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 811-2464
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MFS SERIES TRUST IX
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(Exact name of registrant as specified in charter)
500 Boylston Street, Boston, Massachusetts 02116
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(Address of principal executive offices) (Zip code)
Susan S. Newton
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
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(Name and address of agents for service)
Registrant's telephone number, including area code: (617) 954-5000
Date of fiscal year end: October 31*
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Date of reporting period: April 30, 2006
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* This Form N-CSR filing pertains to the MFS Inflation-Adjusted Bond Fund, a
series of the Registrant. The remaining series of the Registrant do not have a
fiscal year end of October 31.
ITEM 1. REPORTS TO STOCKHOLDERS.
MFS(R) INFLATION-ADJUSTED BOND FUND 4/30/06
SEMIANNUAL REPORT
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LETTER FROM THE CEO 1
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PORTFOLIO COMPOSITION 2
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EXPENSE TABLE 3
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PORTFOLIO OF INVESTMENTS 5
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FINANCIAL STATEMENTS 7
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NOTES TO FINANCIAL STATEMENTS 19
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BOARD REVIEW OF INVESTMENT
ADVISORY AGREEMENT 28
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PROXY VOTING POLICIES AND
INFORMATION 28
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QUARTERLY PORTFOLIO DISCLOSURE 28
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CONTACT INFORMATION BACK COVER
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THE REPORT IS PREPARED FOR THE GENERAL INFORMATION OF
SHAREHOLDERS. IT IS INTENDED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR
ACCOMPANIED BY A CURRENT PROSPECTUS.
[logo] M F S(SM)
INVESTMENT MANAGEMENT(R)
LETTER FROM THE CEO
[Photo of Robert J. Manning]
Dear Shareholders,
It has been said that change is the only constant in life. As investors have
seen, that theme is still accurate today as we recently have experienced
shifting economic cycles because of natural disasters and political instability
around the globe.
Markets worldwide have fluctuated in the past year as devastating hurricanes
had a dramatic effect on the international economy, particularly on oil prices.
We witnessed political unrest in the Middle East, highlighted by instability in
Iraq, and in Africa, the usually stable Nigeria also experienced violence. As a
result, energy prices have bounced up and down, with crude oil prices at one
point topping a record $70 per barrel.
Such cycles are not uncommon and in fact have almost become the norm in our
everyday lives. What does all of this mean to you as an investor? In times like
these, it helps to know that you're working with a seasoned investment
professional who has experience to guide you through difficult times. At
MFS(R), we believe our investment management team has the knowledge and
confidence to navigate through difficult cycles and at the same time see
through adversity to find investment opportunities for our clients and
shareholders.
Our investment management process, honed over 80 years, combines a unique
concept of teamwork with our unwavering focus on the long term. We firmly
believe that the best way to realize long-term financial goals - be it a
college education, a comfortable retirement, or a secure family legacy - is to
follow a three-pronged approach that focuses on longer time horizons. Allocate
holdings across the major asset classes - including stocks, bonds, and cash.
Diversify within each class to take advantage of different market segments and
investing styles. Rebalance assets regularly to maintain a desired asset
allocation. Of course, these strategies cannot guarantee a profit or protect
against a loss. This long-term approach requires diligence and patience, two
traits that in our experience are essential to capitalizing on the many
opportunities the financial markets can offer - through both up and down
economic cycles.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
June 15, 2006
The opinions expressed in this letter are those of MFS, and no forecasts can be
guaranteed.
PORTFOLIO COMPOSITION
PORTFOLIO STRUCTURE (i)
Bonds 98.0%
Cash & Other Net Assets 2.0%
FIXED INCOME MARKET SECTORS (i)
U.S. Treasury Securities 94.1%
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U.S. Government Agencies 3.9%
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CREDIT QUALITY OF BONDS (r)
AAA 100.0%
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PORTFOLIO FACTS
Average Duration (d) 6.3
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Average Life (m) 10.2 yrs.
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Average Maturity (m) 10.6 yrs.
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Average Credit Quality of Rated
Securities (a) AAA
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Average Short Term Credit Quality A-1
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(a) The average credit quality of rated securities is based upon a market
weighted average of portfolio holdings that are rated by public rating
agencies.
(d) Duration is a measure of how much a bond price is likely to fluctuate with
general changes in interest rates, e.g., if rates rise 1.00%, a fund with a
5-year duration is likely to lose about 5.00% of its value.
(i) For purposes of this graphical presentation, the bond component includes
both accrued interest amounts and the equivalent exposure from any
derivative holdings, if applicable.
(m) The average maturity shown is calculated using the final stated maturity on
the portfolio's holdings without taking into account any holdings which
have been pre- refunded to an earlier date or which have a mandatory put
date prior to the stated maturity. The average life shown takes into
account these earlier dates.
(r) Each security is assigned a rating from Moody's Investors Service. If not
rated by Moody's, the rating will be that assigned by Standard & Poor's.
Likewise, if not assigned a rating by Standard & Poor's, it will be based
on the rating assigned by Fitch, Inc. For those portfolios that hold a
security which is not rated by any of the three agencies, the security is
considered Not Rated. Holdings in U.S. Treasuries and government agency
mortgage-backed securities, if any, are included in a "AAA"-rating
category. Percentages are based on the total market value of investments as
of 4/30/06.
Percentages are based on net assets as of 4/30/06, unless otherwise noted.
The portfolio is actively managed, and current holdings may be different.
EXPENSE TABLE
FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, NOVEMBER 1, 2005
THROUGH APRIL 30, 2006.
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 redemption fees on certain exchanges and redemptions, and (2)
ongoing costs, including management fees; distribution and service (12b-1)
fees; and other fund expenses. This example is intended to help you understand
your ongoing costs (in dollars) of investing in the fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period November 1, 2005 through April 30,
2006.
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) or redemption fees. 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.
