redemption within 18 months of purchase. Class B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. Class C shares are subject to a CDSC in the event
of a shareholder redemption within 12 months of purchase. All contingent deferred sales charges are paid to MFD and during the six months ended February 28, 2021, were as follows:
| Amount | |
| Class A | $9,048 |
| Class B | 3,723 |
| Class C | 3,393 |
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 February 28, 2021, the fee was $125,037, which equated to 0.0102% 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 February 28, 2021, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $908,549.
Administrator — MFS
provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund reimburses MFS the costs incurred to provide these services. The fund is
charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.0129% of the fund's average
daily net assets.
Trustees’ and
Officers’ Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not
pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or
directors of MFS, MFD, and MFSC.
Other — The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a
management fee to MFS but does incur investment and operating costs.
The fund is permitted to engage in purchase and sale
transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) pursuant to a policy adopted by the Board of Trustees. This policy has been designed to
28
Notes to Financial
Statements (unaudited) - continued
ensure that cross-trades conducted by the fund comply with Rule 17a-7 under
the Investment Company Act of 1940. During the six months ended February 28, 2021, the fund engaged in purchase transactions pursuant to this policy, which amounted to $236,874.
The adviser has voluntarily undertaken to reimburse the fund
from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the six months ended February 28, 2021, this reimbursement
amounted to $150,949, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the six months ended February 28, 2021, purchases and sales
of investments, other than short-term obligations, aggregated $1,088,064,102 and $932,091,140, respectively.
(5) Shares of Beneficial Interest
The fund's Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Shares sold | |||||
| Class A | 3,639,648 | $130,470,177 | 6,608,833 | $180,870,690 | |
| Class B | 17,196 | 432,766 | 15,794 | 323,361 | |
| Class C | 221,557 | 5,666,178 | 602,585 | 12,002,849 | |
| Class I | 2,696,893 | 111,720,449 | 6,561,643 | 205,619,621 | |
| Class R1 | 20,970 | 519,879 | 39,779 | 798,139 | |
| Class R2 | 144,635 | 4,730,213 | 254,722 | 6,382,302 | |
| Class R3 | 1,256,058 | 42,104,800 | 944,202 | 25,980,926 | |
| Class R4 | 226,931 | 8,720,322 | 353,555 | 10,570,840 | |
| Class R6 | 4,213,345 | 177,178,813 | 7,791,109 | 235,058,472 | |
| 12,437,233 | $481,543,597 | 23,172,222 | $677,607,200 | ||
29
Notes to Financial
Statements (unaudited) - continued
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Shares
issued to shareholders in reinvestment of distributions |
|||||
| Class A | 2,657,076 | $90,181,174 | 1,649,802 | $44,577,654 | |
| Class B | 107,147 | 2,519,035 | 91,737 | 1,809,047 | |
| Class C | 382,598 | 9,025,492 | 262,614 | 5,194,497 | |
| Class I | 847,170 | 33,564,887 | 370,322 | 11,483,689 | |
| Class R1 | 31,334 | 726,956 | 23,754 | 463,207 | |
| Class R2 | 118,275 | 3,626,302 | 96,986 | 2,399,424 | |
| Class R3 | 331,810 | 11,238,415 | 168,747 | 4,552,802 | |
| Class R4 | 52,565 | 1,938,081 | 25,391 | 737,611 | |
| Class R6 | 2,042,242 | 82,118,540 | 1,195,889 | 37,538,966 | |
| 6,570,217 | $234,938,882 | 3,885,242 | $108,756,897 | ||
| Shares reacquired | |||||
| Class A | (2,149,890) | $(76,079,677) | (4,932,374) | $(133,082,279) | |
| Class B | (127,210) | (3,230,925) | (309,654) | (6,133,415) | |
| Class C | (792,124) | (20,027,258) | (1,259,077) | (25,521,156) | |
| Class I | (1,522,964) | (63,534,253) | (3,314,100) | (100,520,470) | |
| Class R1 | (48,316) | (1,186,293) | (77,881) | (1,593,358) | |
| Class R2 | (255,924) | (8,270,654) | (608,642) | (15,267,315) | |
| Class R3 | (491,741) | (17,277,544) | (816,398) | (22,076,452) | |
| Class R4 | (128,142) | (4,953,429) | (191,235) | (5,574,222) | |
| Class R6 | (3,330,664) | (140,328,019) | (5,041,146) | (158,788,985) | |
| (8,846,975) | $(334,888,052) | (16,550,507) | $(468,557,652) | ||
| Net change | |||||
| Class A | 4,146,834 | $144,571,674 | 3,326,261 | $92,366,065 | |
| Class B | (2,867) | (279,124) | (202,123) | (4,001,007) | |
| Class C | (187,969) | (5,335,588) | (393,878) | (8,323,810) | |
| Class I | 2,021,099 | 81,751,083 | 3,617,865 | 116,582,840 | |
| Class R1 | 3,988 | 60,542 | (14,348) | (332,012) | |
| Class R2 | 6,986 | 85,861 | (256,934) | (6,485,589) | |
| Class R3 | 1,096,127 | 36,065,671 | 296,551 | 8,457,276 | |
| Class R4 | 151,354 | 5,704,974 | 187,711 | 5,734,229 | |
| Class R6 | 2,924,923 | 118,969,334 | 3,945,852 | 113,808,453 | |
| 10,160,475 | $381,594,427 | 10,506,957 | $317,806,445 | ||
Effective June 1, 2019, purchases of
the fund’s Class B shares are closed to new and existing investors subject to certain exceptions. Please see the fund’s prospectus for details.
30
Notes to Financial
Statements (unaudited) - continued
The fund is one of several mutual funds in which certain MFS
funds may invest. The MFS funds do not invest in the underlying funds for the purpose of exercising management or control. At the end of the period, the MFS Growth Allocation Fund, the MFS Moderate Allocation Fund, the MFS Aggressive Growth
Allocation Fund, and the MFS Conservative Allocation Fund were the owners of record of approximately 4%, 4%, 2%, and 1%, respectively, of the value of outstanding voting shares of the fund. In addition, the MFS Lifetime 2020 Fund, the MFS
Lifetime 2025 Fund, the MFS Lifetime 2030 Fund, the MFS Lifetime 2035 Fund, the MFS Lifetime 2040 Fund, the MFS Lifetime 2045 Fund, the MFS Lifetime 2050 Fund, the MFS Lifetime 2055 Fund, the MFS Lifetime 2060 Fund, and the MFS Lifetime Income Fund
were each the owners of record of less than 1% of the value of outstanding voting shares of the fund.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in
a $1.25 billion unsecured committed line of credit of which $1 billion is reserved for use by the fund and certain other 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 one month LIBOR, the Federal Funds Effective Rate and the Overnight Bank Funding Rate, 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. 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 February 28, 2021, the
fund’s commitment fee and interest expense were $4,422 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 |
| dMY Technology Group, Inc. II | $— | $25,696,012 | $— | $— | $4,543,106 | $30,239,118 |
| MFS Institutional Money Market Portfolio | 94,206,717 | 513,468,089 | 513,561,506 | — | — | 94,113,300 |
| TS Innovation Acquisitions Corp. | — | 29,546,138 | — | — | (4,732,270) | 24,813,868 |
| $94,206,717 | $568,710,239 | $513,561,506 | $— | $(189,164) | $149,166,286 |
31
Notes to Financial
Statements (unaudited) - continued
| Affiliated Issuers | Dividend
Income |
Capital
Gain Distributions |
| dMY Technology Group, Inc. II | $— | $— |
| MFS Institutional Money Market Portfolio | 48,060 | — |
| TS Innovation Acquisitions Corp. | — | — |
| $48,060 | $— |
(8) Impacts of COVID-19
The pandemic related to the global spread of novel coronavirus
disease (COVID-19), which was first detected in December 2019, has resulted in significant disruptions to global business activity and the global economy, as well as the economies of individual countries, the financial performance of individual
companies and sectors, and the securities and commodities markets in general. Multiple surges in cases globally, the availability and widespread adoption of vaccines, and the emergence of variant strains of the virus continue to create uncertainty
as to the future and long-term impacts resulting from the pandemic including impacts to the prices and liquidity of the fund's investments and the fund's performance.
32
Proxy
Voting Policies and Information
MFS votes proxies on
behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s
Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with
the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A
shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the
“Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
From time to time, MFS may post important information about the
fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at
mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an
investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), 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.
33
Semiannual Report
February 28, 2021
MFS® Research
International Fund
International Fund
RIF-SEM
MFS® Research
International Fund
International Fund
CONTENTS
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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
LETTER FROM THE CEO
Dear Shareholders:
Markets have experienced dramatic swings since the coronavirus
pandemic brought the global economy to a standstill for several months early in 2020. The speedy development of vaccines and therapeutics brightened the economic and market outlook, but uncertainty remains as new variants of the virus appear and
questions persist over how fast vaccines can be made widely available. In the United States, political uncertainty eased after former Vice President Joe Biden won the presidential election and the Democrats gained control of a closely divided
Senate.
Global central banks have
taken aggressive steps to cushion the economic and market fallout related to the virus, and governments are deploying unprecedented levels of fiscal support. Having passed a $1.9 trillion stimulus package in March, the U.S. Congress is expected to
approve additional stimulus later this year, some of it focused on infrastructure. Along with extraordinary government expenditures, pent-up consumer demand could fuel a surge in economic activity as coronavirus restrictions are eased. Because of
this, markets anticipate at least temporary inflation pressures in the months ahead and have pushed up yields on global government bonds, resulting in ripple effects being felt across most financial markets. The measures already put in place have
helped build a supportive environment and are encouraging economic recovery; however, if markets disconnect from fundamentals, they can sow the seeds of instability. As such, recent dramatic increases in speculative retail trading bear
watching.
In the aftermath of the crisis, we could see
societal changes as households, businesses, and governments adjust to a new reality, and any such alterations could affect the investment landscape. For investors, events such as the COVID-19 outbreak demonstrate the importance of having a deep
understanding of company fundamentals, and we have built our global research platform to do just that.
At MFS®, we put our clients’ assets to work responsibly by carefully navigating the increasing complexity of global markets and economies. Guided by our
long-term philosophy and adhering to our commitment to sustainable investing, we tune out the noise and aim to uncover what we believe are the best, most durable investment opportunities in the market. Our unique global investment platform combines
collective expertise, long-term discipline, and thoughtful risk management to create sustainable value for investors.
Respectfully,
Michael W.
Roberge
Chief Executive Officer
MFS Investment Management
April 15, 2021
The opinions expressed in this letter are subject to change
and may not be relied upon for investment advice. No forecasts can be guaranteed.
1
Portfolio Composition -
continued
| (k) | The sectors set forth above and the associated portfolio composition are based on MFS’ own custom sector classification methodology. |
| (o) | Less than 0.1%. |
| (x) | Represents the portfolio’s exposure to issuer countries as a percentage of a portfolio’s net assets. For purposes of this presentation, United States includes Cash & Cash Equivalents and Other. |
| (y) | Represents the portfolio’s exposure to a particular currency as a percentage of a portfolio's net assets. For purposes of this presentation, United States Dollar includes Cash & Cash Equivalents. |
Cash & Cash Equivalents includes any cash, investments in
money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Other includes equivalent exposure from currency derivatives
and/or any offsets to derivative positions and may be negative.
Percentages are based on net assets as of February 28,
2021.
The portfolio is actively managed and current
holdings may be different.
3
Expense Table
Fund expenses borne by the shareholders during the period,
September 1, 2020 through February 28, 2021
September 1, 2020 through February 28, 2021
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 September 1, 2020 through February 28, 2021.
Actual Expenses
The first line for each share class in the following table
provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000
(for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during
this period.
Hypothetical Example for Comparison
Purposes
The second line for each share class in the
following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual
return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to
highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
4
Expense Table -
continued
| Share
Class |
Annualized
Expense Ratio |
Beginning
Account Value 9/01/20 |
Ending
Account Value 2/28/21 |
Expenses
Paid During Period (p) 9/01/20-2/28/21 | |
| A | Actual | 1.03% | $1,000.00 | $1,107.38 | $5.38 |
| Hypothetical (h) | 1.03% | $1,000.00 | $1,019.69 | $5.16 | |
| B | Actual | 1.78% | $1,000.00 | $1,103.31 | $9.28 |
| Hypothetical (h) | 1.78% | $1,000.00 | $1,015.97 | $8.90 | |
| C | Actual | 1.78% | $1,000.00 | $1,103.45 | $9.28 |
| Hypothetical (h) | 1.78% | $1,000.00 | $1,015.97 | $8.90 | |
| I | Actual | 0.78% | $1,000.00 | $1,108.73 | $4.08 |
| Hypothetical (h) | 0.78% | $1,000.00 | $1,020.93 | $3.91 | |
| R1 | Actual | 1.77% | $1,000.00 | $1,103.16 | $9.23 |
| Hypothetical (h) | 1.77% | $1,000.00 | $1,016.02 | $8.85 | |
| R2 | Actual | 1.28% | $1,000.00 | $1,106.36 | $6.68 |
| Hypothetical (h) | 1.28% | $1,000.00 | $1,018.45 | $6.41 | |
| R3 | Actual | 1.03% | $1,000.00 | $1,107.23 | $5.38 |
| Hypothetical (h) | 1.03% | $1,000.00 | $1,019.69 | $5.16 | |
| R4 | Actual | 0.77% | $1,000.00 | $1,109.03 | $4.03 |
| Hypothetical (h) | 0.77% | $1,000.00 | $1,020.98 | $3.86 | |
| R6 | Actual | 0.66% | $1,000.00 | $1,109.82 | $3.45 |
| Hypothetical (h) | 0.66% | $1,000.00 | $1,021.52 | $3.31 | |
| 529A | Actual | 1.06% | $1,000.00 | $1,107.19 | $5.54 |
| Hypothetical (h) | 1.06% | $1,000.00 | $1,019.54 | $5.31 | |
| 529B | Actual | 1.83% | $1,000.00 | $1,103.36 | $9.54 |
| Hypothetical (h) | 1.83% | $1,000.00 | $1,015.72 | $9.15 | |
| 529C | Actual | 1.82% | $1,000.00 | $1,102.80 | $9.49 |
| Hypothetical (h) | 1.82% | $1,000.00 | $1,015.77 | $9.10 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Notes to Expense Table
Each class with a Rule 12b-1 service fee is subject to a rebate
of a portion of such fee. Such rebates are included in the expense ratios above. For Class 529A and Class 529C shares, this rebate reduced the expense ratios above by 0.02% and 0.01%, respectively. See Note 3 in the Notes to Financial Statements for
additional information.
5
Portfolio of
Investments
2/28/21 (unaudited)
The Portfolio of Investments is a complete list of all
securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – 98.6% | ||||
| Airlines – 0.5% | ||||
| Ryanair Holdings PLC, ADR (a) | 607,285 | $ 65,295,283 | ||
| Alcoholic Beverages – 1.6% | ||||
| Diageo PLC | 5,855,109 | $ 229,425,139 | ||
| Apparel Manufacturers – 4.3% | ||||
| Adidas AG | 502,259 | $ 175,073,660 | ||
| Burberry Group PLC (a) | 1,856,585 | 46,959,620 | ||
| Compagnie Financiere Richemont S.A. | 1,009,222 | 97,166,672 | ||
| LVMH Moet Hennessy Louis Vuitton SE | 467,845 | 296,351,301 | ||
| $615,551,253 | ||||
| Automotive – 2.8% | ||||
| Continental AG | 712,776 | $ 102,254,037 | ||
| Koito Manufacturing Co. Ltd. | 2,065,900 | 137,603,921 | ||
| Toyota Industries Corp. | 1,235,300 | 106,923,665 | ||
| USS Co. Ltd. | 2,657,800 | 51,816,880 | ||
| $398,598,503 | ||||
| Brokerage & Asset Managers – 1.8% | ||||
| Euronext N.V. | 1,278,572 | $ 137,605,435 | ||
| Hong Kong Exchanges & Clearing Ltd. | 2,100,600 | 127,893,304 | ||
| $265,498,739 | ||||
| Business Services – 0.8% | ||||
| Nomura Research Institute Ltd. | 3,583,400 | $ 111,272,142 | ||
| Computer Software – 0.6% | ||||
| Cadence Design Systems, Inc. (a) | 610,736 | $ 86,168,742 | ||
| Topicus.com, Inc. (a) | 124,172 | 6,445,704 | ||
| $92,614,446 | ||||
| Computer Software - Systems – 5.4% | ||||
| Amadeus IT Group S.A. (a) | 1,567,874 | $ 108,773,861 | ||
| Constellation Software, Inc. | 68,687 | 88,933,635 | ||
| EPAM Systems, Inc. (a) | 302,667 | 113,079,418 | ||
| Fujitsu Ltd. | 917,900 | 132,266,466 | ||
| Hitachi Ltd. | 4,606,000 | 212,613,594 | ||
| Samsung Electronics Co. Ltd. | 1,627,490 | 119,354,206 | ||
| $775,021,180 | ||||
6
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Construction – 1.6% | ||||
| Techtronic Industries Co. Ltd. | 11,968,500 | $ 182,695,743 | ||
| Toto Ltd. | 864,100 | 52,957,408 | ||
| $235,653,151 | ||||
| Consumer Products – 1.8% | ||||
| Kao Corp. | 1,881,600 | $ 127,001,114 | ||
| Reckitt Benckiser Group PLC | 1,653,057 | 138,182,348 | ||
| $265,183,462 | ||||
| Consumer Services – 1.6% | ||||
| 51job, Inc., ADR (a) | 618,538 | $ 40,576,093 | ||
| Carsales.com Ltd. | 1,643,964 | 23,629,223 | ||
| Naspers Ltd. | 360,812 | 83,887,941 | ||
| Persol Holdings Co. Ltd. | 2,271,100 | 45,384,392 | ||
| SEEK Ltd. | 1,542,452 | 30,571,589 | ||
| $224,049,238 | ||||
| Containers – 0.7% | ||||
| Brambles Ltd. | 14,007,920 | $ 107,539,335 | ||
| Electrical Equipment – 3.7% | ||||
| Legrand S.A. | 1,807,362 | $ 156,834,054 | ||
| Schneider Electric SE | 2,556,602 | 378,951,671 | ||
| $535,785,725 | ||||
| Electronics – 2.5% | ||||
| Kyocera Corp. | 1,538,900 | $ 99,705,686 | ||
| NXP Semiconductors N.V. | 712,126 | 129,998,601 | ||
| Taiwan Semiconductor Manufacturing Co. Ltd. | 6,161,326 | 134,634,266 | ||
| $364,338,553 | ||||
| Energy - Independent – 0.5% | ||||
| Oil Search Ltd. | 22,055,254 | $ 72,843,686 | ||
| Energy - Integrated – 2.3% | ||||
| Cairn Energy PLC | 21,542,034 | $ 57,323,614 | ||
| Eni S.p.A. | 6,561,994 | 75,072,576 | ||
| Galp Energia SGPS S.A., “B” | 9,542,281 | 106,888,966 | ||
| Idemitsu Kosan Co. Ltd. | 3,255,300 | 85,996,998 | ||
| $325,282,154 | ||||
| Food & Beverages – 3.8% | ||||
| Danone S.A. | 2,143,116 | $ 145,993,020 | ||
| Nestle S.A. | 3,831,030 | 400,096,576 | ||
| $546,089,596 | ||||
7
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Food & Drug Stores – 0.3% | ||||
| Sugi Holdings Co. Ltd. (l) | 661,400 | $ 46,039,570 | ||
| Gaming & Lodging – 0.7% | ||||
| Flutter Entertainment PLC (a) | 544,192 | $ 104,778,864 | ||
| Insurance – 5.1% | ||||
| AIA Group Ltd. | 23,263,800 | $ 291,080,557 | ||
| Aon PLC | 989,865 | 225,402,159 | ||
| Beazley PLC (a) | 3,510,441 | 16,912,202 | ||
| Hiscox Ltd. (a) | 4,213,525 | 55,415,475 | ||
| Zurich Insurance Group AG | 369,381 | 150,854,770 | ||
| $739,665,163 | ||||
| Internet – 3.8% | ||||
| NAVER Corp. | 340,504 | $ 113,652,870 | ||
| NetEase.com, Inc., ADR | 1,754,956 | 192,781,917 | ||
| Scout24 AG | 913,014 | 68,794,770 | ||
| Tencent Holdings Ltd. | 1,962,900 | 167,656,757 | ||
| $542,886,314 | ||||
| Leisure & Toys – 1.0% | ||||
| Nintendo Co. Ltd. | 150,000 | $ 91,115,906 | ||
| Yamaha Corp. | 1,057,100 | 59,463,017 | ||
| $150,578,923 | ||||
| Machinery & Tools – 6.6% | ||||
| Daikin Industries Ltd. | 1,186,700 | $ 233,591,527 | ||
| GEA Group AG | 3,021,639 | 104,341,662 | ||
| Kubota Corp. | 8,963,200 | 204,132,444 | ||
| Ritchie Bros. Auctioneers, Inc. | 2,029,424 | 110,752,394 | ||
| Schindler Holding AG | 519,362 | 141,709,062 | ||
| SMC Corp. | 271,500 | 161,404,708 | ||
| $955,931,797 | ||||
| Major Banks – 5.7% | ||||
| Bank of Ireland Group PLC (a) | 21,757,141 | $ 88,728,690 | ||
| BNP Paribas | 4,367,200 | 259,642,185 | ||
| Credit Suisse Group AG | 7,633,841 | 110,145,840 | ||
| Mitsubishi UFJ Financial Group, Inc. | 27,715,200 | 146,715,812 | ||
| NatWest Group PLC | 37,833,113 | 97,090,154 | ||
| UBS Group AG | 8,053,043 | 124,825,929 | ||
| $827,148,610 | ||||
8
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Medical Equipment – 3.6% | ||||
| EssilorLuxottica | 1,208,182 | $ 196,793,918 | ||
| Koninklijke Philips N.V. | 4,181,878 | 226,827,080 | ||
| Terumo Corp. | 2,649,800 | 98,860,732 | ||
| $522,481,730 | ||||
| Natural Gas - Distribution – 0.5% | ||||
| China Resources Gas Group Ltd. | 13,786,000 | $ 68,872,680 | ||
| Natural Gas - Pipeline – 0.8% | ||||
| APA Group | 7,281,034 | $ 52,046,202 | ||
| TC Energy Corp. | 1,675,074 | 70,156,722 | ||
| $122,202,924 | ||||
| Other Banks & Diversified Financials – 5.1% | ||||
| AIB Group PLC (a) | 41,643,255 | $ 93,605,866 | ||
| HDFC Bank Ltd. (a) | 8,025,329 | 167,572,495 | ||
| ING Groep N.V. | 10,393,712 | 113,353,937 | ||
| Julius Baer Group Ltd. | 2,001,176 | 122,756,687 | ||
| KBC Group N.V. | 1,765,558 | 127,004,615 | ||
| Macquarie Group Ltd. | 972,683 | 106,841,469 | ||
| $731,135,069 | ||||
| Pharmaceuticals – 8.2% | ||||
| Bayer AG | 1,624,234 | $ 98,221,192 | ||
| Kyowa Kirin Co. Ltd. | 6,042,300 | 168,953,708 | ||
| Novo Nordisk A.S., “B” | 4,784,375 | 339,972,260 | ||
| Roche Holding AG | 1,307,646 | 428,311,027 | ||
| Santen Pharmaceutical Co. Ltd. | 10,482,600 | 144,527,684 | ||
| $1,179,985,871 | ||||
| Printing & Publishing – 1.2% | ||||
| Wolters Kluwer N.V. | 2,122,212 | $ 168,177,329 | ||
| Real Estate – 2.9% | ||||
| ESR Cayman Ltd. (a) | 21,674,000 | $ 68,600,546 | ||
| Grand City Properties S.A. | 7,075,935 | 173,652,214 | ||
| LEG Immobilien AG | 1,294,986 | 176,777,419 | ||
| $419,030,179 | ||||
| Restaurants – 0.7% | ||||
| Yum China Holdings, Inc. | 1,565,507 | $ 93,679,939 | ||
9
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Specialty Chemicals – 8.1% | ||||
| Akzo Nobel N.V. | 1,541,832 | $ 159,167,125 | ||
| Croda International PLC | 1,930,771 | 165,916,134 | ||
| Kansai Paint Co. Ltd. | 2,546,200 | 67,088,746 | ||
| Linde PLC | 1,319,191 | 325,019,157 | ||
| Nitto Denko Corp. | 1,656,400 | 142,334,355 | ||
| Sika AG | 590,582 | 155,947,668 | ||
| Symrise AG | 1,270,570 | 148,272,437 | ||
| $1,163,745,622 | ||||
| Telecommunications - Wireless – 2.7% | ||||
| Advanced Info Service Public Co. Ltd. | 11,245,000 | $ 61,757,010 | ||
| KDDI Corp. | 4,658,800 | 143,791,472 | ||
| SoftBank Group Corp. | 1,965,000 | 182,407,008 | ||
| $387,955,490 | ||||
| Telephone Services – 0.9% | ||||
| Hellenic Telecommunications Organization S.A. | 4,411,560 | $ 67,812,095 | ||
| Tele2 AB, “B” | 5,281,161 | 66,640,735 | ||
| $134,452,830 | ||||
| Tobacco – 1.7% | ||||
| British American Tobacco PLC | 4,694,942 | $ 162,576,394 | ||
| Japan Tobacco, Inc. | 4,529,600 | 82,114,115 | ||
| $244,690,509 | ||||
| Utilities - Electric Power – 2.7% | ||||
| CLP Holdings Ltd. | 8,192,000 | $ 79,897,995 | ||
| E.ON SE | 6,756,900 | 68,888,978 | ||
| Iberdrola S.A. | 12,291,881 | 154,610,844 | ||
| Orsted A/S (Kingdom of Denmark) | 518,022 | 83,882,716 | ||
| $387,280,533 | ||||
| Total Common Stocks (Identified Cost, $10,955,395,600) | $14,220,761,531 | |||
| Strike
Price |
First
Exercise |
|||
| Warrants – 0.0% | ||||
| Apparel Manufacturers – 0.0% | ||||
| Compagnie Financiere Richemont S.A. (1 share for 2 warrants, Expiration 12/04/23) (a) (Identified Cost, $0) | CHF 67.00 | 11/20/23 | 2,033,964 | $ 715,515 |
10
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Investment Companies (h) – 1.9% | ||||
| Money Market Funds – 1.9% | ||||
| MFS Institutional Money Market Portfolio, 0.07% (v) (Identified Cost, $280,830,993) | 280,834,248 | $ 280,834,248 | ||
| Other Assets, Less Liabilities – (0.5)% | (73,530,229) | |||
| Net Assets – 100.0% | $14,428,781,065 | |||
| (a) | Non-income producing security. | |||
| (h) | An affiliated issuer, which may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $280,834,248 and $14,221,477,046, respectively. | |||
| (l) | A portion of this security is on loan. See Note 2 for additional information. | |||
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. |
| The following abbreviations are used in this report and are defined: | |
| ADR | American Depositary Receipt |
| Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below: | |
| CHF | Swiss Franc |
At February 28, 2021, the fund
had cash collateral of $2,280,000 to cover any collateral or margin obligations for certain derivative contracts. Restricted cash and/or deposits with brokers in the Statement of Assets and Liabilities are comprised of cash collateral.
