SEC Form N-CSRS filed by MFS Intermediate Income Trust
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 811-05440
MFS INTERMEDIATE INCOME TRUST
(Exact name of registrant as specified in charter)
111 Huntington Avenue, Boston, Massachusetts 02199 (Address of principal executive offices) (Zip code)
Christopher R. Bohane
Massachusetts Financial Services Company
111Huntington Avenue Boston, Massachusetts 02199
(Name and address of agents for service)
Registrant’s telephone number, including area code: (617) 954-5000
Date of fiscal year end: October 31
Date of reporting period: April 30, 2024
ITEM 1. REPORTS TO STOCKHOLDERS.
Item 1(a):
Income Trust
Income Trust
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| (a) | For all securities other than those specifically described below, ratings are assigned to underlying securities utilizing ratings from Moody’s, Fitch, and Standard & Poor’s rating agencies and applying the following hierarchy: If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. If none of the 3 rating agencies above assign a rating, but the security is rated by DBRS Morningstar, then the DBRS Morningstar rating is assigned. If none of the 4 rating agencies listed above rate the security, but the security is rated by the Kroll Bond Rating Agency (KBRA), then the KBRA rating is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). Securities rated BBB or higher are considered investment grade. All ratings are subject to change. U.S. Government includes securities issued by the U.S. Department of the Treasury. Federal Agencies includes rated and unrated U.S. Agency fixed-income securities, U.S. Agency mortgage-backed securities, and collateralized mortgage obligations of U.S. Agency mortgage-backed securities. |
| (d) | Duration is a measure of how much a bond’s price is likely to fluctuate with general changes in interest rates, e.g., if rates rise 1.00%, a bond with a 5-year duration is likely to lose about 5.00% of its value due to the interest rate move. The Average Duration calculation reflects the impact of the equivalent exposure of derivative positions, if any. |
| (i) | For purposes of this presentation, the components include the value of securities, and reflect the impact of the equivalent exposure of derivative positions, if any. These amounts may be negative from time to time. Equivalent exposure is a calculated amount that translates the derivative position into a reasonable approximation of the amount of the underlying asset that the portfolio would have to hold at a given point in time to have the same price sensitivity that results from the portfolio’s ownership of the derivative contract. When dealing with derivatives, equivalent exposure is a more representative measure of the potential impact of a position on portfolio performance than value. The bond component will include any accrued interest amounts. |