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Expenses
Paid During
Annualized Beginning Ending Period (p)
Share Expense Account Value Account Value 11/01/05-
Class Ratio 11/01/05 4/30/06 4/30/06
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Actual 0.65% $1,000.00 $987.90 $3.20
A ------------------------------------------------------------------------
Hypothetical (h) 0.65% $1,000.00 $1,021.57 $3.26
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Actual 1.50% $1,000.00 $983.70 $7.38
B ------------------------------------------------------------------------
Hypothetical (h) 1.50% $1,000.00 $1,017.36 $7.50
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Actual 1.50% $1,000.00 $982.70 $7.37
C ------------------------------------------------------------------------
Hypothetical (h) 1.50% $1,000.00 $1,017.36 $7.50
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Actual 0.50% $1,000.00 $988.60 $2.47
I ------------------------------------------------------------------------
Hypothetical (h) 0.50% $1,000.00 $1,022.32 $2.51
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Actual 1.00% $1,000.00 $985.20 $4.92
R ------------------------------------------------------------------------
Hypothetical (h) 1.00% $1,000.00 $1,019.84 $5.01
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Actual 1.60% $1,000.00 $983.20 $7.87
R1 ------------------------------------------------------------------------
Hypothetical (h) 1.60% $1,000.00 $1,016.86 $8.00
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Actual 1.25% $1,000.00 $984.90 $6.15
R2 ------------------------------------------------------------------------
Hypothetical (h) 1.25% $1,000.00 $1,018.60 $6.26
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Actual 1.15% $1,000.00 $984.40 $5.66
R3 ------------------------------------------------------------------------
Hypothetical (h) 1.15% $1,000.00 $1,019.09 $5.76
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Actual 0.90% $1,000.00 $986.70 $4.43
R4 ------------------------------------------------------------------------
Hypothetical (h) 0.90% $1,000.00 $1,020.33 $4.51
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Actual 0.60% $1,000.00 $988.10 $2.96
R5 ------------------------------------------------------------------------
Hypothetical (h) 0.60% $1,000.00 $1,021.82 $3.01
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(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads) or
redemption fees. If these transaction costs had been included, your costs
would have been higher.
PORTFOLIO OF INVESTMENTS (unaudited) - 4/30/06
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Bonds - 96.6%
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ISSUER SHARES/PAR VALUE ($)
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U.S. Government Agencies - 3.9%
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Small Business Administration, 4.57%, 2025 $ 98,254 $ 91,366
Small Business Administration, 4.76%, 2025 91,052 85,636
Small Business Administration, 5.09%, 2025 76,505 73,600
Small Business Administration, 5.36%, 2025 100,000 98,000
Small Business Administration, 5.21%, 2026 90,000 87,233
Small Business Administration, 5.35%, 2026 138,000 134,951
Small Business Administration, 5.57%, 2026 272,000 269,748
------------
$ 840,534
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U.S. Treasury Inflation Protected Securities - 92.7%
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U.S. Treasury Bonds, 2.375%, 2025 $ 1,899,416 $ 1,876,564
U.S. Treasury Bonds, 2%, 2026 1,435,506 1,334,852
U.S. Treasury Bonds, 3.625%, 2028 929,921 1,119,030
U.S. Treasury Bonds, 3.875%, 2029 720,332 904,016
U.S. Treasury Bonds, 3.375%, 2032 359,315 431,510
U.S. Treasury Notes, 3.625%, 2008 1,216,312 1,253,133
U.S. Treasury Notes, 3.875%, 2009 1,062,485 1,115,278
U.S. Treasury Notes, 0.875%, 2010 2,097,560 1,994,813
U.S. Treasury Notes, 3.5%, 2011 614,170 650,396
U.S. Treasury Notes, 2.375%, 2011 1,151,001 1,158,245
U.S. Treasury Notes, 3%, 2012 1,694,026 1,765,692
U.S. Treasury Notes, 1.875%, 2013 1,589,149 1,543,833
U.S. Treasury Notes, 2%, 2014 1,740,894 1,698,800
U.S. Treasury Notes, 1.625%, 2015 1,432,824 1,350,492
U.S. Treasury Notes, 1.875%, 2015 872,335 837,476
U.S. Treasury Notes, 2%, 2016 1,151,208 1,112,939
------------
$ 20,147,069
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TOTAL BONDS (IDENTIFIED COST, $21,414,715) $ 20,987,603
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PAR AMOUNT OF
ISSUE/EXPIRATION/STRIKE PRICE CONTRACTS VALUE ($)
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Call Options Purchased - 0.0%
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U.S. Treasury Notes 10 Year Futures - May 2006 @ $106
(Premiums Paid, $2,264) $ 4 $ 1,188
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Short-Term Obligations - 1.2%
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ISSUER SHARES/PAR VALUE ($)
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UBS Finance Delaware LLC, 4.82%, due 5/01/06, at
Amortized Cost (y) $ 250,000 $ 250,000
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TOTAL INVESTMENTS (IDENTIFIED COST, $21,666,979) (k) $ 21,238,791
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Other Assets, Less Liabilities - 2.2% 486,837
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NET ASSETS - 100.0% $ 21,725,628
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(k) As of April 30, 2006, the fund held securities fair valued in accordance with the policies
adopted by the Board of Trustees, aggregating $20,987,603 and 98.82% of market value provided
by an independent pricing service using an evaluated bid.
(y) The rate shown represents an annualized yield at time of purchase.
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statement of Assets and Liabilities (unaudited)
This statement represents your fund's balance sheet, which details the assets
and liabilities comprising the total value of the fund.