See Notes to Financial Statements
11
Financial Statements
Statement of Assets and Liabilities
At 2/28/21 (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, including $2,089,658 of securities on loan (identified cost, $10,955,395,600) | $14,221,477,046 |
| Investments in affiliated issuers, at value (identified cost, $280,830,993) | 280,834,248 |
| Cash | 170,000 |
| Foreign currency, at value (identified cost, $8,755,585) | 8,672,055 |
| Restricted cash | 2,280,000 |
| Receivables for | |
| Investments sold | 21,771,066 |
| Fund shares sold | 41,744,111 |
| Interest and dividends | 46,413,588 |
| Other assets | 84,321 |
| Total assets | $14,623,446,435 |
| Liabilities | |
| Payables for | |
| Investments purchased | $182,029,459 |
| Fund shares reacquired | 3,849,688 |
| Payable to affiliates | |
| Investment adviser | 1,009,340 |
| Administrative services fee | 5,871 |
| Shareholder servicing costs | 744,552 |
| Distribution and service fees | 33,118 |
| Program manager fees | 99 |
| Payable for independent Trustees' compensation | 8,218 |
| Deferred country tax expense payable | 6,173,323 |
| Accrued expenses and other liabilities | 811,702 |
| Total liabilities | $194,665,370 |
| Net assets | $14,428,781,065 |
| Net assets consist of | |
| Paid-in capital | $11,381,833,240 |
| Total distributable earnings (loss) | 3,046,947,825 |
| Net assets | $14,428,781,065 |
| Shares of beneficial interest outstanding | 655,152,225 |
12
Statement of Assets and
Liabilities (unaudited) – continued
| Net assets | Shares
outstanding |
Net
asset value per share (a) | |
| Class A | $836,432,654 | 37,877,662 | $22.08 |
| Class B | 2,394,086 | 112,089 | 21.36 |
| Class C | 15,196,897 | 730,779 | 20.80 |
| Class I | 1,217,607,305 | 53,163,374 | 22.90 |
| Class R1 | 2,333,642 | 114,716 | 20.34 |
| Class R2 | 96,648,433 | 4,533,580 | 21.32 |
| Class R3 | 68,660,637 | 3,141,999 | 21.85 |
| Class R4 | 89,007,429 | 4,022,806 | 22.13 |
| Class R6 | 12,082,822,172 | 550,628,999 | 21.94 |
| Class 529A | 15,341,600 | 709,350 | 21.63 |
| Class 529B | 218,678 | 10,728 | 20.38 |
| Class 529C | 2,117,532 | 106,143 | 19.95 |
| (a) | Maximum offering price per share was equal to the net asset value per share for all share classes, except for Classes A and 529A, for which the maximum offering prices per share were $23.43 [100 / 94.25 x $22.08] and $22.95 [100 / 94.25 x $21.63], respectively. On sales of $50,000 or more, the maximum offering prices of Class A and Class 529A shares are reduced. A contingent deferred sales charge may be imposed on redemptions of Class A, Class B, Class C, Class 529B, and Class 529C shares. Redemption price per share was equal to the net asset value per share for Classes I, R1, R2, R3, R4, R6, and 529A. |
See Notes to Financial Statements
13
Financial Statements
Statement of Operations
Six months ended 2/28/21 (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 | |
| Dividends | $89,865,259 |
| Dividends from affiliated issuers | 70,291 |
| Income on securities loaned | 38,310 |
| Other | 1,145 |
| Foreign taxes withheld | (6,491,092) |
| Total investment income | $83,483,913 |
| Expenses | |
| Management fee | $41,807,179 |
| Distribution and service fees | 1,456,792 |
| Shareholder servicing costs | 1,324,081 |
| Program manager fees | 4,195 |
| Administrative services fee | 268,128 |
| Independent Trustees' compensation | 49,722 |
| Custodian fee | 807,008 |
| Shareholder communications | 70,881 |
| Audit and tax fees | 48,678 |
| Legal fees | 41,728 |
| Miscellaneous | 213,205 |
| Total expenses | $46,091,597 |
| Reduction of expenses by investment adviser and distributor | (714,743) |
| Net expenses | $45,376,854 |
| Net investment income (loss) | $38,107,059 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $(429,318) |
| Foreign currency | (155,571) |
| Net realized gain (loss) | $(584,889) |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers (net of $5,205,096 increase in deferred country tax) | $1,270,878,005 |
| Translation of assets and liabilities in foreign currencies | (709,319) |
| Net unrealized gain (loss) | $1,270,168,686 |
| Net realized and unrealized gain (loss) | $1,269,583,797 |
| Change in net assets from operations | $1,307,690,856 |
See Notes to Financial
Statements
14
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 | |
| 2/28/21
(unaudited) |
8/31/20 | |
| Change in net assets | ||
| From operations | ||
| Net investment income (loss) | $38,107,059 | $132,623,809 |
| Net realized gain (loss) | (584,889) | 13,406,325 |
| Net unrealized gain (loss) | 1,270,168,686 | 1,279,457,767 |
| Change in net assets from operations | $1,307,690,856 | $1,425,487,901 |
| Total distributions to shareholders | $(135,001,733) | $(195,001,415) |
| Change in net assets from fund share transactions | $1,563,461,805 | $1,638,301,261 |
| Total change in net assets | $2,736,150,928 | $2,868,787,747 |
| Net assets | ||
| At beginning of period | 11,692,630,137 | 8,823,842,390 |
| At end of period | $14,428,781,065 | $11,692,630,137 |
See Notes to Financial
Statements
15
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 | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $20.09 | $17.89 | $19.19 | $18.16 | $15.83 | $16.34 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.03 | $0.19 | $0.32 | $0.26 | $0.20(c) | $0.25 |
| Net realized and unrealized gain (loss) | 2.12 | 2.33 | (0.77) | 0.97 | 2.39 | (0.50) |
| Total from investment operations | $2.15 | $2.52 | $(0.45) | $1.23 | $2.59 | $(0.25) |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.16) | $(0.32) | $(0.72) | $(0.20) | $(0.26) | $(0.26) |
| From net realized gain | — | — | (0.13) | — | — | — |
| Total distributions declared to shareholders | $(0.16) | $(0.32) | $(0.85) | $(0.20) | $(0.26) | $(0.26) |
| Net asset value, end of period (x) | $22.08 | $20.09 | $17.89 | $19.19 | $18.16 | $15.83 |
| Total return (%) (r)(s)(t)(x) | 10.74(n) | 14.19 | (1.82) | 6.79 | 16.66(c) | (1.50) |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.04(a) | 1.07 | 1.10 | 1.09 | 1.12(c) | 1.14 |
| Expenses after expense reductions (f) | 1.03(a) | 1.06 | 1.09 | 1.08 | 1.10(c) | 1.11 |
| Net investment income (loss) | 0.28(a)(l) | 1.02 | 1.79 | 1.37 | 1.25(c) | 1.62 |
| Portfolio turnover | 10(n) | 22 | 22 | 25 | 33 | 40 |
| Net assets at end of period (000 omitted) | $836,433 | $772,695 | $622,639 | $686,128 | $693,538 | $971,630 |
See Notes to Financial
Statements
16
Financial
Highlights – continued
| Class B |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $19.36 | $17.23 | $18.48 | $17.48 | $15.21 | $15.65 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.05) | $0.04 | $0.16 | $0.10 | $0.10(c) | $0.12 |
| Net realized and unrealized gain (loss) | 2.05 | 2.26 | (0.72) | 0.95 | 2.28 | (0.47) |
| Total from investment operations | $2.00 | $2.30 | $(0.56) | $1.05 | $2.38 | $(0.35) |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.17) | $(0.56) | $(0.05) | $(0.11) | $(0.09) |
| From net realized gain | — | — | (0.13) | — | — | — |
| Total distributions declared to shareholders | $— | $(0.17) | $(0.69) | $(0.05) | $(0.11) | $(0.09) |
| Net asset value, end of period (x) | $21.36 | $19.36 | $17.23 | $18.48 | $17.48 | $15.21 |
| Total return (%) (r)(s)(t)(x) | 10.33(n) | 13.38 | (2.63) | 6.01 | 15.77(c) | (2.20) |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.79(a) | 1.82 | 1.85 | 1.84 | 1.87(c) | 1.89 |
| Expenses after expense reductions (f) | 1.78(a) | 1.81 | 1.84 | 1.82 | 1.85(c) | 1.86 |
| Net investment income (loss) | (0.45)(a)(l) | 0.21 | 0.97 | 0.55 | 0.61(c) | 0.82 |
| Portfolio turnover | 10(n) | 22 | 22 | 25 | 33 | 40 |
| Net assets at end of period (000 omitted) | $2,394 | $2,631 | $3,347 | $4,922 | $6,228 | $7,967 |
See Notes to Financial
Statements
17
Financial
Highlights – continued
| Class C |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $18.85 | $16.79 | $17.99 | $17.03 | $14.85 | $15.31 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.04) | $0.04 | $0.17 | $0.08 | $0.10(c) | $0.12 |
| Net realized and unrealized gain (loss) | 1.99 | 2.19 | (0.70) | 0.94 | 2.21 | (0.45) |
| Total from investment operations | $1.95 | $2.23 | $(0.53) | $1.02 | $2.31 | $(0.33) |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.17) | $(0.54) | $(0.06) | $(0.13) | $(0.13) |
| From net realized gain | — | — | (0.13) | — | — | — |
| Total distributions declared to shareholders | $— | $(0.17) | $(0.67) | $(0.06) | $(0.13) | $(0.13) |
| Net asset value, end of period (x) | $20.80 | $18.85 | $16.79 | $17.99 | $17.03 | $14.85 |
| Total return (%) (r)(s)(t)(x) | 10.34(n) | 13.36 | (2.56) | 5.97 | 15.74(c) | (2.16) |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.79(a) | 1.82 | 1.85 | 1.84 | 1.87(c) | 1.89 |
| Expenses after expense reductions (f) | 1.78(a) | 1.81 | 1.84 | 1.83 | 1.85(c) | 1.86 |
| Net investment income (loss) | (0.45)(a)(l) | 0.23 | 1.05 | 0.44 | 0.64(c) | 0.85 |
| Portfolio turnover | 10(n) | 22 | 22 | 25 | 33 | 40 |
| Net assets at end of period (000 omitted) | $15,197 | $17,620 | $22,825 | $27,800 | $48,570 | $62,124 |
See Notes to Financial
Statements
18
Financial
Highlights – continued
| Class I |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $20.85 | $18.55 | $19.87 | $18.79 | $16.38 | $16.90 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.06 | $0.24 | $0.37 | $0.26 | $0.30(c) | $0.30 |
| Net realized and unrealized gain (loss) | 2.20 | 2.43 | (0.80) | 1.06 | 2.42 | (0.51) |
| Total from investment operations | $2.26 | $2.67 | $(0.43) | $1.32 | $2.72 | $(0.21) |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.21) | $(0.37) | $(0.76) | $(0.24) | $(0.31) | $(0.31) |
| From net realized gain | — | — | (0.13) | — | — | — |
| Total distributions declared to shareholders | $(0.21) | $(0.37) | $(0.89) | $(0.24) | $(0.31) | $(0.31) |
| Net asset value, end of period (x) | $22.90 | $20.85 | $18.55 | $19.87 | $18.79 | $16.38 |
| Total return (%) (r)(s)(t)(x) | 10.87(n) | 14.48 | (1.61) | 7.05 | 16.95(c) | (1.24) |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.79(a) | 0.82 | 0.85 | 0.84 | 0.87(c) | 0.89 |
| Expenses after expense reductions (f) | 0.78(a) | 0.81 | 0.84 | 0.83 | 0.86(c) | 0.86 |
| Net investment income (loss) | 0.52(a)(l) | 1.25 | 2.03 | 1.31 | 1.79(c) | 1.86 |
| Portfolio turnover | 10(n) | 22 | 22 | 25 | 33 | 40 |
| Net assets at end of period (000 omitted) | $1,217,607 | $898,821 | $593,064 | $658,193 | $1,099,134 | $2,187,011 |
See Notes to Financial
Statements
19
Financial
Highlights – continued
| Class R1 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $18.45 | $16.46 | $17.72 | $16.80 | $14.63 | $15.08 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.05) | $0.03 | $0.15 | $0.11 | $0.09(c) | $0.11 |
| Net realized and unrealized gain (loss) | 1.95 | 2.17 | (0.69) | 0.90 | 2.20 | (0.44) |
| Total from investment operations | $1.90 | $2.20 | $(0.54) | $1.01 | $2.29 | $(0.33) |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.01) | $(0.21) | $(0.59) | $(0.09) | $(0.12) | $(0.12) |
| From net realized gain | — | — | (0.13) | — | — | — |
| Total distributions declared to shareholders | $(0.01) | $(0.21) | $(0.72) | $(0.09) | $(0.12) | $(0.12) |
| Net asset value, end of period (x) | $20.34 | $18.45 | $16.46 | $17.72 | $16.80 | $14.63 |
| Total return (%) (r)(s)(t)(x) | 10.32(n) | 13.40 | (2.62) | 5.99 | 15.79(c) | (2.19) |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.79(a) | 1.82 | 1.85 | 1.84 | 1.87(c) | 1.89 |
| Expenses after expense reductions (f) | 1.77(a) | 1.81 | 1.84 | 1.83 | 1.85(c) | 1.86 |
| Net investment income (loss) | (0.49)(a)(l) | 0.19 | 0.95 | 0.60 | 0.61(c) | 0.78 |
| Portfolio turnover | 10(n) | 22 | 22 | 25 | 33 | 40 |
| Net assets at end of period (000 omitted) | $2,334 | $1,628 | $1,751 | $2,153 | $2,089 | $2,418 |
See Notes to Financial
Statements
20
Financial
Highlights – continued
| Class R2 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $19.37 | $17.25 | $18.53 | $17.55 | $15.31 | $15.80 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.00(w) | $0.13 | $0.26 | $0.19 | $0.17(c) | $0.21 |
| Net realized and unrealized gain (loss) | 2.06 | 2.26 | (0.75) | 0.95 | 2.30 | (0.48) |
| Total from investment operations | $2.06 | $2.39 | $(0.49) | $1.14 | $2.47 | $(0.27) |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.11) | $(0.27) | $(0.66) | $(0.16) | $(0.23) | $(0.22) |
| From net realized gain | — | — | (0.13) | — | — | — |
| Total distributions declared to shareholders | $(0.11) | $(0.27) | $(0.79) | $(0.16) | $(0.23) | $(0.22) |
| Net asset value, end of period (x) | $21.32 | $19.37 | $17.25 | $18.53 | $17.55 | $15.31 |
| Total return (%) (r)(s)(t)(x) | 10.64(n) | 13.95 | (2.14) | 6.49 | 16.37(c) | (1.69) |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.29(a) | 1.32 | 1.35 | 1.34 | 1.37(c) | 1.39 |
| Expenses after expense reductions (f) | 1.28(a) | 1.31 | 1.34 | 1.33 | 1.35(c) | 1.36 |
| Net investment income (loss) | 0.04(a)(l) | 0.73 | 1.51 | 1.04 | 1.10(c) | 1.38 |
| Portfolio turnover | 10(n) | 22 | 22 | 25 | 33 | 40 |
| Net assets at end of period (000 omitted) | $96,648 | $89,943 | $98,935 | $121,197 | $132,988 | $152,133 |
See Notes to Financial
Statements
21
Financial
Highlights – continued
| Class R3 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $19.88 | $17.70 | $18.99 | $17.98 | $15.67 | $16.16 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.03 | $0.18 | $0.30 | $0.25 | $0.22(c) | $0.24 |
| Net realized and unrealized gain (loss) | 2.10 | 2.32 | (0.75) | 0.96 | 2.35 | (0.48) |
| Total from investment operations | $2.13 | $2.50 | $(0.45) | $1.21 | $2.57 | $(0.24) |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.16) | $(0.32) | $(0.71) | $(0.20) | $(0.26) | $(0.25) |
| From net realized gain | — | — | (0.13) | — | — | — |
| Total distributions declared to shareholders | $(0.16) | $(0.32) | $(0.84) | $(0.20) | $(0.26) | $(0.25) |
| Net asset value, end of period (x) | $21.85 | $19.88 | $17.70 | $18.99 | $17.98 | $15.67 |
| Total return (%) (r)(s)(t)(x) | 10.72(n) | 14.21 | (1.83) | 6.75 | 16.67(c) | (1.47) |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.04(a) | 1.07 | 1.10 | 1.09 | 1.12(c) | 1.14 |
| Expenses after expense reductions (f) | 1.03(a) | 1.06 | 1.09 | 1.08 | 1.10(c) | 1.11 |
| Net investment income (loss) | 0.28(a)(l) | 0.99 | 1.73 | 1.31 | 1.37(c) | 1.59 |
| Portfolio turnover | 10(n) | 22 | 22 | 25 | 33 | 40 |
| Net assets at end of period (000 omitted) | $68,661 | $63,920 | $61,214 | $82,289 | $91,653 | $126,980 |
See Notes to Financial
Statements
22
Financial
Highlights – continued
| Class R4 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $20.15 | $17.93 | $19.25 | $18.21 | $15.86 | $16.36 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.05 | $0.23 | $0.36 | $0.30 | $0.28(c) | $0.30 |
| Net realized and unrealized gain (loss) | 2.14 | 2.35 | (0.78) | 0.98 | 2.35 | (0.50) |
| Total from investment operations | $2.19 | $2.58 | $(0.42) | $1.28 | $2.63 | $(0.20) |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.21) | $(0.36) | $(0.77) | $(0.24) | $(0.28) | $(0.30) |
| From net realized gain | — | — | (0.13) | — | — | — |
| Total distributions declared to shareholders | $(0.21) | $(0.36) | $(0.90) | $(0.24) | $(0.28) | $(0.30) |
| Net asset value, end of period (x) | $22.13 | $20.15 | $17.93 | $19.25 | $18.21 | $15.86 |
| Total return (%) (r)(s)(t)(x) | 10.90(n) | 14.49 | (1.65) | 7.07 | 16.92(c) | (1.20) |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.78(a) | 0.82 | 0.85 | 0.84 | 0.87(c) | 0.89 |
| Expenses after expense reductions (f) | 0.77(a) | 0.81 | 0.84 | 0.83 | 0.86(c) | 0.86 |
| Net investment income (loss) | 0.43(a)(l) | 1.24 | 2.04 | 1.57 | 1.73(c) | 1.93 |
| Portfolio turnover | 10(n) | 22 | 22 | 25 | 33 | 40 |
| Net assets at end of period (000 omitted) | $89,007 | $41,619 | $54,352 | $58,578 | $63,884 | $148,243 |
See Notes to Financial
Statements
23
Financial
Highlights – continued
| Class R6 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $19.99 | $17.80 | $19.11 | $18.10 | $15.79 | $16.30 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.07 | $0.25 | $0.38 | $0.34 | $0.28(c) | $0.31 |
| Net realized and unrealized gain (loss) | 2.11 | 2.33 | (0.77) | 0.95 | 2.36 | (0.50) |
| Total from investment operations | $2.18 | $2.58 | $(0.39) | $1.29 | $2.64 | $(0.19) |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.23) | $(0.39) | $(0.79) | $(0.28) | $(0.33) | $(0.32) |
| From net realized gain | — | — | (0.13) | — | — | — |
| Total distributions declared to shareholders | $(0.23) | $(0.39) | $(0.92) | $(0.28) | $(0.33) | $(0.32) |
| Net asset value, end of period (x) | $21.94 | $19.99 | $17.80 | $19.11 | $18.10 | $15.79 |
| Total return (%) (r)(s)(t)(x) | 10.93(n) | 14.61 | (1.48) | 7.12 | 17.07(c) | (1.13) |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.68(a) | 0.71 | 0.74 | 0.74 | 0.77(c) | 0.79 |
| Expenses after expense reductions (f) | 0.66(a) | 0.70 | 0.73 | 0.73 | 0.76(c) | 0.76 |
| Net investment income (loss) | 0.63(a)(l) | 1.37 | 2.18 | 1.80 | 1.72(c) | 2.02 |
| Portfolio turnover | 10(n) | 22 | 22 | 25 | 33 | 40 |
| Net assets at end of period (000 omitted) | $12,082,822 | $9,787,763 | $7,350,641 | $6,756,773 | $5,228,377 | $2,766,544 |
See Notes to Financial
Statements
24
Financial
Highlights – continued
| Class 529A |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $19.68 | $17.52 | $18.83 | $17.84 | $15.61 | $16.12 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.03 | $0.17 | $0.31 | $0.26 | $0.23(c) | $0.19 |
| Net realized and unrealized gain (loss) | 2.07 | 2.31 | (0.77) | 0.95 | 2.31 | (0.44) |
| Total from investment operations | $2.10 | $2.48 | $(0.46) | $1.21 | $2.54 | $(0.25) |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.15) | $(0.32) | $(0.72) | $(0.22) | $(0.31) | $(0.26) |
| From net realized gain | — | — | (0.13) | — | — | — |
| Total distributions declared to shareholders | $(0.15) | $(0.32) | $(0.85) | $(0.22) | $(0.31) | $(0.26) |
| Net asset value, end of period (x) | $21.63 | $19.68 | $17.52 | $18.83 | $17.84 | $15.61 |
| Total return (%) (r)(s)(t)(x) | 10.72(n) | 14.23 | (1.94) | 6.78 | 16.60(c) | (1.52) |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.09(a) | 1.12 | 1.15 | 1.15 | 1.22(c) | 1.23 |
| Expenses after expense reductions (f) | 1.06(a) | 1.09 | 1.13 | 1.11 | 1.13(c) | 1.13 |
| Net investment income (loss) | 0.25(a)(l) | 0.96 | 1.77 | 1.37 | 1.39(c) | 1.22 |
| Portfolio turnover | 10(n) | 22 | 22 | 25 | 33 | 40 |
| Net assets at end of period (000 omitted) | $15,342 | $13,072 | $11,805 | $12,615 | $10,464 | $9,101 |
See Notes to Financial
Statements
25
Financial
Highlights – continued
| Class 529B |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $18.48 | $16.47 | $17.72 | $16.79 | $14.78 | $15.19 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.05) | $0.03 | $0.16 | $0.10 | $0.09(c) | $0.05 |
| Net realized and unrealized gain (loss) | 1.95 | 2.16 | (0.71) | 0.90 | 2.18 | (0.39) |
| Total from investment operations | $1.90 | $2.19 | $(0.55) | $1.00 | $2.27 | $(0.34) |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.18) | $(0.57) | $(0.07) | $(0.26) | $(0.07) |
| From net realized gain | — | — | (0.13) | — | — | — |
| Total distributions declared to shareholders | $— | $(0.18) | $(0.70) | $(0.07) | $(0.26) | $(0.07) |
| Net asset value, end of period (x) | $20.38 | $18.48 | $16.47 | $17.72 | $16.79 | $14.78 |
| Total return (%) (r)(s)(t)(x) | 10.28(n) | 13.33 | (2.64) | 5.94 | 15.68(c) | (2.25) |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.84(a) | 1.87 | 1.90 | 1.90 | 1.97(c) | 1.98 |
| Expenses after expense reductions (f) | 1.83(a) | 1.86 | 1.89 | 1.88 | 1.90(c) | 1.90 |
| Net investment income (loss) | (0.50)(a)(l) | 0.16 | 1.00 | 0.56 | 0.58(c) | 0.37 |
| Portfolio turnover | 10(n) | 22 | 22 | 25 | 33 | 40 |
| Net assets at end of period (000 omitted) | $219 | $230 | $287 | $358 | $386 | $434 |
See Notes to Financial
Statements
26
Financial
Highlights – continued
| Class 529C |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $18.10 | $16.13 | $17.38 | $16.51 | $14.53 | $15.01 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.05) | $0.03 | $0.15 | $0.09 | $0.10(c) | $0.07 |
| Net realized and unrealized gain (loss) | 1.91 | 2.12 | (0.69) | 0.89 | 2.15 | (0.41) |
| Total from investment operations | $1.86 | $2.15 | $(0.54) | $0.98 | $2.25 | $(0.34) |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.01) | $(0.18) | $(0.58) | $(0.11) | $(0.27) | $(0.14) |
| From net realized gain | — | — | (0.13) | — | — | — |
| Total distributions declared to shareholders | $(0.01) | $(0.18) | $(0.71) | $(0.11) | $(0.27) | $(0.14) |
| Net asset value, end of period (x) | $19.95 | $18.10 | $16.13 | $17.38 | $16.51 | $14.53 |
| Total return (%) (r)(s)(t)(x) | 10.28(n) | 13.39 | (2.68) | 5.93 | 15.78(c) | (2.28) |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.84(a) | 1.87 | 1.90 | 1.90 | 1.97(c) | 1.99 |
| Expenses after expense reductions (f) | 1.82(a) | 1.85 | 1.89 | 1.87 | 1.89(c) | 1.90 |
| Net investment income (loss) | (0.49)(a)(l) | 0.18 | 0.95 | 0.53 | 0.63(c) | 0.47 |
| Portfolio turnover | 10(n) | 22 | 22 | 25 | 33 | 40 |
| Net assets at end of period (000 omitted) | $2,118 | $2,688 | $2,981 | $3,572 | $3,856 | $3,298 |
| (a) | Annualized. |
| (c) | Amount reflects a one-time reimbursement of expenses by the custodian (or former custodian) without which net investment income and performance would be lower and expenses would be higher. |
| (d) | Per share data is based on average shares outstanding. |
| (f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
| (l) | Recognition of net investment income by the fund may be affected by the timing of the declaration of dividends by companies in which the fund invests and the actual annual net investment income ratio may differ. |
| (n) | Not annualized. |
| (r) | Certain expenses have been reduced without which performance would have been lower. |
| (s) | From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. |
| (t) | Total returns do not include any applicable sales charges. |
| (w) | Per share amount was less than $0.01. |
| (x) | The net asset values and total returns have been calculated on net assets which include adjustments made in accordance with U.S. generally accepted accounting principles required at period end for financial reporting purposes. |
See Notes to Financial Statements
27
Notes to Financial
Statements
(unaudited)
(1) Business and Organization
MFS Research International Fund (the fund) is a diversified
series of MFS Series Trust I (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
The fund is an investment company and accordingly follows the
investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation
of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these
financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests in foreign
securities. Investments in foreign securities are vulnerable to the effects of changes in the relative values of the local currency and the U.S. dollar and to the effects of changes in each country’s market, economic, industrial, political,
regulatory, geopolitical, environmental, public health, and other conditions.
In March 2020, the FASB issued Accounting Standards Update
2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional, temporary relief with respect to the financial reporting of
contracts subject to certain types of modifications due to the planned discontinuation of certain tenors of the London Interbank Offered Rate (LIBOR) and other IBOR-based reference rates as of the end of 2021. The temporary relief provided by ASU
2020-04 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 on the fund's investments, derivatives,
debt and other contracts that will undergo reference rate-related modifications as a result of the reference rate reform.
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.
28
Notes to Financial
Statements (unaudited) - continued
Investment Valuations
— Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which
there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days
or less may be valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. 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, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by
a third-party pricing service.
The Board of
Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If
the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under
the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair
value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the
exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not
resume prior to the close of the exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the
determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser
generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and
financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset
value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same
investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's
assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases,
29
Notes to Financial
Statements (unaudited) - continued
an investment's level within the fair value hierarchy is based on the lowest
level of input that is significant to the fair value measurement. The fund's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.
Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and
credit risk). Level 3 includes unobservable inputs, which may include the adviser's own assumptions in determining the fair value of investments. The following is a summary of the levels used as of February 28, 2021 in valuing the fund's assets or
liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | ||||
| Japan | $844,496,485 | $2,291,586,585 | $— | $3,136,083,070 |
| Switzerland | 1,732,529,746 | — | — | 1,732,529,746 |
| France | 1,572,171,584 | — | — | 1,572,171,584 |
| Germany | 1,116,276,369 | — | — | 1,116,276,369 |
| United Kingdom | 969,801,080 | — | — | 969,801,080 |
| Netherlands | 797,524,072 | — | — | 797,524,072 |
| Hong Kong | 622,274,841 | 127,893,304 | — | 750,168,145 |
| United States | 749,669,476 | — | — | 749,669,476 |
| China | 563,567,386 | — | — | 563,567,386 |
| Other Countries | 2,200,144,557 | 633,541,561 | — | 2,833,686,118 |
| Mutual Funds | 280,834,248 | — | — | 280,834,248 |
| Total | $11,449,289,844 | $3,053,021,450 | $— | $14,502,311,294 |
For further information regarding
security characteristics, see the Portfolio of Investments.
Foreign Currency Translation
— Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated
receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign
exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that
results from fluctuations in foreign currency exchange rates is not separately disclosed.
Security Loans — Under
its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can
be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. The loans are
collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. On loans collateralized by cash, the cash collateral is invested in a money market fund.
The market value of the loaned securities is determined at the close of business of the fund and any additional required
30
Notes to Financial
Statements (unaudited) - continued
collateral is delivered to the fund on the next business day. The lending
agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent will, for the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially
impracticable, pay the fund the market value of the loaned securities. In return, the lending agent assumes the fund's rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending
agent is responsible for the shortfall, but only to the extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. At period end, the fund had investment
securities on loan, all of which were classified as equity securities in the fund’s Portfolio of Investments, with a fair value of $2,089,658. The fair value of the fund’s investment securities on loan is presented gross in the Statement
of Assets and Liabilities. These loans were collateralized by U.S. Treasury Obligations of $2,214,617 held by the lending agent. The collateral on securities loaned exceeded the value of securities on loan at period end. A portion of the income
generated upon investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the
Borrower, and is allocated between the fund and the lending agent. Income from securities lending is separately reported in the Statement of Operations. The dividend and interest income earned on the securities loaned is accounted for in the same
manner as other dividend and interest income.