| (m) | In determining each instrument’s effective maturity for purposes of calculating the fund’s dollar-weighted average effective maturity, MFS uses the instrument’s stated maturity or, if applicable, an earlier date on which MFS believes it is probable that a maturity-shortening feature (such as a put, pre-refunding or prepayment) will cause the instrument to be repaid. Such an earlier date can be substantially shorter than the instrument’s stated maturity. |
| (o) | Less than 0.1%. |
| (q) | For purposes of this presentation, Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions and may be negative. |
| (v) | For purposes of this presentation, market value of fixed income and/or equity derivatives, if any, is included in Cash & Cash Equivalents. |
| Portfolio Manager | Primary Role | Since | Title and Five Year History |
| Geoffrey Schechter | Lead Portfolio Manager | 2017 | Investment Officer of MFS; employed in the investment management area of MFS since 1993. |
| Alexander Mackey | Investment Grade Debt Instruments Portfolio Manager | 2017 | Investment Officer of MFS; employed in the investment management area of MFS since 2001. |
| Jake Stone | U.S. Government Securities Portfolio Manager | 2023 | Investment Officer of MFS; employed in the investment management area of MFS since July 2018. |
| Issuer | Shares/Par | Value ($) | ||
| Bonds – 91.5% | ||||
| Aerospace & Defense – 0.5% | ||||
| Huntington Ingalls Industries, Inc., 3.844%, 5/01/2025 | $ | 1,486,000 | $1,454,835 | |
| Asset-Backed & Securitized – 7.5% | ||||
| 3650R Commercial Mortgage Trust, 2021-PF1, “XA”, 1.126%, 11/15/2054 (i) | $ | 10,361,541 | $476,755 | |
| ACREC 2021-FL1 Ltd., “AS”, FLR, 6.933% ((SOFR - 1mo. + 0.11448%) + 1.5%), 10/16/2036 (n) | 1,087,000 | 1,067,327 | ||
| American Credit Acceptance Receivables Trust, 2024-2 “A”, 5.9%, 2/12/2027 (n) | 1,311,000 | 1,310,785 | ||
| AmeriCredit Automobile Receivables Trust, 2024-1, “A”, 5.61%, 1/12/2027 (n) | 336,182 | 335,593 | ||
| Arbor Realty Trust, Inc., CLO, 2021-FL3, “AS”, FLR, 6.835% ((SOFR - 1mo. + 0.11448%) + 1.4%), 8/15/2034 (n) | 1,112,500 | 1,091,617 | ||
| AREIT 2022-CRE6 Trust, “AS”, FLR, 6.98% (SOFR - 30 day + 1.65%), 1/20/2037 (n) | 1,522,500 | 1,498,548 | ||
| ARI Fleet Lease Trust, 2023-B, “A2”, 6.05%, 7/15/2032 (n) | 283,291 | 284,113 | ||
| BDS 2021-FL9 Ltd., “A”, FLR, 6.503% ((SOFR - 1mo. + 0.11448%) + 1.07%), 11/16/2038 (n) | 774,498 | 768,556 | ||
| Brazos Securitization LLC, 5.014%, 9/01/2031 (n) | 695,632 | 679,074 | ||
| Bridgecrest Lending Auto Securitization Trust, 5.78%, 2/16/2027 | 869,000 | 869,023 | ||
| Bridgecrest Lending Auto Securitization Trust, 2023-1, “A2”, 6.34%, 7/15/2026 | 317,717 | 318,114 | ||
| BSPDF 2021-FL1 Issuer Ltd., “A”, FLR, 6.635% ((SOFR - 1mo. + 0.11448%) + 1.2%), 10/15/2036 (n) | 448,047 | 441,759 | ||
| BSPDF 2021-FL1 Issuer Ltd., “AS”, FLR, 6.915% ((SOFR - 1mo. + 0.11448%) + 1.48%), 10/15/2036 (n) | 774,500 | 749,251 | ||
| Business Jet Securities LLC, 2024-1A, “A”, 6.197%, 5/15/2039 (n) | 462,000 | 461,454 | ||
| BXMT 2021-FL4 Ltd., “AS”, FLR, 6.73% ((SOFR - 1mo. + 0.11448%) + 1.3%), 5/15/2038 (n) | 2,000,000 | 1,860,711 | ||
| Commercial Mortgage Trust, 2017-COR2, “A3”, 3.51%, 9/10/2050 | 1,676,352 | 1,538,113 | ||