AT 4/30/06
ASSETS
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Investments, at value (identified cost, $21,666,979) $21,238,791
Cash 243
Receivable for investments sold 321,182
Receivable for fund shares sold 71,354
Interest receivable 120,536
Receivable from investment adviser 118,705
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Total assets $21,870,811
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LIABILITIES
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Distributions payable $8,825
Payable for fund shares reacquired 56,099
Payable to affiliates
Management fee 623
Shareholder servicing costs 2,694
Distribution and service fees 759
Administrative services fee 144
Retirement plan administration and services fees 10
Payable for independent trustees' compensation 238
Accrued expenses and other liabilities 75,791
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Total liabilities $145,183
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Net assets $21,725,628
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NET ASSETS CONSIST OF:
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Paid-in capital $23,079,732
Unrealized appreciation (depreciation) on investments (428,188)
Accumulated distributions in excess of net realized gain
on investments (665,126)
Accumulated distributions in excess of net investment
income (260,790)
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Net assets $21,725,628
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Shares of beneficial interest outstanding 2,281,842
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Class A shares
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Net assets $12,516,748
Shares outstanding 1,314,707
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Net asset value per share $9.52
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Offering price per share (100/95.25Xnet asset value
per share) $9.99
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Class B shares
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Net assets $4,417,811
Shares outstanding 464,228
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Net asset value and offering price per share $9.52
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Statement of Assets and Liabilities (unaudited) - continued
Class C shares
Net assets $2,559,130
Shares outstanding 268,460
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Net asset value and offering price per share $9.53
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Class I shares
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Net assets $1,451,057
Shares outstanding 152,430
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Net asset value, offering price, and redemption price
per share $9.52
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Class R shares
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Net assets $133,867
Shares outstanding 14,056
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Net asset value, offering price, and redemption price
per share $9.52
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Class R1 shares
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Net assets $89,605
Shares outstanding 9,415
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Net asset value, offering price, and redemption price
per share $9.52
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Class R2 shares
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Net assets $49,552
Shares outstanding 5,206
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Net asset value, offering price, and redemption price
per share $9.52
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Class R3 shares
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Net assets $335,192
Shares outstanding 35,198
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Net asset value, offering price, and redemption price
per share $9.52
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Class R4 shares
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Net assets $122,729
Shares outstanding 12,895
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Net asset value, offering price, and redemption price
per share $9.52
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Class R5 shares
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Net assets $49,937
Shares outstanding 5,247
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Net asset value, offering price, and redemption price
per share $9.52
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On sales of $100,000 or more, the 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.
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statement of Operations (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.
SIX MONTHS ENDED 4/30/06
NET INVESTMENT INCOME
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Income
Interest $427,013
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Expenses
Management fee $54,191
Distribution and service fees 59,960
Shareholder servicing costs 16,108
Administrative services fee 6,375
Retirement plan administration and services fees 697
Independent trustees' compensation 747
Custodian fee 14,208
Shareholder communications 47,597
Auditing fees 15,109
Legal fees 2,085
Registration fees 77,499
Miscellaneous 2,193
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Total expenses $296,769
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Fees paid indirectly (481)
Reduction of expenses by investment adviser and distributor (194,036)
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Net expenses $102,252
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Net investment income $324,761
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
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Realized gain (loss) (identified cost basis)
Investment transactions $(517,447)
Futures contracts (2,039)
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Net realized gain (loss) on investments $(519,486)
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Change in unrealized appreciation (depreciation)
Investments $(114,862)
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Net realized and unrealized gain (loss) on investments $(634,348)
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Change in net assets from operations $(309,587)
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SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statements of Changes in Net Assets
This statement describes the increases and/or decreases in net assets resulting
from operations, any distributions, and any shareholder transactions.
SIX MONTHS ENDED YEAR ENDED
4/30/06 10/31/05
(UNAUDITED)
CHANGE IN NET ASSETS
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FROM OPERATIONS
- ------------------------------------------------------------------------------------------------
Net investment income $324,761 $415,547
Net realized gain (loss) on investments (519,486) (68,255)
Net unrealized gain (loss) on investments (114,862) (368,491)
- ------------------------------------------------------------------------------------------------
Change in net assets from operations $(309,587) $(21,199)
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DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------
From net investment income
Class A $(347,431) $(213,813)
Class B (116,633) (115,769)
Class C (66,794) (59,013)
Class I (40,123) (69,708)
Class R (3,554) (4,160)
Class R1 (1,926) (1,146)
Class R2 (1,291) (1,238)
Class R3 (6,957) (2,091)
Class R4 (1,769) (1,381)
Class R5 (1,463) (1,471)
From net realized gain on investments
Class A (4,070) --
Class B (1,584) --
Class C (919) --
Class I (428) --
Class R (42) --
Class R1 (27) --
Class R2 (16) --
Class R3 (82) --
Class R4 (17) --
Class R5 (16) --
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Total distributions declared to shareholders $(595,142) $(469,790)
- ------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $4,508,611 $16,108,174
- ------------------------------------------------------------------------------------------------
Redemption fees $-- $6
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Total change in net assets $3,603,882 $15,617,191
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NET ASSETS
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At beginning of period 18,121,746 2,504,555
At end of period (including accumulated distributions
in excess of net investment income of $260,790 and
undistributed net investment income of $2,390) $21,725,628 $18,121,746
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SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Financial Highlights
The financial highlights table is intended to help you understand the fund's
financial performance for the semiannual period and the past 5 fiscal years (or
life of a particular share class, if shorter). Certain information reflects
financial results for a single fund share. The total returns in the table
represent the rate by which an investor would have earned (or lost) on an
investment in the fund share class (assuming reinvestment of all distributions)
held for the entire period.