Indemnifications — Under
the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters
into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet
occurred.
Investment Transactions and Income — Investment transactions are recorded on the trade date. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed
of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend payments received in additional securities are recorded on the ex-dividend date in an amount equal to the value of the security on such date.
The fund may receive proceeds from litigation settlements. Any
proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund.
Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Tax Matters and Distributions
— The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal
income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state
tax returns for all open tax years and does not believe that there are any uncertain
31
Notes to Financial
Statements (unaudited) - continued
tax positions that require recognition of a tax liability. Foreign taxes, if
any, have been accrued by the fund in the accompanying financial statements in accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized
by the fund on securities issued in or by certain foreign countries may be subject to capital gains tax imposed by those countries.
Distributions to shareholders are recorded on the ex-dividend
date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted
for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in
different periods for financial statement and tax purposes will reverse at some time in the future.
Book/tax differences primarily relate to wash sale loss
deferrals.
The tax character of distributions made during
the current period will be determined at fiscal year end. The tax character of distributions declared to shareholders for the last fiscal year is as follows:
| Year
ended 8/31/20 | |
| Ordinary income (including any short-term capital gains) | $195,001,415 |
The federal tax cost and the tax
basis components of distributable earnings were as follows:
| As of 2/28/21 | |
| Cost of investments | $11,303,928,328 |
| Gross appreciation | 3,563,251,144 |
| Gross depreciation | (364,868,178) |
| Net unrealized appreciation (depreciation) | $ 3,198,382,966 |
| As of 8/31/20 | |
| Undistributed ordinary income | 96,527,606 |
| Capital loss carryforwards | (146,534,521) |
| Other temporary differences | 1,965,752 |
| Net unrealized appreciation (depreciation) | 1,922,299,865 |
The aggregate cost above includes
prior fiscal year end tax adjustments, if applicable.
As
of August 31, 2020, 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 | $(57,210,176) |
| Long-Term | (89,324,345) |
| Total | $(146,534,521) |
32
Notes to Financial
Statements (unaudited) - continued
Multiple Classes of Shares of Beneficial Interest — The fund offers multiple classes of shares, which differ in their respective distribution, service, and program manager fees. The fund's income, realized and unrealized gain (loss), and common expenses are
allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B and Class 529B
shares will convert to Class A and Class 529A shares, respectively, approximately eight years after purchase. In addition, Class C and Class 529C shares will convert to Class A and Class 529A shares, respectively, approximately eight years after
purchase. The fund’s distributions declared to shareholders as reported in the Statements of Changes in Net Assets are presented by class as follows:
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||
| Class A | $6,373,941 | $11,396,464 | |
| Class B | — | 30,070 | |
| Class C | — | 220,193 | |
| Class I | 10,184,538 | 11,272,253 | |
| Class R1 | 1,070 | 22,306 | |
| Class R2 | 476,506 | 1,489,011 | |
| Class R3 | 492,210 | 1,090,789 | |
| Class R4 | 503,547 | 725,317 | |
| Class R6 | 116,864,930 | 168,508,766 | |
| Class 529A | 103,537 | 212,373 | |
| Class 529B | — | 3,033 | |
| Class 529C | 1,454 | 30,840 | |
| Total | $135,001,733 | $195,001,415 |
(3) Transactions with
Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid
monthly at the following annual rates based on the fund's average daily net assets:
| Up to $1 billion | 0.90% |
| In excess of $1 billion and up to $2 billion | 0.80% |
| In excess of $2 billion and up to $5 billion | 0.70% |
| In excess of $5 billion and up to $10 billion | 0.60% |
| In excess of $10 billion and up to $20 billion | 0.55% |
| In excess of $20 billion | 0.50% |
MFS has agreed in writing to reduce
its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund's Board of Trustees. For the six months ended February 28, 2021, this management fee reduction amounted to $713,068, which is
included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.64% of the fund's average daily net assets.
33
Notes to Financial
Statements (unaudited) - continued
Distributor — MFS Fund
Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $37,691 and $2,547 for the six months ended February 28, 2021, as its portion of the initial sales charge on sales of Class A and Class 529A shares of the fund,
respectively.
The Board of Trustees has adopted a
distribution plan for certain share classes pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund's distribution plan provides that the fund will pay
MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee
paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.
Distribution Plan Fee Table:
| Distribution
Fee Rate (d) |
Service
Fee Rate (d) |
Total
Distribution Plan (d) |
Annual
Effective Rate (e) |
Distribution
and Service Fee | |
| Class A | — | 0.25% | 0.25% | 0.25% | $ 1,013,407 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 12,540 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 80,489 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 8,908 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 227,412 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 82,901 |
| Class 529A | — | 0.25% | 0.25% | 0.23% | 17,588 |
| Class 529B | 0.75% | 0.25% | 1.00% | 1.00% | 1,104 |
| Class 529C | 0.75% | 0.25% | 1.00% | 0.99% | 12,443 |
| Total Distribution and Service Fees | $1,456,792 |
| (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 February 28, 2021 based on each class's average daily net assets.MFD has voluntarily agreed to rebate a portion of each class's 0.25% service fee attributable to accounts for which there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates' seed money. For the six months ended February 28, 2021, this rebate amounted to $189, $6, $205, $1,217, and $58 for Class A, Class C, Class R2, Class 529A, and Class 529C, respectively, and is included in the reduction of total expenses in the Statement of Operations. |
Certain Class A shares are subject to a contingent deferred
sales charge (CDSC) in the event of a shareholder redemption within 18 months of purchase. Class B and Class 529B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. Class C and Class 529C shares are
subject to a CDSC in the event of
34
Notes to Financial
Statements (unaudited) - continued
a shareholder redemption within 12 months of purchase. All contingent deferred
sales charges are paid to MFD and during the six months ended February 28, 2021, were as follows:
| Amount | |
| Class A | $1,582 |
| Class B | 728 |
| Class C | 229 |
| Class 529B | — |
| Class 529C | 5 |
The fund has entered into and may
from time to time enter into contracts with program managers and other parties which administer the tuition programs through which an investment in the fund’s 529 share classes is made. The fund has entered into an agreement with MFD pursuant
to which MFD receives an annual fee of up to 0.05% of the average daily net assets attributable to each 529 share class. The services provided by MFD, or a third party with which MFD contracts, include recordkeeping and tax reporting and account
services, as well as services designed to maintain the program’s compliance with the Internal Revenue Code and other regulatory requirements. Program manager fees for the six months ended February 28, 2021, were as follows:
| Fee | |
| Class 529A | $3,518 |
| Class 529B | 55 |
| Class 529C | 622 |
| Total Program Manager Fees | $4,195 |
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 February 28, 2021, the fee was $86,991, which equated to 0.0014% 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 February 28, 2021, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $1,237,090.
Administrator — MFS
provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund reimburses MFS the costs incurred to provide these services. The fund is
charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.0042% of the fund's average
daily net assets.
Trustees’ and
Officers’ Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not
pay
35
Notes to Financial
Statements (unaudited) - continued
compensation directly to Trustees or officers of the fund who are also
officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — The fund invests
in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a management fee to MFS but does incur investment and
operating costs.
The fund is permitted to engage
in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) pursuant to a policy adopted by the Board of Trustees. This policy has been designed to ensure that
cross-trades conducted by the fund comply with Rule 17a-7 under the Investment Company Act of 1940. During the six months ended February 28, 2021, the fund engaged in purchase transactions pursuant to this policy, which amounted to
$11,240,573.
(4) Portfolio Securities
For the six months ended February 28, 2021, purchases and sales
of investments, other than short-term obligations, aggregated $2,653,658,082 and $1,233,090,959, respectively.
(5) Shares of Beneficial Interest
The fund's Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Shares sold | |||||
| Class A | 4,159,883 | $87,625,659 | 13,963,138 | $243,893,288 | |
| Class B | 546 | 12,000 | 434 | 8,259 | |
| Class C | 39,851 | 815,500 | 160,107 | 2,687,377 | |
| Class I | 16,832,034 | 375,186,734 | 28,023,915 | 529,889,314 | |
| Class R1 | 41,623 | 850,158 | 15,393 | 258,945 | |
| Class R2 | 523,986 | 11,217,903 | 635,974 | 10,968,211 | |
| Class R3 | 425,729 | 8,979,553 | 1,005,627 | 18,100,300 | |
| Class R4 | 2,328,056 | 50,812,089 | 506,755 | 9,333,025 | |
| Class R6 | 64,638,204 | 1,396,587,213 | 95,811,233 | 1,741,916,575 | |
| Class 529A | 73,609 | 1,552,216 | 103,747 | 1,834,726 | |
| Class 529B | 70 | 1,381 | 266 | 4,879 | |
| Class 529C | 6,030 | 114,571 | 15,983 | 273,521 | |
| 89,069,621 | $1,933,754,977 | 140,242,572 | $2,559,168,420 | ||
36
Notes to Financial
Statements (unaudited) - continued
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Shares
issued to shareholders in reinvestment of distributions |
|||||
| Class A | 226,334 | $4,852,592 | 437,182 | $8,358,920 | |
| Class B | — | — | 1,242 | 23,006 | |
| Class C | — | — | 9,214 | 166,220 | |
| Class I | 403,189 | 8,958,852 | 442,527 | 8,766,464 | |
| Class R1 | 54 | 1,070 | 1,263 | 22,306 | |
| Class R2 | 22,928 | 474,842 | 79,497 | 1,469,099 | |
| Class R3 | 23,207 | 492,210 | 57,653 | 1,090,789 | |
| Class R4 | 22,208 | 476,800 | 37,248 | 713,292 | |
| Class R6 | 5,117,127 | 108,943,629 | 8,352,804 | 158,536,225 | |
| Class 529A | 4,868 | 102,228 | 11,339 | 212,373 | |
| Class 529B | — | — | 171 | 3,033 | |
| Class 529C | 75 | 1,454 | 1,781 | 30,840 | |
| 5,819,990 | $124,303,677 | 9,431,921 | $179,392,567 | ||
| Shares reacquired | |||||
| Class A | (4,968,991) | $(106,413,010) | (10,752,192) | $(192,913,401) | |
| Class B | (24,356) | (497,615) | (59,995) | (1,061,298) | |
| Class C | (243,929) | (4,827,421) | (594,255) | (10,250,272) | |
| Class I | (7,178,874) | (162,152,753) | (17,336,911) | (307,238,171) | |
| Class R1 | (15,198) | (299,229) | (34,780) | (565,446) | |
| Class R2 | (655,953) | (13,502,350) | (1,806,604) | (32,098,920) | |
| Class R3 | (522,511) | (10,973,211) | (1,306,755) | (23,979,131) | |
| Class R4 | (392,801) | (8,382,377) | (1,510,071) | (28,331,024) | |
| Class R6 | (8,733,107) | (185,878,400) | (27,561,757) | (500,610,866) | |
| Class 529A | (33,493) | (696,275) | (124,476) | (2,251,083) | |
| Class 529B | (1,814) | (34,841) | (5,399) | (91,935) | |
| Class 529C | (48,531) | (939,367) | (53,968) | (868,179) | |
| (22,819,558) | $(494,596,849) | (61,147,163) | $(1,100,259,726) | ||
37
Notes to Financial
Statements (unaudited) - continued
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Net change | |||||
| Class A | (582,774) | $(13,934,759) | 3,648,128 | $59,338,807 | |
| Class B | (23,810) | (485,615) | (58,319) | (1,030,033) | |
| Class C | (204,078) | (4,011,921) | (424,934) | (7,396,675) | |
| Class I | 10,056,349 | 221,992,833 | 11,129,531 | 231,417,607 | |
| Class R1 | 26,479 | 551,999 | (18,124) | (284,195) | |
| Class R2 | (109,039) | (1,809,605) | (1,091,133) | (19,661,610) | |
| Class R3 | (73,575) | (1,501,448) | (243,475) | (4,788,042) | |
| Class R4 | 1,957,463 | 42,906,512 | (966,068) | (18,284,707) | |
| Class R6 | 61,022,224 | 1,319,652,442 | 76,602,280 | 1,399,841,934 | |
| Class 529A | 44,984 | 958,169 | (9,390) | (203,984) | |
| Class 529B | (1,744) | (33,460) | (4,962) | (84,023) | |
| Class 529C | (42,426) | (823,342) | (36,204) | (563,818) | |
| 72,070,053 | $1,563,461,805 | 88,527,330 | $1,638,301,261 | ||
Effective June 1, 2019, purchases of
the fund’s Class B and Class 529B shares are closed to new and existing investors subject to certain exceptions. Please see the fund’s prospectus for details.
The fund is one of several mutual funds in which certain MFS
funds may invest. The MFS funds do not invest in the underlying funds for the purpose of exercising management or control. At the end of the period, the MFS International Diversification Fund, the MFS Growth Allocation Fund, the MFS Moderate
Allocation Fund, the MFS Aggressive Growth Allocation Fund, and the MFS Conservative Allocation Fund were the owners of record of approximately 64%, 3%, 3%, 1%, and 1%, respectively, of the value of outstanding voting shares of the fund. In
addition, the MFS Lifetime 2020 Fund, the MFS Lifetime 2025 Fund, the MFS Lifetime 2030 Fund, the MFS Lifetime 2035 Fund, the MFS Lifetime 2040 Fund, the MFS Lifetime 2045 Fund, the MFS Lifetime 2050 Fund, the MFS Lifetime 2055 Fund, the MFS
Lifetime 2060 Fund, and the MFS Lifetime Income Fund were each the owners of record of less than 1% of the value of outstanding voting shares of the fund.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in
a $1.25 billion unsecured committed line of credit of which $1 billion is reserved for use by the fund and certain other 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 one month LIBOR, the Federal Funds Effective Rate and the Overnight Bank Funding Rate, 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. 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,
38
Notes to Financial
Statements (unaudited) - continued
at rates equal to customary reference rates plus an agreed upon spread. For
the six months ended February 28, 2021, the fund’s commitment fee and interest expense were $25,724 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 | $117,231,063 | $1,271,817,142 | $1,108,213,957 | $— | $— | $280,834,248 |
| Affiliated Issuers | Dividend
Income |
Capital
Gain Distributions |
| MFS Institutional Money Market Portfolio | $70,291 | $— |
(8) Impacts of COVID-19
The pandemic related to the global spread of novel coronavirus
disease (COVID-19), which was first detected in December 2019, has resulted in significant disruptions to global business activity and the global economy, as well as the economies of individual countries, the financial performance of individual
companies and sectors, and the securities and commodities markets in general. Multiple surges in cases globally, the availability and widespread adoption of vaccines, and the emergence of variant strains of the virus continue to create uncertainty
as to the future and long-term impacts resulting from the pandemic including impacts to the prices and liquidity of the fund's investments and the fund's performance.
39
Proxy
Voting Policies and Information
MFS votes proxies on
behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s
Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with
the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A
shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the
“Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
From time to time, MFS may post important information about the
fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at
mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an
investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), 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.
40
Semiannual Report
February 28, 2021
MFS® Technology Fund
SCT-SEM
MFS® Technology Fund
CONTENTS
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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
LETTER FROM THE CEO
Dear Shareholders:
Markets have experienced dramatic swings since the coronavirus
pandemic brought the global economy to a standstill for several months early in 2020. The speedy development of vaccines and therapeutics brightened the economic and market outlook, but uncertainty remains as new variants of the virus appear and
questions persist over how fast vaccines can be made widely available. In the United States, political uncertainty eased after former Vice President Joe Biden won the presidential election and the Democrats gained control of a closely divided
Senate.
Global central banks have
taken aggressive steps to cushion the economic and market fallout related to the virus, and governments are deploying unprecedented levels of fiscal support. Having passed a $1.9 trillion stimulus package in March, the U.S. Congress is expected to
approve additional stimulus later this year, some of it focused on infrastructure. Along with extraordinary government expenditures, pent-up consumer demand could fuel a surge in economic activity as coronavirus restrictions are eased. Because of
this, markets anticipate at least temporary inflation pressures in the months ahead and have pushed up yields on global government bonds, resulting in ripple effects being felt across most financial markets. The measures already put in place have
helped build a supportive environment and are encouraging economic recovery; however, if markets disconnect from fundamentals, they can sow the seeds of instability. As such, recent dramatic increases in speculative retail trading bear
watching.
In the aftermath of the crisis, we could see
societal changes as households, businesses, and governments adjust to a new reality, and any such alterations could affect the investment landscape. For investors, events such as the COVID-19 outbreak demonstrate the importance of having a deep
understanding of company fundamentals, and we have built our global research platform to do just that.
At MFS®, we put our clients’ assets to work responsibly by carefully navigating the increasing complexity of global markets and economies. Guided by our
long-term philosophy and adhering to our commitment to sustainable investing, we tune out the noise and aim to uncover what we believe are the best, most durable investment opportunities in the market. Our unique global investment platform combines
collective expertise, long-term discipline, and thoughtful risk management to create sustainable value for investors.
Respectfully,
Michael W.
Roberge
Chief Executive Officer
MFS Investment Management
April 15, 2021
The opinions expressed in this letter are subject to change
and may not be relied upon for investment advice. No forecasts can be guaranteed.
1
Portfolio Composition
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 February 28, 2021.
The portfolio
is actively managed and current holdings may be different.
2
Expense Table
Fund expenses borne by the shareholders during the period,
September 1, 2020 through February 28, 2021
September 1, 2020 through February 28, 2021
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 September 1, 2020 through February 28, 2021.
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 9/01/20 |
Ending
Account Value 2/28/21 |
Expenses
Paid During Period (p) 9/01/20-2/28/21 | |
| A | Actual | 1.13% | $1,000.00 | $1,075.60 | $5.82 |
| Hypothetical (h) | 1.13% | $1,000.00 | $1,019.19 | $5.66 | |
| B | Actual | 1.88% | $1,000.00 | $1,071.63 | $9.66 |
| Hypothetical (h) | 1.88% | $1,000.00 | $1,015.47 | $9.39 | |
| C | Actual | 1.88% | $1,000.00 | $1,071.61 | $9.66 |
| Hypothetical (h) | 1.88% | $1,000.00 | $1,015.47 | $9.39 | |
| I | Actual | 0.88% | $1,000.00 | $1,077.04 | $4.53 |
| Hypothetical (h) | 0.88% | $1,000.00 | $1,020.43 | $4.41 | |
| R1 | Actual | 1.88% | $1,000.00 | $1,071.57 | $9.66 |
| Hypothetical (h) | 1.88% | $1,000.00 | $1,015.47 | $9.39 | |
| R2 | Actual | 1.38% | $1,000.00 | $1,074.22 | $7.10 |
| Hypothetical (h) | 1.38% | $1,000.00 | $1,017.95 | $6.90 | |
| R3 | Actual | 1.13% | $1,000.00 | $1,075.66 | $5.82 |
| Hypothetical (h) | 1.13% | $1,000.00 | $1,019.19 | $5.66 | |
| R4 | Actual | 0.88% | $1,000.00 | $1,076.87 | $4.53 |
| Hypothetical (h) | 0.88% | $1,000.00 | $1,020.43 | $4.41 | |
| R6 | Actual | 0.78% | $1,000.00 | $1,077.54 | $4.02 |
| Hypothetical (h) | 0.78% | $1,000.00 | $1,020.93 | $3.91 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Notes to Expense Table
Expense ratios include 0.01% of investment related expenses
from short sales (See Note 2 of the Notes to Financial Statements).
4
Portfolio of
Investments
2/28/21 (unaudited)
The Portfolio of Investments is a complete list of all
securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – 98.7% | ||||
| Biotechnology – 0.2% | ||||
| Adaptive Biotechnologies Corp. (a) | 73,910 | $ 4,181,089 | ||
| Brokerage & Asset Managers – 0.3% | ||||
| NASDAQ, Inc. | 7,936 | $ 1,097,469 | ||
| Tradeweb Markets, Inc. | 66,693 | 4,854,584 | ||
| $5,952,053 | ||||
| Business Services – 8.7% | ||||
| Clarivate PLC (a) | 543,621 | $ 12,367,378 | ||
| Endava PLC, ADR (a) | 235,281 | 20,810,605 | ||
| Global Payments, Inc. | 270,660 | 53,587,980 | ||
| Nuvei Corp. (a) | 184,389 | 9,597,447 | ||
| PayPal Holdings, Inc. (a) | 329,882 | 85,719,838 | ||
| Verisk Analytics, Inc., “A” | 40,365 | 6,613,805 | ||
| $188,697,053 | ||||
| Cable TV – 0.9% | ||||
| Charter Communications, Inc., “A” (a) | 32,030 | $ 19,647,843 | ||
| Computer Software – 25.1% | ||||
| Adobe Systems, Inc. (a) | 154,822 | $ 71,167,029 | ||
| Asana, Inc. (a) | 299,731 | 10,379,684 | ||
| Atlassian Corp. PLC, “A” (a) | 65,451 | 15,557,703 | ||
| Autodesk, Inc. (a) | 87,315 | 24,098,940 | ||
| Bentley Systems, Inc., “B” | 65,093 | 2,887,525 | ||
| Black Knight, Inc. (a) | 173,426 | 13,300,040 | ||
| DocuSign, Inc. (a) | 66,568 | 15,088,303 | ||
| Dun & Bradstreet Holdings, Inc. (a) | 426,115 | 9,314,874 | ||
| Eventbrite, Inc. (a) | 426,231 | 8,469,210 | ||
| Lyft, Inc. (a) | 178,013 | 9,915,324 | ||
| Microsoft Corp. (s) | 918,476 | 213,435,453 | ||
| Okta, Inc. (a) | 68,518 | 17,914,031 | ||
| Ping Identity Holding Corp. (a) | 204,421 | 4,789,584 | ||
| Qualtrics International, “A” (a) | 136,522 | 5,187,836 | ||
| RAKUS Co. Ltd. (l) | 61,700 | 1,066,198 | ||
| RingCentral, Inc. (a) | 94,633 | 35,786,415 | ||
| salesforce.com, inc. (a) | 224,358 | 48,573,507 | ||
| Topicus.com, Inc. (a) | 26,260 | 1,363,143 | ||
| Twilio, Inc., “A” (a) | 56,359 | 22,142,324 | ||
| Zendesk, Inc. (a) | 117,134 | 17,117,963 | ||
| $547,555,086 | ||||
5
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Computer Software - Systems – 11.1% | ||||
| Apple, Inc. (s) | 526,152 | $ 63,801,191 | ||
| Constellation Software, Inc. | 14,120 | 18,282,105 | ||
| Descartes Systems Group, Inc. (a) | 183,874 | 10,765,717 | ||
| EPAM Systems, Inc. (a) | 50,591 | 18,901,303 | ||
| HubSpot, Inc. (a) | 55,207 | 28,431,605 | ||
| Q2 Holdings, Inc. (a) | 103,723 | 12,641,759 | ||
| ServiceNow, Inc. (a) | 77,293 | 41,232,724 | ||
| Square, Inc., “A” (a) | 74,594 | 17,158,858 | ||
| TransUnion | 126,436 | 10,647,176 | ||
| Wix.com Ltd. (a) | 55,796 | 19,448,812 | ||
| $241,311,250 | ||||
| Consumer Services – 3.9% | ||||
| Booking Holdings, Inc. (a) | 25,190 | $ 58,655,167 | ||
| Uber Technologies, Inc. (a) | 487,610 | 25,233,817 | ||
| $83,888,984 | ||||
| Electronics – 11.3% | ||||
| Advanced Micro Devices (a) | 546,046 | $ 46,146,347 | ||
| Allegro MicroSystems, Inc. (a) | 325,419 | 8,506,453 | ||
| ASML Holding N.V. | 28,516 | 16,171,138 | ||
| KLA Corp. | 91,538 | 28,489,372 | ||
| Lam Research Corp. | 68,863 | 39,058,405 | ||
| Marvell Technology Group Ltd. | 431,589 | 20,837,117 | ||
| Micron Technology, Inc. (a) | 85,856 | 7,858,400 | ||
| NVIDIA Corp. | 82,166 | 45,074,624 | ||
| Skyworks Solutions, Inc. | 155,792 | 27,702,933 | ||
| Taiwan Semiconductor Manufacturing Co. Ltd., ADR | 58,455 | 7,361,823 | ||
| $247,206,612 | ||||
| Gaming & Lodging – 0.6% | ||||
| DraftKings, Inc. (a) | 215,477 | $ 13,258,300 | ||
| Internet – 16.0% | ||||
| Alibaba Group Holding Ltd., ADR (a) | 148,328 | $ 35,266,465 | ||
| Allegro.eu S.A. (a) | 299,980 | 5,148,689 | ||
| Alphabet, Inc., “A” (a) | 46,730 | 94,483,854 | ||
| Facebook, Inc., “A” (a) | 274,539 | 70,726,737 | ||
| Farfetch Ltd., “A” (a) | 225,928 | 14,884,137 | ||
| Match Group, Inc. (a) | 127,282 | 19,455,054 | ||
| Mercadolibre, Inc. (a) | 8,201 | 13,434,140 | ||
| NetEase.com, Inc., ADR | 198,453 | 21,800,062 | ||
| Pinterest, Inc. (a) | 249,277 | 20,086,741 | ||
| Sea Ltd., ADR (a) | 50,782 | 11,968,810 | ||
6
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Internet – continued | ||||
| Tencent Holdings Ltd. | 495,500 | $ 42,322,035 | ||
| $349,576,724 | ||||
| Leisure & Toys – 3.0% | ||||
| Activision Blizzard, Inc. | 347,533 | $ 33,227,630 | ||
| Electronic Arts, Inc. | 97,961 | 13,123,835 | ||
| Take-Two Interactive Software, Inc. (a) | 102,167 | 18,845,725 | ||
| $65,197,190 | ||||
| Medical & Health Technology & Services – 0.5% | ||||
| Guardant Health, Inc. (a) | 69,204 | $ 10,185,445 | ||
| Medical Equipment – 0.8% | ||||
| Bio-Techne Corp. | 36,127 | $ 13,066,774 | ||
| Maravai Lifesciences Holdings, Inc., “A” (a) | 150,746 | 4,902,260 | ||
| $17,969,034 | ||||
| Other Banks & Diversified Financials – 6.4% | ||||
| Mastercard, Inc., “A” | 248,090 | $ 87,786,647 | ||
| Visa, Inc., “A” | 242,288 | 51,459,548 | ||
| $139,246,195 | ||||
| Specialty Stores – 9.9% | ||||
| Amazon.com, Inc. (a)(s) | 62,617 | $ 193,669,998 | ||
| Chewy, Inc., “A” (a) | 143,848 | 14,609,203 | ||
| Pinduoduo, Inc., ADR (a) | 24,593 | 4,209,338 | ||
| Shopify, Inc. (a) | 3,119 | 3,995,345 | ||
| $216,483,884 | ||||
| Total Common Stocks (Identified Cost, $1,010,663,926) | $2,150,356,742 | |||
| Investment Companies (h) – 1.1% | ||||
| Money Market Funds – 1.1% | ||||
| MFS Institutional Money Market Portfolio, 0.07% (v) (Identified Cost, $23,906,471) | 23,906,709 | $ 23,906,709 | ||
| Other Assets, Less Liabilities – 0.2% | 4,285,991 | |||
| Net Assets – 100.0% | $2,178,549,442 | |||
| (a) | Non-income producing security. | |||
| (h) | An affiliated issuer, which may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $23,906,709 and $2,150,356,742, respectively. | |||
| (l) | A portion of this security is on loan. See Note 2 for additional information. |
7
Portfolio of
Investments (unaudited) – continued
| (s) | Security or a portion of the security was pledged to cover collateral requirements for securities sold short and/or certain derivative transactions. | |||
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. |
| The following abbreviations are used in this report and are defined: | |
| ADR | American Depositary Receipt |
At February 28,
2021, the fund had liquid securities with an aggregate value of $537,068 to cover any collateral or margin obligations for certain derivative contracts.
