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 811-7992
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MFS SERIES TRUST XI
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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
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Date of fiscal year end: September 30
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Date of reporting period: March 31, 2007
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ITEM 1. REPORTS TO STOCKHOLDERS.
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
Semiannual report
MFS(R) UNION STANDARD EQUITY FUND
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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STATEMENT OF ASSETS AND LIABILITIES 10
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STATEMENT OF OPERATIONS 12
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STATEMENTS OF CHANGES IN NET ASSETS 13
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FINANCIAL HIGHLIGHTS 14
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NOTES TO FINANCIAL STATEMENTS 18
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BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 26
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PROXY VOTING POLICIES AND INFORMATION 26
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QUARTERLY PORTFOLIO DISCLOSURE 26
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CONTACT INFORMATION BACK COVER
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THE REPORT IS PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR
ACCOMPANIED BY A CURRENT PROSPECTUS.
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NOT FDIC INSURED o MAY LOSE VALUE o
NO BANK OR CREDIT UNION GUARANTEE o NOT A DEPOSIT o
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR
NCUA/NCUSIF
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3/31/07
UNE-SEM
[Photo of Robert J. Manning]
LETTER FROM THE CEO
Dear Shareholders:
The past year has been a great example of why investors should keep their eyes
on the long term.
In 2006 the Dow Jones Industrial Average returned 19%. In February 2007 it hit
its all-time high of 12,787. Less than a week later, stocks sold off around
the globe. By March 5 the Dow was off 5.8%. That is a sign of volatile markets
and a reason investors should make sure they have an investment plan that can
ride out the peaks and troughs.
If you are focused on a long-term investment strategy, the short-term ups and
downs of the markets should not necessarily dictate portfolio action on your
part. Both the bond and stock markets are inherently cyclical. In our view,
investors who remain committed to a long-term plan are more likely to achieve
their financial goals. We believe you should not let the headlines guide you
in your investment decisions and that there is no sense in reacting to short-
term volatility.
In any market environment, we believe individual investors are best served by
following a three-pronged investment strategy of allocating their holdings
across the major asset classes, diversifying within each class, and regularly
rebalancing their portfolios to maintain their desired allocations. Of course,
these strategies cannot guarantee a profit or protect against a loss.
Investing and planning for the long term require 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)
May 15, 2007
The opinions expressed in this letter are subject to change, may not be relied
upon for investment advice, and no forecasts can be guaranteed.
PORTFOLIO COMPOSITION
PORTFOLIO STRUCTURE
Common Stocks 98.5%
Cash & Other Net Assets 1.5%
TOP TEN HOLDINGS
Exxon Mobil Corp. 4.6%
------------------------------------------------
General Electric Co. 3.0%
------------------------------------------------
Johnson & Johnson 2.6%
------------------------------------------------
Chevron Corp. 2.4%
------------------------------------------------
JPMorgan Chase & Co. 2.3%
------------------------------------------------
Merck & Co., Inc. 2.1%
------------------------------------------------
Intel Corp. 2.1%
------------------------------------------------
Goldman Sachs Group, Inc. 2.0%
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Bank of America Corp. 2.0%
------------------------------------------------
Morgan Stanley 2.0%
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EQUITY SECTORS
Financial Services 19.0%
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Industrial Goods & Services 12.6%
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Technology 11.7%
------------------------------------------------
Health Care 11.1%
------------------------------------------------
Utilities & Communications 10.0%
------------------------------------------------
Consumer Staples 8.9%
------------------------------------------------
Energy 8.8%
------------------------------------------------
Retailing 5.6%
------------------------------------------------
Leisure 4.4%
------------------------------------------------
Basic Materials 4.2%
------------------------------------------------
Autos & Housing 2.2%
------------------------------------------------
Percentages are based on net assets as of 03/31/07.
The portfolio is actively managed and current holdings may be different.
EXPENSE TABLE
Fund expenses borne by the shareholders during the period,
October 1, 2006 through March 31, 2007
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 October 1, 2006 through
March 31, 2007.
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 10/01/06-
Class Ratio 10/01/06 3/31/07 3/31/07
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Actual 1.30% $1,000.00 $1,090.90 $6.78
A --------------------------------------------------------------------------
Hypothetical (h) 1.30% $1,000.00 $1,018.45 $6.54
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Actual 1.95% $1,000.00 $1,087.70 $10.15
B --------------------------------------------------------------------------
Hypothetical (h) 1.95% $1,000.00 $1,015.21 $9.80
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Actual 1.95% $1,000.00 $1,088.20 $10.15
C -------------------------------------------------------------------------
Hypothetical (h) 1.95% $1,000.00 $1,015.21 $9.80
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Actual 0.95% $1,000.00 $1,093.40 $4.96
I --------------------------------------------------------------------------
Hypothetical (h) 0.95% $1,000.00 $1,020.19 $4.78
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(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads) or
redemption fees. If these transaction costs had been included, your costs
would have been higher.
PORTFOLIO OF INVESTMENTS
3/31/07 (unaudited)
The Portfolio of Investments is a complete list of all securities owned by your fund. It is
categorized by broad-based asset classes.
Common Stocks - 98.5%
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ISSUER SHARES/PAR VALUE ($)
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Aerospace - 2.9%
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Lockheed Martin Corp. 13,763 $ 1,335,286
Northrop Grumman Corp. 17,119 1,270,572
------------
$ 2,605,858
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Automotive - 0.6%
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Goodyear Tire & Rubber Co. (a) 16,060 $ 500,911
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Broadcasting - 3.2%
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Idearc, Inc. 2,183 $ 76,623
Time Warner, Inc. 55,250 1,089,530
Viacom, Inc., "B" (a) 16,183 665,283
Walt Disney Co. 28,730 989,174
------------
$ 2,820,610
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Brokerage & Asset Managers - 6.3%
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Goldman Sachs Group, Inc. 8,710 $ 1,799,747
Lehman Brothers Holdings, Inc. 17,020 1,192,591
Merrill Lynch & Co., Inc. 9,306 760,021
Morgan Stanley 22,610 1,780,764
------------
$ 5,533,123
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Computer Software - 2.8%
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Adobe Systems, Inc. (a) 29,480 $ 1,229,316
Oracle Corp. (a) 43,390 786,661
Symantec Corp. (a) 29,330 507,409
------------
$ 2,523,386
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Computer Software - Systems - 3.0%
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Hewlett-Packard Co. 34,360 $ 1,379,210
International Business Machines Corp. 13,640 1,285,706
------------
$ 2,664,916
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Construction - 1.6%
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Masco Corp. 18,190 $ 498,406
Sherwin-Williams Co. 13,750 908,050
------------
$ 1,406,456
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Consumer Goods & Services - 3.3%
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Colgate-Palmolive Co. 15,700 $ 1,048,603
Kimberly-Clark Corp. 10,740 735,583
Procter & Gamble Co. 18,060 1,140,670
------------
$ 2,924,856
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Electrical Equipment - 5.4%
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General Electric Co. 75,718 $ 2,677,388
Rockwell Automation, Inc. 19,050 1,140,524
Tyco International Ltd. 31,830 1,004,237
------------
$ 4,822,149
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Electronics - 3.4%
- ---------------------------------------------------------------------------------------------
Intel Corp. 97,440 $ 1,864,027
Intersil Corp., "A" 27,290 722,912
PerkinElmer, Inc. 16,133 390,741
------------
$ 2,977,680
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Energy - Integrated - 8.8%
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Chevron Corp. 28,430 $ 2,102,683
ConocoPhillips 23,280 1,591,188
Exxon Mobil Corp. 53,832 4,061,624
------------
$ 7,755,495
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Food & Beverages - 3.6%
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General Mills, Inc. 18,359 $ 1,068,861
Kraft Foods, Inc. 18,309 580,578
PepsiCo, Inc. 24,650 1,566,754
------------
$ 3,216,193
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Food & Drug Stores - 3.0%
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CVS Corp. 39,020 $ 1,332,143
Kroger Co. 45,800 1,293,850
------------
$ 2,625,993
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General Merchandise - 2.6%
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Federated Department Stores, Inc. 27,888 $ 1,256,354
J.C. Penney Co., Inc. 12,230 1,004,817
------------
$ 2,261,171
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Insurance - 7.1%
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American International Group, Inc. 4,248 $ 285,551
Genworth Financial, Inc., "A" 22,640 791,042
Hartford Financial Services Group, Inc. 10,667 1,019,552
MetLife, Inc. 21,550 1,360,883
PartnerRe Ltd. 13,100 897,874
RenaissanceRe Holdings Ltd. 10,880 545,523
Travelers Cos., Inc. 25,800 1,335,666
------------
$ 6,236,091
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Internet - 1.3%
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Google, Inc., "A" (a) 2,570 $ 1,177,471
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Machinery & Tools - 4.3%
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Cummins, Inc. 5,150 $ 745,308
Deere & Co. 8,720 947,341
Eaton Corp. 14,720 1,230,003
Parker Hannifin Corp. 4,550 392,711
Timken Co. 16,607 503,358
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$ 3,818,721
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Major Banks - 4.4%
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Bank of America Corp. 35,066 $ 1,789,067
JPMorgan Chase & Co. 42,650 2,063,407
------------
$ 3,852,474
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Medical & Health Technology & Services - 1.8%
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AmerisourceBergen Corp. 14,090 $ 743,248
Cardinal Health, Inc. 11,370 829,442
------------
$ 1,572,690
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Medical Equipment - 1.1%
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Zimmer Holdings, Inc. (a) 11,175 $ 954,457
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Metals & Mining - 1.1%
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Cleveland-Cliffs, Inc. 11,620 $ 743,796
Freeport-McMoRan Copper & Gold, Inc., "B" 3,269 216,375
------------
$ 960,171
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Natural Gas - Pipeline - 1.5%
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Williams Cos., Inc. 45,990 $ 1,308,875
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Network & Telecom - 1.2%
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Cisco Systems, Inc. (a) 30,580 $ 780,707
UTStarcom, Inc. (a) 31,090 257,736
------------
$ 1,038,443
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Other Banks & Diversified Financials - 1.2%
- ---------------------------------------------------------------------------------------------
Countrywide Financial Corp. 31,970 $ 1,075,471
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Pharmaceuticals - 8.2%
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Barr Pharmaceuticals, Inc. (a) 16,360 $ 758,286
Bristol-Myers Squibb Co. 15,070 418,343
Johnson & Johnson 37,958 2,287,349
King Pharmaceuticals, Inc. (a) 14,600 287,182
Merck & Co., Inc. 42,850 1,892,685
Wyeth 31,791 1,590,504
------------
$ 7,234,349
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Restaurants - 1.2%
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YUM! Brands, Inc. 18,880 $ 1,090,509
- ---------------------------------------------------------------------------------------------
Specialty Chemicals - 3.1%
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Air Products & Chemicals, Inc. 15,000 $ 1,109,400
Lyondell Chemical Co. 22,610 677,622
Praxair, Inc. 15,690 987,842
------------
$ 2,774,864
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Telephone Services - 4.7%
- ---------------------------------------------------------------------------------------------
AT&T, Inc. 33,700 $ 1,328,791
Cincinnati Bell, Inc. (a) 69,360 325,992
Qwest Communications International, Inc. (a) 98,420 884,796
Verizon Communications, Inc. 43,515 1,650,089
------------
$ 4,189,668
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Tobacco - 2.0%
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Altria Group, Inc. 26,458 $ 1,743,318
- ---------------------------------------------------------------------------------------------
Utilities - Electric Power - 3.8%
- ---------------------------------------------------------------------------------------------
Allegheny Energy, Inc. (a) 24,910 $ 1,224,077
Alliant Energy Corp. 15,810 708,604
CMS Energy Corp. 42,960 764,688
PPL Corp. 16,280 665,852
------------
$ 3,363,221
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TOTAL COMMON STOCKS (IDENTIFIED COST, $73,468,491) $ 87,029,590
- ---------------------------------------------------------------------------------------------
Repurchase Agreements - 2.9%
- ---------------------------------------------------------------------------------------------
Merrill Lynch, 5.39%, dated 3/30/07, due 4/2/07, total to be
received $2,532,137 (secured by various U.S. Treasury and
Federal Agency obligations and Mortgage Backed securities in
a jointly traded account), at Cost $ 2,531,000 $ 2,531,000
- ---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $75,999,491) (k) $ 89,560,590
- ---------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (1.4)% (1,234,499)
- ---------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 88,326,091
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(a) Non-income producing security.