SIX MONTHS YEARS ENDED 10/31
ENDED ---------------------- YEAR ENDED
CLASS A 4/30/06 2005 2004(x) 4/30/04(c)
(UNAUDITED)
Net asset value, beginning of period $9.92 $10.24 $9.85 $10.00
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INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.15 $0.46 $0.20 $0.16
Net realized and unrealized gain (loss)
on investments (0.27) (0.27) 0.40 (0.13)
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations $(0.12) $0.19 $0.60 $0.03
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LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------
From net investment income $(0.28) $(0.51) $(0.21) $(0.18)
From net realized gain on investments (0.00)(w) -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.28) $(0.51) $(0.21) $(0.18)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.52 $9.92 $10.24 $9.85
- -----------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) (1.21)(n) 1.85 6.09(n) 0.33(n)
- -----------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.52(a) 3.22 17.87(a) 5.20(a)
Expenses after expense reductions (f) 0.65(a) 0.64 0.55(a) 0.50(a)
Net investment income 3.13(a) 4.64 3.93(a) 2.72(a)
Portfolio turnover 120 203 90 141
Net assets at end of period (000 Omitted) $12,517 $8,831 $647 $503
- -----------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31
ENDED -----------------------------
CLASS B 4/30/06 2005 2004(i)
(UNAUDITED)
Net asset value, beginning of period $9.92 $10.23 $10.20
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.13 $0.37 $0.00(w)
Net realized and unrealized gain (loss) on investments (0.29) (0.26) 0.08
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations $(0.16) $0.11 $0.08
- -----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------
From net investment income $(0.24) $(0.42) $(0.05)
From net realized gain on investments (0.00)(w) -- --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.24) $(0.42) $(0.05)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.52 $9.92 $10.23
- -----------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) (1.63)(n) 1.04 0.82(n)
- -----------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 3.17(a) 3.87 18.54(a)
Expenses after expense reductions (f) 1.50(a) 1.49 1.52(a)
Net investment income 2.70(a) 3.69 0.26(a)
Portfolio turnover 120 203 90
Net assets at end of period (000 Omitted) $4,418 $4,818 $310
- -----------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31
ENDED -----------------------------
CLASS C 4/30/06 2005 2004(i)
(UNAUDITED)
Net asset value, beginning of period $9.94 $10.24 $10.20
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.13 $0.38 $(0.00)(w)
Net realized and unrealized gain (loss) on investments (0.30) (0.26) 0.09
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations $(0.17) $0.12 $0.09
- -----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------
From net investment income $(0.24) $(0.42) $(0.05)
From net realized gain on investments (0.00)(w) -- --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.24) $(0.42) $(0.05)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.53 $9.94 $10.24
- -----------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) (1.73)(n) 1.15 0.92(n)
- -----------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 3.17(a) 3.87 18.51(a)
Expenses after expense reductions (f) 1.50(a) 1.49 1.49(a)
Net investment income (loss) 2.61(a) 3.74 (0.17)(a)
Portfolio turnover 120 203 90
Net assets at end of period (000 Omitted) $2,559 $2,548 $85
- -----------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31
ENDED ---------------------- YEAR ENDED
CLASS I 4/30/06 2005 2004(x) 4/30/04(c)
(UNAUDITED)
Net asset value, beginning of period $9.92 $10.24 $9.85 $10.00
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.18 $0.43 $0.20 $0.16
Net realized and unrealized gain (loss)
on investments (0.29) (0.22) 0.40 (0.13)
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations $(0.11) $0.21 $0.60 $0.03
- -----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------
From net investment income $(0.29) $(0.53) $(0.21) $(0.18)
From net realized gain on investments (0.00)(w) -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.29) $(0.53) $(0.21) $(0.18)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.52 $9.92 $10.24 $9.85
- -----------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) (1.14)(n) 2.02 6.12(n) 0.33(n)
- -----------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.17(a) 2.88 17.52(a) 4.86(a)
Expenses after expense reductions (f) 0.50(a) 0.50 0.50(a) 0.50(a)
Net investment income 3.66(a) 4.23 4.01(a) 2.74(a)
Portfolio turnover 120 203 90 141
Net assets at end of period (000 Omitted) $1,451 $1,339 $1,382 $1,044
- -----------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31
ENDED -----------------------------
CLASS R 4/30/06 2005 2004(i)
(UNAUDITED)
Net asset value, beginning of period $9.93 $10.24 $10.20
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.15 $0.42 $0.00(w)
Net realized and unrealized gain (loss) on investments (0.30) (0.26) 0.10
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations $(0.15) $0.16 $0.10
- -----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------
From net investment income $(0.26) $(0.47) $(0.06)
From net realized gain on investments (0.00)(w) -- --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.26) $(0.47) $(0.06)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.52 $9.93 $10.24
- -----------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) (1.48)(n) 1.58 1.01(n)
- -----------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.67(a) 3.38 18.02(a)
Expenses after expense reductions (f) 1.00(a) 1.00 1.00(a)
Net investment income 3.10(a) 4.15 0.15(a)
Portfolio turnover 120 203 90
Net assets at end of period (000 Omitted) $134 $129 $40
- -----------------------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED
CLASS R1 ENDED 4/30/06 10/31/05(i)
(UNAUDITED)
Net asset value, beginning of period $9.92 $10.10
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.09 $0.24
Net realized and unrealized gain (loss) on investments (0.26) (0.19)
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations $(0.17) $0.05
- -----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------
From net investment income $(0.23) $(0.23)
From net realized gain on investments (0.00)(w) --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.23) $(0.23)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.52 $9.92
- -----------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) (1.68)(n) 0.47(n)
- -----------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 3.37(a) 4.08(a)
Expenses after expense reductions (f) 1.60(a) 1.69(a)
Net investment income 2.00(a) 3.97(a)
Portfolio turnover 120 203
Net assets at end of period (000 Omitted) $90 $50
- -----------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEAR ENDED
CLASS R2 ENDED 4/30/06 10/31/05(i)
(UNAUDITED)
Net asset value, beginning of period $9.92 $10.10
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.12 $0.25
Net realized and unrealized gain (loss) on investments (0.27) (0.18)
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations $(0.15) $0.07
- -----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------
From net investment income $(0.25) $(0.25)
From net realized gain on investments (0.00)(w) --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.25) $(0.25)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.52 $9.92
- -----------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) (1.51)(n) 0.65(n)
- -----------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 3.07(a) 3.78(a)
Expenses after expense reductions (f) 1.25(a) 1.38(a)
Net investment income 2.87(a) 4.29(a)
Portfolio turnover 120 203
Net assets at end of period (000 Omitted) $50 $50
- -----------------------------------------------------------------------------------------------------------------------
SIX MONTHS YEARS ENDED 10/31