See Notes to Financial Statements
8
Financial Statements
Statement of Assets and Liabilities
At 2/28/21 (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, including $518,339 of securities on loan (identified cost, $1,010,663,926) | $2,150,356,742 |
| Investments in affiliated issuers, at value (identified cost, $23,906,471) | 23,906,709 |
| Receivables for | |
| Investments sold | 13,313,970 |
| Fund shares sold | 3,904,539 |
| Interest and dividends | 774,923 |
| Other assets | 54,169 |
| Total assets | $2,192,311,052 |
| Liabilities | |
| Payable to custodian | $24,581 |
| Payables for | |
| Investments purchased | 9,828,806 |
| Fund shares reacquired | 2,996,429 |
| Payable to affiliates | |
| Investment adviser | 170,456 |
| Administrative services fee | 3,079 |
| Shareholder servicing costs | 579,370 |
| Distribution and service fees | 52,875 |
| Payable for independent Trustees' compensation | 1,708 |
| Accrued expenses and other liabilities | 104,306 |
| Total liabilities | $13,761,610 |
| Net assets | $2,178,549,442 |
| Net assets consist of | |
| Paid-in capital | $942,345,246 |
| Total distributable earnings (loss) | 1,236,204,196 |
| Net assets | $2,178,549,442 |
| Shares of beneficial interest outstanding | 32,500,520 |
9
Statement of Assets and
Liabilities (unaudited) – continued
| Net assets | Shares
outstanding |
Net
asset value per share (a) | |
| Class A | $793,563,211 | 11,993,079 | $66.17 |
| Class B | 43,020,735 | 781,873 | 55.02 |
| Class C | 182,123,489 | 3,317,899 | 54.89 |
| Class I | 592,955,626 | 8,271,362 | 71.69 |
| Class R1 | 10,865,299 | 198,408 | 54.76 |
| Class R2 | 37,361,429 | 599,878 | 62.28 |
| Class R3 | 115,307,671 | 1,743,834 | 66.12 |
| Class R4 | 37,162,320 | 533,916 | 69.60 |
| Class R6 | 366,189,662 | 5,060,271 | 72.37 |
| (a) | Maximum offering price per share was equal to the net asset value per share for all share classes, except for Class A, for which the maximum offering price per share was $70.21 [100 / 94.25 x $66.17]. 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
10
Financial Statements
Statement of Operations
Six months ended 2/28/21 (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 | |
| Dividends | $3,087,995 |
| Other | 60,405 |
| Dividends from affiliated issuers | 15,349 |
| Income on securities loaned | 1,615 |
| Foreign taxes withheld | (24,069) |
| Total investment income | $3,141,295 |
| Expenses | |
| Management fee | $7,452,867 |
| Distribution and service fees | 2,338,114 |
| Shareholder servicing costs | 1,056,042 |
| Administrative services fee | 133,769 |
| Independent Trustees' compensation | 13,017 |
| Custodian fee | 50,875 |
| Shareholder communications | 34,432 |
| Audit and tax fees | 30,813 |
| Legal fees | 6,865 |
| Dividend and interest expense on securities sold short | 100,591 |
| Interest expense and fees | 4,069 |
| Miscellaneous | 110,033 |
| Total expenses | $11,331,487 |
| Reduction of expenses by investment adviser and distributor | (114,893) |
| Net expenses | $11,216,594 |
| Net investment income (loss) | $(8,075,299) |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $139,383,699 |
| Written options | 1,392,308 |
| Securities sold short | (11,478,430) |
| Foreign currency | (11,654) |
| Net realized gain (loss) | $129,285,923 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $31,947,753 |
| Net realized and unrealized gain (loss) | $161,233,676 |
| Change in net assets from operations | $153,158,377 |
See Notes to Financial
Statements
11
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 | |
| 2/28/21
(unaudited) |
8/31/20 | |
| Change in net assets | ||
| From operations | ||
| Net investment income (loss) | $(8,075,299) | $(10,142,571) |
| Net realized gain (loss) | 129,285,923 | 101,865,379 |
| Net unrealized gain (loss) | 31,947,753 | 551,264,892 |
| Change in net assets from operations | $153,158,377 | $642,987,700 |
| Total distributions to shareholders | $(109,215,038) | $(27,686,049) |
| Change in net assets from fund share transactions | $91,198,425 | $162,189,967 |
| Total change in net assets | $135,141,764 | $777,491,618 |
| Net assets | ||
| At beginning of period | 2,043,407,678 | 1,265,916,060 |
| At end of period | $2,178,549,442 | $2,043,407,678 |
See Notes to Financial
Statements
12
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 | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $64.90 | $44.73 | $45.65 | $35.67 | $28.27 | $24.62 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.26) | $(0.35) | $(0.27) | $(0.26) | $(0.19)(c) | $(0.12) |
| Net realized and unrealized gain (loss) | 5.04 | 21.50 | 1.24 | 11.61 | 8.13 | 4.76 |
| Total from investment operations | $4.78 | $21.15 | $0.97 | $11.35 | $7.94 | $4.64 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.51) | $(0.98) | $(1.89) | $(1.37) | $(0.54) | $(0.99) |
| Net asset value, end of period (x) | $66.17 | $64.90 | $44.73 | $45.65 | $35.67 | $28.27 |
| Total return (%) (r)(s)(t)(x) | 7.56(n) | 48.23 | 2.97 | 32.79 | 28.58(c) | 19.20 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.14(a) | 1.18 | 1.19 | 1.24 | 1.24(c) | 1.27 |
| Expenses after expense reductions (f) | 1.13(a) | 1.16 | 1.18 | 1.22 | 1.23(c) | 1.26 |
| Net investment income (loss) | (0.82)(a) | (0.71) | (0.64) | (0.66) | (0.63)(c) | (0.48) |
| Portfolio turnover | 19(n) | 46 | 32 | 30 | 43 | 30 |
| Net assets at end of period (000 omitted) | $793,563 | $745,157 | $471,468 | $484,477 | $359,698 | $320,898 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 1.12(a) | 1.13 | 1.15 | 1.16 | 1.19(c) | 1.24 |
See Notes to Financial
Statements
13
Financial
Highlights – continued
| Class B |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $54.73 | $38.16 | $39.55 | $31.31 | $25.06 | $22.09 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.42) | $(0.61) | $(0.50) | $(0.49) | $(0.38)(c) | $(0.28) |
| Net realized and unrealized gain (loss) | 4.22 | 18.16 | 1.00 | 10.10 | 7.17 | 4.24 |
| Total from investment operations | $3.80 | $17.55 | $0.50 | $9.61 | $6.79 | $3.96 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.51) | $(0.98) | $(1.89) | $(1.37) | $(0.54) | $(0.99) |
| Net asset value, end of period (x) | $55.02 | $54.73 | $38.16 | $39.55 | $31.31 | $25.06 |
| Total return (%) (r)(s)(t)(x) | 7.16(n) | 47.07 | 2.21 | 31.77 | 27.64(c) | 18.29 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.89(a) | 1.93 | 1.94 | 1.99 | 1.99(c) | 2.02 |
| Expenses after expense reductions (f) | 1.88(a) | 1.92 | 1.93 | 1.98 | 1.98(c) | 2.01 |
| Net investment income (loss) | (1.57)(a) | (1.46) | (1.39) | (1.41) | (1.38)(c) | (1.22) |
| Portfolio turnover | 19(n) | 46 | 32 | 30 | 43 | 30 |
| Net assets at end of period (000 omitted) | $43,021 | $46,224 | $41,017 | $45,337 | $34,396 | $25,990 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 1.87(a) | 1.88 | 1.90 | 1.92 | 1.94(c) | 1.99 |
See Notes to Financial
Statements
14
Financial
Highlights – continued
| Class C |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $54.61 | $38.07 | $39.47 | $31.24 | $25.01 | $22.05 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.42) | $(0.61) | $(0.50) | $(0.49) | $(0.38)(c) | $(0.28) |
| Net realized and unrealized gain (loss) | 4.21 | 18.13 | 0.99 | 10.09 | 7.15 | 4.23 |
| Total from investment operations | $3.79 | $17.52 | $0.49 | $9.60 | $6.77 | $3.95 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.51) | $(0.98) | $(1.89) | $(1.37) | $(0.54) | $(0.99) |
| Net asset value, end of period (x) | $54.89 | $54.61 | $38.07 | $39.47 | $31.24 | $25.01 |
| Total return (%) (r)(s)(t)(x) | 7.16(n) | 47.11 | 2.19 | 31.81 | 27.62(c) | 18.28 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.89(a) | 1.93 | 1.94 | 1.98 | 1.99(c) | 2.02 |
| Expenses after expense reductions (f) | 1.88(a) | 1.92 | 1.93 | 1.97 | 1.98(c) | 2.01 |
| Net investment income (loss) | (1.57)(a) | (1.46) | (1.40) | (1.41) | (1.38)(c) | (1.23) |
| Portfolio turnover | 19(n) | 46 | 32 | 30 | 43 | 30 |
| Net assets at end of period (000 omitted) | $182,123 | $183,286 | $128,817 | $128,707 | $101,656 | $73,071 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 1.87(a) | 1.88 | 1.91 | 1.92 | 1.94(c) | 2.00 |
See Notes to Financial
Statements
15
Financial
Highlights – continued
| Class I |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $69.94 | $48.02 | $48.74 | $37.90 | $29.93 | $25.96 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.20) | $(0.25) | $(0.18) | $(0.18) | $(0.13)(c) | $(0.07) |
| Net realized and unrealized gain (loss) | 5.46 | 23.15 | 1.35 | 12.39 | 8.64 | 5.03 |
| Total from investment operations | $5.26 | $22.90 | $1.17 | $12.21 | $8.51 | $4.96 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.51) | $(0.98) | $(1.89) | $(1.37) | $(0.54) | $(0.99) |
| Net asset value, end of period (x) | $71.69 | $69.94 | $48.02 | $48.74 | $37.90 | $29.93 |
| Total return (%) (r)(s)(t)(x) | 7.70(n) | 48.57 | 3.20 | 33.14 | 28.91(c) | 19.45 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.89(a) | 0.93 | 0.94 | 0.99 | 0.99(c) | 1.02 |
| Expenses after expense reductions (f) | 0.88(a) | 0.92 | 0.93 | 0.98 | 0.98(c) | 1.01 |
| Net investment income (loss) | (0.57)(a) | (0.46) | (0.40) | (0.41) | (0.39)(c) | (0.24) |
| Portfolio turnover | 19(n) | 46 | 32 | 30 | 43 | 30 |
| Net assets at end of period (000 omitted) | $592,956 | $561,531 | $315,655 | $303,359 | $174,275 | $96,700 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 0.87(a) | 0.88 | 0.91 | 0.92 | 0.95(c) | 1.00 |
See Notes to Financial
Statements
16
Financial
Highlights – continued
| Class R1 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $54.49 | $37.99 | $39.39 | $31.18 | $24.96 | $22.01 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.42) | $(0.62) | $(0.50) | $(0.49) | $(0.38)(c) | $(0.28) |
| Net realized and unrealized gain (loss) | 4.20 | 18.10 | 0.99 | 10.07 | 7.14 | 4.22 |
| Total from investment operations | $3.78 | $17.48 | $0.49 | $9.58 | $6.76 | $3.94 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.51) | $(0.98) | $(1.89) | $(1.37) | $(0.54) | $(0.99) |
| Net asset value, end of period (x) | $54.76 | $54.49 | $37.99 | $39.39 | $31.18 | $24.96 |
| Total return (%) (r)(s)(t)(x) | 7.16(n) | 47.10 | 2.19 | 31.80 | 27.63(c) | 18.27 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.89(a) | 1.93 | 1.94 | 1.99 | 1.99(c) | 2.02 |
| Expenses after expense reductions (f) | 1.88(a) | 1.91 | 1.93 | 1.98 | 1.98(c) | 2.01 |
| Net investment income (loss) | (1.57)(a) | (1.47) | (1.40) | (1.41) | (1.38)(c) | (1.22) |
| Portfolio turnover | 19(n) | 46 | 32 | 30 | 43 | 30 |
| Net assets at end of period (000 omitted) | $10,865 | $9,882 | $5,715 | $5,534 | $4,256 | $3,073 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 1.87(a) | 1.88 | 1.91 | 1.92 | 1.95(c) | 1.99 |
See Notes to Financial
Statements
17
Financial
Highlights – continued
| Class R2 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $61.36 | $42.45 | $43.55 | $34.17 | $27.17 | $23.76 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.32) | $(0.45) | $(0.36) | $(0.35) | $(0.26)(c) | $(0.18) |
| Net realized and unrealized gain (loss) | 4.75 | 20.34 | 1.15 | 11.10 | 7.80 | 4.58 |
| Total from investment operations | $4.43 | $19.89 | $0.79 | $10.75 | $7.54 | $4.40 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.51) | $(0.98) | $(1.89) | $(1.37) | $(0.54) | $(0.99) |
| Net asset value, end of period (x) | $62.28 | $61.36 | $42.45 | $43.55 | $34.17 | $27.17 |
| Total return (%) (r)(s)(t)(x) | 7.42(n) | 47.84 | 2.69 | 32.46 | 28.27(c) | 18.88 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.39(a) | 1.43 | 1.44 | 1.48 | 1.49(c) | 1.52 |
| Expenses after expense reductions (f) | 1.38(a) | 1.42 | 1.43 | 1.48 | 1.49(c) | 1.51 |
| Net investment income (loss) | (1.07)(a) | (0.97) | (0.90) | (0.91) | (0.89)(c) | (0.72) |
| Portfolio turnover | 19(n) | 46 | 32 | 30 | 43 | 30 |
| Net assets at end of period (000 omitted) | $37,361 | $38,511 | $29,339 | $28,071 | $23,625 | $17,031 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 1.37(a) | 1.38 | 1.41 | 1.42 | 1.45(c) | 1.49 |
See Notes to Financial
Statements
18
Financial
Highlights – continued
| Class R3 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $64.85 | $44.71 | $45.63 | $35.66 | $28.26 | $24.61 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.26) | $(0.35) | $(0.27) | $(0.27) | $(0.20)(c) | $(0.13) |
| Net realized and unrealized gain (loss) | 5.04 | 21.47 | 1.24 | 11.61 | 8.14 | 4.77 |
| Total from investment operations | $4.78 | $21.12 | $0.97 | $11.34 | $7.94 | $4.64 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.51) | $(0.98) | $(1.89) | $(1.37) | $(0.54) | $(0.99) |
| Net asset value, end of period (x) | $66.12 | $64.85 | $44.71 | $45.63 | $35.66 | $28.26 |
| Total return (%) (r)(s)(t)(x) | 7.57(n) | 48.18 | 2.97 | 32.77 | 28.59(c) | 19.21 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.14(a) | 1.18 | 1.19 | 1.24 | 1.24(c) | 1.27 |
| Expenses after expense reductions (f) | 1.13(a) | 1.17 | 1.18 | 1.23 | 1.23(c) | 1.26 |
| Net investment income (loss) | (0.82)(a) | (0.71) | (0.65) | (0.66) | (0.65)(c) | (0.49) |
| Portfolio turnover | 19(n) | 46 | 32 | 30 | 43 | 30 |
| Net assets at end of period (000 omitted) | $115,308 | $109,884 | $80,242 | $79,534 | $53,199 | $20,180 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 1.12(a) | 1.13 | 1.16 | 1.17 | 1.20(c) | 1.25 |
See Notes to Financial
Statements
19
Financial
Highlights – continued
| Class R4 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $68.01 | $46.72 | $47.47 | $36.95 | $29.19 | $25.34 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.19) | $(0.24) | $(0.17) | $(0.17) | $(0.13)(c) | $(0.06) |
| Net realized and unrealized gain (loss) | 5.29 | 22.51 | 1.31 | 12.06 | 8.43 | 4.90 |
| Total from investment operations | $5.10 | $22.27 | $1.14 | $11.89 | $8.30 | $4.84 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.51) | $(0.98) | $(1.89) | $(1.37) | $(0.54) | $(0.99) |
| Net asset value, end of period (x) | $69.60 | $68.01 | $46.72 | $47.47 | $36.95 | $29.19 |
| Total return (%) (r)(s)(t)(x) | 7.69(n) | 48.57 | 3.22 | 33.12 | 28.92(c) | 19.45 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.89(a) | 0.93 | 0.94 | 0.99 | 0.99(c) | 1.02 |
| Expenses after expense reductions (f) | 0.88(a) | 0.92 | 0.93 | 0.98 | 0.99(c) | 1.01 |
| Net investment income (loss) | (0.57)(a) | (0.47) | (0.40) | (0.41) | (0.39)(c) | (0.24) |
| Portfolio turnover | 19(n) | 46 | 32 | 30 | 43 | 30 |
| Net assets at end of period (000 omitted) | $37,162 | $32,530 | $25,310 | $23,004 | $14,443 | $8,141 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 0.87(a) | 0.89 | 0.91 | 0.92 | 0.95(c) | 1.00 |
See Notes to Financial
Statements
20
Financial
Highlights – continued
| Class R6 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $70.54 | $48.38 | $49.03 | $38.09 | $30.05 | $26.03 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $(0.16) | $(0.20) | $(0.13) | $(0.13) | $(0.10)(c) | $(0.04) |
| Net realized and unrealized gain (loss) | 5.50 | 23.34 | 1.37 | 12.44 | 8.68 | 5.05 |
| Total from investment operations | $5.34 | $23.14 | $1.24 | $12.31 | $8.58 | $5.01 |
| Less distributions declared to shareholders | ||||||
| From net realized gain | $(3.51) | $(0.98) | $(1.89) | $(1.37) | $(0.54) | $(0.99) |
| Net asset value, end of period (x) | $72.37 | $70.54 | $48.38 | $49.03 | $38.09 | $30.05 |
| Total return (%) (r)(s)(t)(x) | 7.75(n) | 48.71 | 3.33 | 33.24 | 29.03(c) | 19.59 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.79(a) | 0.84 | 0.84 | 0.89 | 0.90(c) | 0.92 |
| Expenses after expense reductions (f) | 0.78(a) | 0.82 | 0.83 | 0.88 | 0.89(c) | 0.91 |
| Net investment income (loss) | (0.47)(a) | (0.37) | (0.30) | (0.31) | (0.30)(c) | (0.13) |
| Portfolio turnover | 19(n) | 46 | 32 | 30 | 43 | 30 |
| Net assets at end of period (000 omitted) | $366,190 | $316,404 | $168,352 | $138,924 | $95,534 | $33,411 |
| Supplemental Ratios (%): | ||||||
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees (f) | 0.76(a) | 0.79 | 0.81 | 0.82 | 0.85(c) | 0.90 |
| (a) | Annualized. |
| (c) | Amount reflects a one-time reimbursement of expenses by the custodian (or former custodian) without which net investment income and performance would be lower and expenses would be higher. |
| (d) | Per share data is based on average shares outstanding. |
| (f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
| (n) | Not annualized. |
| (r) | Certain expenses have been reduced without which performance would have been lower. |
| (s) | From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. |
| (t) | Total returns do not include any applicable sales charges. |
| (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
21
Notes to Financial
Statements
(unaudited)
(1) Business and Organization
MFS Technology Fund (the fund) is a non-diversified series of
MFS Series Trust I (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
The fund is an investment company and accordingly follows the
investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation
of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these
financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests primarily in
securities of issuers in the technology industry. Issuers in a single industry can react similarly to market, currency, political, economic, regulatory, geopolitical, environmental, public health, and other conditions. The value of stocks in the
technology sector can be very volatile due to the rapid pace of product change, technological developments, and other factors.
In March 2020, the FASB issued Accounting Standards Update
2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional, temporary relief with respect to the financial reporting of
contracts subject to certain types of modifications due to the planned discontinuation of certain tenors of the London Interbank Offered Rate (LIBOR) and other IBOR-based reference rates as of the end of 2021. The temporary relief provided by ASU
2020-04 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 on the fund's investments, derivatives,
debt and other contracts that will undergo reference rate-related modifications as a result of the reference rate reform.
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.
22
Notes to Financial
Statements (unaudited) - continued
Investment Valuations
— Equity securities, including restricted equity securities and equity securities sold short, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing
service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Equity securities sold short,
for which there were no sales reported that day, are generally valued at the last quoted daily ask quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of
60 days or less may be valued at amortized cost, which approximates market value. Exchange-traded options are generally valued at the last sale or official closing price on their primary exchange as provided by a third-party pricing service.
Exchange-traded options for which there were no sales reported that day are generally valued at the last daily bid quotation on their primary exchange as provided by a third-party pricing service. For put options, the position may be valued at the
last daily ask quotation if there are no trades reported during the day. Options not traded on an exchange are generally valued at a broker/dealer bid quotation. Foreign currency options are generally valued at valuations provided by a third-party
pricing service. Open-end investment companies are generally valued at net asset value per share. 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, and other market
data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.
The Board of Trustees has delegated primary responsibility for
determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market
quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and
procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from
third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the
investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the
exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s
net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party
pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the
23
Notes to Financial
Statements (unaudited) - continued
issuer; and trading and other market data) to assist in determining whether to
fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the
value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to
sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's
assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair
value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers
factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities,
interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser's own assumptions in determining the fair value of investments. The following is a summary of the levels used as of February 28,
2021 in valuing the fund's assets or liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities | $2,150,356,742 | $— | $— | $2,150,356,742 |
| Mutual Funds | 23,906,709 | — | — | 23,906,709 |
| Total | $2,174,263,451 | $— | $— | $2,174,263,451 |
For further information regarding
security characteristics, see the Portfolio of Investments.
Foreign Currency Translation
— Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated
receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign
exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that
results from fluctuations in foreign currency exchange rates is not separately disclosed.
Derivatives — The fund
uses derivatives primarily to increase or decrease exposure to a particular market or segment of the market, or security, to increase or decrease interest rate or currency exposure, or as alternatives to direct investments. Derivatives are used for
hedging or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from
derivative instruments may be substantially greater than the derivative’s original cost.
24
Notes to Financial
Statements (unaudited) - continued
The derivative instruments used by the fund during the period
were written options. Depending on the type of derivative, the fund may exit a derivative position by entering into an offsetting transaction with a counterparty or exchange, negotiating an agreement with the derivative counterparty, or novating the
position to a third party. At February 28, 2021, the fund did not have any outstanding derivative instruments.
The following table presents, by major type of derivative
contract, the realized gain (loss) on derivatives held by the fund for the six months ended February 28, 2021 as reported in the Statement of Operations:
| Risk | Written
Options |
| Equity | $1,392,308 |
There is no change in unrealized
appreciation (depreciation) on derivative transactions at period end.
Derivative counterparty credit risk is managed through formal
evaluation of the creditworthiness of all potential counterparties. On certain, but not all, 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 collateral 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
“Interest expense and fees” in the Statement of Operations.
25
Notes to Financial
Statements (unaudited) - continued
Written Options — In
exchange for a premium, the fund wrote call options on securities for which it anticipated the price would decline and also wrote put options on securities for which it anticipated the price would increase. At the time the option was written, the
fund believed the premium received exceeded the potential loss that could result from adverse price changes in the options’ underlying securities. In a written option, the fund as the option writer grants the buyer the right to purchase from,
or sell to, the fund a specified number of shares or units of a particular security, currency or index at a specified price within a specified period of time.
The premium received is initially recorded as a liability in
the Statement of Assets and Liabilities. The option is subsequently marked-to-market daily with the difference between the premium received and the market value of the written option being recorded as unrealized appreciation or depreciation. When a
written option expires, the fund realizes a gain equal to the amount of the premium received. The difference between the premium received and the amount paid on effecting a closing transaction is considered a realized gain or loss. When a written
call option is exercised, the premium received is offset against the proceeds to determine the realized gain or loss. When a written put option is exercised, the premium reduces the cost basis of the security purchased by the fund.
At the initiation of the written option contract, for exchange
traded options, the fund is required to deposit securities or cash as collateral with the custodian for the benefit of the broker or directly with the clearing broker, based on the type of option. For uncleared options, the fund may post collateral
subject to the terms of an ISDA Master Agreement as generally described above if the market value of the options contract moves against it. The fund, as writer of an option, may have no control over whether the underlying securities may be sold
(call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the securities underlying the written option. Losses from writing options can exceed the premium received and can exceed the potential loss
from an ordinary buy and sell transaction. Although the fund’s market risk may be significant, the maximum counterparty credit risk to the fund is equal to the market value of any collateral posted to the broker. For uncleared options, this
risk is mitigated in cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above.
Short Sales — The fund
entered into short sales whereby it sells a security it does not own in anticipation of a decline in the value of that security. The fund will realize a gain if the security price decreases and a loss if the security price increases between the date
of the short sale and the date on which the fund replaces the borrowed security. Losses from short sales can exceed the proceeds of the security sold; and they can also exceed the potential loss from an ordinary buy and sell transaction. The amount
of any premium, dividends, or interest the fund may be required to pay in connection with a short sale will be recognized as a fund expense. During the six months ended February 28, 2021, this expense amounted to $100,591. The fund segregates cash
or marketable securities in an amount that, when combined with the amount of proceeds from the short sale deposited with the broker, at least equals the current market value of the security sold short. At February 28, 2021, the fund had no short
sales outstanding.
Security Loans — Under its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the
“Borrowers”) approved by the fund. Security loans
26
Notes to Financial
Statements (unaudited) - continued
can be terminated at the discretion of either the lending agent or the fund
and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an
amount typically at least equal to the market value of the securities loaned. On loans collateralized by cash, the cash collateral is invested in a money market fund. The market value of the loaned securities is determined at the close of business
of the fund and any additional required collateral is delivered to the fund on the next business day. The lending agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent will, for
the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the fund the market value of the loaned securities. In return, the lending agent assumes the fund's rights to the
related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent is responsible for the shortfall, but only to the extent that such shortfall is not due to a decline in collateral value resulting
from collateral reinvestment for which the fund bears the risk of loss. At period end, the fund had investment securities on loan, all of which were classified as equity securities in the fund’s Portfolio of Investments, with a fair value of
$518,339. The fair value of the fund’s investment securities on loan is presented gross in the Statement of Assets and Liabilities. These loans were collateralized by U.S. Treasury Obligations of $546,617 held by the lending agent. The
collateral on securities loaned exceeded the value of securities on loan at period end. A portion of the income generated upon investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending
agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund and the lending agent. Income from securities lending is separately reported in the Statement
of Operations. The dividend and interest income earned on the securities loaned is accounted for in the same manner as other dividend and interest income.
Indemnifications — Under
the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters
into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet
occurred.
Investment Transactions and Income — Investment transactions are recorded on the trade date. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed
of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend payments received in additional securities are recorded on the ex-dividend date in an amount equal to the value of the security on such date.
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.
27
Notes to Financial
Statements (unaudited) - continued
Tax Matters and Distributions
— The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal
income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state
tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in
accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be
subject to capital gains tax imposed by those countries.
Distributions to shareholders are recorded on the ex-dividend
date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted
for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in
different periods for financial statement and tax purposes will reverse at some time in the future.
Book/tax differences primarily relate to net operating losses,
wash sale loss deferrals, straddle loss deferrals, and treating a portion of the proceeds from redemptions as a distribution for tax purposes.
The tax character of distributions made during the current
period will be determined at fiscal year end. The tax character of distributions declared to shareholders for the last fiscal year is as follows:
| Year
ended 8/31/20 | |
| Long-term capital gains | $27,686,049 |
The federal tax cost and the tax
basis components of distributable earnings were as follows:
| As of 2/28/21 | |
| Cost of investments | $1,039,536,106 |
| Gross appreciation | 1,141,505,408 |
| Gross depreciation | (6,778,063) |
| Net unrealized appreciation (depreciation) | $1,134,727,345 |
| As of 8/31/20 | |
| Undistributed long-term capital gain | 96,706,208 |
| Late year ordinary loss deferral | (7,224,943) |
| Net unrealized appreciation (depreciation) | 1,102,779,592 |
The aggregate cost above includes
prior fiscal year end tax adjustments, if applicable.