(k) As of March 31, 2007, the fund had one security that was fair valued, aggregating
$580,578 and 0.65% of market value, in accordance with the policies adopted by the
Board of Trustees.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 3/31/07 (unaudited)
This statement represents your fund's balance sheet, which details the assets
and liabilities comprising the total value of the fund.
ASSETS
- ------------------------------------------------------------------------------------------------------
Investments, at value (identified cost, $75,999,491) $89,560,590
Cash 6,765
Receivable for fund shares sold 177,213
Interest and dividends receivable 106,445
Receivable from investment adviser 5,448
Other assets 2,269
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Total assets $89,858,730
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LIABILITIES
- ------------------------------------------------------------------------------------------------------
Payable for investments purchased $1,457,192
Payable for fund shares reacquired 4,739
Payable to affiliates
Management fee 4,712
Shareholder servicing costs 12,708
Distribution and service fees 1,505
Administrative services fee 199
Payable for independent trustees' compensation 41
Accrued expenses and other liabilities 51,543
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Total liabilities $1,532,639
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Net assets $88,326,091
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NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------------
Paid-in capital $76,351,203
Unrealized appreciation (depreciation) on investments and
translation of assets and liabilities in foreign currencies 13,561,099
Accumulated net realized gain (loss) on investments (1,927,208)
Undistributed net investment income 340,997
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Net assets $88,326,091
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Shares of beneficial interest outstanding 5,792,992
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Statement of Assets and Liabilities (unaudited) - continued
Class A shares
- ------------------------------------------------------------------------------------------------------
Net assets $33,535,677
Shares outstanding 2,206,287
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Net asset value per share $15.20
- ------------------------------------------------------------------------------------------------------
Offering price per share (100/94.25Xnet asset value per share $16.13
- ------------------------------------------------------------------------------------------------------
Class B shares:
- ------------------------------------------------------------------------------------------------------
Net assets $3,965,468
Shares outstanding 265,649
- ------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $14.93
- ------------------------------------------------------------------------------------------------------
Class C shares:
- ------------------------------------------------------------------------------------------------------
Net assets $2,683,159
Shares outstanding 180,735
- ------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $14.85
- ------------------------------------------------------------------------------------------------------
Class I shares:
- ------------------------------------------------------------------------------------------------------
Net assets $48,141,787
Shares outstanding 3,140,321
- ------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $15.33
- ------------------------------------------------------------------------------------------------------
On sales of $50,000 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
Six months ended 3/31/07 (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
- ------------------------------------------------------------------------------------------------------
Income
Dividends $736,716
Interest 55,062
- ------------------------------------------------------------------------------------------------------
Total investment income $791,778
- ------------------------------------------------------------------------------------------------------
Expenses
Management fee $255,402
Distribution and service fees 79,466
Shareholder servicing costs 44,644
Administrative services fee 11,240
Independent trustees' compensation 897
Custodian fee 15,622
Shareholder communications 11,905
Auditing fees 20,642
Legal fees 578
Registration fees 24,375
Miscellaneous 7,513
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Total expenses $472,284
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Fees paid indirectly (2,450)
Reduction of expenses by investment adviser (20,066)
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Net expenses $449,768
- ------------------------------------------------------------------------------------------------------
Net investment income $342,010
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions investment
transactions (identified cost basis) $5,510,708
- ------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) on investments $638,876
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $6,149,584
- ------------------------------------------------------------------------------------------------------
Change in net assets from operations $6,491,594
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SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
These statements describe the increases and/or decreases in net assets resulting from operations, any distributions,
and any shareholder transactions.
SIX MONTHS ENDED YEAR ENDED
3/31/07 9/30/06
(UNAUDITED)
CHANGE IN NET ASSETS
FROM OPERATIONS
- ------------------------------------------------------------------------------------------------------
Net investment income $342,010 $465,742
Net realized gain (loss) on investments 5,510,708 2,011,440
Net unrealized gain (loss) on investments 638,876 5,410,549
- ------------------------------------------------------------------------------------------------------
Change in net assets from operations $6,491,594 $7,887,731
- ------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------
From net investment income
Class A $(162,288) $(87,995)
Class B (3,565) (1,749)
Class C (3,383) (2,547)
Class I (296,528) (396,025)
- ------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(465,764) $(488,316)
- ------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $15,010,436 $12,824,923
- ------------------------------------------------------------------------------------------------------
Total change in net assets $21,036,266 $20,224,338
- ------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------
At beginning of period 67,289,825 47,065,487
At end of period (including undistributed net investment
income of $340,997 and $464,751, respectively) $88,326,091 $67,289,825
- ------------------------------------------------------------------------------------------------------
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. 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 9/30
ENDED ----------------------------------------------------------------------
CLASS A 3/31/07 2006 2005 2004 2003 2002
(UNAUDITED)
Net asset value,
beginning of period $14.01 $12.33 $10.82 $9.49 $8.09 $9.98
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.05 $0.09 $0.10 $0.06 $0.05 $0.03
Net realized and unrealized
gain (loss) on investments 1.22 1.70 1.47 1.33 1.38 (1.90)
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.27 $1.79 $1.57 $1.39 $1.43 $(1.87)
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.08) $(0.11) $(0.06) $(0.06) $(0.03) $(0.02)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.20 $14.01 $12.33 $10.82 $9.49 $8.09
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 9.09(n) 14.58 14.51 14.64 17.66(j) (18.76)
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions(f) 1.35(a) 1.47 1.54 1.52 1.57 1.44
Expenses after expense reductions (f) 1.30(a) 1.30 1.30 1.30 1.26 1.20
Net investment income 0.71(a) 0.66 0.88 0.54 0.57 0.30
Portfolio turnover 32 28 48 59 59 48
Net assets at end of period
(000 Omitted) $33,536 $24,213 $9,994 $7,896 $6,634 $5,872
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED -------------------------------------------------------------------
CLASS B 3/31/07 2006 2005 2004 2003 2002
(UNAUDITED)
Net asset value,
beginning of period $13.74 $12.09 $10.62 $9.33 $7.98 $9.89
- --------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.00(w) $0.00(w) $0.03 $(0.01) $(0.01) $(0.03)
Net realized and unrealized
gain (loss) on investments 1.21 1.66 1.44 1.30 1.36 (1.88)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.21 $1.66 $1.47 $1.29 $1.35 $(1.91)
- --------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.02) $(0.01) $-- $-- $-- $--
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.93 $13.74 $12.09 $10.62 $9.33 $7.98
- --------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 8.77(n) 13.74 13.84 13.83 16.92(j) (19.31)
- --------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions(f) 2.00(a) 2.13 2.19 2.17 2.21 2.09
Expenses after expense reductions (f) 1.95(a) 1.95 1.95 1.95 1.90 1.85
Net investment income (loss) 0.07(a) 0.03 0.25 (0.11) (0.08) (0.34)
Portfolio turnover 32 28 48 59 59 48
Net assets at end of period
(000 Omitted) $3,965 $2,376 $2,082 $2,234 $2,082 $2,534
- --------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED --------------------------------------------------------------------
CLASS C 3/31/07 2006 2005 2004 2003 2002
(UNAUDITED)
Net asset value,
beginning of period $13.67 $12.06 $10.59 $9.30 $7.95 $9.85
- --------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.01 $0.00(w) $0.03 $(0.01) $(0.01) $(0.03)
Net realized and unrealized
gain (loss) on investments 1.20 1.65 1.44 1.30 1.36 (1.87)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.21 $1.65 $1.47 $1.29 $1.35 $(1.90)
- --------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.03) $(0.04) $(0.00)(w) $-- $-- $--
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.85 $13.67 $12.06 $10.59 $9.30 $7.95
- --------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 8.82(n) 13.69 13.90 13.87 16.98(j) (19.29)
- --------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions(f) 2.00(a) 2.12 2.19 2.17 2.20 2.09
Expenses after expense reductions(f) 1.95(a) 1.95 1.95 1.95 1.89 1.85
Net investment income (loss) 0.07(a) 0.04 0.23 (0.11) (0.07) (0.34)
Portfolio turnover 32 28 48 59 59 48
Net assets at end of period
(000 Omitted) $2,683 $1,460 $790 $659 $466 $697
- --------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED ------------------------------------------------------------------
CLASS I 3/31/07 2006 2005 2004 2003 2002
(UNAUDITED)
Net asset value,
beginning of period $14.12 $12.43 $10.90 $9.56 $8.15 $10.06
- --------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.08 $0.14 $0.15 $0.09 $0.08 $0.07
Net realized and unrealized
gain (loss) on investments 1.24 1.69 1.47 1.34 1.40 (1.92)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.32 $1.83 $1.62 $1.43 $1.48 $(1.85)
- --------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.11) $(0.14) $(0.09) $(0.09) $(0.07) $(0.06)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.33 $14.12 $12.43 $10.90 $9.56 $8.15
- --------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 9.34(n) 14.89 14.94 14.98 18.22(j) (18.53)
- --------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.00(a) 1.13 1.19 1.17 1.22 1.09
Expenses after expense reductions (f) 0.95(a) 0.95 0.95 0.95 0.91 0.85
Net investment income 1.08(a) 1.03 1.23 0.89 0.92 0.65
Portfolio turnover 32 28 48 59 59 48
Net assets at end of period
(000 Omitted) $48,142 $39,241 $34,200 $29,693 $25,809 $27,658
- --------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2005 fiscal year resulted in a per share impact of less than $0.01.
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(j) The fund's net asset value and total return calculation include proceeds received on March 26, 2003 for the partial payment
of a non-recurring litigation settlement from Cendant Corporation, recorded as a realized gain on investment transactions.
The proceeds resulted in an increase in the net asset value of $0.06 per share based on shares outstanding on the day the
proceeds were received. Excluding the effect of this payment from the ending net asset value per share, the Class A, Class
B, Class C, and Class I total returns for the year ended September 30, 2003 would have been lower by approximately 0.73%,
0.74%, 0.74%, and 0.72% respectively.
(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.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(unaudited)
(1) BUSINESS AND ORGANIZATION
MFS Union Standard Equity Fund (the fund) is a series of MFS Series Trust XI
(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. The
fund can invest 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
legal, political, and economic environment.
INVESTMENT VALUATIONS - Equity securities, including restricted equity
securities, are generally valued at the last sale or official closing price as
reported by an independent pricing service on the market or exchange on which
they are primarily traded. For securities for which there were no sales
reported that day, equity securities are generally valued at the last quoted
daily bid quotation as reported by an independent pricing service on the
market or exchange on which they are primarily traded. For securities held
short for which there were no sales reported for the day, the position is
generally valued at the last quoted daily ask quotation as reported by an
independent pricing service on the market or exchange on which such securities
are primarily traded. Short-term instruments with a maturity at issuance of 60
days or less may be valued at amortized cost, which approximates market value.