| Dell Equipment Finance Trust, 2023-1, “A2”, 5.65%, 9/22/2028 (n) | 411,697 | 411,694 | ||
| Dell Equipment Finance Trust, 2023-3, “A2”, 6.1%, 4/23/2029 (n) | 346,000 | 346,592 | ||
| GLS Auto Select Receivables Trust, 2023-2A, 6.37%, 6/15/2028 (n) | 431,058 | 433,120 | ||
| LoanCore 2021-CRE6 Ltd., “AS”, FLR, 7.085% ((SOFR - 1mo. + 0.11448%) + 1.65%), 11/15/2038 (n) | 1,500,000 | 1,474,071 | ||
| Neuberger Berman CLO Ltd., 2023-53A, “B”, FLR, 7.572% (SOFR - 3mo. + 2.25%), 10/24/2032 (n) | 758,092 | 762,448 | ||
| OBX Trust, 2024-NQM1, “A1”, 5.928%, 11/25/2063 (n) | 327,243 | 324,181 | ||
| OBX Trust, 2024-NQM1, “A2”, 6.253%, 11/25/2063 (n) | 99,061 | 98,160 | ||
| OBX Trust, 2024-NQM2, “A1”, 5.878%, 12/25/2063 (n) | 1,517,075 | 1,507,702 | ||
| Issuer | Shares/Par | Value ($) | ||
| Bonds – continued | ||||
| Asset-Backed & Securitized – continued | ||||
| PFS Financing Corp., 2024-A, “A”, FLR, 6.18% (SOFR - 1mo. + 0.85%), 1/15/2028 (n) | $ | 1,700,000 | $1,704,182 | |
| ReadyCap Commercial Mortgage Trust, 2021-FL7, “A”, FLR, 6.631% ((SOFR - 1mo. + 0.11448%) + 1.2%), 11/25/2036 (z) | 431,567 | 428,463 | ||
| ReadyCap Commercial Mortgage Trust, 2021-FL7, “AS”, FLR, 6.931% ((SOFR - 1mo. + 0.11448%) + 1.5%), 11/25/2036 (z) | 199,500 | 197,778 | ||
| Santander Drive Auto Receivables Trust, 2024-1, “A2”, 5.71%, 2/16/2027 | 425,885 | 425,719 | ||
| SBNA Auto Lease Trust, 2024-A, “A2”, 5.45%, 1/20/2026 (n) | 433,000 | 432,065 | ||
| Verus Securitization Trust, 2014-1, “A1”, 5.712%, 1/25/2069 (n) | 915,910 | 905,256 | ||
| Verus Securitization Trust, 2024-1, “A2”, 5.915%, 1/25/2069 (n) | 255,947 | 252,774 | ||
| Westlake Automobile Receivables Trust, 2024-1A “A2B”, FLR, 5.9% (SOFR - 1mo. + 0.57%), 3/15/2027 (n) | 660,000 | 660,130 | ||
| $24,115,128 | ||||
| Automotive – 1.6% | ||||
| Ford Motor Credit Co. LLC, 5.8%, 3/05/2027 | $ | 958,000 | $951,652 | |
| Hyundai Capital America, 1.65%, 9/17/2026 (n) | 1,000,000 | 907,826 | ||
| LKQ Corp., 5.75%, 6/15/2028 | 862,000 | 861,145 | ||
| LKQ Corp., 6.25%, 6/15/2033 | 1,176,000 | 1,182,998 | ||
| Stellantis Finance US, Inc., 1.711%, 1/29/2027 (n) | 762,000 | 686,491 | ||
| Stellantis Finance US, Inc., 2.691%, 9/15/2031 (n) | 532,000 | 435,184 | ||
| $5,025,296 | ||||
| Broadcasting – 0.7% | ||||
| WarnerMedia Holdings, Inc., 4.279%, 3/15/2032 | $ | 2,524,000 | $2,174,140 | |
| Brokerage & Asset Managers – 2.6% | ||||
| Brookfield Finance, Inc., 2.724%, 4/15/2031 | $ | 2,844,000 | $2,369,778 | |
| Charles Schwab Corp., 5.875%, 8/24/2026 | 425,000 | 428,994 | ||
| Charles Schwab Corp., 5.643% to 5/19/2028, FLR (SOFR - 1 day + 2.210%) to 5/19/2029 | 1,535,000 | 1,537,417 | ||
| Low Income Investment Fund, 3.386%, 7/01/2026 | 705,000 | 657,705 | ||
| Low Income Investment Fund, 3.711%, 7/01/2029 | 1,905,000 | 1,711,261 | ||
| LPL Holdings, Inc., 6.75%, 11/17/2028 | 1,437,000 | 1,476,883 | ||
| $8,182,038 | ||||
| Business Services – 0.9% | ||||
| Tencent Holdings Ltd., 2.88%, 4/22/2031 (n) | $ | 1,499,000 | $1,275,482 | |
| Verisk Analytics, Inc., 4.125%, 3/15/2029 | 716,000 | 674,486 | ||
| Verisk Analytics, Inc., 5.75%, 4/01/2033 | 850,000 | 856,317 | ||