Multiple Classes of Shares of Beneficial Interest — The fund offers multiple classes of shares, which differ in their respective distribution and service fees. The fund's income, realized and unrealized gain (loss), and common expenses are allocated
to
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 shares will convert to Class A shares approximately eight years after purchase. In addition, 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 2/28/21 |
Year
ended 8/31/20 | |
| Class A | $39,988,461 | $10,280,837 |
| Class B | 2,836,401 | 1,005,040 |
| Class C | 11,727,114 | 3,234,463 |
| Class I | 27,987,681 | 6,452,463 |
| Class R1 | 660,107 | 145,838 |
| Class R2 | 2,189,374 | 661,860 |
| Class R3 | 6,034,105 | 1,720,727 |
| Class R4 | 1,741,234 | 561,942 |
| Class R6 | 16,050,561 | 3,622,879 |
| Total | $109,215,038 | $27,686,049 |
(3) Transactions with
Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid
monthly at the following annual rates based on the fund's average daily net assets:
| Up to $1 billion | 0.75% |
| In excess of $1 billion and up to $2.5 billion | 0.70% |
| In excess of $2.5 billion | 0.65% |
MFS has agreed in writing to reduce
its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund's Board of Trustees. For the six months ended February 28, 2021, this management fee reduction amounted to $114,276, which is
included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.71% of the fund's average daily net assets.
Distributor — MFS Fund
Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $131,457 for the six months ended February 28, 2021, 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.
29
Notes to Financial
Statements (unaudited) - continued
Distribution Plan Fee Table:
| Distribution
Fee Rate (d) |
Service
Fee Rate (d) |
Total
Distribution Plan (d) |
Annual
Effective Rate (e) |
Distribution
and Service Fee | |
| Class A | — | 0.25% | 0.25% | 0.25% | $ 935,656 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 221,134 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 899,301 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 50,831 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 93,268 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 137,924 |
| Total Distribution and Service Fees | $2,338,114 |
| (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 February 28, 2021 based on each class's average daily net assets.MFD has voluntarily agreed to rebate a portion of each class's 0.25% service fee attributable to accounts for which there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates' seed money. For the six months ended February 28, 2021, this rebate amounted to $615, $1, and $1 for Class A, Class B, and Class C, respectively, and is included in the reduction of total expenses in the Statement of Operations. |
Certain Class A shares are subject to a contingent deferred
sales charge (CDSC) in the event of a shareholder redemption within 18 months of purchase. Class B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. Class C shares are subject to a CDSC in the event
of a shareholder redemption within 12 months of purchase. All contingent deferred sales charges are paid to MFD and during the six months ended February 28, 2021, were as follows:
| Amount | |
| Class A | $1,820 |
| Class B | 16,062 |
| Class C | 9,112 |
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 February 28, 2021, the fee was $103,404, which equated to 0.0100% 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 February 28, 2021, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $952,638.
30
Notes to Financial
Statements (unaudited) - continued
Administrator — MFS
provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund reimburses MFS the costs incurred to provide these services. The fund is
charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.0130% of the fund's average
daily net assets.
Trustees’ and
Officers’ Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not
pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or
directors of MFS, MFD, and MFSC.
Other — The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a
management fee to MFS but does incur investment and operating costs.
The fund is permitted to engage in sale transactions with funds
and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) pursuant to a policy adopted by the Board of Trustees. This policy has been designed to ensure that cross-trades conducted by the fund comply with
Rule 17a-7 under the Investment Company Act of 1940. During the six months ended February 28, 2021, the fund engaged in sale transactions pursuant to this policy, which amounted to $304,702. The sales transactions resulted in net realized gains
(losses) of $140,415.
The adviser has voluntarily
undertaken to reimburse the fund from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the six months ended
February 28, 2021, this reimbursement amounted to $59,685, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the six months ended February 28, 2021, purchases and sales
of investments, other than short sales and short-term obligations, aggregated $387,253,765 and $407,743,336, respectively.
31
Notes to Financial
Statements (unaudited) - continued
(5) Shares of Beneficial Interest
The fund's Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Shares sold | |||||
| Class A | 1,311,491 | $84,990,797 | 3,196,679 | $156,383,415 | |
| Class B | 10,699 | 569,138 | 30,703 | 1,352,228 | |
| Class C | 263,321 | 14,182,919 | 735,408 | 30,781,466 | |
| Class I | 1,342,430 | 93,546,305 | 3,724,439 | 197,807,902 | |
| Class R1 | 40,757 | 2,212,179 | 81,262 | 3,502,677 | |
| Class R2 | 133,898 | 8,201,486 | 289,424 | 13,574,856 | |
| Class R3 | 372,315 | 24,064,154 | 870,221 | 43,148,754 | |
| Class R4 | 118,396 | 8,065,880 | 278,627 | 14,023,378 | |
| Class R6 | 1,147,838 | 80,937,143 | 2,345,670 | 126,956,140 | |
| 4,741,145 | $316,770,001 | 11,552,433 | $587,530,816 | ||
| Shares
issued to shareholders in reinvestment of distributions |
|||||
| Class A | 606,823 | $38,788,111 | 219,633 | $9,997,680 | |
| Class B | 52,636 | 2,802,337 | 25,706 | 992,506 | |
| Class C | 208,877 | 11,093,450 | 77,734 | 2,994,325 | |
| Class I | 364,594 | 25,233,552 | 115,169 | 5,640,993 | |
| Class R1 | 12,421 | 658,166 | 3,780 | 145,294 | |
| Class R2 | 35,971 | 2,165,483 | 14,422 | 621,865 | |
| Class R3 | 94,475 | 6,034,105 | 37,818 | 1,720,727 | |
| Class R4 | 22,758 | 1,529,365 | 10,015 | 476,930 | |
| Class R6 | 194,133 | 13,560,203 | 60,950 | 3,008,484 | |
| 1,592,688 | $101,864,772 | 565,227 | $25,598,804 | ||
| Shares reacquired | |||||
| Class A | (1,407,658) | $(90,726,202) | (2,473,623) | $(120,310,091) | |
| Class B | (126,024) | (6,854,488) | (286,793) | (11,801,503) | |
| Class C | (510,637) | (27,651,583) | (840,060) | (34,586,669) | |
| Class I | (1,464,222) | (101,746,943) | (2,383,943) | (124,283,773) | |
| Class R1 | (36,125) | (1,946,517) | (54,104) | (2,240,801) | |
| Class R2 | (197,653) | (11,997,088) | (367,286) | (17,088,110) | |
| Class R3 | (417,289) | (26,850,646) | (1,008,479) | (48,431,980) | |
| Class R4 | (85,570) | (5,777,737) | (352,031) | (18,578,859) | |
| Class R6 | (767,408) | (53,885,144) | (1,400,790) | (73,617,867) | |
| (5,012,586) | $(327,436,348) | (9,167,109) | $(450,939,653) | ||
32
Notes to Financial
Statements (unaudited) - continued
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Net change | |||||
| Class A | 510,656 | $33,052,706 | 942,689 | $46,071,004 | |
| Class B | (62,689) | (3,483,013) | (230,384) | (9,456,769) | |
| Class C | (38,439) | (2,375,214) | (26,918) | (810,878) | |
| Class I | 242,802 | 17,032,914 | 1,455,665 | 79,165,122 | |
| Class R1 | 17,053 | 923,828 | 30,938 | 1,407,170 | |
| Class R2 | (27,784) | (1,630,119) | (63,440) | (2,891,389) | |
| Class R3 | 49,501 | 3,247,613 | (100,440) | (3,562,499) | |
| Class R4 | 55,584 | 3,817,508 | (63,389) | (4,078,551) | |
| Class R6 | 574,563 | 40,612,202 | 1,005,830 | 56,346,757 | |
| 1,321,247 | $91,198,425 | 2,950,551 | $162,189,967 | ||
Effective June 1, 2019, purchases of
the fund’s Class B shares are closed to new and existing investors subject to certain exceptions. Please see the fund’s prospectus for details.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in
a $1.25 billion unsecured committed line of credit of which $1 billion is reserved for use by the fund and certain other 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 one month LIBOR, the Federal Funds Effective Rate and the Overnight Bank Funding Rate, 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. 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 February 28, 2021, the
fund’s commitment fee and interest expense were $4,068 and $0, respectively, and are included in “Interest expense and fees” in the Statement of Operations.
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund
owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
| Affiliated Issuers | Beginning
Value |
Purchases | Sales
Proceeds |
Realized
Gain (Loss) |
Change
in Unrealized Appreciation or Depreciation |
Ending
Value |
| MFS Institutional Money Market Portfolio | $38,944,270 | $140,576,132 | $155,613,693 | $— | $— | $23,906,709 |
33
Notes to Financial
Statements (unaudited) - continued
| Affiliated Issuers | Dividend
Income |
Capital
Gain Distributions |
| MFS Institutional Money Market Portfolio | $15,349 | $— |
(8) Impacts of COVID-19
The pandemic related to the global spread of novel coronavirus
disease (COVID-19), which was first detected in December 2019, has resulted in significant disruptions to global business activity and the global economy, as well as the economies of individual countries, the financial performance of individual
companies and sectors, and the securities and commodities markets in general. Multiple surges in cases globally, the availability and widespread adoption of vaccines, and the emergence of variant strains of the virus continue to create uncertainty
as to the future and long-term impacts resulting from the pandemic including impacts to the prices and liquidity of the fund's investments and the fund's performance.
34
Proxy
Voting Policies and Information
MFS votes proxies on
behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s
Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with
the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A
shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the
“Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
From time to time, MFS may post important information about the
fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at
mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an
investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), 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.
35
Semiannual Report
February 28, 2021
MFS® U.S. Government Cash Reserve Fund
LMM-SEM
MFS® U.S. Government Cash Reserve Fund
CONTENTS
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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
LETTER FROM THE CEO
Dear Shareholders:
Markets have experienced dramatic swings since the coronavirus
pandemic brought the global economy to a standstill for several months early in 2020. The speedy development of vaccines and therapeutics brightened the economic and market outlook, but uncertainty remains as new variants of the virus appear and
questions persist over how fast vaccines can be made widely available. In the United States, political uncertainty eased after former Vice President Joe Biden won the presidential election and the Democrats gained control of a closely divided
Senate.
Global central banks have
taken aggressive steps to cushion the economic and market fallout related to the virus, and governments are deploying unprecedented levels of fiscal support. Having passed a $1.9 trillion stimulus package in March, the U.S. Congress is expected to
approve additional stimulus later this year, some of it focused on infrastructure. Along with extraordinary government expenditures, pent-up consumer demand could fuel a surge in economic activity as coronavirus restrictions are eased. Because of
this, markets anticipate at least temporary inflation pressures in the months ahead and have pushed up yields on global government bonds, resulting in ripple effects being felt across most financial markets. The measures already put in place have
helped build a supportive environment and are encouraging economic recovery; however, if markets disconnect from fundamentals, they can sow the seeds of instability. As such, recent dramatic increases in speculative retail trading bear
watching.
In the aftermath of the crisis, we could see
societal changes as households, businesses, and governments adjust to a new reality, and any such alterations could affect the investment landscape. For investors, events such as the COVID-19 outbreak demonstrate the importance of having a deep
understanding of company fundamentals, and we have built our global research platform to do just that.
At MFS®, we put our clients’ assets to work responsibly by carefully navigating the increasing complexity of global markets and economies. Guided by our
long-term philosophy and adhering to our commitment to sustainable investing, we tune out the noise and aim to uncover what we believe are the best, most durable investment opportunities in the market. Our unique global investment platform combines
collective expertise, long-term discipline, and thoughtful risk management to create sustainable value for investors.
Respectfully,
Michael W.
Roberge
Chief Executive Officer
MFS Investment Management
April 15, 2021
The opinions expressed in this letter are subject to change
and may not be relied upon for investment advice. No forecasts can be guaranteed.
1
Portfolio Composition
| (a) | Ratings are assigned to portfolio securities utilizing ratings from Moody’s, Fitch, and Standard & Poor’s rating agencies and applying the following hierarchy: If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. Ratings are shown in the S&P scale. All ratings are subject to change. The fund did not hold unrated securities. The fund is not rated by these agencies. |
| (o) | Less than 0.1%. |
| (u) | For purposes of this presentation, accrued interest, where applicable, is included. |
Percentages are based on net assets as of February
28, 2021.
The portfolio is actively managed
and current holdings may be different.
2
Expense Table
Fund expenses borne by the shareholders during the period,
September 1, 2020 through February 28, 2021
September 1, 2020 through February 28, 2021
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 September 1, 2020 through February 28, 2021.
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 9/01/20 |
Ending
Account Value 2/28/21 |
Expenses
Paid During Period (p) 9/01/20-2/28/21 | |
| A | Actual | 0.08% | $1,000.00 | $1,000.00 | $0.40 |
| Hypothetical (h) | 0.08% | $1,000.00 | $1,024.40 | $0.40 | |
| B | Actual | 0.08% | $1,000.00 | $1,000.00 | $0.40 |
| Hypothetical (h) | 0.08% | $1,000.00 | $1,024.40 | $0.40 | |
| C | Actual | 0.08% | $1,000.00 | $1,000.00 | $0.40 |
| Hypothetical (h) | 0.08% | $1,000.00 | $1,024.40 | $0.40 | |
| I | Actual | 0.08% | $1,000.00 | $1,000.00 | $0.40 |
| Hypothetical (h) | 0.08% | $1,000.00 | $1,024.40 | $0.40 | |
| R1 | Actual | 0.08% | $1,000.00 | $1,000.00 | $0.40 |
| Hypothetical (h) | 0.08% | $1,000.00 | $1,024.40 | $0.40 | |
| R2 | Actual | 0.08% | $1,000.00 | $1,000.00 | $0.40 |
| Hypothetical (h) | 0.08% | $1,000.00 | $1,024.40 | $0.40 | |
| R3 | Actual | 0.08% | $1,000.00 | $1,000.00 | $0.40 |
| Hypothetical (h) | 0.08% | $1,000.00 | $1,024.40 | $0.40 | |
| R4 | Actual | 0.08% | $1,000.00 | $1,000.00 | $0.40 |
| Hypothetical (h) | 0.08% | $1,000.00 | $1,024.40 | $0.40 | |
| R6 | Actual | 0.08% | $1,000.00 | $1,000.00 | $0.40 |
| Hypothetical (h) | 0.08% | $1,000.00 | $1,024.40 | $0.40 | |
| 529A | Actual | 0.08% | $1,000.00 | $1,000.00 | $0.40 |
| Hypothetical (h) | 0.08% | $1,000.00 | $1,024.40 | $0.40 | |
| 529B | Actual | 0.08% | $1,000.00 | $1,000.00 | $0.40 |
| Hypothetical (h) | 0.08% | $1,000.00 | $1,024.40 | $0.40 | |
| 529C | Actual | 0.08% | $1,000.00 | $1,000.00 | $0.40 |
| Hypothetical (h) | 0.08% | $1,000.00 | $1,024.40 | $0.40 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Notes to Expense Table
As more fully disclosed in Note 3 in the Notes to Financial
Statements, the expense ratios reported above include additional expense reductions to avoid a negative yield.
4
Portfolio of
Investments
2/28/21 (unaudited)
The Portfolio of Investments is a complete list of all
securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | Shares/Par | Value ($) | ||
| U.S. Government Agencies and Equivalents (y) – 78.4% | ||||
| Federal Farm Credit Bank, 0.112%, due 3/16/2021 | $ 6,597,000 | $ 6,596,698 | ||
| Federal Farm Credit Bank, 0.02%, due 3/23/2021 | 7,693,000 | 7,692,906 | ||
| Federal Farm Credit Bank, 0.03%, due 4/01/2021 | 5,807,000 | 5,806,850 | ||
| Federal Farm Credit Bank, 0.03%, due 4/12/2021 | 11,968,000 | 11,967,581 | ||
| Federal Home Loan Bank, 0.015%, due 3/05/2021 | 5,349,000 | 5,348,991 | ||
| Federal Home Loan Bank, 0.03%, due 4/09/2021 | 11,321,000 | 11,320,632 | ||
| Federal Home Loan Bank, 0.035%, due 4/14/2021 | 4,132,000 | 4,131,823 | ||
| Federal Home Loan Bank, 0.025%, due 4/21/2021 | 12,000,000 | 11,999,575 | ||
| U.S. Treasury Bill, 0.071%, due 3/02/2021 | 8,413,000 | 8,412,984 | ||
| U.S. Treasury Bill, 0.076%, due 3/04/2021 | 9,728,000 | 9,727,939 | ||
| U.S. Treasury Bill, 0.074%, due 3/09/2021 | 10,027,000 | 10,026,839 | ||
| U.S. Treasury Bill, 0.076%, due 3/11/2021 | 30,213,000 | 30,212,371 | ||
| U.S. Treasury Bill, 0.02%, due 3/16/2021 | 12,856,000 | 12,855,893 | ||
| U.S. Treasury Bill, 0.066%, due 3/18/2021 | 6,425,000 | 6,424,803 | ||
| U.S. Treasury Bill, 0.071%, due 3/23/2021 | 4,500,000 | 4,499,808 | ||
| U.S. Treasury Bill, 0.076%, due 4/06/2021 | 5,000,000 | 4,999,625 | ||
| U.S. Treasury Bill, 0.076%, due 4/08/2021 | 9,977,000 | 9,976,210 | ||
| U.S. Treasury Bill, 0.076%, due 4/13/2021 | 24,000,000 | 23,997,850 | ||
| U.S. Treasury Bill, 0.056%, due 4/20/2021 | 6,150,000 | 6,149,530 | ||
| U.S. Treasury Bill, 0.035%, due 4/22/2021 | 6,403,000 | 6,402,676 | ||
| U.S. Treasury Bill, 0.035%, due 4/27/2021 | 4,380,000 | 4,379,757 | ||
| U.S. Treasury Bill, 0.035%, due 5/04/2021 | 4,351,000 | 4,350,729 | ||
| U.S. Treasury Bill, 0.02%, due 5/06/2021 | 14,259,000 | 14,258,477 | ||
| U.S. Treasury Bill, 0.035%, due 5/06/2021 | 3,754,000 | 3,753,759 | ||
| U.S. Treasury Bill, 0.03%, due 5/11/2021 | 9,351,000 | 9,350,447 | ||
| U.S. Treasury Bill, 0.041%, due 5/18/2021 | 5,801,000 | 5,800,497 | ||
| Total U.S. Government Agencies and Equivalents, at Amortized Cost and Value | $240,445,250 | |||
5
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Repurchase Agreements – 21.6% | ||||
| Bank
of America Corp. Repurchase Agreement, 0.01%, dated 2/26/2021, due 3/01/2021, total to be recieved $31,113,028 (secured by U.S. Treasury obligations valued at $33,869,632 in a jointly traded account) |
$ 33,113,000 | $ 33,113,000 | ||
| JPMorgan
Chase & Co. Repurchase Agreement, 0.01%, dated 2/26/2021, due 3/01/2021, total to be recieved $33,049,028 (secured by U.S. Treasury obligations valued at $33,710,008 in a jointly traded account) |
33,049,000 | 33,049,000 | ||
| Total Repurchase Agreements, at Cost and Value | $ 66,162,000 | |||
| Other Assets, Less Liabilities – 0.0% | 94,047 | |||
| Net Assets – 100.0% | $306,701,297 | |||
| (y) | The rate shown represents an annualized yield at time of purchase. |
See Notes to Financial Statements
6
Financial Statements
Statement of Assets and Liabilities
At 2/28/21 (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 cost and value | $240,445,250 |
| Investments in unaffiliated repurchase agreements, at cost and value | 66,162,000 |
| Cash | 360 |
| Receivables for | |
| Fund shares sold | 433,947 |
| Interest | 55 |
| Receivable from investment adviser and distributor | 87,426 |
| Other assets | 10,072 |
| Total assets | $307,139,110 |
| Liabilities | |
| Payables for | |
| Fund shares reacquired | $304,683 |
| Payable to affiliates | |
| Administrative services fee | 539 |
| Shareholder servicing costs | 89,124 |
| Program manager fees | 204 |
| Payable for independent Trustees' compensation | 4,743 |
| Accrued expenses and other liabilities | 38,520 |
| Total liabilities | $437,813 |
| Net assets | $306,701,297 |
| Net assets consist of | |
| Paid-in capital | $306,705,686 |
| Total distributable earnings (loss) | (4,389) |
| Net assets | $306,701,297 |
| Shares of beneficial interest outstanding | 306,931,204 |
7
Statement of Assets and
Liabilities (unaudited) – continued
| Net assets | Shares
outstanding |
Net
asset value per share | |
| Class A | $156,529,943 | 156,647,310 | $1.00 |
| Class B | 9,779,349 | 9,786,774 | 1.00 |
| Class C | 25,662,941 | 25,682,528 | 1.00 |
| Class I | 13,917,831 | 13,928,508 | 1.00 |
| Class R1 | 9,524,216 | 9,531,282 | 1.00 |
| Class R2 | 30,950,552 | 30,973,561 | 1.00 |
| Class R3 | 20,407,114 | 20,422,260 | 1.00 |
| Class R4 | 2,692,909 | 2,694,910 | 1.00 |
| Class R6 | 112,669 | 112,753 | 1.00 |
| Class 529A | 29,899,198 | 29,921,316 | 1.00 |
| Class 529B | 260,041 | 260,235 | 1.00 |
| Class 529C | 6,964,534 | 6,969,767 | 1.00 |
A contingent deferred sales charge
may be imposed on redemptions of Class A, Class B, Class C, Class 529B, and Class 529C shares. Redemption price per share was equal to the net asset value per share for Classes I, R1, R2, R3, R4, R6, and 529A.
See Notes to Financial Statements
8
Financial Statements
Statement of Operations
Six months ended 2/28/21 (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 | $118,059 |
| Other | 1,458 |
| Total investment income | $119,517 |
| Expenses | |
| Management fee | $623,243 |
| Distribution and service fees | 627,825 |
| Shareholder servicing costs | 238,605 |
| Program manager fees | 9,327 |
| Administrative services fee | 24,981 |
| Independent Trustees' compensation | 3,965 |
| Custodian fee | 10,561 |
| Shareholder communications | 8,461 |
| Audit and tax fees | 19,815 |
| Legal fees | 1,244 |
| Registration fees | 76,897 |
| Miscellaneous | 20,277 |
| Total expenses | $1,665,201 |
| Reduction of expenses by investment adviser and distributor | (1,545,684) |
| Net expenses | $119,517 |
| Net investment income (loss) | $0 |
| Change in net assets from operations | $0 |
See Notes to Financial
Statements
9
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 | |
| 2/28/21
(unaudited) |
8/31/20 | |
| Change in net assets | ||
| From operations | ||
| Net investment income (loss) | $0 | $1,106,667 |
| Net realized gain (loss) | — | 100 |
| Change in net assets from operations | $0 | $1,106,767 |
| Total distributions to shareholders | $— | $(1,106,667) |
| Change in net assets from fund share transactions | $4,963,510 | $89,527,043 |
| Total change in net assets | $4,963,510 | $89,527,143 |
| Net assets | ||
| At beginning of period | 301,737,787 | 212,210,644 |
| At end of period | $306,701,297 | $301,737,787 |
See Notes to Financial
Statements
10
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 (or life of a particular share class, if shorter). Certain information reflects financial results for a single fund share. The total returns in the
table represent the rate that an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
| Class A |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(c)(w) | $0.00 |
| Net realized and unrealized gain (loss) | — | 0.00(w) | 0.00(w) | — | (0.00)(w) | — |
| Total from investment operations | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(w) | $0.00 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.00)(w) | $(0.02) | $(0.01) | $(0.00)(w) | $— |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 0.00(n) | 0.54 | 1.58 | 0.76 | 0.08(c) | 0.00 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.91(a) | 0.96 | 0.98 | 0.94 | 0.91(c) | 0.91 |
| Expenses after expense reductions (f) | 0.08(a) | 0.44 | 0.72 | 0.68 | 0.50(c) | 0.23 |
| Net investment income (loss) | 0.00(a) | 0.44 | 1.57 | 0.76 | 0.08(c) | 0.00 |
| Net assets at end of period (000 omitted) | $156,530 | $140,426 | $99,511 | $100,463 | $105,859 | $120,740 |
See Notes to Financial
Statements
11
Financial
Highlights – continued
| Class B |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(c)(w) | $0.00 |
| Net realized and unrealized gain (loss) | — | 0.00(w) | 0.00(w) | — | (0.00)(w) | — |
| Total from investment operations | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(w) | $0.00 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.00)(w) | $(0.02) | $(0.01) | $(0.00)(w) | $— |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 0.00(n) | 0.54 | 1.58 | 0.76 | 0.08(c) | 0.00 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.66(a) | 1.71 | 1.73 | 1.69 | 1.66(c) | 1.66 |
| Expenses after expense reductions (f) | 0.08(a) | 0.47 | 0.72 | 0.68 | 0.51(c) | 0.23 |
| Net investment income (loss) | 0.00(a) | 0.49 | 1.57 | 0.72 | 0.07(c) | 0.00 |
| Net assets at end of period (000 omitted) | $9,779 | $9,528 | $8,977 | $11,664 | $17,338 | $18,096 |
See Notes to Financial
Statements
12
Financial
Highlights – continued
| Class C |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(c)(w) | $0.00 |
| Net realized and unrealized gain (loss) | — | 0.00(w) | 0.00(w) | — | (0.00)(w) | — |
| Total from investment operations | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(w) | $0.00 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.00)(w) | $(0.02) | $(0.01) | $(0.00)(w) | $— |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 0.00(n) | 0.54 | 1.58 | 0.76 | 0.08(c) | 0.00 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.66(a) | 1.71 | 1.73 | 1.69 | 1.66(c) | 1.66 |
| Expenses after expense reductions (f) | 0.08(a) | 0.40 | 0.72 | 0.68 | 0.50(c) | 0.24 |
| Net investment income (loss) | 0.00(a) | 0.37 | 1.57 | 0.68 | 0.07(c) | 0.00 |
| Net assets at end of period (000 omitted) | $25,663 | $34,508 | $19,438 | $18,451 | $38,458 | $48,749 |
See Notes to Financial
Statements
13
Financial
Highlights – continued
| Class I |
Six months ended |
Year ended | |
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19(i) | |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations | |||
| Net investment income (loss) (d) | $0.00 | $0.00(w) | $0.02 |
| Net realized and unrealized gain (loss) | — | 0.00(w) | 0.00(w) |
| Total from investment operations | $0.00 | $0.00(w) | $0.02 |
| Less distributions declared to shareholders | |||
| From net investment income | $— | $(0.00)(w) | $(0.02) |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 0.00(n) | 0.54 | 1.52(n) |
| Ratios
(%) (to average net assets) and Supplemental data: | |||
| Expenses before expense reductions (f) | 0.66(a) | 0.69 | 0.73(a) |
| Expenses after expense reductions (f) | 0.08(a) | 0.23 | 0.72(a) |
| Net investment income (loss) | 0.00(a) | 0.06 | 1.60(a) |
| Net assets at end of period (000 omitted) | $13,918 | $9,797 | $56 |
| Class R1 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(c)(w) | $0.00 |
| Net realized and unrealized gain (loss) | — | 0.00(w) | 0.00(w) | — | (0.00)(w) | — |
| Total from investment operations | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(w) | $0.00 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.00)(w) | $(0.02) | $(0.01) | $(0.00)(w) | $— |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 0.00(n) | 0.54 | 1.57 | 0.76 | 0.08(c) | 0.00 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.66(a) | 1.71 | 1.73 | 1.69 | 1.66(c) | 1.66 |
| Expenses after expense reductions (f) | 0.08(a) | 0.47 | 0.72 | 0.68 | 0.50(c) | 0.23 |
| Net investment income (loss) | 0.00(a) | 0.48 | 1.57 | 0.72 | 0.07(c) | 0.00 |
| Net assets at end of period (000 omitted) | $9,524 | $9,209 | $7,610 | $8,305 | $12,236 | $14,569 |
See Notes to Financial
Statements
14
Financial
Highlights – continued
| Class R2 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.00 | $0.01 | $0.02 | $0.01 | $0.00(c)(w) | $0.00 |
| Net realized and unrealized gain (loss) | — | 0.00(w) | 0.00(w) | — | (0.00)(w) | — |
| Total from investment operations | $0.00 | $0.01 | $0.02 | $0.01 | $0.00(w) | $0.00 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.01) | $(0.02) | $(0.01) | $(0.00)(w) | $— |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 0.00(n) | 0.54 | 1.57 | 0.76 | 0.08(c) | 0.00 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.16(a) | 1.21 | 1.23 | 1.19 | 1.16(c) | 1.16 |
| Expenses after expense reductions (f) | 0.08(a) | 0.48 | 0.72 | 0.68 | 0.51(c) | 0.23 |
| Net investment income (loss) | 0.00(a) | 0.51 | 1.57 | 0.73 | 0.08(c) | 0.00 |
| Net assets at end of period (000 omitted) | $30,951 | $33,676 | $31,672 | $34,993 | $48,184 | $51,537 |
See Notes to Financial
Statements
15
Financial
Highlights – continued
| Class R3 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(c)(w) | $0.00 |
| Net realized and unrealized gain (loss) | — | 0.00(w) | 0.00(w) | — | (0.00)(w) | — |
| Total from investment operations | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(w) | $0.00 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.00)(w) | $(0.02) | $(0.01) | $(0.00)(w) | $— |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 0.00(n) | 0.54 | 1.57 | 0.76 | 0.08(c) | 0.00 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.91(a) | 0.96 | 0.98 | 0.94 | 0.91(c) | 0.91 |
| Expenses after expense reductions (f) | 0.08(a) | 0.44 | 0.72 | 0.68 | 0.51(c) | 0.23 |
| Net investment income (loss) | 0.00(a) | 0.44 | 1.55 | 0.73 | 0.08(c) | 0.00 |
| Net assets at end of period (000 omitted) | $20,407 | $24,536 | $16,471 | $26,227 | $35,196 | $37,650 |
See Notes to Financial
Statements
16
Financial
Highlights – continued
| Class R4 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.00 | $0.01 | $0.02 | $0.01 | $0.00(c)(w) | $0.00 |
| Net realized and unrealized gain (loss) | — | 0.00(w) | 0.00(w) | — | (0.00)(w) | — |
| Total from investment operations | $0.00 | $0.01 | $0.02 | $0.01 | $0.00(w) | $0.00 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.01) | $(0.02) | $(0.01) | $(0.00)(w) | $— |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 0.00(n) | 0.54 | 1.57 | 0.76 | 0.08(c) | 0.00 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.66(a) | 0.71 | 0.73 | 0.69 | 0.67(c) | 0.66 |
| Expenses after expense reductions (f) | 0.08(a) | 0.49 | 0.72 | 0.68 | 0.52(c) | 0.23 |
| Net investment income (loss) | 0.00(a) | 0.54 | 1.57 | 0.74 | 0.08(c) | 0.00 |
| Net assets at end of period (000 omitted) | $2,693 | $2,709 | $2,676 | $2,729 | $3,250 | $3,077 |
See Notes to Financial
Statements
17
Financial
Highlights – continued
| Class R6 |
Six months ended |
Year ended | |
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19(i) | |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations | |||
| Net investment income (loss) (d) | $0.00 | $0.00(w) | $0.02 |
| Net realized and unrealized gain (loss) | — | 0.00(w) | 0.00(w) |
| Total from investment operations | $0.00 | $0.00(w) | $0.02 |
| Less distributions declared to shareholders | |||
| From net investment income | $— | $(0.00)(w) | $(0.02) |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 0.00(n) | 0.58 | 1.58(n) |
| Ratios
(%) (to average net assets) and Supplemental data: | |||
| Expenses before expense reductions (f) | 0.59(a) | 0.65 | 0.66(a) |
| Expenses after expense reductions (f) | 0.08(a) | 0.42 | 0.65(a) |
| Net investment income (loss) | 0.00(a) | 0.46 | 1.65(a) |
| Net assets at end of period (000 omitted) | $113 | $113 | $54 |
| Class 529A |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(c)(w) | $0.00 |
| Net realized and unrealized gain (loss) | — | 0.00(w) | 0.00(w) | — | (0.00)(w) | — |
| Total from investment operations | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(w) | $0.00 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.00)(w) | $(0.02) | $(0.01) | $(0.00)(w) | $— |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 0.00(n) | 0.51 | 1.53 | 0.71 | 0.06(c) | 0.00 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.96(a) | 1.01 | 1.03 | 1.00 | 1.01(c) | 1.00 |
| Expenses after expense reductions (f) | 0.08(a) | 0.47 | 0.77 | 0.73 | 0.53(c) | 0.23 |
| Net investment income (loss) | 0.00(a) | 0.44 | 1.52 | 0.73 | 0.06(c) | 0.00 |
| Net assets at end of period (000 omitted) | $29,899 | $28,695 | $19,061 | $15,197 | $13,208 | $12,841 |
See Notes to Financial
Statements
18
Financial
Highlights – continued
| Class 529B |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.00 | $0.01 | $0.02 | $0.01 | $0.00(c)(w) | $0.00 |
| Net realized and unrealized gain (loss) | — | 0.00(w) | 0.00(w) | — | (0.00)(w) | — |
| Total from investment operations | $0.00 | $0.01 | $0.02 | $0.01 | $0.00(w) | $0.00 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.01) | $(0.02) | $(0.01) | $(0.00)(w) | $— |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 0.00(n) | 0.51 | 1.53 | 0.71 | 0.06(c) | 0.00 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.71(a) | 1.76 | 1.78 | 1.75 | 1.76(c) | 1.76 |
| Expenses after expense reductions (f) | 0.08(a) | 0.53 | 0.77 | 0.73 | 0.53(c) | 0.22 |
| Net investment income (loss) | 0.00(a) | 0.53 | 1.51 | 0.71 | 0.06(c) | 0.00 |
| Net assets at end of period (000 omitted) | $260 | $183 | $247 | $293 | $348 | $355 |
See Notes to Financial
Statements
19
Financial
Highlights – continued
| Class 529C |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(c)(w) | $0.00 |
| Net realized and unrealized gain (loss) | — | 0.00(w) | 0.00(w) | — | (0.00)(w) | — |
| Total from investment operations | $0.00 | $0.00(w) | $0.02 | $0.01 | $0.00(w) | $0.00 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $— | $(0.00)(w) | $(0.02) | $(0.01) | $(0.00)(w) | $— |
| Net asset value, end of period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total return (%) (r)(t) | 0.00(n) | 0.51 | 1.53 | 0.71 | 0.06(c) | 0.00 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.71(a) | 1.76 | 1.78 | 1.75 | 1.76(c) | 1.76 |
| Expenses after expense reductions (f) | 0.08(a) | 0.49 | 0.77 | 0.73 | 0.54(c) | 0.24 |
| Net investment income (loss) | 0.00(a) | 0.46 | 1.52 | 0.70 | 0.06(c) | 0.00 |
| Net assets at end of period (000 omitted) | $6,965 | $8,360 | $6,437 | $6,419 | $6,957 | $6,728 |
| (a) | Annualized. |
| (c) | Amount reflects a one-time reimbursement of expenses by the custodian (or former custodian) without which net investment income and performance would be lower and expenses would be higher. |
| (d) | Per share data is based on average shares outstanding. |
| (f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
| (i) | For Class I and Class R6, the period is from the class inception, September 18, 2018, through the stated period end. |
| (n) | Not annualized. |
| (r) | Certain expenses have been reduced without which performance would have been lower. |
| (t) | Total returns do not include any applicable sales charges. |
| (w) | Per share amount was less than $0.01 and total return or ratio was less than 0.01%, as applicable. |
See Notes to Financial Statements
20
Notes to Financial
Statements
(unaudited)
(1) Business and Organization
MFS U.S. Government Cash Reserve Fund (the fund) is a
diversified series of MFS Series Trust I (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
The fund is an investment company and accordingly follows the
investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation
of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these
financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.