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 and certain types of derivatives.
These investments are generally valued at fair value based on information from
independent 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 halting 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 on a frequent basis 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 affect 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 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.
In September 2006, FASB Statement No. 157, Fair Value Measurements (the
"Statement") was issued, and is effective for fiscal years beginning after
November 15, 2007 and for all interim periods within those fiscal years. This
Statement provides a single definition of fair value, a hierarchy for
measuring fair value and expanded disclosures about fair value measurements.
Management is evaluating the application of the Statement to the fund, and
believes the impact will be limited to expanded disclosures resulting from the
adoption of this Statement in the fund's financial statements.
REPURCHASE AGREEMENTS - The fund may enter into repurchase agreements with
institutions that the fund's investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The fund requires
that the securities collateral in a repurchase transaction be transferred to
the custodian in a manner sufficient to enable the fund to obtain those
securities in the event of a default under the repurchase agreement. 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. The fund and other funds managed by
Massachusetts Financial Services Company (MFS), may utilize a joint trading
account for the purpose of entering into one or more repurchase agreements.
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. 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. Dividends received in cash are recorded on the ex-dividend date.
Certain dividends from foreign securities will be recorded when the fund is
informed of the dividend if such information is obtained subsequent to the ex-
dividend date. Dividend and interest payments received in additional
securities are recorded on the ex-dividend or ex-interest date in an amount
equal to the value of the security on such date.
The fund may receive proceeds from litigation settlements. Any proceeds received
from litigation involving the portfolio holdings 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. Any other proceeds from litigation not
related to portfolio holdings are reflected as other income in the Statement of
Operations.
FEES PAID INDIRECTLY - The fund's custody fee 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 March 31, 2007, is shown as a
reduction of total expenses on 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.
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 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. 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.
During the year ended September 30, 2006, there were no significant adjustments
due to differences between book and tax accounting.
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:
9/30/06
Ordinary income (including any short-term
capital gains) $ 488,316
The federal tax cost and the tax basis components of distributable earnings
were as follows:
AS OF 3/31/07
Cost of investments $76,015,363
----------------------------------------------------------
Gross appreciation $14,477,256
Gross depreciation (932,029)
----------------------------------------------------------
Net unrealized appreciation (depreciation) $13,545,227
AS OF 9/30/06
Undistributed ordinary income 464,751
Capital loss carryforwards (7,422,044)
Net unrealized appreciation (depreciation) 12,906,351
The aggregate cost above includes prior fiscal year end tax adjustments.
As of September 30, 2006, the fund had capital loss carryforwards available to
offset future realized gains. Such losses expire as follows:
9/30/10 $(1,247,099)
9/30/11 (5,556,028)
9/30/12 (618,917)
--------------------------------------------------------
$(7,422,044)
In June 2006, FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (the "Interpretation") was issued, and is effective for fiscal years
beginning after December 15, 2006 and is to be applied to all open tax years
as of the effective date. On December 22, 2006, the SEC delayed the
implementation of the Interpretation for regulated investment companies for an
additional six months. This Interpretation prescribes a minimum threshold for
financial statement recognition of the benefit of a tax position taken or
expected to be taken in a tax return, and requires certain expanded
disclosures. Management has evaluated the application of the Interpretation to
the fund, and has determined that there is no impact resulting from the
adoption of this Interpretation on the fund's financial statements.
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 daily net
assets 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 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 an annual rate of 0.65% of the fund's average daily net assets.
The investment adviser has agreed in writing to pay a portion of the fund's
operating expenses, exclusive of management, distribution and service, and
certain other fees and expenses, such that operating expenses do not exceed
0.30% annually of the fund's average daily net assets. This written agreement
will continue through January 31, 2008 unless changed or rescinded by the
fund's Board of Trustees. For the six months ended March 31, 2007, this
reduction amounted to $19,864 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 $7,873 for the six months ended
March 31, 2007, 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(d) RATE(e) FEE
Class A 0.10% 0.25% 0.35% 0.35% $52,090
Class B 0.75% 0.25% 1.00% 1.00% 17,043
Class C 0.75% 0.25% 1.00% 1.00% 10,333
- ---------------------------------------------------------------------------------------------------------------------
Total Distribution and Service Fees $79,466
(d) 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.
(e) The annual effective rates represent actual fees incurred under the
distribution plan for the six months ended March 31, 2007 based on each
class' average daily net assets.
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 March
31, 2007, were as follows:
AMOUNT
Class A $6
Class B 1,361
Class C 212
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 March 31, 2007, the fee was
$27,326, which equated to 0.0695% annually of the fund's average daily net
assets. MFSC also receives payment 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. For the six months ended March
31, 2007, these out-of-pocket expenses, sub-accounting and other shareholder
servicing costs amounted to $13,345. The fund may also pay shareholder
servicing related costs directly to non-related parties.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to the fund.
Under an administrative services agreement, the fund partially reimburses MFS
the costs incurred to provide these services. The fund is charged a fixed
amount plus a fee based on calendar year average net assets. The fund's annual
fixed amount is $17,500.
The administrative services fee incurred for the six months ended
March 31, 2007 was equivalent to an annual effective rate of 0.0286% 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 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 March 31, 2007, the fee paid to Tarantino
LLC was $307. MFS has agreed to reimburse the fund for a portion of the
payments made by the funds to Tarantino LLC in the amount of $202, 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 U.S.
government securities, purchased option transactions, and short-term
obligations, aggregated $40,124,617 and $24,716,015, 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 YEAR ENDED
3/31/07 9/30/06
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 805,684 $11,988,210 1,145,994 $14,855,071
Class B 125,253 1,816,228 52,178 679,747
Class C 90,750 1,320,658 58,385 746,164
Class I 356,118 5,489,374 21,326 290,145
- ----------------------------------------------------------------------------------------------------------
1,377,805 $20,614,470 1,277,883 $16,571,127
Shares issued to shareholders
in reinvestment of distributions
Class A 10,689 $158,519 6,748 $84,888
Class B 211 3,079 134 1,667
Class C 170 2,462 131 1,617
Class I 16,895 252,408 26,577 336,205
- ----------------------------------------------------------------------------------------------------------
27,965 $416,468 33,590 $424,377
Shares reacquired
Class A (338,907) $(5,120,343) (234,194) $(3,019,807)
Class B (32,789) (481,394) (51,550) (661,344)
Class C (16,956) (248,058) (17,313) (222,842)
Class I (11,356) (170,707) (19,893) (266,588)
- ----------------------------------------------------------------------------------------------------------
(400,008) $(6,020,502) (322,950) $(4,170,581)
Net change
Class A 477,466 $7,026,386 918,548 $11,920,152
Class B 92,675 1,337,913 762 20,070
Class C 73,964 1,075,062 41,203 524,939
Class I 361,657 5,571,075 28,010 359,762
- ----------------------------------------------------------------------------------------------------------
1,005,762 $15,010,436 988,523 $12,824,923
(6) LINE OF CREDIT
The fund and other funds managed by MFS participate in a $1 billion unsecured
committed line of credit provided by a syndication of banks under a credit
agreement. In addition, the fund and other funds managed by MFS have
established uncommitted borrowing arrangements with certain banks. 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 Federal Reserve
funds rate plus 0.35%. In addition, a commitment fee, based on the average
daily, unused portion of the committed line of credit, is allocated among the
participating funds at the end of each calendar quarter. For the six months
ended March 31, 2007, the fund's commitment fee and interest expense were $193
and $0, respectively, and are included in miscellaneous expense on the
Statement of Operations.
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 fund 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 fund'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 fund'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 US
WEB SITE MAILING ADDRESS
mfs.com MFS Service Center, Inc.
P.O. Box 55824
MFS TALK Boston, MA
1-800-637-8255 02205-5824
24 hours a day
OVERNIGHT MAIL
ACCOUNT SERVICE AND MFS Service Center, Inc.
LITERATURE 500 Boylston Street
Boston, MA 02116-3741
SHAREHOLDERS
1-800-225-2606
8 a.m. to 8 p.m. ET
INVESTMENT PROFESSIONALS
1-800-343-2829
8 a.m. to 8 p.m. ET
RETIREMENT PLAN SERVICES
1-800-637-1255
8 a.m. to 8 p.m. ET
- -------------------------------------------------------------------------------
Go paperless with eDELIVERY: Arrange to have MFS(R) send prospectuses, reports,
and proxies directly to your e-mail inbox. You'll get timely information and
less clutter in your mailbox (not to mention help your fund save printing and
postage costs).
SIGN UP: If your account is registered with us, simply go to mfs.com, log in to
your account via MFS(R) Access, and select the eDelivery sign up options.
If you own your MFS fund shares through a financial institution or a retirement
plan, MFS(R) TALK, MFS Access, and eDelivery may not be available to you.
- -------------------------------------------------------------------------------
M F S(R)
INVESTMENT MANAGEMENT
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
SEMIANNUAL REPORT
MFS(R) MID CAP VALUE FUND
LETTER FROM THE CEO 1
- ------------------------------------------------------------
PORTFOLIO COMPOSITION 2
- ------------------------------------------------------------
EXPENSE TABLE 3
- ------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 5
- ------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 11
- ------------------------------------------------------------
STATEMENT OF OPERATIONS 14
- ------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 15
- ------------------------------------------------------------
FINANCIAL HIGHLIGHTS 17
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 31
- ------------------------------------------------------------
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 42
- ------------------------------------------------------------
PROXY VOTING POLICIES AND INFORMATION 42
- ------------------------------------------------------------
QUARTERLY PORTFOLIO DISCLOSURE 42
- ------------------------------------------------------------
CONTACT INFORMATION 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 o MAY LOSE VALUE o
NO BANK OR CREDIT UNION GUARANTEE o NOT A DEPOSIT o
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR
NCUA/NCUSIF
- ------------------------------------------------------------------------------
3/31/07
MDV-SEM
LETTER FROM THE CEO
[Photo of Robert J. Manning]
Dear Shareholders:
The past year has been a great example of why investors should keep their eyes
on the long term.
In 2006 the Dow Jones Industrial Average returned 19%. In February 2007 it hit
its all-time high of 12,787. Less than a week later, stocks sold off around the
globe. By March 5 the Dow was off 5.8%. That is a sign of volatile markets and
a reason investors should make sure they have an investment plan that can ride
out the peaks and troughs.
If you are focused on a long-term investment strategy, the short-term ups and
downs of the markets should not necessarily dictate portfolio action on your
part. Both the bond and stock markets are inherently cyclical. In our view,
investors who remain committed to a long-term plan are more likely to achieve
their financial goals. We believe you should not let the headlines guide you in
your investment decisions and that there is no sense in reacting to short- term
volatility.
In any market environment, we believe individual investors are best served by
following a three-pronged investment strategy of allocating their holdings
across the major asset classes, diversifying within each class, and regularly
rebalancing their portfolios to maintain their desired allocations. Of course,
these strategies cannot guarantee a profit or protect against a loss. Investing
and planning for the long term require 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)
May 15, 2007
The opinions expressed in this letter are subject to change, may not be relied
upon for investment advice, and no forecasts can be guaranteed.