| $2,806,285 | ||||
| Issuer | Shares/Par | Value ($) | ||
| Bonds – continued | ||||
| Cable TV – 1.0% | ||||
| Charter Communications Operating LLC/Charter Communications Operating Capital Corp., 4.908%, 7/23/2025 | $ | 1,350,000 | $1,331,519 | |
| Charter Communications Operating LLC/Charter Communications Operating Capital Corp., 6.15%, 11/10/2026 | 372,000 | 372,915 | ||
| Cox Communications, Inc., 5.45%, 9/15/2028 (n) | 1,559,000 | 1,550,764 | ||
| $3,255,198 | ||||
| Conglomerates – 1.4% | ||||
| nVent Finance S.à r.l., 5.65%, 5/15/2033 | $ | 1,216,000 | $1,200,200 | |
| Regal Rexnord Corp., 6.05%, 4/15/2028 (n) | 1,533,000 | 1,530,038 | ||
| Westinghouse Air Brake Technologies Corp., 4.7%, 9/15/2028 | 1,760,000 | 1,694,007 | ||
| $4,424,245 | ||||
| Consumer Products – 0.2% | ||||
| Haleon US Capital LLC, 3.375%, 3/24/2029 | $ | 860,000 | $783,936 | |
| Consumer Services – 1.0% | ||||
| Booking Holdings, Inc., 3.55%, 3/15/2028 | $ | 2,737,000 | $2,571,005 | |
| Conservation Fund, 3.474%, 12/15/2029 | 563,000 | 498,555 | ||
| $3,069,560 | ||||
| Containers – 0.5% | ||||
| Berry Global, Inc., 1.65%, 1/15/2027 | $ | 1,542,000 | $1,390,517 | |
| Berry Global, Inc., 5.5%, 4/15/2028 | 325,000 | 321,295 | ||
| $1,711,812 | ||||
| Electrical Equipment – 0.3% | ||||
| Arrow Electronics, Inc., 3.875%, 1/12/2028 | $ | 1,049,000 | $986,496 | |
| Electronics – 0.2% | ||||
| Qorvo, Inc., 1.75%, 12/15/2024 | $ | 634,000 | $617,086 | |
| Emerging Market Quasi-Sovereign – 0.9% | ||||
| DAE Funding LLC (United Arab Emirates), 1.55%, 8/01/2024 (n) | $ | 613,000 | $605,212 | |
| DAE Funding LLC (United Arab Emirates), 2.625%, 3/20/2025 (n) | 1,000,000 | 967,280 | ||
| Qatar Petroleum, 2.25%, 7/12/2031 (n) | 1,635,000 | 1,328,110 | ||
| $2,900,602 | ||||
| Energy - Independent – 0.4% | ||||
| Pioneer Natural Resources Co., 1.9%, 8/15/2030 | $ | 1,750,000 | $1,435,819 | |
| Energy - Integrated – 0.4% | ||||
| Eni S.p.A., 4.25%, 5/09/2029 (n) | $ | 1,252,000 | $1,183,153 | |
| Issuer | Shares/Par | Value ($) | ||
| Bonds – continued | ||||
| Financial Institutions – 1.4% | ||||
| AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 3.3%, 1/30/2032 | $ | 332,000 | $277,169 | |
| Avolon Holdings Funding Ltd., 3.25%, 2/15/2027 (n) | 583,000 | 537,546 | ||
| Avolon Holdings Funding Ltd., 2.528%, 11/18/2027 (n) | 869,000 | 765,790 | ||
| Avolon Holdings Funding Ltd., 2.75%, 2/21/2028 (n) | 2,336,000 | 2,066,779 | ||
| SMBC Aviation Capital Finance DAC, 5.3%, 4/03/2029 (n) | 789,000 | 769,595 | ||
| $4,416,879 | ||||
| Food & Beverages – 2.4% | ||||
| Bacardi-Martini B.V., 5.25%, 1/15/2029 (n) | $ | 1,356,000 | $1,319,939 | |
| Constellation Brands, Inc., 4.4%, 11/15/2025 | 3,306,000 | 3,243,373 | ||
| JBS USA Lux S.A./JBS USA Food Co./JBS USA Finance, Inc., 3%, 2/02/2029 | 1,451,000 | 1,261,970 | ||
| JDE Peet's N.V., 1.375%, 1/15/2027 (n) | 1,931,000 | 1,723,455 | ||
| $7,548,737 | ||||
| Gaming & Lodging – 1.9% | ||||
| GLP Capital LP/GLP Financing II, Inc., 4%, 1/15/2031 | $ | 3,055,000 | $2,675,125 | |
| Hyatt Hotels Corp., 1.8%, 10/01/2024 | 1,286,000 | 1,263,277 | ||