In March 2020, the FASB issued Accounting Standards Update
2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional, temporary relief with respect to the financial reporting of
contracts subject to certain types of modifications due to the planned discontinuation of certain tenors of the London Interbank Offered Rate (LIBOR) and other IBOR-based reference rates as of the end of 2021. The temporary relief provided by ASU
2020-04 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 on the fund's investments, derivatives,
debt and other contracts that will undergo reference rate-related modifications as a result of the reference rate reform.
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.
21
Notes to Financial
Statements (unaudited) - continued
Investment Valuations
— Pursuant to procedures approved by the Board of Trustees, investments held by the fund are generally valued at amortized cost, which approximates market value. Amortized cost involves valuing an instrument at its cost as adjusted for
amortization of premium or accretion of discount rather than its current market value. The amortized cost value of an instrument can be different from the market value of an instrument.
Various inputs are used in determining the value of the fund's
assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair
value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers
factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities,
interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser's own assumptions in determining the fair value of investments. The following is a summary of the levels used as of February 28,
2021 in valuing the fund's assets or liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Short-Term Securities | $— | $306,607,250 | $— | $306,607,250 |
For further information regarding
security characteristics, see the Portfolio of Investments.
Repurchase Agreements —
The fund enters into repurchase agreements under the terms of Master Repurchase Agreements with approved counterparties. Each repurchase agreement is recorded at cost. The fund requires that the securities collateral in a repurchase transaction be
transferred to a custodian. The fund monitors, on a daily basis, the value of the collateral to ensure that its value, including accrued interest, is greater than amounts owed to the fund under each such repurchase agreement. Upon an event of
default under a Master Repurchase Agreement, the non-defaulting party may close out all transactions traded under such agreement and net amounts owed under each transaction to one net amount payable by one party to the other. Absent an event of
default, the Master Repurchase Agreement does not result in an offset of reported amounts of assets and liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund and other
funds managed by MFS may utilize a joint trading account for the purpose of entering into one or more repurchase agreements. At February 28, 2021, the fund had investments in repurchase agreements with a gross value of $66,162,000. The value of the
related collateral exceeded the value of the repurchase agreements at period end.
Indemnifications — Under
the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters
into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet
occurred.
22
Notes to Financial
Statements (unaudited) - continued
Investment Transactions and Income — Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in
accordance with U.S. generally accepted accounting principles.
Tax Matters and Distributions
— The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a
result, no provision for federal income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax
positions taken on federal and state tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
Distributions to shareholders are recorded on the ex-dividend
date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted
for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in
different periods for financial statement and tax purposes will reverse at some time in the future.
During the year ended August 31, 2020, there were no
significant adjustments due to differences between book and tax accounting.
The tax character of distributions declared to shareholders for
the last fiscal year is as follows:
| Year
ended 8/31/20 | |
| Ordinary income (including any short-term capital gains) | $1,106,667 |
The federal tax cost and the tax
basis components of distributable earnings were as follows:
| As of 2/28/21 | |
| Cost of investments | $306,607,250 |
| As of 8/31/20 | |
| Other temporary differences | (4,389) |
The aggregate cost above includes
prior fiscal year end tax adjustments, if applicable.
Multiple Classes of Shares of Beneficial Interest — The fund offers multiple classes of shares, which differ in their respective distribution, service, and program manager fees. The fund's income and common expenses are allocated to shareholders based on the value
of settled shares outstanding of each class. The fund's realized and unrealized gain (loss) are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share
dividend rates are generally due to differences in separate class expenses. Class B and Class 529B shares will convert to Class A and Class 529A shares, respectively, approximately eight years after purchase. In addition, Class C and Class 529C
shares will convert to Class A
23
Notes to Financial
Statements (unaudited) - continued
and Class 529A shares, respectively, approximately eight years after purchase.
The fund’s distributions declared to shareholders as reported in the Statements of Changes in Net Assets are presented by class as follows:
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | |
| Class A | $— | $526,766 |
| Class B | — | 46,026 |
| Class C | — | 96,350 |
| Class I | — | 1,357 |
| Class R1 | — | 40,645 |
| Class R2 | — | 160,346 |
| Class R3 | — | 83,166 |
| Class R4 | — | 14,581 |
| Class R6 | — | 431 |
| Class 529A | — | 102,419 |
| Class 529B | — | 1,227 |
| Class 529C | — | 33,353 |
| Total | $— | $1,106,667 |
(3) Transactions with
Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid
monthly at the following annual rates based on the fund's average daily net assets:
| Up to $1 billion | 0.40% |
| In excess of $1 billion | 0.35% |
During the six months ended February
28, 2021, MFS voluntarily waived receipt of $457,765 of the fund’s management fee in order to avoid a negative yield. For the six months ended February 28, 2021, this amount 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. For the six months ended February 28, 2021,
this management fee reduction amounted to $17,286, which is included in the reduction of total expenses in the Statement of Operations. For the six months ended February 28, 2021, these waivers had the effect of reducing the management fee by 0.30%
of average daily net assets on an annualized basis. The management fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.10% of the fund’s average daily net assets.
In order to avoid a negative yield for the six months ended
February 28, 2021, MFS voluntarily agreed to reduce certain other expenses in the amount of $101,508, which is included in the reduction of total expenses in the Statement of Operations.
24
Notes to Financial
Statements (unaudited) - continued
The investment adviser has agreed in writing to pay a portion
of the fund’s total annual operating expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, and investment-related expenses, such that total fund operating expenses do not exceed the following rates
annually of each class’s average daily net assets:
| Classes | |||||||||||
| A | B | C | I | R1 | R2 | R3 | R4 | R6 | 529A | 529B | 529C |
| 0.45% | 0.45% | 0.45% | 0.45% | 0.45% | 0.45% | 0.45% | 0.45% | 0.37% | 0.50% | 0.50% | 0.50% |
This written agreement will continue
until modified by the fund’s Board of Trustees, but such agreement will continue at least until December 31, 2021. For the six months ended February 28, 2021, this reduction amounted to $331,973, which is included in the reduction of total
expenses in the Statement of Operations.
Distributor — The Board of Trustees has adopted a distribution plan for certain share classes pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund’s distribution plan provides that the fund will
pay MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a
distribution fee paid to MFD and another component of the plan is a service fee paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.
Distribution Plan Fee Table:
| Distribution
Fee Rate (d) |
Service
Fee Rate (d) |
Total
Distribution Plan (d) |
Annual
Effective Rate (e) |
Distribution
and Service Fee | |
| Class A | — | 0.25% | 0.25% | 0.00% | $ 192,439 |
| Class B | 0.75% | 0.25% | 1.00% | 0.00% | 46,655 |
| Class C | 0.75% | 0.25% | 1.00% | 0.00% | 154,209 |
| Class R1 | 0.75% | 0.25% | 1.00% | 0.00% | 48,920 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.00% | 80,740 |
| Class R3 | — | 0.25% | 0.25% | 0.00% | 28,786 |
| Class 529A | — | 0.25% | 0.25% | 0.00% | 36,820 |
| Class 529B | 0.75% | 0.25% | 1.00% | 0.00% | 1,140 |
| Class 529C | 0.75% | 0.25% | 1.00% | 0.00% | 38,116 |
| Total Distribution and Service Fees | $627,825 |
| (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 February 28, 2021 based on each class's average daily net assets.MFD has agreed in writing to waive any distribution and/or service fees for Class A, Class B, Class C, Class R1, Class R2, Class R3, Class 529A, Class 529B, and Class 529C. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue until at least December 31, 2021. These reductions, for the six months ended February 28, |
25
Notes to Financial
Statements (unaudited) - continued
2021, for Class A, Class B, Class C, Class R1, Class R2,
Class R3, Class 529A, Class 529B, and Class 529C amounted to $192,439, $46,655, $154,209, $48,920, $80,740, $28,786, $36,820, $1,140, and $38,116, respectively, and are 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 and Class 529B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. Class C and
Class 529C shares are subject to a CDSC in the event of a shareholder redemption within 12 months of purchase. All contingent deferred sales charges are paid to MFD and during the six months ended February 28, 2021, were as follows:
| Amount | |
| Class A | $4,194 |
| Class B | 12,761 |
| Class C | 8,061 |
| Class 529B | — |
| Class 529C | 546 |
The fund has entered into and may
from time to time enter into contracts with program managers and other parties which administer the tuition programs through which an investment in the fund’s 529 share classes is made. The fund has entered into an agreement with MFD pursuant
to which MFD receives an annual fee of up to 0.05% of the average daily net assets attributable to each 529 share class. During the six months ended February 28, 2021, MFS voluntarily agreed to reduce the fund’s program manager fees in the
amount of $9,327 in order to avoid a negative yield for Class 529A, Class 529B, and Class 529C shares. For the six months ended February 28, 2021, this amount is included in the reduction of total expenses in the Statements of Operations. This
voluntary reduction had the effect of reducing the program manager fee by 0.05% of average daily net assets attributable to each of the Class 529A, Class 529B, and 529C shares on an annualized basis. The program manager fee incurred for the six
months ended February 28, 2021, was equivalent to an annual effective rate of 0.00% of average daily net assets attributable to each of the Class 529A, Class 529B, and 529C shares. The services provided by MFD, or a third party with which MFD
contracts, include recordkeeping and tax reporting and account services, as well as services designed to maintain the program’s compliance with the Internal Revenue Code and other regulatory requirements. Program manager fees for the six
months ended February 28, 2021, were as follows:
| Fee | Waiver | |
| Class 529A | $7,364 | $7,634 |
| Class 529B | 57 | 57 |
| Class 529C | 1,906 | 1,906 |
| Total Program Manager Fees and Waivers | $9,327 | $9,327 |
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 February 28, 2021, the fee was $87,131, which equated to 0.0559% annually of the fund's average daily net assets. MFSC also
receives
26
Notes to Financial
Statements (unaudited) - continued
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 February 28, 2021, these out-of-pocket expenses, sub-accounting and
other shareholder servicing costs amounted to $151,474.
Administrator — MFS
provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund reimburses MFS the costs incurred to provide these services. The fund is
charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.016% of the fund's average
daily net assets.
Trustees’ and
Officers’ Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not
pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or
directors of MFS, MFD, and MFSC.
Prior to December
31, 2001, the fund had an unfunded defined benefit plan (“DB plan”) for independent Trustees. As of December 31, 2001, the Board took action to terminate the DB plan with respect to then-current and any future independent Trustees, such
that the DB plan covers only certain of those former independent Trustees who retired on or before December 31, 2001. The DB plan resulted in a pension expense of $101 and is included in “Independent Trustees’ compensation” in the
Statement of Operations for the six months ended February 28, 2021. The liability for deferred retirement benefits payable to those former independent Trustees under the DB plan amounted to $4,166 at February 28, 2021, and is included in
“Payable for independent Trustees’ compensation” in the Statement of Assets and Liabilities.
Other — At August 31,
2020, MFS held approximately 99% of the outstanding shares of Class R4.
27
Notes to Financial
Statements (unaudited) - continued
(4) Shares of Beneficial Interest
The fund's Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest. The number of shares sold, reinvested and reacquired corresponds to the net proceeds from the sale of shares, reinvestment of distributions and cost of shares reacquired,
respectively, since shares are sold and reacquired at $1.00 per share. Transactions in fund shares were as follows:
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||
| Shares sold | |||
| Class A | 80,070,701 | 122,940,202 | |
| Class B | 4,396,005 | 8,381,554 | |
| Class C | 12,908,487 | 41,843,235 | |
| Class I | 6,559,823 | 11,753,483 | |
| Class R1 | 5,488,095 | 4,897,312 | |
| Class R2 | 7,679,661 | 22,199,048 | |
| Class R3 | 3,218,124 | 17,768,905 | |
| Class R4 | 3,331 | 39,778 | |
| Class R6 | 220 | 64,875 | |
| Class 529A | 8,593,920 | 20,385,658 | |
| Class 529B | 116,810 | 141,050 | |
| Class 529C | 2,445,030 | 6,623,904 | |
| 131,480,207 | 257,039,004 | ||
| Shares
issued to shareholders in reinvestment of distributions |
|||
| Class A | — | 511,320 | |
| Class B | — | 43,246 | |
| Class C | — | 92,098 | |
| Class I | — | 1,248 | |
| Class R1 | — | 40,600 | |
| Class R2 | — | 160,346 | |
| Class R3 | — | 83,166 | |
| Class R4 | — | 14,581 | |
| Class R6 | — | 431 | |
| Class 529A | — | 101,802 | |
| Class 529B | — | 1,207 | |
| Class 529C | — | 33,129 | |
| — | 1,083,174 |
28
Notes to Financial
Statements (unaudited) - continued
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||
| Shares reacquired | |||
| Class A | (63,956,671) | (82,537,454) | |
| Class B | (4,144,059) | (7,876,811) | |
| Class C | (21,760,662) | (26,859,099) | |
| Class I | (2,435,528) | (2,006,406) | |
| Class R1 | (5,172,316) | (3,341,014) | |
| Class R2 | (10,407,618) | (20,364,536) | |
| Class R3 | (7,350,287) | (9,786,066) | |
| Class R4 | (19,263) | (22,746) | |
| Class R6 | (216) | (7,061) | |
| Class 529A | (7,389,195) | (10,851,883) | |
| Class 529B | (39,712) | (206,442) | |
| Class 529C | (3,841,170) | (4,735,617) | |
| (126,516,697) | (168,595,135) | ||
| Net change | |||
| Class A | 16,114,030 | 40,914,068 | |
| Class B | 251,946 | 547,989 | |
| Class C | (8,852,175) | 15,076,234 | |
| Class I | 4,124,295 | 9,748,325 | |
| Class R1 | 315,779 | 1,596,898 | |
| Class R2 | (2,727,957) | 1,994,858 | |
| Class R3 | (4,132,163) | 8,066,005 | |
| Class R4 | (15,932) | 31,613 | |
| Class R6 | 4 | 58,245 | |
| Class 529A | 1,204,725 | 9,635,577 | |
| Class 529B | 77,098 | (64,185) | |
| Class 529C | (1,396,140) | 1,921,416 | |
| 4,963,510 | 89,527,043 |
Effective June 1, 2019, purchases of
the fund’s Class B and Class 529B shares are closed to new and existing investors subject to certain exceptions. Please see the fund’s prospectus for details.
Effective at the close of business on May 29, 2020, purchases
of the fund are closed to new and existing investors subject to certain exceptions. Please see the fund's prospectus for details.
(5) Line of Credit
The fund and certain other funds managed by MFS participate in
a $1.25 billion unsecured committed line of credit of which $1 billion is reserved for use by the fund and certain other 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
29
Notes to Financial
Statements (unaudited) - continued
the highest of one month LIBOR, the Federal Funds Effective Rate and the
Overnight Bank Funding Rate, 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. 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 February 28, 2021, the fund’s commitment fee and interest expense were $781 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(6) Impacts of COVID-19
The pandemic related to the global spread of novel coronavirus
disease (COVID-19), which was first detected in December 2019, has resulted in significant disruptions to global business activity and the global economy, as well as the economies of individual countries, the financial performance of individual
companies and sectors, and the securities and commodities markets in general. Multiple surges in cases globally, the availability and widespread adoption of vaccines, and the emergence of variant strains of the virus continue to create uncertainty
as to the future and long-term impacts resulting from the pandemic including impacts to the prices and liquidity of the fund's investments and the fund's performance.
30
Proxy
Voting Policies and Information
MFS votes proxies on
behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s
Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Portfolio Holdings Information
The fund files monthly portfolio information with the SEC on
Form N-MFP. The fund’s Form N-MFP reports are available on the SEC’s Web site at http://www.sec.gov. A shareholder can also access the fund’s portfolio holdings as of each month end and
the fund’s Form N-MFP reports at mfs.com/openendfunds after choosing “Click here for access to Money Market fund reports”.
Further Information
From time to time, MFS may post important information about the
fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at
mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an
investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), 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.
31
Semiannual Report
February 28, 2021
MFS® Value Fund
EIF-SEM
MFS® Value Fund
CONTENTS
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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
LETTER FROM THE CEO
Dear Shareholders:
Markets have experienced dramatic swings since the coronavirus
pandemic brought the global economy to a standstill for several months early in 2020. The speedy development of vaccines and therapeutics brightened the economic and market outlook, but uncertainty remains as new variants of the virus appear and
questions persist over how fast vaccines can be made widely available. In the United States, political uncertainty eased after former Vice President Joe Biden won the presidential election and the Democrats gained control of a closely divided
Senate.
Global central banks have
taken aggressive steps to cushion the economic and market fallout related to the virus, and governments are deploying unprecedented levels of fiscal support. Having passed a $1.9 trillion stimulus package in March, the U.S. Congress is expected to
approve additional stimulus later this year, some of it focused on infrastructure. Along with extraordinary government expenditures, pent-up consumer demand could fuel a surge in economic activity as coronavirus restrictions are eased. Because of
this, markets anticipate at least temporary inflation pressures in the months ahead and have pushed up yields on global government bonds, resulting in ripple effects being felt across most financial markets. The measures already put in place have
helped build a supportive environment and are encouraging economic recovery; however, if markets disconnect from fundamentals, they can sow the seeds of instability. As such, recent dramatic increases in speculative retail trading bear
watching.
In the aftermath of the crisis, we could see
societal changes as households, businesses, and governments adjust to a new reality, and any such alterations could affect the investment landscape. For investors, events such as the COVID-19 outbreak demonstrate the importance of having a deep
understanding of company fundamentals, and we have built our global research platform to do just that.
At MFS®, we put our clients’ assets to work responsibly by carefully navigating the increasing complexity of global markets and economies. Guided by our
long-term philosophy and adhering to our commitment to sustainable investing, we tune out the noise and aim to uncover what we believe are the best, most durable investment opportunities in the market. Our unique global investment platform combines
collective expertise, long-term discipline, and thoughtful risk management to create sustainable value for investors.
Respectfully,
Michael W.
Roberge
Chief Executive Officer
MFS Investment Management
April 15, 2021
The opinions expressed in this letter are subject to change
and may not be relied upon for investment advice. No forecasts can be guaranteed.
1
Portfolio Composition
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
Cash & Cash Equivalents includes any cash,
investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and
liabilities.
Percentages are based on net
assets as of February 28, 2021.
The portfolio
is actively managed and current holdings may be different.
2
Expense Table
Fund expenses borne by the shareholders during the period,
September 1, 2020 through February 28, 2021
September 1, 2020 through February 28, 2021
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 September 1, 2020 through February 28, 2021.
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 9/01/20 |
Ending
Account Value 2/28/21 |
Expenses
Paid During Period (p) 9/01/20-2/28/21 | |
| A | Actual | 0.81% | $1,000.00 | $1,126.16 | $4.27 |
| Hypothetical (h) | 0.81% | $1,000.00 | $1,020.78 | $4.06 | |
| B | Actual | 1.56% | $1,000.00 | $1,121.82 | $8.21 |
| Hypothetical (h) | 1.56% | $1,000.00 | $1,017.06 | $7.80 | |
| C | Actual | 1.56% | $1,000.00 | $1,121.86 | $8.21 |
| Hypothetical (h) | 1.56% | $1,000.00 | $1,017.06 | $7.80 | |
| I | Actual | 0.56% | $1,000.00 | $1,127.48 | $2.95 |
| Hypothetical (h) | 0.56% | $1,000.00 | $1,022.02 | $2.81 | |
| R1 | Actual | 1.56% | $1,000.00 | $1,121.96 | $8.21 |
| Hypothetical (h) | 1.56% | $1,000.00 | $1,017.06 | $7.80 | |
| R2 | Actual | 1.06% | $1,000.00 | $1,124.67 | $5.58 |
| Hypothetical (h) | 1.06% | $1,000.00 | $1,019.54 | $5.31 | |
| R3 | Actual | 0.81% | $1,000.00 | $1,125.95 | $4.27 |
| Hypothetical (h) | 0.81% | $1,000.00 | $1,020.78 | $4.06 | |
| R4 | Actual | 0.56% | $1,000.00 | $1,127.53 | $2.95 |
| Hypothetical (h) | 0.56% | $1,000.00 | $1,022.02 | $2.81 | |
| R6 | Actual | 0.45% | $1,000.00 | $1,128.16 | $2.37 |
| Hypothetical (h) | 0.45% | $1,000.00 | $1,022.56 | $2.26 | |
| 529A | Actual | 0.83% | $1,000.00 | $1,125.96 | $4.38 |
| Hypothetical (h) | 0.83% | $1,000.00 | $1,020.68 | $4.16 | |
| 529B | Actual | 0.86% | $1,000.00 | $1,125.93 | $4.53 |
| Hypothetical (h) | 0.86% | $1,000.00 | $1,020.53 | $4.31 | |
| 529C | Actual | 1.61% | $1,000.00 | $1,121.58 | $8.47 |
| Hypothetical (h) | 1.61% | $1,000.00 | $1,016.81 | $8.05 |
| (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 181/365 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Notes to Expense Table
For the period from September 1, 2020 through February 28,
2021, the distribution fee for Class 529B was not imposed. Had the distribution fee been imposed throughout the entire six month period, the annualized expense ratio, the actual expenses paid during the period, and the hypothetical expenses paid
during the period would have been approximately 1.61%, $8.49, and $8.05 for Class 529B. See Note 3 in the Notes to Financial Statements for additional information.