PORTFOLIO COMPOSITION
PORTFOLIO STRUCTURE
Common Stocks 97.7%
Cash & Other Net Assets 2.3%
TOP TEN HOLDINGS
Constellation Energy Group, Inc. 3.0%
------------------------------------------------
Hess Corp. 2.7%
------------------------------------------------
Eaton Corp. 2.6%
------------------------------------------------
Embarq Corp. 2.5%
------------------------------------------------
PG&E Corp. 2.2%
------------------------------------------------
Equity Residential, REIT 2.1%
------------------------------------------------
Pepco Holdings, Inc. 1.9%
------------------------------------------------
Genworth Financial, Inc., "A" 1.9%
------------------------------------------------
Loews Corp. 1.8%
------------------------------------------------
Aeropostale, Inc. 1.8%
------------------------------------------------
EQUITY SECTORS
Financial Services 27.9%
------------------------------------------------
Utilities & Communications 20.9%
------------------------------------------------
Industrial Goods & Services 7.4%
------------------------------------------------
Retailing 6.5%
------------------------------------------------
Consumer Staples 5.9%
------------------------------------------------
Technology 5.3%
------------------------------------------------
Health Care 5.1%
------------------------------------------------
Autos & Housing 4.4%
------------------------------------------------
Energy 4.1%
------------------------------------------------
Leisure 4.1%
------------------------------------------------
Basic Materials 3.9%
------------------------------------------------
Transportation 1.2%
------------------------------------------------
Special Products & Services 1.0%
------------------------------------------------
Percentages are based on net assets as of 3/31/07.
The portfolio is actively managed and current holdings may be different.
EXPENSE TABLE
Fund expenses borne by the shareholders during the period,
October 1, 2006 through March 31, 2007
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 October 1, 2006 through March 31,
2007.
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.
- -------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Share Expense Account Value Account Value 10/01/06-
Class Ratio 10/01/06 3/31/07 3/31/07
- --------------------------------------------------------------------------------
Actual 1.30% $1,000.00 $1,142.10 $6.94
A ------------------------------------------------------------------------
Hypothetical (h) 1.30% $1,000.00 $1,018.45 $6.54
- --------------------------------------------------------------------------------
Actual 1.95% $1,000.00 $1,138.00 $10.39
B -------------------------------------------------------------------------
Hypothetical (h) 1.95% $1,000.00 $1,015.21 $9.80
- --------------------------------------------------------------------------------
Actual 1.95% $1,000.00 $1,138.80 $10.40
C ------------------------------------------------------------------------
Hypothetical (h) 1.95% $1,000.00 $1,015.21 $9.80
- --------------------------------------------------------------------------------
Actual 0.95% $1,000.00 $1,143.60 $5.08
I ------------------------------------------------------------------------
Hypothetical (h) 0.95% $1,000.00 $1,020.19 $4.78
- --------------------------------------------------------------------------------
Actual 1.45% $1,000.00 $1,141.50 $7.74
R ------------------------------------------------------------------------
Hypothetical (h) 1.45% $1,000.00 $1,017.70 $7.29
- --------------------------------------------------------------------------------
Actual 2.06% $1,000.00 $1,137.50 $10.98
R1 ------------------------------------------------------------------------
Hypothetical (h) 2.06% $1,000.00 $1,014.66 $10.35
- --------------------------------------------------------------------------------
Actual 1.70% $1,000.00 $1,140.10 $9.07
R2 ------------------------------------------------------------------------
Hypothetical (h) 1.70% $1,000.00 $1,016.45 $8.55
- --------------------------------------------------------------------------------
Actual 1.60% $1,000.00 $1,140.90 $8.54
R3 ------------------------------------------------------------------------
Hypothetical (h) 1.60% $1,000.00 $1,016.95 $8.05
- --------------------------------------------------------------------------------
Actual 1.35% $1,000.00 $1,142.10 $7.21
R4 ------------------------------------------------------------------------
Hypothetical (h) 1.35% $1,000.00 $1,018.20 $6.79
- --------------------------------------------------------------------------------
Actual 1.05% $1,000.00 $1,143.00 $5.61
R5 ------------------------------------------------------------------------
Hypothetical (h) 1.05% $1,000.00 $1,019.70 $5.29
- --------------------------------------------------------------------------------
Actual 1.55% $1,000.00 $1,140.50 $8.27
529A ------------------------------------------------------------------------
Hypothetical (h) 1.55% $1,000.00 $1,017.20 $7.80
- --------------------------------------------------------------------------------
Actual 2.20% $1,000.00 $1,137.50 $11.72
529B ------------------------------------------------------------------------
Hypothetical (h) 2.20% $1,000.00 $1,013.96 $11.05
- --------------------------------------------------------------------------------
Actual 2.20% $1,000.00 $1,137.20 $11.72
529C ------------------------------------------------------------------------
Hypothetical (h) 2.20% $1,000.00 $1,013.96 $11.05
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads) or
redemption fees. If these transaction costs had been included, your costs
would have been higher.
PORTFOLIO OF INVESTMENTS
3/31/07 (unaudited)
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Common Stocks - 97.7%
- ----------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ----------------------------------------------------------------------------------------------------------
<c>
Apparel Manufacturers - 0.1%
- ----------------------------------------------------------------------------------------------------------
Phillips-Van Heusen Corp. 19,520 $ 1,147,776
- ----------------------------------------------------------------------------------------------------------
Brokerage & Asset Managers - 2.4%
- ----------------------------------------------------------------------------------------------------------
Investment Technology Group, Inc. (a) 40,170 $ 1,574,664
Legg Mason, Inc. 40,920 3,855,073
Mellon Financial Corp. 298,480 12,876,427
Waddell & Reed Financial, Inc., "A" 101,120 2,358,118
------------
$ 20,664,282
- ----------------------------------------------------------------------------------------------------------
Business Services - 1.0%
- ----------------------------------------------------------------------------------------------------------
Alliance Data Systems Corp. (a) 23,400 $ 1,441,908
Fidelity National Information Services, Inc. 161,940 7,361,792
------------
$ 8,803,700
- ----------------------------------------------------------------------------------------------------------
Cable TV - 0.2%
- ----------------------------------------------------------------------------------------------------------
Liberty Global, Inc., "A" (a) 58,490 $ 1,926,076
- ----------------------------------------------------------------------------------------------------------
Chemicals - 1.7%
- ----------------------------------------------------------------------------------------------------------
Nalco Holding Co. 178,880 $ 4,275,232
Rohm & Haas Co. 208,300 10,773,276
------------
$ 15,048,508
- ----------------------------------------------------------------------------------------------------------
Computer Software - 2.6%
- ----------------------------------------------------------------------------------------------------------
Compuware Corp. (a) 940,250 $ 8,922,972
McAfee, Inc. (a) 439,680 12,785,894
Synopsys, Inc. (a) 43,470 1,140,218
------------
$ 22,849,084
- ----------------------------------------------------------------------------------------------------------
Construction - 3.6%
- ----------------------------------------------------------------------------------------------------------
D.R. Horton, Inc. 497,450 $ 10,943,900
Masco Corp. 360,720 9,883,728
Sherwin-Williams Co. 159,840 10,555,834
------------
$ 31,383,462
- ----------------------------------------------------------------------------------------------------------
Consumer Goods & Services - 2.2%
- ----------------------------------------------------------------------------------------------------------
Alberto-Culver Co. 112,440 $ 2,572,627
Estee Lauder Cos., Inc., "A" 132,980 6,496,073
Scotts Miracle-Gro Co. 240,030 10,568,521
------------
$ 19,637,221
- ----------------------------------------------------------------------------------------------------------
Containers - 0.3%
- ----------------------------------------------------------------------------------------------------------
Smurfit-Stone Container Corp. (a) 209,270 $ 2,356,380
- ----------------------------------------------------------------------------------------------------------
Electrical Equipment - 2.4%
- ----------------------------------------------------------------------------------------------------------
Rockwell Automation, Inc. 174,300 $ 10,435,341
W.W. Grainger, Inc. 139,800 10,798,152
------------
$ 21,233,493
- ----------------------------------------------------------------------------------------------------------
Electronics - 0.8%
- ----------------------------------------------------------------------------------------------------------
Intersil Corp., "A" 241,510 $ 6,397,600
Kronos, Inc. (a) 16,100 861,350
------------
$ 7,258,950
- ----------------------------------------------------------------------------------------------------------
Energy - Independent - 0.9%
- ----------------------------------------------------------------------------------------------------------
Newfield Exploration Co. (a) 198,880 $ 8,295,285
- ----------------------------------------------------------------------------------------------------------
Energy - Integrated - 2.7%
- ----------------------------------------------------------------------------------------------------------
Hess Corp. 432,220 $ 23,975,243
- ----------------------------------------------------------------------------------------------------------
Food & Beverages - 1.3%
- ----------------------------------------------------------------------------------------------------------
Pepsi Bottling Group, Inc. 360,620 $ 11,500,172
- ----------------------------------------------------------------------------------------------------------
Food & Drug Stores - 1.7%
- ----------------------------------------------------------------------------------------------------------
Kroger Co. 525,810 $ 14,854,133
- ----------------------------------------------------------------------------------------------------------
Forest & Paper Products - 0.5%
- ----------------------------------------------------------------------------------------------------------
MeadWestvaco Corp. 140,140 $ 4,321,918
- ----------------------------------------------------------------------------------------------------------
Furniture & Appliances - 0.8%
- ----------------------------------------------------------------------------------------------------------
Tupperware Brands Corp. 282,930 $ 7,053,445
- ----------------------------------------------------------------------------------------------------------
General Merchandise - 2.3%
- ----------------------------------------------------------------------------------------------------------
Family Dollar Stores, Inc. 187,700 $ 5,559,674
Federated Department Stores, Inc. 319,100 14,375,455
------------
$ 19,935,129
- ----------------------------------------------------------------------------------------------------------
Health Maintenance Organizations - 2.2%
- ----------------------------------------------------------------------------------------------------------
AMERIGROUP Corp. (a) 71,100 $ 2,161,440
CIGNA Corp. 99,460 14,188,964
Health Net, Inc. (a) 55,890 3,007,441
------------
$ 19,357,845
- ----------------------------------------------------------------------------------------------------------
Insurance - 10.1%
- ----------------------------------------------------------------------------------------------------------
Ace Ltd. 99,380 $ 5,670,623
Endurance Specialty Holdings Ltd. 374,260 13,376,052
Fidelity National Title Group, Inc. 411,790 9,887,078
First American Corp. 258,540 13,113,149
Genworth Financial, Inc., "A" 474,070 16,564,006
Mercury General Corp. 15,050 798,252
MGIC Investment Corp. 109,210 6,434,653
PartnerRe Ltd. 180,830 12,394,088
Protective Life Corp. 35,650 1,570,026
W.R. Berkley Corp. 129,350 4,284,072
Zenith National Insurance Corp. 97,930 4,629,151
------------
$ 88,721,150
- ----------------------------------------------------------------------------------------------------------
Internet - 0.6%
- ----------------------------------------------------------------------------------------------------------
RealNetworks, Inc. (a) 617,370 $ 4,846,355
- ----------------------------------------------------------------------------------------------------------
Leisure & Toys - 1.0%
- ----------------------------------------------------------------------------------------------------------
Hasbro, Inc. 318,690 $ 9,120,908
- ----------------------------------------------------------------------------------------------------------
Machinery & Tools - 5.0%
- ----------------------------------------------------------------------------------------------------------
Cummins, Inc. 103,060 $ 14,914,843
Eaton Corp. 268,140 22,405,778
Timken Co. 62,520 1,894,981
United Rentals, Inc. (a) 178,390 4,905,725
------------
$ 44,121,327
- ----------------------------------------------------------------------------------------------------------
Major Banks - 1.3%
- ----------------------------------------------------------------------------------------------------------
PNC Financial Services Group, Inc. 159,240 $ 11,460,503
- ----------------------------------------------------------------------------------------------------------
Medical & Health Technology & Services - 0.7%
- ----------------------------------------------------------------------------------------------------------
McKesson Corp. 97,560 $ 5,711,162
- ----------------------------------------------------------------------------------------------------------
Medical Equipment - 1.7%
- ----------------------------------------------------------------------------------------------------------
Advanced Medical Optics, Inc. (a) 56,830 $ 2,114,076
Cooper Cos., Inc. 266,040 12,934,865
------------
$ 15,048,941
- ----------------------------------------------------------------------------------------------------------
Metals & Mining - 0.4%
- ----------------------------------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc. 58,470 $ 3,870,129
- ----------------------------------------------------------------------------------------------------------
Natural Gas - Distribution - 0.3%
- ----------------------------------------------------------------------------------------------------------
Equitable Resources, Inc. 48,520 $ 2,344,486
- ----------------------------------------------------------------------------------------------------------
Natural Gas - Pipeline - 1.8%
- ----------------------------------------------------------------------------------------------------------