ENDED -----------------------------
CLASS R3 4/30/06 2005 2004(i)(x)
(UNAUDITED)
Net asset value, beginning of period $9.93 $10.24 $10.20
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.14 $0.29 $(0.00)(w)
Net realized and unrealized gain (loss) on investments (0.29) (0.15)(g) 0.10
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations $(0.15) $0.14 $0.10
- -----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------
From net investment income $(0.26) $(0.45) $(0.06)
From net realized gain on investments (0.00)(w) -- --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.26) $(0.45) $(0.06)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.52 $9.93 $10.24
- -----------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) (1.56)(n) 1.32 0.96(n)
- -----------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.92(a) 3.59 18.27(a)
Expenses after expense reductions (f) 1.15(a) 1.21 1.25(a)
Net investment income (loss) 3.03(a) 3.77 (0.10)(a)
Portfolio turnover 120 203 90
Net assets at end of period (000 Omitted) $335 $255 $40
- -----------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEAR ENDED
CLASS R4 ENDED 4/30/06 10/31/05(i)
(UNAUDITED)
Net asset value, beginning of period $9.92 $10.10
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.14 $0.28
Net realized and unrealized gain (loss) on investments (0.27) (0.18)
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations $(0.13) $0.10
- -----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------
From net investment income $(0.27) $(0.28)
From net realized gain on investments (0.00)(w) --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.27) $(0.28)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.52 $9.92
- -----------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) (1.33)(n) 0.93(n)
- -----------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.57(a) 3.28(a)
Expenses after expense reductions (f) 0.90(a) 0.90(a)
Net investment income 3.29(a) 4.76(a)
Portfolio turnover 120 203
Net assets at end of period (000 Omitted) $123 $50
- -----------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEAR ENDED
CLASS R5 ENDED 4/30/06 10/31/05(i)
(UNAUDITED)
Net asset value, beginning of period $9.92 $10.10
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.15 $0.30
Net realized and unrealized gain (loss) on investments (0.27) (0.19)
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations $(0.12) $0.11
- -----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------
From net investment income $(0.28) $(0.29)
From net realized gain on investments (0.00)(w) --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.28) $(0.29)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.52 $9.92
- -----------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) (1.19)(n) 1.10(n)
- -----------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.27(a) 2.98(a)
Expenses after expense reductions (f) 0.60(a) 0.60(a)
Net investment income 3.52(a) 5.06(a)
Portfolio turnover 120 203
Net assets at end of period (000 Omitted) $50 $51
- -----------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2004 and 2005 fiscal years resulted in a per share impact of less
than $0.01.
(a) Annualized.
(c) For the period from the commencement of the fund's investment operations, September 30, 2003, through April 30,
2004.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(g) The per share amount is not in accordance with the net realized and unrealized gain/loss for the period because of
the timing of sales of fund shares and the amount of per share realized and unrealized gains and losses at such
time.
(i) For the period from the class' inception, September 1, 2004 (Class B, C, R, and R3) and April 1, 2005 (Classes R1,
R2, R4, and R5) through the stated period end.
(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) During 2004, the fund changed its fiscal year-end from April 30 to October 31.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS (unaudited)
(1) BUSINESS AND ORGANIZATION
MFS Inflation-Adjusted Bond Fund (the fund) is a series of MFS Series Trust IX
(the trust). The trust is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
(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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INVESTMENT VALUATIONS - Debt instruments (other than short-term instruments),
including restricted debt instruments, are generally valued at an evaluated bid
price as reported by an independent pricing service. Values of debt instruments
obtained from pricing services can utilize both dealer-supplied valuations and
electronic data processing techniques which take into account factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. Short-term instruments with a maturity at issuance of 365 days or less
are generally valued at amortized cost, which approximates market value.
Exchange-traded options are generally valued at the last sale or official
closing price as reported by an independent pricing service on the exchange on
which they are primarily traded. For exchange-traded options in which there
were no sales reported that day, exchange-traded options are generally valued
at the last daily bid quotation as reported by an independent pricing service
on the exchange on which they are primarily traded. Options not traded on an
exchange are generally valued at a broker-dealer bid quotation. Foreign
currency options are generally valued using an external pricing model that uses
market data from an independent source. Futures contracts are generally valued
at last posted settlement price as reported by an independent pricing service
on the market on which they are primarily traded. Futures contracts for which
there were no trades that day for a particular position are generally valued at
the closing bid quotation as reported by an independent pricing service on the
market on which they are primarily traded. Securities and other assets
generally valued on the basis of information from an independent pricing
service may also be valued at a broker-dealer bid quotation. 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 many types of
debt instruments. These investments are generally valued at fair value based on
information from independent pricing services. These valuations can be based on
both dealer-supplied valuations and electronic data processing techniques,
which take into account factors such as institutional-size trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics and other market data. The adviser may rely on
independent 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 investments used to determine
the fund's net asset value may differ from quoted or published prices for the
same investments.
INFLATION-ADJUSTED DEBT SECURITIES - The fund invests in inflation-adjusted
debt securities issued by the U.S. Treasury. The fund may also invest in
inflation-adjusted debt securities issued by U.S. Government agencies and
instrumentalities other than the U.S. Treasury and by other entities such as
U.S. and foreign corporations and foreign governments. The principal value of
these debt securities is adjusted by references to changes in the Consumer
Price Index or another general price or wage index. These debt securities
typically pay a fixed rate of interest, but this fixed rate is applied to the
inflation-adjusted principal amount. The principal paid at maturity of the debt
security is typically equal to the inflation-adjusted principal amount, or the
security's original par value, whichever is greater. Other types of
inflation-adjusted securities may use other methods to adjust for other
measures of inflation.
DERIVATIVE RISK - The fund may invest in derivatives 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
gain market exposure, or for hedging purposes, gains and losses from derivative
instruments may be substantially greater than the derivative's original cost.
Derivative instruments include purchased options and futures contracts.