Each class with a Rule 12b-1 service fee is subject to a rebate
of a portion of such fee. Such rebates are included in the expense ratios above. For Class 529A shares, this rebate reduced the
4
Expense Table -
continued
expense ratio above by 0.03%. See Note 3 in the Notes to Financial Statements
for additional information.
5
Portfolio of
Investments
2/28/21 (unaudited)
The Portfolio of Investments is a complete list of all
securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – 98.7% | ||||
| Aerospace – 6.0% | ||||
| Honeywell International, Inc. | 7,265,036 | $ 1,470,080,035 | ||
| Lockheed Martin Corp. | 1,476,886 | 487,741,601 | ||
| Northrop Grumman Corp. | 3,482,478 | 1,015,699,533 | ||
| Raytheon Technologies Corp. | 5,042,406 | 363,002,808 | ||
| $3,336,523,977 | ||||
| Alcoholic Beverages – 1.4% | ||||
| Diageo PLC | 19,540,269 | $ 765,661,053 | ||
| Brokerage & Asset Managers – 3.2% | ||||
| BlackRock, Inc. | 1,098,700 | $ 763,047,150 | ||
| NASDAQ, Inc. | 5,846,579 | 808,523,410 | ||
| T. Rowe Price Group, Inc. | 1,188,786 | 192,749,762 | ||
| $1,764,320,322 | ||||
| Business Services – 6.2% | ||||
| Accenture PLC, “A” | 5,528,524 | $ 1,387,106,672 | ||
| Equifax, Inc. | 3,130,997 | 506,845,794 | ||
| Fidelity National Information Services, Inc. | 5,037,259 | 695,141,742 | ||
| Fiserv, Inc. (a) | 7,178,061 | 828,132,898 | ||
| $3,417,227,106 | ||||
| Cable TV – 3.3% | ||||
| Comcast Corp., “A” | 34,887,602 | $ 1,839,274,377 | ||
| Chemicals – 1.7% | ||||
| PPG Industries, Inc. | 6,793,344 | $ 915,878,638 | ||
| Construction – 3.3% | ||||
| Masco Corp. | 8,036,738 | $ 427,715,197 | ||
| Otis Worldwide Corp. | 2,521,203 | 160,625,843 | ||
| Sherwin-Williams Co. | 898,647 | 611,385,500 | ||
| Stanley Black & Decker, Inc. | 3,642,743 | 636,897,186 | ||
| $1,836,623,726 | ||||
| Consumer Products – 2.2% | ||||
| Colgate-Palmolive Co. | 4,632,473 | $ 348,361,970 | ||
| International Flavors & Fragrances, Inc. | 979,034 | 132,668,897 | ||
| Kimberly-Clark Corp. | 3,338,826 | 428,471,541 | ||
| Reckitt Benckiser Group PLC | 3,374,029 | 282,041,846 | ||
| $1,191,544,254 | ||||
6
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Electrical Equipment – 1.3% | ||||
| Johnson Controls International PLC | 13,021,923 | $ 726,493,084 | ||
| Electronics – 5.3% | ||||
| Analog Devices, Inc. | 2,853,783 | $ 444,676,467 | ||
| Intel Corp. | 9,069,539 | 551,246,580 | ||
| NXP Semiconductors N.V. | 2,670,486 | 487,497,219 | ||
| Texas Instruments, Inc. | 8,523,009 | 1,468,258,761 | ||
| $2,951,679,027 | ||||
| Energy - Independent – 1.9% | ||||
| ConocoPhillips | 8,632,007 | $ 448,950,684 | ||
| EOG Resources, Inc. | 4,533,428 | 292,678,112 | ||
| Pioneer Natural Resources Co. | 1,913,752 | 284,326,134 | ||
| $1,025,954,930 | ||||
| Energy - Integrated – 0.6% | ||||
| Chevron Corp. | 3,244,061 | $ 324,406,100 | ||
| Food & Beverages – 3.2% | ||||
| Archer Daniels Midland Co. | 6,321,812 | $ 357,688,123 | ||
| Danone S.A. | 1,172,261 | 79,856,585 | ||
| J.M. Smucker Co. | 1,259,154 | 141,025,248 | ||
| Nestle S.A. | 8,228,697 | 859,370,324 | ||
| PepsiCo, Inc. | 2,668,377 | 344,727,624 | ||
| $1,782,667,904 | ||||
| Gaming & Lodging – 0.4% | ||||
| Marriott International, Inc., “A” (a) | 1,557,666 | $ 230,643,605 | ||
| Health Maintenance Organizations – 2.2% | ||||
| Cigna Corp. | 5,725,900 | $ 1,201,866,410 | ||
| Insurance – 8.8% | ||||
| Aon PLC | 5,938,266 | $ 1,352,202,551 | ||
| Chubb Ltd. | 7,556,110 | 1,228,472,364 | ||
| Marsh & McLennan Cos., Inc. | 8,693,257 | 1,001,637,072 | ||
| Progressive Corp. | 4,329,241 | 372,098,264 | ||
| Travelers Cos., Inc. | 6,277,677 | 913,402,003 | ||
| $4,867,812,254 | ||||
| Machinery & Tools – 4.4% | ||||
| Eaton Corp. PLC | 6,725,410 | $ 875,581,128 | ||
| Illinois Tool Works, Inc. | 4,694,200 | 949,073,356 | ||
| Trane Technologies PLC | 4,124,986 | 632,112,855 | ||
| $2,456,767,339 | ||||
7
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Major Banks – 8.8% | ||||
| Goldman Sachs Group, Inc. | 2,767,379 | $ 884,122,243 | ||
| JPMorgan Chase & Co. | 17,982,718 | 2,646,516,608 | ||
| Morgan Stanley | 7,851,668 | 603,557,719 | ||
| PNC Financial Services Group, Inc. | 4,266,928 | 718,379,998 | ||
| $4,852,576,568 | ||||
| Medical & Health Technology & Services – 0.9% | ||||
| McKesson Corp. | 2,897,922 | $ 491,255,737 | ||
| Medical Equipment – 9.0% | ||||
| Abbott Laboratories | 7,702,728 | $ 922,632,760 | ||
| Boston Scientific Corp. (a) | 14,370,458 | 557,286,361 | ||
| Danaher Corp. | 4,147,532 | 911,088,354 | ||
| Medtronic PLC | 13,533,093 | 1,582,965,888 | ||
| Thermo Fisher Scientific, Inc. | 2,239,406 | 1,007,911,853 | ||
| $4,981,885,216 | ||||
| Other Banks & Diversified Financials – 6.6% | ||||
| American Express Co. | 5,363,048 | $ 725,405,873 | ||
| Citigroup, Inc. | 17,976,275 | 1,184,276,997 | ||
| Moody's Corp. | 1,053,318 | 289,546,585 | ||
| Truist Financial Corp. | 10,025,842 | 571,071,960 | ||
| U.S. Bancorp | 17,092,042 | 854,602,100 | ||
| $3,624,903,515 | ||||
| Pharmaceuticals – 6.9% | ||||
| Johnson & Johnson | 13,342,936 | $ 2,114,321,638 | ||
| Merck & Co., Inc. | 8,557,209 | 621,424,518 | ||
| Pfizer, Inc. | 24,340,052 | 815,148,341 | ||
| Roche Holding AG | 739,619 | 242,257,441 | ||
| $3,793,151,938 | ||||
| Railroad & Shipping – 2.1% | ||||
| Canadian National Railway Co. | 3,224,776 | $ 352,532,512 | ||
| Union Pacific Corp. | 4,052,431 | 834,638,689 | ||
| $1,187,171,201 | ||||
| Real Estate – 0.4% | ||||
| Public Storage, Inc., REIT | 833,539 | $ 194,998,114 | ||
| Specialty Chemicals – 0.6% | ||||
| DuPont de Nemours, Inc. | 5,125,778 | $ 360,444,709 | ||
| Specialty Stores – 1.2% | ||||
| Lowe's Cos., Inc. | 4,267,231 | $ 681,690,152 | ||
8
Portfolio of
Investments (unaudited) – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Telephone Services – 0.4% | ||||
| Verizon Communications, Inc. | 4,064,263 | $ 224,753,744 | ||
| Tobacco – 0.5% | ||||
| Philip Morris International, Inc. | 3,164,047 | $ 265,843,229 | ||
| Utilities - Electric Power – 5.9% | ||||
| American Electric Power Co., Inc. | 5,182,839 | $ 387,935,499 | ||
| Dominion Energy, Inc. | 8,727,177 | 596,240,733 | ||
| Duke Energy Corp. | 13,054,233 | 1,117,311,803 | ||
| Southern Co. | 16,156,464 | 916,394,638 | ||
| Xcel Energy, Inc. | 4,544,843 | 266,282,351 | ||
| $3,284,165,024 | ||||
| Total Common Stocks (Identified Cost, $30,772,897,357) | $54,578,183,253 | |||
| Investment Companies (h) – 1.0% | ||||
| Money Market Funds – 1.0% | ||||
| MFS Institutional Money Market Portfolio, 0.07% (v) (Identified Cost, $563,551,714) | 563,551,714 | $ 563,551,714 | ||
| Other Assets, Less Liabilities – 0.3% | 170,080,882 | |||
| Net Assets – 100.0% | $55,311,815,849 | |||
| (a) | Non-income producing security. | |||
| (h) | An affiliated issuer, which may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $563,551,714 and $54,578,183,253, respectively. | |||
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. |
| The following abbreviations are used in this report and are defined: | |
| REIT | Real Estate Investment Trust |
See Notes to
Financial Statements
9
Financial Statements
Statement of Assets and Liabilities
At 2/28/21 (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, $30,772,897,357) | $54,578,183,253 |
| Investments in affiliated issuers, at value (identified cost, $563,551,714) | 563,551,714 |
| Cash | 89 |
| Receivables for | |
| Investments sold | 237,502,120 |
| Fund shares sold | 114,780,871 |
| Interest and dividends | 133,312,436 |
| Other assets | 172,194 |
| Total assets | $55,627,502,677 |
| Liabilities | |
| Payables for | |
| Investments purchased | $244,466,212 |
| Fund shares reacquired | 56,020,678 |
| Payable to affiliates | |
| Investment adviser | 2,642,721 |
| Administrative services fee | 5,871 |
| Shareholder servicing costs | 10,675,642 |
| Distribution and service fees | 360,975 |
| Program manager fees | 206 |
| Payable for independent Trustees' compensation | 16,464 |
| Accrued expenses and other liabilities | 1,498,059 |
| Total liabilities | $315,686,828 |
| Net assets | $55,311,815,849 |
| Net assets consist of | |
| Paid-in capital | $31,083,624,812 |
| Total distributable earnings (loss) | 24,228,191,037 |
| Net assets | $55,311,815,849 |
| Shares of beneficial interest outstanding | 1,207,169,148 |
10
Statement of Assets and
Liabilities (unaudited) – continued
| Net assets | Shares
outstanding |
Net
asset value per share (a) | |
| Class A | $7,223,246,323 | 158,001,284 | $45.72 |
| Class B | 52,426,260 | 1,151,913 | 45.51 |
| Class C | 617,184,771 | 13,669,394 | 45.15 |
| Class I | 23,564,890,838 | 512,266,993 | 46.00 |
| Class R1 | 20,306,737 | 453,754 | 44.75 |
| Class R2 | 385,009,692 | 8,515,659 | 45.21 |
| Class R3 | 2,210,767,578 | 48,563,545 | 45.52 |
| Class R4 | 2,476,624,027 | 54,169,819 | 45.72 |
| Class R6 | 18,724,358,201 | 409,558,317 | 45.72 |
| Class 529A | 32,669,284 | 721,220 | 45.30 |
| Class 529B | 486,488 | 10,856 | 44.81 |
| Class 529C | 3,845,650 | 86,394 | 44.51 |
| (a) | Maximum offering price per share was equal to the net asset value per share for all share classes, except for Classes A and 529A, for which the maximum offering prices per share were $48.51 [100 / 94.25 x $45.72] and $48.06 [100 / 94.25 x $45.30], respectively. On sales of $50,000 or more, the maximum offering prices of Class A and Class 529A shares are reduced. A contingent deferred sales charge may be imposed on redemptions of Class A, Class B, Class C, Class 529B, and Class 529C shares. Redemption price per share was equal to the net asset value per share for Classes I, R1, R2, R3, R4, R6, and 529A. |
See Notes to Financial Statements
11
Financial Statements
Statement of Operations
Six months ended 2/28/21 (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 | |
| Dividends | $537,234,697 |
| Other | 243,020 |
| Dividends from affiliated issuers | 230,810 |
| Income on securities loaned | 712 |
| Foreign taxes withheld | (1,179,891) |
| Total investment income | $536,529,348 |
| Expenses | |
| Management fee | $115,669,155 |
| Distribution and service fees | 15,542,338 |
| Shareholder servicing costs | 19,804,062 |
| Program manager fees | 8,589 |
| Administrative services fee | 268,128 |
| Independent Trustees' compensation | 81,765 |
| Custodian fee | 353,088 |
| Shareholder communications | 856,511 |
| Audit and tax fees | 84,617 |
| Legal fees | 194,353 |
| Miscellaneous | 659,047 |
| Total expenses | $153,521,653 |
| Reduction of expenses by investment adviser and distributor | (2,868,479) |
| Net expenses | $150,653,174 |
| Net investment income (loss) | $385,876,174 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $404,539,923 |
| Foreign currency | (337,348) |
| Net realized gain (loss) | $404,202,575 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $5,449,230,712 |
| Translation of assets and liabilities in foreign currencies | (569,525) |
| Net unrealized gain (loss) | $5,448,661,187 |
| Net realized and unrealized gain (loss) | $5,852,863,762 |
| Change in net assets from operations | $6,238,739,936 |
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 | |
| 2/28/21
(unaudited) |
8/31/20 | |
| Change in net assets | ||
| From operations | ||
| Net investment income (loss) | $385,876,174 | $844,373,433 |
| Net realized gain (loss) | 404,202,575 | 690,082,416 |
| Net unrealized gain (loss) | 5,448,661,187 | 102,621,554 |
| Change in net assets from operations | $6,238,739,936 | $1,637,077,403 |
| Total distributions to shareholders | $(953,319,852) | $(1,492,986,929) |
| Change in net assets from fund share transactions | $901,322,241 | $1,196,891,687 |
| Total change in net assets | $6,186,742,325 | $1,340,982,161 |
| Net assets | ||
| At beginning of period | 49,125,073,524 | 47,784,091,363 |
| At end of period | $55,311,815,849 | $49,125,073,524 |
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 | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $41.31 | $41.31 | $40.82 | $39.00 | $35.93 | $33.38 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.27 | $0.63 | $0.79 | $0.59 | $0.66(c) | $0.54 |
| Net realized and unrealized gain (loss) | 4.90 | 0.57 | 1.03 | 3.04 | 3.65 | 3.81 |
| Total from investment operations | $5.17 | $1.20 | $1.82 | $3.63 | $4.31 | $4.35 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.29) | $(0.65) | $(0.79) | $(0.60) | $(0.62) | $(0.56) |
| From net realized gain | (0.47) | (0.55) | (0.54) | (1.21) | (0.62) | (1.24) |
| Total distributions declared to shareholders | $(0.76) | $(1.20) | $(1.33) | $(1.81) | $(1.24) | $(1.80) |
| Net asset value, end of period (x) | $45.72 | $41.31 | $41.31 | $40.82 | $39.00 | $35.93 |
| Total return (%) (r)(s)(t)(x) | 12.62(n) | 2.93 | 4.85 | 9.42 | 12.24(c) | 13.55 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.82(a) | 0.83 | 0.83 | 0.82 | 0.86(c) | 0.90 |
| Expenses after expense reductions (f) | 0.81(a) | 0.82 | 0.82 | 0.81 | 0.84(c) | 0.86 |
| Net investment income (loss) | 1.27(a) | 1.56 | 2.00 | 1.46 | 1.77(c) | 1.60 |
| Portfolio turnover | 5(n) | 16 | 11 | 11 | 14 | 12 |
| Net assets at end of period (000 omitted) | $7,223,246 | $6,460,837 | $6,520,132 | $6,736,296 | $6,344,965 | $9,033,842 |
See Notes to Financial
Statements
14
Financial
Highlights – continued
| Class B |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $41.12 | $41.09 | $40.59 | $38.76 | $35.72 | $33.19 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.11 | $0.32 | $0.49 | $0.28 | $0.37(c) | $0.28 |
| Net realized and unrealized gain (loss) | 4.88 | 0.58 | 1.03 | 3.04 | 3.64 | 3.79 |
| Total from investment operations | $4.99 | $0.90 | $1.52 | $3.32 | $4.01 | $4.07 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.13) | $(0.32) | $(0.48) | $(0.28) | $(0.35) | $(0.30) |
| From net realized gain | (0.47) | (0.55) | (0.54) | (1.21) | (0.62) | (1.24) |
| Total distributions declared to shareholders | $(0.60) | $(0.87) | $(1.02) | $(1.49) | $(0.97) | $(1.54) |
| Net asset value, end of period (x) | $45.51 | $41.12 | $41.09 | $40.59 | $38.76 | $35.72 |
| Total return (%) (r)(s)(t)(x) | 12.18(n) | 2.15 | 4.08 | 8.62 | 11.40(c) | 12.68 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.57(a) | 1.58 | 1.58 | 1.57 | 1.61(c) | 1.65 |
| Expenses after expense reductions (f) | 1.56(a) | 1.56 | 1.57 | 1.56 | 1.59(c) | 1.61 |
| Net investment income (loss) | 0.52(a) | 0.79 | 1.24 | 0.71 | 0.99(c) | 0.85 |
| Portfolio turnover | 5(n) | 16 | 11 | 11 | 14 | 12 |
| Net assets at end of period (000 omitted) | $52,426 | $55,897 | $84,737 | $111,494 | $137,361 | $154,742 |
See Notes to Financial
Statements
15
Financial
Highlights – continued
| Class C |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $40.80 | $40.80 | $40.31 | $38.52 | $35.50 | $33.00 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.11 | $0.32 | $0.49 | $0.28 | $0.37(c) | $0.28 |
| Net realized and unrealized gain (loss) | 4.84 | 0.56 | 1.03 | 3.01 | 3.62 | 3.77 |
| Total from investment operations | $4.95 | $0.88 | $1.52 | $3.29 | $3.99 | $4.05 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.13) | $(0.33) | $(0.49) | $(0.29) | $(0.35) | $(0.31) |
| From net realized gain | (0.47) | (0.55) | (0.54) | (1.21) | (0.62) | (1.24) |
| Total distributions declared to shareholders | $(0.60) | $(0.88) | $(1.03) | $(1.50) | $(0.97) | $(1.55) |
| Net asset value, end of period (x) | $45.15 | $40.80 | $40.80 | $40.31 | $38.52 | $35.50 |
| Total return (%) (r)(s)(t)(x) | 12.19(n) | 2.14 | 4.10 | 8.58 | 11.43(c) | 12.69 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.57(a) | 1.58 | 1.58 | 1.57 | 1.61(c) | 1.65 |
| Expenses after expense reductions (f) | 1.56(a) | 1.57 | 1.57 | 1.56 | 1.59(c) | 1.61 |
| Net investment income (loss) | 0.52(a) | 0.80 | 1.24 | 0.71 | 0.99(c) | 0.85 |
| Portfolio turnover | 5(n) | 16 | 11 | 11 | 14 | 12 |
| Net assets at end of period (000 omitted) | $617,185 | $650,697 | $881,020 | $1,050,477 | $1,389,685 | $1,538,605 |
See Notes to Financial
Statements
16
Financial
Highlights – continued
| Class I |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $41.56 | $41.56 | $41.06 | $39.22 | $36.13 | $33.56 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.33 | $0.74 | $0.90 | $0.70 | $0.74(c) | $0.63 |
| Net realized and unrealized gain (loss) | 4.92 | 0.56 | 1.02 | 3.05 | 3.70 | 3.82 |
| Total from investment operations | $5.25 | $1.30 | $1.92 | $3.75 | $4.44 | $4.45 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.34) | $(0.75) | $(0.88) | $(0.70) | $(0.73) | $(0.64) |
| From net realized gain | (0.47) | (0.55) | (0.54) | (1.21) | (0.62) | (1.24) |
| Total distributions declared to shareholders | $(0.81) | $(1.30) | $(1.42) | $(1.91) | $(1.35) | $(1.88) |
| Net asset value, end of period (x) | $46.00 | $41.56 | $41.56 | $41.06 | $39.22 | $36.13 |
| Total return (%) (r)(s)(t)(x) | 12.75(n) | 3.18 | 5.11 | 9.69 | 12.54(c) | 13.83 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.57(a) | 0.58 | 0.58 | 0.57 | 0.61(c) | 0.65 |
| Expenses after expense reductions (f) | 0.56(a) | 0.57 | 0.57 | 0.57 | 0.59(c) | 0.61 |
| Net investment income (loss) | 1.52(a) | 1.81 | 2.25 | 1.72 | 1.98(c) | 1.84 |
| Portfolio turnover | 5(n) | 16 | 11 | 11 | 14 | 12 |
| Net assets at end of period (000 omitted) | $23,564,891 | $21,027,882 | $20,076,773 | $20,727,676 | $19,624,016 | $17,134,836 |
See Notes to Financial
Statements
17
Financial
Highlights – continued
| Class R1 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $40.45 | $40.47 | $40.01 | $38.25 | $35.27 | $32.79 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.11 | $0.32 | $0.48 | $0.28 | $0.36(c) | $0.28 |
| Net realized and unrealized gain (loss) | 4.80 | 0.55 | 1.02 | 2.99 | 3.60 | 3.74 |
| Total from investment operations | $4.91 | $0.87 | $1.50 | $3.27 | $3.96 | $4.02 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.14) | $(0.34) | $(0.50) | $(0.30) | $(0.36) | $(0.30) |
| From net realized gain | (0.47) | (0.55) | (0.54) | (1.21) | (0.62) | (1.24) |
| Total distributions declared to shareholders | $(0.61) | $(0.89) | $(1.04) | $(1.51) | $(0.98) | $(1.54) |
| Net asset value, end of period (x) | $44.75 | $40.45 | $40.47 | $40.01 | $38.25 | $35.27 |
| Total return (%) (r)(s)(t)(x) | 12.20(n) | 2.13 | 4.08 | 8.61 | 11.40(c) | 12.69 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.57(a) | 1.58 | 1.58 | 1.57 | 1.61(c) | 1.65 |
| Expenses after expense reductions (f) | 1.56(a) | 1.57 | 1.57 | 1.56 | 1.59(c) | 1.61 |
| Net investment income (loss) | 0.52(a) | 0.80 | 1.24 | 0.72 | 0.99(c) | 0.85 |
| Portfolio turnover | 5(n) | 16 | 11 | 11 | 14 | 12 |
| Net assets at end of period (000 omitted) | $20,307 | $18,914 | $21,820 | $24,791 | $26,663 | $27,096 |
See Notes to Financial
Statements
18
Financial
Highlights – continued
| Class R2 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $40.86 | $40.87 | $40.39 | $38.60 | $35.59 | $33.08 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.22 | $0.52 | $0.68 | $0.48 | $0.55(c) | $0.45 |
| Net realized and unrealized gain (loss) | 4.84 | 0.56 | 1.03 | 3.02 | 3.62 | 3.78 |
| Total from investment operations | $5.06 | $1.08 | $1.71 | $3.50 | $4.17 | $4.23 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.24) | $(0.54) | $(0.69) | $(0.50) | $(0.54) | $(0.48) |
| From net realized gain | (0.47) | (0.55) | (0.54) | (1.21) | (0.62) | (1.24) |
| Total distributions declared to shareholders | $(0.71) | $(1.09) | $(1.23) | $(1.71) | $(1.16) | $(1.72) |
| Net asset value, end of period (x) | $45.21 | $40.86 | $40.87 | $40.39 | $38.60 | $35.59 |
| Total return (%) (r)(s)(t)(x) | 12.47(n) | 2.66 | 4.60 | 9.15 | 11.95(c) | 13.27 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.07(a) | 1.08 | 1.08 | 1.07 | 1.11(c) | 1.15 |
| Expenses after expense reductions (f) | 1.06(a) | 1.07 | 1.07 | 1.07 | 1.09(c) | 1.11 |
| Net investment income (loss) | 1.02(a) | 1.30 | 1.73 | 1.21 | 1.49(c) | 1.35 |
| Portfolio turnover | 5(n) | 16 | 11 | 11 | 14 | 12 |
| Net assets at end of period (000 omitted) | $385,010 | $359,598 | $437,221 | $550,200 | $614,044 | $567,665 |
See Notes to Financial
Statements
19
Financial
Highlights – continued
| Class R3 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $41.14 | $41.15 | $40.66 | $38.85 | $35.81 | $33.28 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.27 | $0.63 | $0.79 | $0.59 | $0.65(c) | $0.54 |
| Net realized and unrealized gain (loss) | 4.87 | 0.56 | 1.03 | 3.03 | 3.64 | 3.79 |
| Total from investment operations | $5.14 | $1.19 | $1.82 | $3.62 | $4.29 | $4.33 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.29) | $(0.65) | $(0.79) | $(0.60) | $(0.63) | $(0.56) |
| From net realized gain | (0.47) | (0.55) | (0.54) | (1.21) | (0.62) | (1.24) |
| Total distributions declared to shareholders | $(0.76) | $(1.20) | $(1.33) | $(1.81) | $(1.25) | $(1.80) |
| Net asset value, end of period (x) | $45.52 | $41.14 | $41.15 | $40.66 | $38.85 | $35.81 |
| Total return (%) (r)(s)(t)(x) | 12.59(n) | 2.92 | 4.87 | 9.43 | 12.23(c) | 13.54 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.82(a) | 0.83 | 0.83 | 0.82 | 0.86(c) | 0.90 |
| Expenses after expense reductions (f) | 0.81(a) | 0.82 | 0.82 | 0.82 | 0.84(c) | 0.86 |
| Net investment income (loss) | 1.27(a) | 1.56 | 1.99 | 1.47 | 1.74(c) | 1.60 |
| Portfolio turnover | 5(n) | 16 | 11 | 11 | 14 | 12 |
| Net assets at end of period (000 omitted) | $2,210,768 | $2,036,093 | $2,096,743 | $2,259,562 | $2,030,023 | $1,903,910 |
See Notes to Financial
Statements
20
Financial
Highlights – continued
| Class R4 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $41.31 | $41.32 | $40.82 | $39.00 | $35.94 | $33.40 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.33 | $0.73 | $0.89 | $0.69 | $0.74(c) | $0.62 |
| Net realized and unrealized gain (loss) | 4.89 | 0.56 | 1.03 | 3.04 | 3.67 | 3.80 |
| Total from investment operations | $5.22 | $1.29 | $1.92 | $3.73 | $4.41 | $4.42 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.34) | $(0.75) | $(0.88) | $(0.70) | $(0.73) | $(0.64) |
| From net realized gain | (0.47) | (0.55) | (0.54) | (1.21) | (0.62) | (1.24) |
| Total distributions declared to shareholders | $(0.81) | $(1.30) | $(1.42) | $(1.91) | $(1.35) | $(1.88) |
| Net asset value, end of period (x) | $45.72 | $41.31 | $41.32 | $40.82 | $39.00 | $35.94 |
| Total return (%) (r)(s)(t)(x) | 12.75(n) | 3.17 | 5.14 | 9.70 | 12.52(c) | 13.80 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.57(a) | 0.58 | 0.58 | 0.57 | 0.61(c) | 0.65 |
| Expenses after expense reductions (f) | 0.56(a) | 0.57 | 0.57 | 0.57 | 0.59(c) | 0.61 |
| Net investment income (loss) | 1.52(a) | 1.80 | 2.24 | 1.72 | 1.99(c) | 1.85 |
| Portfolio turnover | 5(n) | 16 | 11 | 11 | 14 | 12 |
| Net assets at end of period (000 omitted) | $2,476,624 | $2,323,830 | $2,916,674 | $3,201,331 | $3,060,883 | $3,233,421 |
See Notes to Financial
Statements
21
Financial
Highlights – continued
| Class R6 |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $41.31 | $41.32 | $40.83 | $39.01 | $35.94 | $33.40 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.35 | $0.78 | $0.93 | $0.73 | $0.76(c) | $0.66 |
| Net realized and unrealized gain (loss) | 4.89 | 0.55 | 1.02 | 3.04 | 3.69 | 3.80 |
| Total from investment operations | $5.24 | $1.33 | $1.95 | $3.77 | $4.45 | $4.46 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.36) | $(0.79) | $(0.92) | $(0.74) | $(0.76) | $(0.68) |
| From net realized gain | (0.47) | (0.55) | (0.54) | (1.21) | (0.62) | (1.24) |
| Total distributions declared to shareholders | $(0.83) | $(1.34) | $(1.46) | $(1.95) | $(1.38) | $(1.92) |
| Net asset value, end of period (x) | $45.72 | $41.31 | $41.32 | $40.83 | $39.01 | $35.94 |
| Total return (%) (r)(s)(t)(x) | 12.82(n) | 3.29 | 5.22 | 9.81 | 12.66(c) | 13.93 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.46(a) | 0.47 | 0.48 | 0.47 | 0.51(c) | 0.54 |
| Expenses after expense reductions (f) | 0.45(a) | 0.46 | 0.47 | 0.47 | 0.49(c) | 0.50 |
| Net investment income (loss) | 1.63(a) | 1.92 | 2.35 | 1.83 | 2.04(c) | 1.95 |
| Portfolio turnover | 5(n) | 16 | 11 | 11 | 14 | 12 |
| Net assets at end of period (000 omitted) | $18,724,358 | $16,158,507 | $14,716,194 | $13,941,823 | $10,957,734 | $6,218,954 |
See Notes to Financial
Statements
22
Financial
Highlights – continued
| Class 529A |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $40.94 | $40.96 | $40.48 | $38.69 | $35.67 | $33.15 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.27 | $0.62 | $0.78 | $0.58 | $0.63(c) | $0.53 |
| Net realized and unrealized gain (loss) | 4.85 | 0.55 | 1.02 | 3.02 | 3.64 | 3.79 |
| Total from investment operations | $5.12 | $1.17 | $1.80 | $3.60 | $4.27 | $4.32 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.29) | $(0.64) | $(0.78) | $(0.60) | $(0.63) | $(0.56) |
| From net realized gain | (0.47) | (0.55) | (0.54) | (1.21) | (0.62) | (1.24) |
| Total distributions declared to shareholders | $(0.76) | $(1.19) | $(1.32) | $(1.81) | $(1.25) | $(1.80) |
| Net asset value, end of period (x) | $45.30 | $40.94 | $40.96 | $40.48 | $38.69 | $35.67 |
| Total return (%) (r)(s)(t)(x) | 12.60(n) | 2.89 | 4.85 | 9.40 | 12.21(c) | 13.55 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.87(a) | 0.88 | 0.88 | 0.89 | 0.96(c) | 1.00 |
| Expenses after expense reductions (f) | 0.83(a) | 0.84 | 0.84 | 0.83 | 0.85(c) | 0.86 |
| Net investment income (loss) | 1.24(a) | 1.54 | 1.98 | 1.45 | 1.71(c) | 1.59 |
| Portfolio turnover | 5(n) | 16 | 11 | 11 | 14 | 12 |
| Net assets at end of period (000 omitted) | $32,669 | $28,038 | $27,149 | $25,416 | $22,490 | $18,625 |
See Notes to Financial
Statements
23
Financial
Highlights – continued
| Class 529B |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $40.50 | $40.46 | $40.05 | $38.23 | $35.27 | $32.78 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.26 | $0.57 | $0.63 | $0.43 | $0.47(c) | $0.29 |
| Net realized and unrealized gain (loss) | 4.80 | 0.55 | 1.00 | 3.00 | 3.61 | 3.73 |
| Total from investment operations | $5.06 | $1.12 | $1.63 | $3.43 | $4.08 | $4.02 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.28) | $(0.53) | $(0.68) | $(0.40) | $(0.50) | $(0.29) |
| From net realized gain | (0.47) | (0.55) | (0.54) | (1.21) | (0.62) | (1.24) |
| Total distributions declared to shareholders | $(0.75) | $(1.08) | $(1.22) | $(1.61) | $(1.12) | $(1.53) |
| Net asset value, end of period (x) | $44.81 | $40.50 | $40.46 | $40.05 | $38.23 | $35.27 |
| Total return (%) (r)(s)(t)(x) | 12.59(n) | 2.79 | 4.46 | 9.05 | 11.78(c) | 12.70 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 0.87(a) | 0.95 | 1.22 | 1.22 | 1.34(c) | 1.68 |
| Expenses after expense reductions (f) | 0.86(a) | 0.94 | 1.20 | 1.19 | 1.26(c) | 1.58 |
| Net investment income (loss) | 1.22(a) | 1.42 | 1.61 | 1.10 | 1.28(c) | 0.87 |
| Portfolio turnover | 5(n) | 16 | 11 | 11 | 14 | 12 |
| Net assets at end of period (000 omitted) | $486 | $474 | $680 | $835 | $908 | $941 |
See Notes to Financial
Statements
24
Financial
Highlights – continued
| Class 529C |
Six months ended |
Year ended | ||||
| 2/28/21
(unaudited) |
8/31/20 | 8/31/19 | 8/31/18 | 8/31/17 | 8/31/16 | |
| Net asset value, beginning of period | $40.24 | $40.26 | $39.81 | $38.07 | $35.11 | $32.66 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.10 | $0.30 | $0.46 | $0.26 | $0.34(c) | $0.26 |
| Net realized and unrealized gain (loss) | 4.77 | 0.56 | 1.01 | 2.97 | 3.59 | 3.73 |
| Total from investment operations | $4.87 | $0.86 | $1.47 | $3.23 | $3.93 | $3.99 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.13) | $(0.33) | $(0.48) | $(0.28) | $(0.35) | $(0.30) |
| From net realized gain | (0.47) | (0.55) | (0.54) | (1.21) | (0.62) | (1.24) |
| Total distributions declared to shareholders | $(0.60) | $(0.88) | $(1.02) | $(1.49) | $(0.97) | $(1.54) |
| Net asset value, end of period (x) | $44.51 | $40.24 | $40.26 | $39.81 | $38.07 | $35.11 |
| Total return (%) (r)(s)(t)(x) | 12.16(n) | 2.10 | 4.04 | 8.54 | 11.38(c) | 12.64 |
| Ratios
(%) (to average net assets) and Supplemental data: | ||||||
| Expenses before expense reductions (f) | 1.62(a) | 1.63 | 1.63 | 1.64 | 1.71(c) | 1.75 |
| Expenses after expense reductions (f) | 1.61(a) | 1.62 | 1.61 | 1.61 | 1.63(c) | 1.65 |
| Net investment income (loss) | 0.47(a) | 0.76 | 1.19 | 0.67 | 0.93(c) | 0.80 |
| Portfolio turnover | 5(n) | 16 | 11 | 11 | 14 | 12 |
| Net assets at end of period (000 omitted) | $3,846 | $4,308 | $4,947 | $5,320 | $5,924 | $5,381 |
| (a) | Annualized. |
| (c) | Amount reflects a one-time reimbursement of expenses by the custodian (or former custodian) without which net investment income and performance would be lower and expenses would be higher. |
| (d) | Per share data is based on average shares outstanding. |
| (f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
| (n) | Not annualized. |
| (r) | Certain expenses have been reduced without which performance would have been lower. |
| (s) | From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. |
| (t) | Total returns do not include any applicable sales charges. |
| (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
25
Notes to Financial
Statements
(unaudited)
(1) Business and Organization
MFS Value Fund (the fund) is a diversified series of MFS Series
Trust I (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
The fund is an investment company and accordingly follows the
investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General - The preparation of
financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these
financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.