Williams Cos., Inc. 546,320 $ 15,548,267
- ----------------------------------------------------------------------------------------------------------
Network & Telecom - 0.1%
- ----------------------------------------------------------------------------------------------------------
InterDigital Communications Corp. (a) 28,850 $ 913,680
- ----------------------------------------------------------------------------------------------------------
Oil Services - 0.5%
- ----------------------------------------------------------------------------------------------------------
GlobalSantaFe Corp. 69,520 $ 4,287,994
- ----------------------------------------------------------------------------------------------------------
Other Banks & Diversified Financials - 6.2%
- ----------------------------------------------------------------------------------------------------------
AmeriCredit Corp. (a) 78,570 $ 1,796,110
BankUnited Financial Corp., "A" 174,220 3,695,206
CapitalSource, Inc., REIT 113,310 2,847,480
CIT Group, Inc. 204,640 10,829,549
Marshall & Ilsley Corp. 74,830 3,465,377
New York Community Bancorp, Inc. 746,490 13,130,759
Northern Trust Corp. 81,890 4,924,865
TCF Financial Corp. 126,130 3,324,787
Zions Bancorporation 124,420 10,515,978
------------
$ 54,530,111
- ----------------------------------------------------------------------------------------------------------
Personal Computers & Peripherals - 1.2%
- ----------------------------------------------------------------------------------------------------------
Western Digital Corp. (a) 617,800 $ 10,385,218
- ----------------------------------------------------------------------------------------------------------
Pharmaceuticals - 0.5%
- ----------------------------------------------------------------------------------------------------------
Endo Pharmaceuticals Holdings, Inc. (a) 160,330 $ 4,713,702
- ----------------------------------------------------------------------------------------------------------
Printing & Publishing - 1.4%
- ----------------------------------------------------------------------------------------------------------
Lee Enterprises, Inc. 102,350 $ 3,075,618
New York Times Co., "A" 46,180 1,085,692
R.R. Donnelley & Sons Co. 26,310 962,683
Washington Post Co., "B" 8,950 6,833,325
------------
$ 11,957,318
- ----------------------------------------------------------------------------------------------------------
Railroad & Shipping - 1.2%
- ----------------------------------------------------------------------------------------------------------
Norfolk Southern Corp. 199,070 $ 10,072,942
- ----------------------------------------------------------------------------------------------------------
Real Estate - 7.9%
- ----------------------------------------------------------------------------------------------------------
BRE Properties, Inc., REIT 93,550 $ 5,907,682
CBL & Associates Properties, Inc., REIT 298,390 13,379,808
DiamondRock Hospitality Co., REIT 348,010 6,612,190
Equity Residential, REIT 382,830 18,463,891
Host Hotels & Resorts, Inc., REIT 497,500 13,089,225
Macerich Co., REIT 45,200 4,174,672
Maguire Properties, Inc., REIT 101,700 3,616,452
Taubman Centers, Inc., REIT 74,200 4,302,858
------------
$ 69,546,778
- ----------------------------------------------------------------------------------------------------------
Restaurants - 1.5%
- ----------------------------------------------------------------------------------------------------------
Brinker International, Inc. 161,680 $ 5,286,936
Jack in the Box, Inc. (a) 42,460 2,935,260
YUM! Brands, Inc. 89,620 5,176,451
------------
$ 13,398,647
- ----------------------------------------------------------------------------------------------------------
Specialty Chemicals - 1.0%
- ----------------------------------------------------------------------------------------------------------
Air Products & Chemicals, Inc. 56,240 $ 4,159,510
Albemarle Corp. 102,800 4,249,752
------------
$ 8,409,262
- ----------------------------------------------------------------------------------------------------------
Specialty Stores - 2.4%
- ----------------------------------------------------------------------------------------------------------
Aeropostale, Inc. (a) 400,010 $ 16,092,402
OfficeMax, Inc. 40,490 2,135,443
PetSmart, Inc. 94,440 3,112,742
------------
$ 21,340,587
- ----------------------------------------------------------------------------------------------------------
Telephone Services - 3.8%
- ----------------------------------------------------------------------------------------------------------
Embarq Corp. 382,970 $ 21,580,360
Qwest Communications International, Inc. (a) 1,273,820 11,451,642
------------
$ 33,032,002
- ----------------------------------------------------------------------------------------------------------
Tobacco - 2.4%
- ----------------------------------------------------------------------------------------------------------
Loews Corp. 213,640 $ 16,153,320
Reynolds American, Inc. 70,860 4,422,373
------------
$ 20,575,693
- ----------------------------------------------------------------------------------------------------------
Utilities - Electric Power - 15.0%
- ----------------------------------------------------------------------------------------------------------
American Electric Power Co., Inc. 325,240 $ 15,855,450
CMS Energy Corp. 453,290 8,068,562
Constellation Energy Group, Inc. 297,960 25,907,622
Edison International 41,190 2,023,665
FPL Group, Inc. 174,080 10,648,474
Mirant Corp. (a) 171,160 6,925,134
Northeast Utilities 357,840 11,726,417
NRG Energy, Inc. (a) 96,880 6,979,235
Pepco Holdings, Inc. 583,960 16,946,519
PG&E Corp. 391,300 18,888,051
PPL Corp. 45,180 1,847,862
Xcel Energy, Inc. 215,300 5,315,757
------------
$131,132,748
- ----------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $734,345,666) $856,692,012
- ----------------------------------------------------------------------------------------------------------
Short-Term Obligations - 2.4%
- ----------------------------------------------------------------------------------------------------------
New Center Asset Trust, 5.39%, due 4/02/07, at Amortized Cost and Value (y) $20,873,000 $ 20,869,875
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $755,215,541) $877,561,887
- ----------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (0.1)% (865,291)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $876,696,596
- ----------------------------------------------------------------------------------------------------------
(a) Non-income producing security.
(y) The rate shown represents an annualized yield at time of purchase.
The following abbreviation is used in this report and is defined:
REIT Real Estate Investment Trust
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 3/31/07 (unaudited)
This statement represents your fund's balance sheet, which details the assets
and liabilities comprising the total value of the fund.
ASSETS
- -------------------------------------------------------------------------------------------------------
Investments, at value (identified cost, $755,215,541) $877,561,887
Cash 661
Receivable for fund shares sold 432,073
Dividends receivable 1,496,690
Other assets 13,421
- -------------------------------------------------------------------------------------------------------
Total assets $879,504,732
- -------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------
Payable for fund shares reacquired $2,573,317
Payable to affiliates
Management fee 54,079
Shareholder servicing costs 65,363
Distribution and service fees 15,706
Administrative services fee 1,329
Program manager fees 37
Retirement plan administration and services fees 233
Payable for independent trustees' compensation 1,131
Accrued expenses and other liabilities 96,941
- -------------------------------------------------------------------------------------------------------
Total liabilities $2,808,136
- -------------------------------------------------------------------------------------------------------
Net assets $876,696,596
- -------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- -------------------------------------------------------------------------------------------------------
Paid-in capital $721,270,366
Unrealized appreciation (depreciation) on investments and
translation of assets and liabilities in foreign currencies 122,346,346
Accumulated net realized gain (loss) on investments 29,032,054
Undistributed net investment income 4,047,830
- -------------------------------------------------------------------------------------------------------
Net assets $876,696,596
- -------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 58,525,866
- -------------------------------------------------------------------------------------------------------
Class A shares
- -------------------------------------------------------------------------------------------------------
Net assets $155,251,089
Shares outstanding 10,420,609
- -------------------------------------------------------------------------------------------------------
Net asset value per share $14.90
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/94.25Xnet asset value per share) $15.81
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued
Class B shares
- -------------------------------------------------------------------------------------------------------
Net assets $83,472,406
Shares outstanding 5,804,061
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $14.38
- -------------------------------------------------------------------------------------------------------
Class C shares
- -------------------------------------------------------------------------------------------------------
Net assets $42,766,868
Shares outstanding 2,972,044
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $14.39
- -------------------------------------------------------------------------------------------------------
Class I shares
- -------------------------------------------------------------------------------------------------------
Net assets $574,504,155
Shares outstanding 37,912,863
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $15.15
- -------------------------------------------------------------------------------------------------------
Class R shares
- -------------------------------------------------------------------------------------------------------
Net assets $6,046,250
Shares outstanding 407,689
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $14.83
- -------------------------------------------------------------------------------------------------------
Class R1 shares
- -------------------------------------------------------------------------------------------------------
Net assets $917,531
Shares outstanding 63,931
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $14.35
- -------------------------------------------------------------------------------------------------------
Class R2 shares
- -------------------------------------------------------------------------------------------------------
Net assets $7,205,899
Shares outstanding 500,207
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $14.41
- -------------------------------------------------------------------------------------------------------
Class R3 shares
- -------------------------------------------------------------------------------------------------------
Net assets $3,028,691
Shares outstanding 205,939
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $14.71
- -------------------------------------------------------------------------------------------------------
Class R4 shares
- -------------------------------------------------------------------------------------------------------
Net assets $1,751,312
Shares outstanding 117,790
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $14.87
- -------------------------------------------------------------------------------------------------------
Class R5 shares
- -------------------------------------------------------------------------------------------------------
Net assets $65,021
Shares outstanding 4,351
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $14.94
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued
Class 529A shares
- -------------------------------------------------------------------------------------------------------
Net assets $962,615
Shares outstanding 65,339
- -------------------------------------------------------------------------------------------------------
Net asset value per share $14.73
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/94.25Xnet asset value per share) $15.63
- -------------------------------------------------------------------------------------------------------
Class 529B shares
- -------------------------------------------------------------------------------------------------------
Net assets $274,223
Shares outstanding 19,342
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $14.18
- -------------------------------------------------------------------------------------------------------
Class 529C shares
- -------------------------------------------------------------------------------------------------------
Net assets $450,536
Shares outstanding 31,701
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $14.21
- -------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the 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.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF OPERATIONS
Six months ended 3/31/07 (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
- ----------------------------------------------------------------------------------------------------
Income
Dividends $10,308,808
Interest 392,536
- ----------------------------------------------------------------------------------------------------
Total investment income $10,701,344
- ----------------------------------------------------------------------------------------------------
Expenses
Management fee $3,157,386
Distribution and service fees 953,911
Program manager fees 1,939
Shareholder servicing costs 483,598
Administrative services fee 77,801
Retirement plan administration and services fees 18,858
Independent trustees' compensation 9,985
Custodian fee 115,460
Shareholder communications 40,060
Auditing fees 14,478
Legal fees 7,917
Miscellaneous 111,352
- ----------------------------------------------------------------------------------------------------
Total expenses $4,992,745
- ----------------------------------------------------------------------------------------------------
Fees paid indirectly (32,145)
Reduction of expenses by investment adviser (8,608)
- ----------------------------------------------------------------------------------------------------
Net expenses $4,951,992
- ----------------------------------------------------------------------------------------------------
Net investment income $5,749,352
- ----------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis)
Investment transactions $32,442,167
- ----------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
Investments $73,330,331
- ----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $105,772,498
- ----------------------------------------------------------------------------------------------------
Change in net assets from operations $111,521,850
- ----------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
These statements describe the increases and/or decreases in net assets resulting from operations, any
distributions, and any shareholder transactions.