PURCHASED OPTIONS - The fund may purchase call or put options for a premium.
Purchasing call options may be a hedge against an anticipated increase in the
dollar cost of securities to be acquired or to increase the fund's exposure to
the underlying instrument. Purchasing put options may hedge against a decline
in the value of portfolio securities. The premium paid is included as an
investment in the Statement of Assets and Liabilities and is subsequently
adjusted to the current value of the option. Premiums paid for purchased
options which have expired are treated as realized losses on investments in the
Statement of Operations. Premiums paid for purchased options which are
exercised or closed are added to the amount paid or offset against the proceeds
on the underlying security or financial instrument to determine the realized
gain or loss. The risk of loss associated with purchased options is limited to
the premium paid.
FUTURES CONTRACTS - The fund may enter into futures contracts for the delayed
delivery of securities or currency, or contracts based on financial indices at
a fixed price on a future date. In entering such contracts, the fund is
required to deposit with the broker either in cash or securities an amount
equal to a certain percentage of the contract amount. Subsequent payments are
made or received by the fund each day, depending on the daily fluctuations in
the value of the contract, and are recorded for financial statement purposes as
unrealized gains or losses by the fund. Upon entering into such contracts, the
fund bears the risk of interest or exchange rates or securities prices moving
unexpectedly, in which case, the fund may not achieve the anticipated benefits
of the futures contracts and may realize a loss.
SHORT TERM FEES - For purchases made on or after July 1, 2004 and before April
1, 2005, the fund charged a 2% redemption fee (which was retained by the fund)
on proceeds from Class A, Class B, Class C, and Class I shares redeemed or
exchanged within 5 business days following their acquisition (either by
purchase or exchange). Effective April 1, 2005, the fund no longer charges a
redemption fee. See the fund's prospectus for details. Any redemption fees
charged are accounted for as an addition to paid-in capital.
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. All discount is
accreted for tax reporting purposes as required by federal income tax
regulations.
The fund may receive proceeds from litigation settlements involving its
portfolio holdings. Any proceeds received are reflected in realized gain/loss
in the Statement of Operations, or in unrealized gain/loss if the security is
still held by the fund.
FEES PAID INDIRECTLY - The fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
fund. This amount, for the six months ended April 30, 2006, is shown as a
reduction of total expenses on the Statement of Operations.
TAX MATTERS AND DISTRIBUTIONS - The fund intends to continue 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. Accordingly, no provision for federal income tax is required in
the financial statements. Foreign taxes, if any, have been accrued by the fund
in the accompanying financial statements.
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 generally accepted accounting principles.
Certain capital accounts in the financial statements are periodically adjusted
for permanent differences in order to reflect their tax character. These
adjustments have no impact on net assets or net asset value per share.
Temporary differences which arise from recognizing certain items of income,
expense, gain or loss in different periods for financial statement and tax
purposes will reverse at some time in the future. Distributions in excess of
net investment income or net realized gains are temporary overdistributions for
financial statement purposes resulting from differences in the recognition or
classification of income or distributions for financial statement and tax
purposes. Book/tax differences primarily relate to amortization and accretion
of debt securities and wash sale loss deferrals.
The tax character of distributions made during the current period will be
determined at fiscal year end. The tax character of distributions declared to
shareholders is as follows:
OCTOBER 31, 2005 OCTOBER 31, 2004
Ordinary income (including any
short-term capital gains) $469,790 $35,368
The federal tax cost and the tax basis components of distributable earnings
were as follows:
AS OF APRIL 30, 2006
Cost of investments $21,795,639
-----------------------------------------------------------
Gross appreciation $8,253
Gross depreciation (565,101)
-----------------------------------------------------------
Net unrealized appreciation (depreciation) $(556,848)
AS OF OCTOBER 31, 2005
Undistributed ordinary income 131,351
Undistributed long-term capital gain 7,128
Other temporary differences (130,714)
Net unrealized appreciation (depreciation) (457,140)
The aggregate cost above includes prior fiscal year end tax adjustments.
MULTIPLE CLASSES OF SHARES OF BENEFICIAL INTEREST - The fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the fund based on the value
of settled shares outstanding of each class, without distinction between share
classes. 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.
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities.
The management fee is computed daily and paid monthly at an annual rate of
0.50% of the fund's average daily net assets. The investment adviser has
contractually agreed to waive a portion of its management fee to 0.35% of
average net assets, amounting to $16,257, which is shown as a reduction of
total expenses in the Statement of Operations. The management fee incurred for
the six months ended April 30, 2006 was equivalent to an annual effective rate
of 0.35% of the fund's average daily net assets.
The investment adviser has contractually agreed to pay a portion of the fund's
operating expenses, exclusive of management, distribution and service,
retirement plan administration and services, and certain other fees and
expenses, such that operating expenses do not exceed 0.15% annually of the
fund's average daily net assets. This contractual fee arrangement will continue
until March 1, 2007. For the six months ended April 30, 2006, this reduction
amounted to $165,233 and is reflected as a reduction of total expenses in the
Statement of Operations.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly owned subsidiary of
MFS, as distributor, received $6,857 for the six months ended April 30, 2006,
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 class shares
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 Fee Plan Table:
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(1) RATE(2) FEE
Class A 0.10% 0.25% 0.35% 0.15% $21,469
Class B 0.75% 0.25% 1.00% 1.00% 23,469
Class C 0.75% 0.25% 1.00% 1.00% 13,504
Class R 0.25% 0.25% 0.50% 0.50% 329
Class R1 0.50% 0.25% 0.75% 0.75% 311
Class R2 0.25% 0.25% 0.50% 0.50% 125
Class R3 0.25% 0.25% 0.50% 0.50% 667
Class R4 -- 0.25% 0.25% 0.25% 86
- -------------------------------------------------------------------------------------------------------------
Total Distribution and Service Fees $59,960
=======
(1) In accordance with the distribution plan for certain classes, the fund pays
distribution and/or service fees up to these annual percentage rates of each
class' average daily net assets.