In March 2020, the FASB issued Accounting Standards Update
2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional, temporary relief with respect to the financial reporting of
contracts subject to certain types of modifications due to the planned discontinuation of certain tenors of the London Interbank Offered Rate (LIBOR) and other IBOR-based reference rates as of the end of 2021. The temporary relief provided by ASU
2020-04 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 on the fund's investments, derivatives,
debt and other contracts that will undergo reference rate-related modifications as a result of the reference rate reform.
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
— Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which
there were no sales reported that day, are generally valued at the last quoted daily bid
26
Notes to Financial
Statements (unaudited) - continued
quotation on their primary market or exchange as provided by a third-party
pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per
share. 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, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign
currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.
The Board of Trustees has delegated primary responsibility for
determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market
quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and
procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from
third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the
investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the
exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s
net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party
pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the
issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on
the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance
that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's
assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair
value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers
factors specific to the investment. Level 1 includes unadjusted
27
Notes to Financial
Statements (unaudited) - continued
quoted prices in active markets for identical assets or liabilities. Level 2
includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser's own assumptions in
determining the fair value of investments. The following is a summary of the levels used as of February 28, 2021 in valuing the fund's assets or liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities | $54,578,183,253 | $— | $— | $54,578,183,253 |
| Mutual Funds | 563,551,714 | — | — | 563,551,714 |
| Total | $55,141,734,967 | $— | $— | $55,141,734,967 |
For further information regarding
security characteristics, see the Portfolio of Investments.
Foreign Currency Translation
— Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated
receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign
exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that
results from fluctuations in foreign currency exchange rates is not separately disclosed.
Security Loans — Under
its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can
be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. The loans are
collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. On loans collateralized by cash, the cash collateral is invested in a money market fund.
The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. The lending agent provides the fund with indemnification against
Borrower default. In the event of Borrower default, the lending agent will, for the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the fund the market value of the
loaned securities. In return, the lending agent assumes the fund's rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent is responsible for the shortfall, but only to the
extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. A portion of the income generated upon investment of the collateral is remitted to the
Borrowers, and the remainder is allocated between the fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund and the lending
agent. Income from
28
Notes to Financial
Statements (unaudited) - continued
securities lending is separately reported in the Statement of Operations. The
dividend and interest income earned on the securities loaned is accounted for in the same manner as other dividend and interest income. At February 28, 2021, there were no securities on loan or collateral outstanding.
Indemnifications — Under
the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters
into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet
occurred.
Investment Transactions and Income — Investment transactions are recorded on the trade date. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed
of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend payments received in additional securities are recorded on the ex-dividend date in an amount equal to the value of the security on such date.
The fund may receive proceeds from litigation settlements. Any
proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund.
Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Tax Matters and Distributions
— The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal
income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state
tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in
accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be
subject to capital gains tax imposed by those countries.
Distributions to shareholders are recorded on the ex-dividend
date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted
for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in
different periods for financial statement and tax purposes will reverse at some time in the future.
Book/tax differences primarily relate to wash sale loss
deferrals and treating a portion of the proceeds from redemptions as a distribution for tax purposes.
29
Notes to Financial
Statements (unaudited) - continued
The tax character of distributions made during the current
period will be determined at fiscal year end. The tax character of distributions declared to shareholders for the last fiscal year is as follows:
| Year
ended 8/31/20 | |
| Ordinary income (including any short-term capital gains) | $856,724,783 |
| Long-term capital gains | 636,262,146 |
| Total distributions | $1,492,986,929 |
The federal tax cost and the tax
basis components of distributable earnings were as follows:
| As of 2/28/21 | |
| Cost of investments | $31,471,621,401 |
| Gross appreciation | 23,887,610,208 |
| Gross depreciation | (217,496,642) |
| Net unrealized appreciation (depreciation) | $23,670,113,566 |
| As of 8/31/20 | |
| Undistributed ordinary income | 132,043,074 |
| Undistributed long-term capital gain | 553,610,938 |
| Other temporary differences | 2,246,090 |
| Net unrealized appreciation (depreciation) | 18,254,870,581 |
The aggregate cost above includes
prior fiscal year end tax adjustments, if applicable.
Multiple Classes of Shares of Beneficial Interest — The fund offers multiple classes of shares, which differ in their respective distribution, service, and program manager fees. The fund's income, realized and unrealized gain (loss), and common expenses are
allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B and Class 529B
shares will convert to Class A and Class 529A shares, respectively, approximately eight years after purchase. In addition, Class C and Class 529C shares will convert to Class A and Class
30
Notes to Financial
Statements (unaudited) - continued
529A shares, respectively, approximately eight years after purchase. The
fund’s distributions declared to shareholders as reported in the Statements of Changes in Net Assets are presented by class as follows:
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||
| Class A | $117,269,058 | $189,343,734 | |
| Class B | 735,663 | 1,608,077 | |
| Class C | 9,037,579 | 18,063,688 | |
| Class I | 407,280,021 | 633,742,213 | |
| Class R1 | 273,150 | 439,617 | |
| Class R2 | 5,978,699 | 10,736,209 | |
| Class R3 | 36,841,800 | 61,144,148 | |
| Class R4 | 44,615,923 | 84,606,489 | |
| Class R6 | 330,703,257 | 492,370,052 | |
| Class 529A | 514,145 | 806,572 | |
| Class 529B | 8,733 | 16,333 | |
| Class 529C | 61,824 | 109,797 | |
| Total | $953,319,852 | $1,492,986,929 |
(3) Transactions with
Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid
monthly at the following annual rates based on the fund's average daily net assets:
| Up to $7.5 billion | 0.60% |
| In excess of $7.5 billion and up to $10 billion | 0.53% |
| In excess of $10 billion and up to $20 billion | 0.50% |
| In excess of $20 billion and up to $25 billion | 0.45% |
| In excess of $25 billion and up to $30 billion | 0.42% |
| In excess of $30 billion and up to $35 billion | 0.40% |
| In excess of $35 billion and up to $40 billion | 0.38% |
| In excess of $40 billion and up to $45 billion | 0.36% |
| In excess of $45 billion and up to $50 billion | 0.35% |
| In excess of $50 billion and up to $60 billion | 0.34% |
| In excess of $60 billion | 0.33% |
MFS has agreed in writing to reduce
its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund's Board of Trustees. For the six months ended February 28, 2021, this management fee reduction amounted to $2,862,314, which
is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.44% of the fund's average daily net
assets.
Distributor
— MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $483,156 and $6,674 for the six months ended February 28, 2021, as its portion of the initial sales charge on
sales of Class A and Class 529A shares of the fund, respectively.
31
Notes to Financial
Statements (unaudited) - continued
The Board of Trustees has adopted a distribution plan for
certain share classes pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund's distribution plan provides that the fund will pay
MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee
paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.
Distribution Plan Fee Table:
| Distribution
Fee Rate (d) |
Service
Fee Rate (d) |
Total
Distribution Plan (d) |
Annual
Effective Rate (e) |
Distribution
and Service Fee | |
| Class A | — | 0.25% | 0.25% | 0.25% | $ 8,431,907 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 268,091 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 3,160,168 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 96,482 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 911,592 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 2,615,668 |
| Class 529A | — | 0.25% | 0.25% | 0.22% | 37,179 |
| Class 529B | 0.75% | 0.25% | 1.00% | 0.25% | 606 |
| Class 529C | 0.75% | 0.25% | 1.00% | 1.00% | 20,645 |
| Total Distribution and Service Fees | $15,542,338 |
| (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 February 28, 2021 based on each class's average daily net assets.MFD has voluntarily agreed to rebate a portion of each class’s 0.25% service fee attributable to accounts for which there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates’ seed money. For the six months ended February 28, 2021, this rebate amounted to $1,475, $14, $61, $511, $162, $3,920, $4, and $18 for Class A, Class B, Class C, Class R2, Class R3, Class 529A, Class 529B, and Class 529C, respectively, and is included in the reduction of total expenses in the Statement of Operations. For the six months ended February 28, 2021, the 0.75% distribution fee was not imposed for Class 529B shares due to the sales charge limitations contained in Financial Industry Regulatory Authority (“FINRA”) Rule 2341. |
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 and Class 529B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. Class C and Class 529C shares are
subject to a CDSC in the event of
32
Notes to Financial
Statements (unaudited) - continued
a shareholder redemption within 12 months of purchase. All contingent deferred
sales charges are paid to MFD and during the six months ended February 28, 2021, were as follows:
| Amount | |
| Class A | $30,180 |
| Class B | 27,440 |
| Class C | 25,597 |
| Class 529B | — |
| Class 529C | 14 |
The fund has entered into and may
from time to time enter into contracts with program managers and other parties which administer the tuition programs through which an investment in the fund’s 529 share classes is made. The fund has entered into an agreement with MFD pursuant
to which MFD receives an annual fee of up to 0.05% of the average daily net assets attributable to each 529 share class. The services provided by MFD, or a third party with which MFD contracts, include recordkeeping and tax reporting and account
services, as well as services designed to maintain the program’s compliance with the Internal Revenue Code and other regulatory requirements. Program manager fees for the six months ended February 28, 2021, were as follows:
| Fee | |
| Class 529A | $7,436 |
| Class 529B | 121 |
| Class 529C | 1,032 |
| Total Program Manager Fees | $8,589 |
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 February 28, 2021, the fee was $689,225, which equated to 0.0027% 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 February 28, 2021, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $19,114,837.
Administrator — MFS
provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund reimburses MFS the costs incurred to provide these services. The fund is
charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended February 28, 2021 was equivalent to an annual effective rate of 0.0010% of the fund's average
daily net assets.
Trustees’ and
Officers’ Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not
pay
33
Notes to Financial
Statements (unaudited) - continued
compensation directly to Trustees or officers of the fund who are also
officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — The fund invests
in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a management fee to MFS but does incur investment and
operating costs.
The fund is permitted to engage
in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) pursuant to a policy adopted by the Board of Trustees. This policy has been designed to ensure that
cross-trades conducted by the fund comply with Rule 17a-7 under the Investment Company Act of 1940. During the six months ended February 28, 2021, the fund engaged in purchase and sale transactions pursuant to this policy, which amounted to $309,928
and $20,210,842, respectively. The sales transactions resulted in net realized gains (losses) of $7,285,683.
The adviser has voluntarily undertaken to reimburse the fund
from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the six months ended February 28, 2021, this reimbursement
amounted to $237,436, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the six months ended February 28, 2021, purchases and sales
of investments, other than in-kind transactions and short-term obligations, aggregated $2,465,736,138 and $2,476,429,174, respectively.
34
Notes to Financial
Statements (unaudited) - continued
(5) Shares of Beneficial Interest
The fund's Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Shares sold | |||||
| Class A | 14,717,744 | $641,263,926 | 32,179,921 | $1,285,103,620 | |
| Class B | 5,499 | 241,902 | 22,510 | 897,563 | |
| Class C | 1,041,442 | 45,187,940 | 2,799,389 | 112,466,888 | |
| Class I | 63,821,212 | 2,798,234,300 | 159,003,585 | 6,274,452,177 | |
| Class R1 | 39,433 | 1,676,774 | 104,875 | 4,045,352 | |
| Class R2 | 879,581 | 38,387,671 | 1,481,392 | 57,589,080 | |
| Class R3 | 4,767,358 | 207,741,906 | 11,752,487 | 470,050,248 | |
| Class R4 | 6,090,946 | 265,984,843 | 12,531,598 | 505,219,277 | |
| Class R6 | 51,314,722 | 2,239,227,772 | 101,124,110 | 4,019,606,531 | |
| Class 529A | 66,550 | 2,903,140 | 114,245 | 4,545,442 | |
| Class 529B | 211 | 8,522 | 560 | 23,732 | |
| Class 529C | 5,347 | 227,349 | 21,415 | 869,914 | |
| 142,750,045 | $6,241,086,045 | 321,136,087 | $12,734,869,824 | ||
| Shares
issued to shareholders in reinvestment of distributions |
|||||
| Class A | 2,157,105 | $93,179,560 | 3,739,811 | $154,518,285 | |
| Class B | 15,702 | 683,501 | 35,655 | 1,507,926 | |
| Class C | 174,985 | 7,562,555 | 322,796 | 13,469,315 | |
| Class I | 7,626,708 | 330,644,331 | 12,287,552 | 507,551,608 | |
| Class R1 | 6,387 | 273,147 | 10,639 | 439,617 | |
| Class R2 | 138,522 | 5,934,471 | 254,474 | 10,485,129 | |
| Class R3 | 856,423 | 36,841,683 | 1,483,875 | 61,141,312 | |
| Class R4 | 1,007,807 | 43,398,302 | 1,995,590 | 82,542,335 | |
| Class R6 | 6,999,984 | 301,222,751 | 10,977,082 | 449,913,313 | |
| Class 529A | 11,786 | 504,744 | 19,707 | 806,333 | |
| Class 529B | 206 | 8,733 | 401 | 16,333 | |
| Class 529C | 1,419 | 60,399 | 2,664 | 109,768 | |
| 18,997,034 | $820,314,177 | 31,130,246 | $1,282,501,274 | ||
35
Notes to Financial
Statements (unaudited) - continued
| Six
months ended 2/28/21 |
Year
ended 8/31/20 | ||||
| Shares | Amount | Shares | Amount | ||
| Shares reacquired | |||||
| Class A | (15,277,695) | $(660,979,348) | (37,330,996) | $(1,477,906,301) | |
| Class B | (228,709) | (9,851,008) | (761,072) | (30,351,253) | |
| Class C | (3,496,162) | (150,516,679) | (8,769,204) | (346,449,467) | |
| Class I | (65,143,973) | (2,859,141,682) | (148,362,399) | (5,916,833,396) | |
| Class R1 | (59,612) | (2,511,063) | (187,211) | (7,418,840) | |
| Class R2 | (1,303,170) | (56,065,611) | (3,632,966) | (145,985,614) | |
| Class R3 | (6,555,496) | (283,964,634) | (14,697,138) | (591,558,514) | |
| Class R4 | (9,181,756) | (399,724,657) | (28,864,156) | (1,183,319,732) | |
| Class R6 | (39,908,045) | (1,734,297,852) | (77,068,491) | (3,114,431,826) | |
| Class 529A | (41,954) | (1,798,671) | (111,934) | (4,441,918) | |
| Class 529B | (1,255) | (54,246) | (6,068) | (244,380) | |
| Class 529C | (27,436) | (1,172,530) | (39,904) | (1,538,170) | |
| (141,225,263) | $(6,160,077,981) | (319,831,539) | $(12,820,479,411) | ||
| Net change | |||||
| Class A | 1,597,154 | $73,464,138 | (1,411,264) | $(38,284,396) | |
| Class B | (207,508) | (8,925,605) | (702,907) | (27,945,764) | |
| Class C | (2,279,735) | (97,766,184) | (5,647,019) | (220,513,264) | |
| Class I | 6,303,947 | 269,736,949 | 22,928,738 | 865,170,389 | |
| Class R1 | (13,792) | (561,142) | (71,697) | (2,933,871) | |
| Class R2 | (285,067) | (11,743,469) | (1,897,100) | (77,911,405) | |
| Class R3 | (931,715) | (39,381,045) | (1,460,776) | (60,366,954) | |
| Class R4 | (2,083,003) | (90,341,512) | (14,336,968) | (595,558,120) | |
| Class R6 | 18,406,661 | 806,152,671 | 35,032,701 | 1,355,088,018 | |
| Class 529A | 36,382 | 1,609,213 | 22,018 | 909,857 | |
| Class 529B | (838) | (36,991) | (5,107) | (204,315) | |
| Class 529C | (20,670) | (884,782) | (15,825) | (558,488) | |
| 20,521,816 | $901,322,241 | 32,434,794 | $1,196,891,687 | ||
Effective June 1, 2019, purchases of
the fund’s Class B and Class 529B shares are closed to new and existing investors subject to certain exceptions. Please see the fund’s prospectus for details.
The fund is one of several mutual funds in which certain MFS
funds may invest. The MFS funds do not invest in the underlying funds for the purpose of exercising management or control. At the end of the period, the MFS Growth Allocation Fund was the owner of record of approximately 1% of the value of
outstanding voting shares of the fund. In addition, the MFS Aggressive Growth Allocation Fund, the MFS Conservative Allocation Fund, the MFS Lifetime 2020 Fund, the MFS Lifetime 2025 Fund, the MFS Lifetime 2030 Fund, the MFS Lifetime 2035 Fund, the
MFS Lifetime 2040 Fund, the MFS Lifetime 2045 Fund, the MFS Lifetime 2050 Fund, the
36
Notes to Financial
Statements (unaudited) - continued
MFS Lifetime 2055 Fund, the MFS Lifetime 2060 Fund, the MFS Lifetime Income
Fund, the MFS Managed Wealth Fund, and the MFS Moderate Allocation Fund were each the owners of record of less than 1% of the value of outstanding voting shares of the fund.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in
a $1.25 billion unsecured committed line of credit of which $1 billion is reserved for use by the fund and certain other 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 one month LIBOR, the Federal Funds Effective Rate and the Overnight Bank Funding Rate, 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. 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 February 28, 2021, the
fund’s commitment fee and interest expense were $111,750 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 | $688,394,733 | $2,132,422,173 | $2,257,265,192 | $— | $— | $563,551,714 |
| Affiliated Issuers | Dividend
Income |
Capital
Gain Distributions |
| MFS Institutional Money Market Portfolio | $230,810 | $— |
(8) Redemptions In-Kind
On October 12, 2020, the fund recorded a redemption in-kind of
portfolio securities and cash that was valued at $78,123,652. The redeeming shareholder generally receives a pro rata share of the securities held by the fund. The distribution of such securities generated a realized gain of $42,246,369 for the
fund, which is included in Net realized gain in the Statement of Operations. For tax purposes, no gains or losses were recognized with respect to the portfolio securities redeemed in-kind.
37
Notes to Financial
Statements (unaudited) - continued
(9) Impacts of COVID-19
The pandemic related to the global spread of novel coronavirus
disease (COVID-19), which was first detected in December 2019, has resulted in significant disruptions to global business activity and the global economy, as well as the economies of individual countries, the financial performance of individual
companies and sectors, and the securities and commodities markets in general. Multiple surges in cases globally, the availability and widespread adoption of vaccines, and the emergence of variant strains of the virus continue to create uncertainty
as to the future and long-term impacts resulting from the pandemic including impacts to the prices and liquidity of the fund's investments and the fund's performance.
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Proxy
Voting Policies and Information
MFS votes proxies on
behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s
Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with
the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A
shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the
“Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
From time to time, MFS may post important information about the
fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at
mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an
investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), 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.
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| 1(b): | |
Not applicable.
| ITEM 2. | CODE OF ETHICS. |
During the period covered by this report, the Registrant has not amended any provision in its Code of Ethics (the “Code”) that relates to an element of the Code’s definitions enumerated in paragraph (b) of Item 2 of this Form N-CSR. During the period covered by this report, the Registrant did not grant a waiver, including an implicit waiver, from any provision of the Code.
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Not applicable for semi-annual reports.
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Not applicable for semi-annual reports.
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable to the Registrant.
| ITEM 6. | INVESTMENTS |
A schedule of investments for each series of the Registrant is included as part of the report to shareholders of such series under Item 1(a) of this Form N-CSR.
| ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable to the Registrant.
| ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable to the Registrant.
| ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable to the Registrant.
| ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
There were no material changes to the procedures by which shareholders may send recommendations to the Board for nominees to the Registrant’s Board since the Registrant last provided disclosure as to such procedures in response to the requirements of Item 407 (c)(2)(iv) of Regulation S-K or this Item.
| ITEM 11. | CONTROLS AND PROCEDURES. |
| (a) | Based upon their evaluation of the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as conducted within 90 days of the filing date of this report on Form N-CSR, the registrant’s principal financial officer and principal executive officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. |
| (b) | There were no changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the period covered by the report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| ITEM 12. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable to the Registrant.
| ITEM 13. | EXHIBITS. |
| (a) | File the exhibits listed below as part of this form. Letter or number the exhibits in the sequence indicated. |
| (1) | Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. Not applicable. |
| (2) | A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2): Attached hereto as EX-99.302CERT. |
| (3) | Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable. |
| (4) | Change in the registrant’s independent public accountant. Not applicable. |
| (b) | If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference: Attached hereto as EX-99.906CERT. |
Notice
A copy of the Amended and Restated Declaration of Trust, as amended, of the Registrant is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually, but are binding only upon the assets and property of the respective constituent series of the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) MFS SERIES TRUST I
| By (Signature and Title)* | /S/ DAVID L. DILORENZO | |
| David L. DiLorenzo, President |
Date: April 15, 2021
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: April 15, 2021
| By (Signature and Title)* | /S/ JAMES O. YOST | |
| James O. Yost, Treasurer (Principal Financial Officer and Accounting Officer) |
Date: April 15, 2021
| * | Print name and title of each signing officer under his or her signature. |