SIX MONTHS ENDED YEAR ENDED
3/31/07 9/30/06
(UNAUDITED)
CHANGE IN NET ASSETS
FROM OPERATIONS
- ------------------------------------------------------------------------------------------------------
Net investment income $5,749,352 $3,301,916
Net realized gain (loss) on investments 32,442,167 23,310,213
Net unrealized gain (loss) on investments 73,330,331 6,315,753
- ------------------------------------------------------------------------------------------------------
Change in net assets from operations $111,521,850 $32,927,882
- ------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------
From net investment income
Class A $(549,262) $--
Class I (3,907,377) --
Class R (11,988) --
Class R2 (21,883) --
Class R3 (4,691) --
Class R4 (6,706) --
Class R5 (392) --
Class 529A (65) --
From net realized gain on investments and foreign
currency transactions
Class A (4,107,567) (16,161,417)
Class B (2,545,421) (12,599,704)
Class C (1,193,455) (4,886,027)
Class I (14,774,288) (44,424,812)
Class R (180,871) (1,281,416)
Class R1 (25,855) (50,206)
Class R2 (174,770) (41,349)
Class R3 (74,629) (184,488)
Class R4 (37,405) (7,303)
Class R5 (1,700) (5,977)
Class 529A (25,841) (122,985)
Class 529B (6,853) (23,073)
Class 529C (12,175) (40,872)
- ------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(27,663,194) $(79,829,629)
- ------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $1,060,595 $138,637,532
- ------------------------------------------------------------------------------------------------------
Total change in net assets $84,919,251 $91,735,785
- ------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets - continued
SIX MONTHS ENDED YEAR ENDED
3/31/07 9/30/06
(UNAUDITED)
NET ASSETS
- ------------------------------------------------------------------------------------------------------
At beginning of period 791,777,345 700,041,560
At end of period (including undistributed net investment
income of $4,047,830 and $2,800,842, respectively) $876,696,596 $791,777,345
- ------------------------------------------------------------------------------------------------------
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 9/30
ENDED ---------------------------------------------------------
CLASS A 3/31/07 2006 2005 2004 2003 2002
(UNAUDITED)
Net asset value, beginning of period $13.47 $14.45 $13.13 $10.72 $8.56 $8.74
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.09 $0.05 $(0.01) $(0.02) $0.01 $0.02
Net realized and unrealized gain (loss)
on investments and foreign currency 1.79 0.56 2.56 2.43 2.15 (0.20)
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.88 $0.61 $2.55 $2.41 $2.16 $(0.18)
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.05) $-- $-- $-- $-- $(0.00)(w)
From net realized gain on investments
and foreign currency transactions (0.40) (1.59) (1.23) -- -- (0.00)(w)
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.45) $(1.59) $(1.23) $-- $-- $(0.00)(w)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.90 $13.47 $14.45 $13.13 $10.72 $8.56
- -----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 14.21(n) 4.41 20.11 22.48 25.23 (2.03)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.30(a) 1.34 1.36 1.36 1.50 1.83
Expenses after expense reductions (f) 1.30(a) 1.34 1.35 1.34 1.34 1.37
Net investment income (loss) 1.24(a) 0.34 (0.07) (0.17) 0.10 0.22
Portfolio turnover 26 122 126 128 158 113
Net assets at end of period (000 Omitted) $155,251 $146,373 $142,972 $83,631 $47,603 $26,013
- -----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED ---------------------------------------------------------
CLASS B 3/31/07 2006 2005 2004 2003 2002(i)
(UNAUDITED)
Net asset value, beginning of period $13.01 $14.10 $12.91 $10.61 $8.53 $9.24
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.04 $(0.04) $(0.10) $(0.10) $(0.05) $(0.04)
Net realized and unrealized gain (loss)
on investments and foreign currency 1.73 0.54 2.52 2.40 2.13 (0.67)
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.77 $0.50 $2.42 $2.30 $2.08 $(0.71)
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
and foreign currency transactions $(0.40) $(1.59) $(1.23) $-- $-- $(0.00)(w)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.38 $13.01 $14.10 $12.91 $10.61 $8.53
- -----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 13.80(n) 3.68 19.40 21.68 24.38 (7.67)(n)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.95(a) 1.99 2.01 2.01 2.14 2.48(a)
Expenses after expense reductions (f) 1.95(a) 1.99 2.00 1.99 1.99 2.02(a)
Net investment income (loss) 0.55(a) (0.33) (0.73) (0.82) (0.54) (0.44)(a)
Portfolio turnover 26 122 126 128 158 113
Net assets at end of period (000 Omitted) $83,472 $88,922 $113,672 $88,348 $65,799 $44,390
- -----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED --------------------------------------------------------
CLASS C 3/31/07 2006 2005 2004 2003 2002(i)
(UNAUDITED)
Net asset value, beginning of period $13.01 $14.10 $12.92 $10.61 $8.53 $9.24
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.04 $(0.04) $(0.10) $(0.10) $(0.05) $(0.04)
Net realized and unrealized gain (loss)
on investments and foreign currency 1.74 0.54 2.51 2.41 2.13 (0.67)
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.78 $0.50 $2.41 $2.31 $2.08 $(0.71)
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
and foreign currency transactions $(0.40) $(1.59) $(1.23) $-- $-- $(0.00)(w)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.39 $13.01 $14.10 $12.92 $10.61 $8.53
- -----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 13.88(n) 3.68 19.30 21.77 24.38 (7.67)(n)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.95(a) 1.99 2.01 2.01 2.14 2.48(a)
Expenses after expense reductions (f) 1.95(a) 1.99 2.00 1.99 1.99 2.02(a)
Net investment income (loss) 0.59(a) (0.31) (0.72) (0.82) (0.54) (0.46)(a)
Portfolio turnover 26 122 126 128 158 113
Net assets at end of period (000 Omitted) $42,767 $39,939 $42,162 $25,482 $16,369 $11,348
- -----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED --------------------------------------------------------
CLASS I 3/31/07 2006 2005 2004 2003 2002(i)
(UNAUDITED)
Net asset value, beginning of period $13.72 $14.65 $13.25 $10.80 $8.59 $9.24
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.12 $0.10 $0.04 $0.02 $0.04 $0.06
Net realized and unrealized gain (loss)
on investments and foreign currency 1.82 0.56 2.59 2.45 2.17 (0.71)
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.94 $0.66 $2.63 $2.47 $2.21 $(0.65)
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.11) $-- $-- $-- $-- $(0.00)(w)
From net realized gain on investments
and foreign currency transactions (0.40) (1.59) (1.23) (0.02) -- (0.00)(w)
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.51) $(1.59) $(1.23) $(0.02) $-- $(0.00)(w)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.15 $13.72 $14.65 $13.25 $10.80 $8.59
- -----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 14.36(n) 4.72 20.56 22.93 25.58 (6.89)(n)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 0.95(a) 0.99 1.01 1.01 1.16 1.48(a)
Expenses after expense reductions (f) 0.95(a) 0.99 1.00 0.99 1.00 1.02(a)
Net investment income 1.61(a) 0.72 0.28 0.18 0.43 0.99(a)
Portfolio turnover 26 122 126 128 158 113
Net assets at end of period (000 Omitted) $574,504 $498,403 $386,860 $249,118 $93,944 $4,655
- -----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED ---------------------------------------------
CLASS R 3/31/07 2006 2005 2004 2003(i)
(UNAUDITED)
Net asset value, beginning of period $13.39 $14.40 $13.11 $10.72 $9.11
- -----------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.07 $0.02 $(0.02) $(0.04) $(0.00)(w)
Net realized and unrealized gain (loss) on
investments and foreign currency 1.80 0.56 2.54 2.44 1.61(g)
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations $1.87 $0.58 $2.52 $2.40 $1.61
- -----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------
From net investment income $(0.03) $-- $-- $-- $--
From net realized gain on investments and
foreign currency transactions (0.40) (1.59) (1.23) (0.01) --
- -----------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.43) $(1.59) $(1.23) $(0.01) $--
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.83 $13.39 $14.40 $13.11 $10.72
- -----------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 14.15(n) 4.20 19.90 22.43 17.67(n)
- -----------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.45(a) 1.49 1.52 1.52 1.65(a)
Expenses after expense reductions (f) 1.45(a) 1.49 1.51 1.50 1.49(a)
Net investment income (loss) 1.04(a) 0.16 (0.18) (0.30) (0.06)(a)
Portfolio turnover 26 122 126 128 158
Net assets at end of period (000 Omitted) $6,046 $6,829 $10,761 $1,941 $260
- -----------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED -------------------
CLASS R1 3/31/07 2006 2005(i)
(UNAUDITED)
Net asset value, beginning of period $12.99 $14.09 $13.03
- -----------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.03 $(0.04) $(0.06)
Net realized and unrealized gain (loss)
on investments and foreign currency 1.73 0.53 1.12(g)
- -----------------------------------------------------------------------------------------
Total from investment operations $1.76 $0.49 $1.06
- -----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------
From net realized gain on investments
and foreign currency transactions $(0.40) $(1.59) $--
- -----------------------------------------------------------------------------------------
Net asset value, end of period $14.35 $12.99 $14.09
- -----------------------------------------------------------------------------------------
Total return (%) (r)(s) 13.75(n) 3.61 8.14(n)
- -----------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.16(a) 2.19 2.21(a)
Expenses after expense reductions (f) 2.06(a) 2.09 2.20(a)
Net investment income (loss) 0.42(a) (0.32) (0.83)(a)
Portfolio turnover 26 122 126
Net assets at end of period (000 Omitted) $918 $849 $313
- -----------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED -------------------
CLASS R2 3/31/07 2006 2005(i)
(UNAUDITED)
Net asset value, beginning of period $13.06 $14.11 $13.03
- -----------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.06 $0.04 $(0.03)
Net realized and unrealized gain (loss)
on investments and foreign currency 1.74 0.50 1.11(g)
- -----------------------------------------------------------------------------------------
Total from investment operations $1.80 $0.54 $1.08
- -----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------
From net investment income $(0.05) $-- $--
From net realized gain on investments
and foreign currency transactions (0.40) (1.59) --
- -----------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.45) $(1.59) $--
- -----------------------------------------------------------------------------------------
Net asset value, end of period $14.41 $13.06 $14.11
- -----------------------------------------------------------------------------------------
Total return (%) (r)(s) 14.01(n) 3.98 8.29(n)
- -----------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.85(a) 1.88 1.90(a)
Expenses after expense reductions (f) 1.70(a) 1.73 1.89(a)
Net investment income (loss) 0.92(a) 0.28 (0.42)(a)
Portfolio turnover 26 122 126
Net assets at end of period (000 Omitted) $7,206 $4,933 $410
- -----------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED -------------------------------
CLASS R3 3/31/07 2006 2005 2004(i)
(UNAUDITED)
Net asset value, beginning of period $13.29 $14.31 $13.06 $11.39
- -----------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.07 $0.01 $(0.06) $(0.06)
Net realized and unrealized gain (loss)
on investments and foreign currency 1.78 0.56 2.54 1.74(g)
- -----------------------------------------------------------------------------------------------------
Total from investment operations $1.85 $0.57 $2.48 $1.68
- -----------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------
From net investment income $(0.03) $-- $-- $--
From net realized gain on investments
and foreign currency transactions (0.40) (1.59) (1.23) (0.01)
- -----------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.43) $(1.59) $(1.23) $(0.01)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $14.71 $13.29 $14.31 $13.06
- -----------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 14.09(n) 4.16 19.66 14.79(n)
- -----------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.70(a) 1.74 1.76 1.78(a)
Expenses after expense reductions (f) 1.60(a) 1.64 1.75 1.76(a)
Net investment income (loss) 0.93(a) 0.09 (0.45) (0.62)(a)
Portfolio turnover 26 122 126 128
Net assets at end of period (000 Omitted) $3,029 $2,415 $1,218 $212
- -----------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED -------------------
CLASS R4 3/31/07 2006 2005(i)
(UNAUDITED)
Net asset value, beginning of period $13.46 $14.45 $13.32
- -----------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.09 $0.09 $(0.00)(w)
Net realized and unrealized gain (loss)
on investments and foreign currency 1.79 0.51 1.13(g)
- -----------------------------------------------------------------------------------------
Total from investment operations $1.88 $0.60 $1.13
- -----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------
From net investment income $(0.07) $-- $--
From net realized gain on investments