(2) The annual effective rates represent actual fees incurred under the
distribution plan for the six months ended April 30, 2006 based on each
class' average daily net assets. 0.10% of the Class A service fee is
currently being waived under a contractual waiver arrangement. For the six
months ended April 30, 2006, this waiver amounted to $6,134 and is reflected
as a reduction of total expenses in the Statement of Operations. 0.10% of
the Class A distribution fee is currently being waived under a contractual
waiver arrangement. For the six months ended April 30, 2006, this waiver
amounted to $6,134 and is reflected as a reduction of total expenses in the
Statement of Operations.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months of purchase.
Class B shares are subject to a contingent deferred sales charge in the event
of a shareholder redemption within six years of purchase. All contingent
deferred sales charges are paid to MFD and during the six months ended April
30, 2006, were as follows:
AMOUNT
Class A $--
Class B $2,457
Class C $1,137
SHAREHOLDER SERVICING AGENT - The fund pays a portion of shareholder servicing
costs to MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS.
MFSC receives a fee from the fund, for its services as shareholder servicing
agent, set periodically under the supervision of the fund's Board of Trustees.
For the six months ended April 30, 2006, the fee was $10,366, which equated to
0.0956% annually of the fund's average daily net assets. MFSC also receives
payment from the fund for out-of-pocket and sub-accounting expenses paid by
MFSC on behalf of the fund. For the six months ended April 30, 2006, these
costs amounted to $5,298.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to certain funds
for which MFS acts as investment adviser. Under an administrative services
agreement, the funds may partially reimburse MFS the costs incurred to provide
these services, subject to review and approval by the Board of Trustees. Each
fund is charged a fixed amount plus a fee based on calendar year average net
assets. From July 1, 2005 through March 31, 2006, the fund's annual fixed
amount was $10,000. Effective April 1, 2006, the fund's annual fixed amount is
$17,500.
The administrative services fee incurred for the six months ended April 30,
2006 was equivalent to an annual effective rate of 0.0588% of the fund's
average daily net assets.
In addition to the administrative services provided by MFS to the fund as
described above, MFS is responsible for providing certain retirement plan
administration and services with respect to certain shares. These services
include various administrative, recordkeeping, and communication/educational
services with respect to the retirement plans which invest in these shares, and
may be provided directly by MFS or by a third party. MFS may subsequently pay
all, or a portion, of the retirement plan administration and services fee to
affiliated or unaffiliated third parties. For the six months ended April 30,
2006, the fund paid MFS an annual retirement plan administration and services
fee up to the following annual percentage rates of each class' average daily
net assets:
ANNUAL
EFFECTIVE TOTAL
FEE RATE RATE(1) AMOUNT
Class R1 0.45% 0.35% $186
Class R2 0.40% 0.25% 100
Class R3 0.25% 0.15% 334
Class R4 0.15% 0.15% 52
Class R5 0.10% 0.10% 25
- -------------------------------------------------------------------------------
Total Retirement Plan Administration and
Services Fees $697
====
(1) Effective October 1, 2005, MFS has contractually agreed to waive a portion
of the retirement plan administration and services fee equal to 0.10% for
Class R1 shares, 0.15% for Class R2 shares, and 0.10% for Class R3 shares.
This agreement will continue until at least September 30, 2007. For the six
months ended April 30, 2006, this waiver amounted to $212 and is reflected
as a reduction of total expenses in the Statement of Operations.
TRUSTEES' AND OFFICERS' COMPENSATION - The fund pays compensation to
Independent Trustees in the form of a retainer, attendance fees, and additional
compensation to Board and Committee chairpersons. The fund does not pay
compensation directly to Trustees or officers of the fund who are also officers
of the investment adviser, all of whom receive remuneration for their services
to the fund from MFS. Certain officers and Trustees of the fund are officers or
directors of MFS, MFD, and MFSC.
OTHER - This fund and certain other MFS funds (the funds) have entered into a
services agreement (the Agreement) which provides for payment of fees by the
funds to Tarantino LLC in return for the provision of services of an
Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an
officer of the funds and the sole member of Tarantino LLC. The funds can
terminate the Agreement with Tarantino LLC at any time under the terms of the
Agreement. For the six months ended April 30, 2006, the fee paid to Tarantino
LLC was $78. MFS has agreed to reimburse the fund for a portion of the payments
made by the funds to Tarantino LLC in the amount of $66, which is shown as a
reduction of total expenses in the Statement of Operations. Additionally, MFS
has agreed to bear all expenses associated with office space, other
administrative support, and supplies provided to the ICCO.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than purchased option transactions
and short-term obligations, were as follows:
PURCHASES SALES
U.S. government securities $29,206,177 $25,123,421
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(5) SHARES OF BENEFICIAL INTEREST
The fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
fund shares were as follows:
SIX MONTHS ENDED 4/30/06 YEAR ENDED 10/31/05(i)
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 571,082 $5,629,006 952,909 $9,698,933
Class B 71,864 703,836 551,989 5,620,493
Class C 73,291 721,450 272,913 2,781,571
Class I 28,347 276,070 79,595 812,800
Class R 2,801 27,386 13,915 141,284
Class R1 4,272 42,203 4,951 50,000
Class R2 -- -- 4,951 50,000
Class R3 16,509 157,445 21,562 213,062
Class R4 7,625 73,748 4,950 50,000
Class R5 -- -- 4,951 50,000
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775,791 $7,631,144 1,912,686 $19,468,143
Shares issued to shareholders
in reinvestment of distributions
Class A 32,256 $315,725 18,680 $188,595
Class B 9,121 89,311 8,599 86,898
Class C 3,865 37,913 3,603 36,472
Class I 4,124 40,355 6,743 68,417
Class R 367 3,590 410 4,152
Class R1 199 1,952 113 1,146
Class R2 133 1,307 122 1,238
Class R3 719 7,039 207 2,091
Class R4 183 1,785 137 1,381
Class R5 151 1,479 145 1,471
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51,118 $500,456 38,759 $391,861
Shares reacquired
Class A (178,504) $(1,748,025) (144,917) $(1,468,226)
Class B (102,425) (997,727) (105,226) (1,065,745)
Class C (65,128) (635,495) (28,368) (287,725)
Class I (14,958) (146,304) (86,332) (875,900)
Class R (2,100) (20,378) (5,284) (54,234)
Class R1 (120) (1,176) -- --
Class R3 (7,745) (73,884) -- --
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(370,980) $(3,622,989) (370,127) $(3,751,830)
Net change
Class A 424,834 $4,196,706 826,672 $8,419,302
Class B (21,440) (204,580) 455,362 4,641,646
Class C 12,028 123,868 248,148 2,530,318
Class I 17,513 170,121 6 5,317
Class R 1,068 10,598 9,041 91,202
Class R1 4,351 42,979 5,064 51,146
Class R2 133 1,307 5,073 51,238
Class R3 9,483 90,600 21,769 215,153
Class R4 7,808 75,533 5,087 51,381
Class R5 151 1,479 5,096 51,471
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455,929 $4,508,611 1,581,318 $16,108,174
(i) For the period from the class' inception, April 1, 2005 (Classes R1, R2, R4, and R5) through the
stated period end.