and foreign currency transactions (0.40) (1.59) --
- -----------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.47) $(1.59) $--
- -----------------------------------------------------------------------------------------
Net asset value, end of period $14.87 $13.46 $14.45
- -----------------------------------------------------------------------------------------
Total return (%) (r)(s) 14.21(n) 4.33 8.48(n)
- -----------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.35(a) 1.39 1.41(a)
Expenses after expense reductions (f) 1.35(a) 1.39 1.40(a)
Net investment income (loss) 1.22(a) 0.68 (0.06)(a)
Portfolio turnover 26 122 126
Net assets at end of period (000 Omitted) $1,751 $1,194 $54
- -----------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED -------------------
CLASS R5 3/31/07 2006 2005(i)
(UNAUDITED)
Net asset value, beginning of period $13.53 $14.48 $13.32
- -----------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------
Net investment income (d) $0.11 $0.08 $0.02
Net realized and unrealized gain (loss)
on investments and foreign currency 1.79 0.56 1.14(g)
- -----------------------------------------------------------------------------------------
Total from investment operations $1.90 $0.64 $1.16
- -----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------
From net investment income $(0.09) $-- $--
From net realized gain on investments
and foreign currency transactions (0.40) (1.59) --
- -----------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.49) $(1.59) $--
- -----------------------------------------------------------------------------------------
Net asset value, end of period $14.94 $13.53 $14.48
- -----------------------------------------------------------------------------------------
Total return (%) (r)(s) 14.30(n) 4.63 8.71(n)
- -----------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.05(a) 1.09 1.11(a)
Expenses after expense reductions (f) 1.05(a) 1.09 1.10(a)
Net investment income 1.50(a) 0.60 0.24(a)
Portfolio turnover 26 122 126
Net assets at end of period (000 Omitted) $65 $57 $54
- -----------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED -------------------------------------------------------
CLASS 529A 3/31/07 2006 2005 2004 2003 2002(i)
(UNAUDITED)
Net asset value, beginning of period $13.29 $14.32 $13.05 $10.68 $8.55 $9.24
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.07 $0.01 $(0.04) $(0.05) $(0.02) $0.01
Net realized and unrealized gain (loss)
on investments and foreign currency 1.77 0.55 2.54 2.42 2.15 (0.70)
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.84 $0.56 $2.50 $2.37 $2.13 $(0.69)
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.00)(w) $-- $-- $-- $-- $--
From net realized gain on investments
and foreign currency transactions (0.40) (1.59) (1.23) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(0.40) $(1.59) $(1.23) $-- $-- $--
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.73 $13.29 $14.32 $13.05 $10.68 $8.55
- -----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 14.05(n) 4.08 19.83 22.19 24.91 (7.47)(n)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.55(a) 1.59 1.61 1.62 1.75 2.08(a)
Expenses after expense reductions (f) 1.55(a) 1.59 1.60 1.60 1.59 1.62(a)
Net investment income (loss) 1.01(a) 0.11 (0.32) (0.42) (0.18) 0.50(a)
Portfolio turnover 26 122 126 128 158 113
Net assets at end of period (000 Omitted) $963 $1,252 $1,038 $643 $262 $7
- -----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED -------------------------------------------------------
CLASS 529B 3/31/07 2006 2005 2004 2003 2002(i)
(UNAUDITED)
Net asset value, beginning of period $12.84 $13.97 $12.84 $10.58 $8.52 $9.22
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.03 $(0.07) $(0.13) $(0.13) $(0.08) $(0.00)(w)
Net realized and unrealized gain (loss)
on investments and foreign currency 1.71 0.53 2.49 2.39 2.14 (0.70)
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.74 $0.46 $2.36 $2.26 $2.06 $(0.70)
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
and foreign currency transactions $(0.40) $(1.59) $(1.23) $-- $-- $--
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.18 $12.84 $13.97 $12.84 $10.58 $8.52
- -----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 13.75(n) 3.40 19.01 21.36 24.18 (7.59)(n)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.20(a) 2.24 2.26 2.26 2.40 2.73(a)
Expenses after expense reductions (f) 2.20(a) 2.24 2.25 2.24 2.24 2.27(a)
Net investment income (loss) 0.39(a) (0.56) (0.97) (1.07) (0.82) (0.20)(a)
Portfolio turnover 26 122 126 128 158 113
Net assets at end of period (000 Omitted) $274 $214 $174 $135 $59 $5
- -----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 9/30
ENDED -------------------------------------------------------
CLASS 529C 3/31/07 2006 2005 2004 2003 2002(i)
(UNAUDITED)
Net asset value, beginning of period $12.87 $14.00 $12.86 $10.59 $8.52 $9.22
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.02 $(0.07) $(0.13) $(0.13) $(0.08) $(0.00)(w)
Net realized and unrealized gain (loss)
on investments and foreign currency 1.72 0.53 2.50 2.40 2.15 (0.70)
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.74 $0.46 $2.37 $2.27 $2.07 $(0.70)
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
and foreign currency transactions $(0.40) $(1.59) $(1.23) $-- $-- $--
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.21 $12.87 $14.00 $12.86 $10.59 $8.52
- -----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 13.72(n) 3.39 19.06 21.44 24.30 (7.59)(n)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.20(a) 2.24 2.26 2.26 2.40 2.73(a)
Expenses after expense reductions (f) 2.20(a) 2.24 2.25 2.24 2.24 2.27(a)
Net investment income (loss) 0.36(a) (0.55) (0.95) (1.06) (0.85) (0.20)(a)
Portfolio turnover 26 122 126 128 158 113
Net assets at end of period (000 Omitted) $451 $396 $353 $178 $44 $5
- -----------------------------------------------------------------------------------------------------------------------------
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.
(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 per share amount of realized and unrealized gains and losses at such time.
(i) For the period from the class' inception, November 1, 2001 (Classes B, C, and I), July 31, 2002 (Classes 529A, 529B, and
529C), December 31, 2002 (Class R), October 31, 2003 (Class 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.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(unaudited)
(1) BUSINESS AND ORGANIZATION
MFS Mid Cap Value Fund (the fund) is a series of MFS Series Trust XI (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. The fund
can invest 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
legal, political, and economic environment.
INVESTMENT VALUATIONS - Equity securities, including restricted equity
securities, are generally valued at the last sale or official closing price as
reported by an independent pricing service on the market or exchange on which
they are primarily traded. For securities for which there were no sales
reported that day, equity securities are generally valued at the last quoted
daily bid quotation as reported by an independent pricing service on the market
or exchange on which they are primarily traded. For securities held short for
which there were no sales reported for the day, the position is generally
valued at the last quoted daily ask quotation as reported by an independent
pricing service on the market or exchange on which such securities are
primarily traded. Short-term instruments with a maturity at issuance of 60 days
or less may be valued at amortized cost, which approximates market value.
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 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 reported by an independent 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 many types of debt instruments and certain types of derivatives.
These investments are generally valued at fair value based on information from
independent 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 halting
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 on a frequent basis 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 affect 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 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.
In September 2006, FASB Statement No. 157, Fair Value Measurements (the
"Statement") was issued, and is effective for fiscal years beginning after
November 15, 2007 and for all interim periods within those fiscal years. This
Statement provides a single definition of fair value, a hierarchy for measuring
fair value and expanded disclosures about fair value measurements. Management
is evaluating the application of the Statement to the fund, and believes the
impact will be limited to expanded disclosures resulting from the adoption of
this Statement in the fund's financial statements.
REPURCHASE AGREEMENTS - The fund may enter into repurchase agreements with
institutions that the fund's investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The fund requires
that the securities collateral in a repurchase transaction be transferred to
the custodian in a manner sufficient to enable the fund to obtain those
securities in the event of a default under the repurchase agreement. 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. The fund and other funds managed by
Massachusetts Financial Services Company (MFS), may utilize a joint trading
account for the purpose of entering into one or more repurchase agreements.
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. 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 income and expenses are recorded for financial statement
purposes as foreign currency transaction gains and losses. That portion of both
realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed.
INDEMNIFICATIONS - Under the fund's organizational documents, its officers and
trustees may be indemnified against certain liabilities and expenses arising
out of the performance of their duties to the fund. Additionally, in the normal
course of business, the fund enters into agreements with service providers that
may contain indemnification clauses. The fund's maximum exposure under these
agreements is unknown as this would involve future claims that may be made
against the fund that have not yet occurred.
INVESTMENT TRANSACTIONS AND INCOME - 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. Dividends received in cash are recorded on the ex-dividend date.
Certain dividends from foreign securities will be recorded when the fund is
informed of the dividend if such information is obtained subsequent to the ex-
dividend date. Dividend and interest payments received in additional securities
are recorded on the ex-dividend or ex-interest date in an amount equal to the
value of the security on such date.
The fund may receive proceeds from litigation settlements. Any proceeds
received from litigation involving portfolio holdings are reflected in the
Statement of Operations in realized gain/loss if the security has been disposed
of by the fund or in unrealized gain/loss if the security is still held by the
fund. Any other proceeds from litigation not related to portfolio holdings are
reflected as other income in the Statement of Operations.
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 March 31, 2007, is shown as a
reduction of total expenses on 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.
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 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. 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 real estate investment trusts, 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 is as follows:
9/30/06
Ordinary income (including any short-term
capital gains) $45,509,637
Long-term capital gain 34,319,992
----------------------------------------------------------
Total distributions $79,829,629
The federal tax cost and the tax basis components of distributable earnings
were as follows:
AS OF 3/31/07
Cost of investments $755,842,056
----------------------------------------------------------
Gross appreciation $139,352,148
Gross depreciation (17,632,317)
----------------------------------------------------------
Net unrealized appreciation (depreciation) $121,719,831
AS OF 9/30/06
Undistributed ordinary income $2,921,968
Undistributed long-term capital gain 20,256,106
Net unrealized appreciation (depreciation) 48,389,500
The aggregate cost above includes prior fiscal year end tax adjustments.
In June 2006, FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (the "Interpretation") was issued, and is effective for fiscal years
beginning after December 15, 2006 and is to be applied to all open tax years as
of the effective date. On December 22, 2006, the SEC delayed the implementation
of the Interpretation for regulated investment companies for an additional six
months. This Interpretation prescribes a minimum threshold for financial
statement recognition of the benefit of a tax position taken or expected to be
taken in a tax return, and requires certain expanded disclosures. Management
has evaluated the application of the Interpretation to the fund, and has
determined that there is no impact resulting from the adoption of this
Interpretation on the fund's financial statements.
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 daily net
assets 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 and Class 529B
shares will convert to Class A and Class 529A shares, respectively,
approximately eight years after purchase.
(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 an annual rate of
0.75% of the fund's average daily net assets.
The investment adviser has agreed in writing to reduce its management fee to
0.70% of average daily net assets in excess of $1 billion. This written
agreement may be rescinded only upon consent of the fund's Board of Trustees.
For the six months ended March 31, 2007 the fund's average daily net assets did
not exceed $1 billion and therefore, the management fee was not reduced.
The investment adviser has agreed in writing to pay a portion of the fund's
operating expenses, exclusive of management, distribution and service,
retirement plan administration and services, program manager, and certain other
fees and expenses, such that operating expenses do not exceed 0.25% annually of
the fund's average daily net assets. This written agreement will continue
through January 31, 2008 unless changed or rescinded by the fund's Board of
Trustees. For the six months ended March 31, 2007, the fund's actual operating
expenses did not exceed the limit and therefore, the investment adviser did not
pay any portion of the fund's expenses.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of
MFS, as distributor, received $18,339 and $1,107 for the six months ended March
31, 2007, 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 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(d) RATE(e) FEE
Class A 0.10% 0.25% 0.35% 0.35% $261,534
Class B 0.75% 0.25% 1.00% 1.00% 437,001
Class C 0.75% 0.25% 1.00% 1.00% 207,080
Class R 0.25% 0.25% 0.50% 0.50% 16,064
Class R1 0.50% 0.25% 0.75% 0.75% 3,437
Class R2 0.25% 0.25% 0.50% 0.50% 15,413
Class R3 0.25% 0.25% 0.50% 0.50% 6,608
Class R4 -- 0.25% 0.25% 0.25% 1,884
Class 529A 0.25% 0.25% 0.50% 0.35% 1,546
Class 529B 0.75% 0.25% 1.00% 1.00% 1,220
Class 529C 0.75% 0.25% 1.00% 1.00% 2,124
- ---------------------------------------------------------------------------------------------
Total Distribution and Service Fees $953,911
(d) 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.
(e) The annual effective rates represent actual fees incurred under the
distribution plan for the six months ended March 31, 2007 based on each
class' average daily net assets. 0.10% of the Class 529A distribution fee
is currently being paid by the fund. Payment of the remaining 0.15% of the
Class 529A distribution fee is not yet in effect and will be implemented on
such date as the fund's Board of Trustees may determine.
Certain Class A, Class C, and Class 529C shares are subject to a contingent
deferred sales charge in the event of a shareholder redemption within 12 months
of purchase. Class B and Class 529B 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 March 31, 2007, were as follows:
AMOUNT
Class A $1,487
Class B 56,928
Class C 2,307
Class 529B 87
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 0.35% of the average daily net assets attributable to each 529
share class. The fee is based on average daily net assets and is currently
established at 0.25% annually of average daily net assets of the fund's 529
share classes. The fee may only be increased with the approval of the Board of
Trustees who oversees the fund. 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 March 31, 2007, were as follows:
AMOUNT
Class 529A $1,104
Class 529B 304
Class 529C 531
--------------------------------------------------
Total Program Manager Fees $1,939
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 March 31, 2007, the fee was $294,841,
which equated to 0.0700% annually of the fund's average daily net assets. MFSC
also receives payment 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. For the six months ended March 31, 2007, these
out-of-pocket expenses, sub-accounting and other shareholder servicing costs
amounted to $114,428. The fund may also pay shareholder servicing related costs
directly to non-related parties.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to the fund.
Under an administrative services agreement, the fund partially reimburses MFS
the costs incurred to provide these services. The fund is charged a fixed
amount plus a fee based on calendar year average net assets. The fund's annual
fixed amount is $17,500.
The administrative services fee incurred for the six months ended March 31,
2007 was equivalent to an annual effective rate of 0.0185% 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 March 31,
2007, 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(g) AMOUNT
Class R1 0.45% 0.35% $2,063
Class R2 0.40% 0.25% 12,331
Class R3 0.25% 0.15% 3,304
Class R4 0.15% 0.15% 1,129
Class R5 0.10% 0.10% 31
- -------------------------------------------------------------------------------
Total Retirement Plan Administration and
Services Fees $18,858
(g) MFS has agreed in writing 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, 2008. For the six months ended March
31, 2007, this waiver amounted to $6,404 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 March 31, 2007, the fee paid to Tarantino
LLC was $3,344. MFS has agreed to reimburse the fund for a portion of the
payments made by the funds to Tarantino LLC in the amount of $2,204, 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 U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$214,865,205 and $247,098,327, 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 YEAR ENDED
3/31/07 9/30/06
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 1,351,793 $19,530,470 4,027,250 $54,771,079
Class B 383,613 5,326,018 1,306,607 17,277,857
Class C 430,440 5,997,425 901,878 11,936,976
Class I 1,170,859 16,815,008 7,022,109 96,541,548
Class R 59,926 863,446 222,993 3,055,942
Class R1 74,401 1,043,928 58,658 775,905
Class R2 258,568 3,615,152 399,234 5,211,336
Class R3 246,717 3,557,758 216,320 2,906,741
Class R4 145,467 2,119,672 84,936 1,138,130
Class R5 -- -- 6 75
Class 529A 9,526 138,184 17,145 230,965
Class 529B 2,610 35,864 5,176 68,299
Class 529C 3,039 41,402 5,533 72,125
- ---------------------------------------------------------------------------------------------------------
4,136,959 $59,084,327 14,267,845 $193,986,978
Shares issued to shareholders in
reinvestment of distributions
Class A 310,421 $4,383,148 1,144,048 $15,170,079
Class B 170,425 2,328,001 897,005 11,544,457
Class C 76,472 1,045,378 330,575 4,257,810
Class I 1,301,900 18,682,266 3,288,670 44,298,382
Class R 12,272 172,675 92,104 1,215,766
Class R1 1,897 25,855 3,918 50,206
Class R2 14,382 196,604 3,205 41,349
Class R3 5,700 79,510 14,047 184,015
Class R4 3,129 44,111 551 7,303
Class R5 147 2,092 450 5,977
Class 529A 1,815 25,378 9,381 122,985
Class 529B 508 6,853 1,811 23,073
Class 529C 901 12,175 3,201 40,872
- ---------------------------------------------------------------------------------------------------------
1,899,969 $27,004,046 5,788,966 $76,962,274
Shares reacquired
Class A (2,109,650) $(30,131,440) (4,194,606) $(56,494,904)
Class B (1,586,094) (22,004,712) (3,431,282) (44,863,355)
Class C (603,748) (8,362,959) (1,153,342) (15,176,279)
Class I (895,202) (13,174,353) (390,988) (5,395,014)
Class R (174,420) (2,496,959) (552,496) (7,497,808)
Class R1 (77,758) (1,096,476) (19,366) (251,156)
Class R2 (150,482) (2,120,115) (53,732) (700,825)
Class R3 (228,161) (3,294,704) (133,816) (1,784,425)
Class R4 (119,483) (1,759,566) (564) (7,705)
Class R5 -- -- (6) (76)
Class 529A (40,237) (539,469) (4,793) (62,700)
Class 529B (413) (5,618) (2,832) (36,151)
Class 529C (3,026) (41,407) (3,160) (41,322)
- ---------------------------------------------------------------------------------------------------------
(5,988,674) $(85,027,778) (9,940,983) $(132,311,720)
Net change
Class A (447,436) $(6,217,822) 976,692 $13,446,254
Class B (1,032,056) (14,350,693) (1,227,670) (16,041,041)
Class C (96,836) (1,320,156) 79,111 1,018,507
Class I 1,577,557 22,322,921 9,919,791 135,444,916
Class R (102,222) (1,460,838) (237,399) (3,226,100)
Class R1 (1,460) (26,693) 43,210 574,955
Class R2 122,468 1,691,641 348,707 4,551,860
Class R3 24,256 342,564 96,551 1,306,331
Class R4 29,113 404,217 84,923 1,137,728
Class R5 147 2,092 450 5,976
Class 529A (28,896) (375,907) 21,733 291,250
Class 529B 2,705 37,099 4,155 55,221
Class 529C 914 12,170 5,574 71,675
- ---------------------------------------------------------------------------------------------------------
48,254 $1,060,595 10,115,828 $138,637,532
The fund is one of several mutual funds in which the MFS funds-of-funds may
invest. The MFS funds-of-funds do not invest in the underlying MFS funds for
the purpose of exercising management or control. At the end of the period, the
MFS Growth Allocation Fund, MFS Aggressive Growth Allocation Fund, and MFS
Moderate Allocation Fund were the owners of record of approximately 30%, 21%,
and 13%, respectively, of the value of outstanding voting shares. In addition,
the MFS Lifetime 2020 Fund, the MFS Lifetime 2030 Fund, and the MFS Lifetime
2040 Fund were each the owners of record of less than 1% of the value of
outstanding voting shares.
(6) LINE OF CREDIT
The fund and other funds managed by MFS participate in a $1 billion unsecured
committed line of credit provided by a syndication of banks under a credit
agreement. In addition, the fund and other funds managed by MFS have
established uncommitted borrowing arrangements with certain banks. 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 Federal Reserve funds
rate plus 0.35%. In addition, a commitment fee, based on the average daily,
unused portion of the committed line of credit, is allocated among the
participating funds at the end of each calendar quarter. For the six months
ended March 31, 2007, the fund's commitment fee and interest expense were
$2,516 and $0, respectively, and are included in miscellaneous expense on the
Statement of Operations.
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 fund 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 fund'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 fund'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 US
WEB SITE MAILING ADDRESS
mfs.com MFS Service Center, Inc.
P.O. Box 55824
MFS TALK Boston, MA
1-800-637-8255 02205-5824
24 hours a day
OVERNIGHT MAIL
ACCOUNT SERVICE AND MFS Service Center, Inc.
LITERATURE 500 Boylston Street
Boston, MA 02116-3741
SHAREHOLDERS
1-800-225-2606
8 a.m. to 8 p.m. ET
INVESTMENT PROFESSIONALS
1-800-343-2829
8 a.m. to 8 p.m. ET
RETIREMENT PLAN SERVICES
1-800-637-1255
8 a.m. to 8 p.m. ET
- -------------------------------------------------------------------------------
Go paperless with eDELIVERY: Arrange to have MFS(R) send prospectuses, reports,
and proxies directly to your e-mail inbox. You'll get timely information and
less clutter in your mailbox (not to mention help your fund save printing and
postage costs).
SIGN UP: If your account is registered with us, simply go to mfs.com, log in to
your account via MFS(R) Access, and select the eDelivery sign up options.
If you own your MFS fund shares through a financial institution or a retirement
plan, MFS(R) TALK, MFS Access, and eDelivery may not be available to you.
- -------------------------------------------------------------------------------
M F S(R)
INVESTMENT MANAGEMENT
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 407(c)(2)(iv) of Regulation S-K (as required by Item
22(b)(15) 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 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 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 XI
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By (Signature and Title)* MARIA F. DWYER
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Maria F. Dwyer, President
Date: May 14, 2007
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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
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Maria F. Dwyer, President (Principal Executive
Officer)
Date: May 14, 2007
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By (Signature and Title)* TRACY ATKINSON
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Tracy Atkinson, Treasurer (Principal Financial Officer
and Accounting Officer)
Date: May 14, 2007
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* Print name and title of each signing officer under his or her signature.