(6) LINE OF CREDIT
The fund and other affiliated funds participate in a $1 billion unsecured line
of credit provided by a syndication of banks under a credit agreement.
Borrowings may be made for temporary financing needs. Interest is charged to
each fund, based on its borrowings, at a rate equal to the Federal Reserve
funds rate plus 0.35%. In addition, a commitment fee, based on the average
daily, unused portion of the line of credit, is allocated among the
participating funds at the end of each calendar quarter. The commitment fee
allocated to the fund for the six months ended April 30, 2006 was $78, and is
included in miscellaneous expense on the Statement of Operations. The fund had
no significant borrowings during the six months ended April 30, 2006.
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT
A discussion regarding the Board's most recent review and renewal of the Fund's
investment advisory agreement is available by clicking on the fund's name under
"Select a fund" on the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
A general description of the MFS funds' proxy voting policies and procedures is
available without charge, upon request, by calling 1-800-225-2606, by visiting
the Proxy Voting section of mfs.com or by visiting the SEC's Web site at
http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is
available without charge by visiting the Proxy Voting section of mfs.com or by
visiting the SEC's Web site at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The trust will file a complete schedule of portfolio holdings with the
Securities and Exchange Commission (the Commission) for the first and third
quarters of each fiscal year on Form N-Q. The trust's Form N-Q may be reviewed
and copied at the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-551-5850. The trust's Form N-Q is available on
the EDGAR database on the Commission's Internet Web site at http://www.sec.gov,
and copies of this information may be obtained, upon payment of a duplicating
fee, by electronic request at the following e-mail address: publicinfo@sec.gov
or by writing the Public Reference Section at the above address.
A shareholder can also obtain the quarterly portfolio holdings report at
mfs.com.
CONTACT INFORMATION
INVESTOR SERVICE
Write to us at: MFS Service Center, Inc.
P.O. Box 55824
Boston, MA 02205-5824
Type of Information Phone number Hours, Eastern Time
- --------------------------------------------------------------------------------
General information 1-800-225-2606 8 a.m. to 8 p.m., any
business day
- --------------------------------------------------------------------------------
Speech- or hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m., any
business day
- --------------------------------------------------------------------------------
Shares prices, account 1-800-MFS-TALK
balances exchanges (1-800-637-8255) 24 hours a day, 365 days a
or stock and bond outlooks touch-tone required year
- --------------------------------------------------------------------------------
M F S(SM)
INVESTMENT MANAGEMENT(R)
MFS Investment Management(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc., 500
Boylston Street, Boston, MA 02116.
IAB-SEM-6/06 1M
ITEM 2. CODE OF ETHICS.
The Registrant has not amended any provision in its Code of Ethics (the "Code")
that relates to any element of the Code's definition enumerated in paragraph
(b) of Item 2 of this Form N-CSR.
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. SCHEDULE OF INVESTMENTS
A schedule of investments for each series of the Registrant is included as part
of the report to shareholders of such series under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the Registrant.
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 7(d)(2)(ii)(G) of Schedule 14A 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 Form N-CSR, the registrant's principal financial
officer and principal executive officer have concluded that those
disclosure controls and procedures provide reasonable assurance that the
material information required to be disclosed by the registrant on this
report is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and
forms.
(b) There were no changes in the registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the second fiscal quarter of the period covered by the report that have
materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant
intends to satisfy the Item 2 requirements through filing of an
exhibit.
(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Act (17 CFR 270.30a-2): Attached hereto.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17
CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title
18 of the United States Code (18 U.S.C. 1350) as an exhibit. A
certification furnished pursuant to this paragraph will not be deemed
"filed" for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r),
or otherwise subject to the liability of that section. Such certification
will not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933 or the Exchange Act, except to the extent that
the registrant specifically incorporates it by reference: Attached hereto.
NOTICE
A copy of the Amended and Restated Declaration of Trust of the Registrant is on
file with the Secretary of State of the Commonwealth of Massachusetts and
notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not individually
and the obligations of or arising out of this instrument are not binding upon
any of the Trustees or shareholders individually, but are binding only upon the
assets and property of the respective constituent series of the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) MFS SERIES TRUST IX
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By (Signature and Title)* MARIA F. DWYER
-----------------------------------------------------
Maria F. Dwyer, President
Date: June 23, 2006
-------------
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)* MARIA F. DWYER
-----------------------------------------------------
Maria F. Dwyer, President (Principal Executive
Officer)
Date: June 23, 2006
-------------
By (Signature and Title)* TRACY ATKINSON
-----------------------------------------------------
Tracy Atkinson, Treasurer (Principal Financial
Officer and Accounting Officer)
Date: June 23, 2006
-------------
* Print name and title of each signing officer under his or her signature.