| Marriott International, Inc., 2.85%, 4/15/2031 | 802,000 | 672,704 | ||
| Marriott International, Inc., 2.75%, 10/15/2033 | 1,750,000 | 1,378,590 | ||
| $5,989,696 | ||||
| Industrial – 0.3% | ||||
| Howard University, Washington D.C., AGM, 2.757%, 10/01/2027 | $ | 1,250,000 | $1,120,183 | |
| Insurance – 1.4% | ||||
| AIA Group Ltd., 3.375%, 4/07/2030 (n) | $ | 563,000 | $503,472 | |
| Corebridge Financial, Inc., 3.85%, 4/05/2029 | 2,500,000 | 2,294,925 | ||
| Sammons Financial Group, Inc., 4.75%, 4/08/2032 (n) | 2,000,000 | 1,722,209 | ||
| $4,520,606 | ||||
| Insurance - Health – 0.2% | ||||
| Humana, Inc., 3.7%, 3/23/2029 | $ | 867,000 | $799,110 | |
| Insurance - Property & Casualty – 2.1% | ||||
| Allied World Assurance Co. Holdings Ltd., 4.35%, 10/29/2025 | $ | 3,110,000 | $3,030,518 | |
| Arthur J. Gallagher & Co., 6.5%, 2/15/2034 | 1,626,000 | 1,693,382 | ||
| RenaissanceRe Holdings Ltd., 5.75%, 6/05/2033 | 2,000,000 | 1,949,529 | ||
| $6,673,429 | ||||
| International Market Quasi-Sovereign – 0.4% | ||||
| NBN Co. Ltd. (Commonwealth of Australia), 5.75%, 10/06/2028 (n) | $ | 1,181,000 | $1,196,887 | |
| Issuer | Shares/Par | Value ($) | ||
| Bonds – continued | ||||
| Machinery & Tools – 1.1% | ||||
| AGCO Corp., 5.8%, 3/21/2034 | $ | 529,000 | $517,599 | |
| CNH Industrial N.V., 3.85%, 11/15/2027 | 3,066,000 | 2,919,858 | ||
| $3,437,457 | ||||
| Major Banks – 11.2% | ||||
| Bank of America Corp., 1.734% to 7/22/2026, FLR (SOFR - 1 day + 0.96%) to 7/22/2027 | $ | 2,224,000 | $2,040,382 | |
| Bank of America Corp., 2.572% to 10/20/2031, FLR (SOFR - 1 day + 1.21%) to 10/20/2032 | 1,823,000 | 1,470,638 | ||
| Barclays PLC, 2.279% to 11/24/2026, FLR (CMT - 1yr. + 1.05%) to 11/24/2027 | 1,435,000 | 1,310,182 | ||
| BNP Paribas S.A., 2.591% to 1/20/2027, FLR (SOFR - 1 day + 1.228%) to 1/20/2028 (n) | 1,723,000 | 1,582,400 | ||
| Capital One Financial Corp., 7.624% to 10/30/2030, FLR (SOFR - 1 day + 3.07%) to 10/30/2031 | 1,677,000 | 1,804,620 | ||
| Deutsche Bank AG, 2.311% to 11/16/2026, FLR (SOFR - 1 day + 1.219%) to 11/16/2027 | 457,000 | 415,734 | ||
| Deutsche Bank AG, 6.72% to 1/18/2028, FLR (SOFR - 1 day + 3.18%) to 1/18/2029 | 150,000 | 152,982 | ||
| Goldman Sachs Group, Inc., 3.5%, 4/01/2025 | 1,500,000 | 1,470,101 | ||
| Goldman Sachs Group, Inc., 1.093% to 12/09/2025, FLR (SOFR - 1 day + 0.789%) to 12/09/2026 | 894,000 | 828,747 | ||
| HSBC Holdings PLC, 2.251% to 11/22/2026, FLR (SOFR - 1 day + 1.1%) to 11/22/2027 | 1,446,000 | 1,322,708 | ||
| Huntington Bancshares, Inc., 6.208% to 8/21/2028, FLR (SOFR - 1 day + 2.02%) to 8/21/2029 | 1,142,000 | 1,146,839 | ||
| JPMorgan Chase & Co., 2.005% to 3/13/2025, FLR (SOFR - 1 day + 1.585%) to 3/13/2026 | 2,500,000 | 2,418,417 | ||
| JPMorgan Chase & Co., 5.04% to 1/23/2027, FLR (SOFR - 1 day + 1.19%) to 1/23/2028 | 357,000 | 351,936 | ||
| JPMorgan Chase & Co., 2.58% to 4/22/2031, FLR (SOFR - 1 day + 1.25%) to 4/22/2032 | 2,250,000 | 1,851,425 | ||
| Lloyds Banking Group PLC, 3.511% to 3/18/2025, FLR (CMT - 1yr. + 1.6%) to 3/18/2026 | 2,546,000 | 2,490,013 | ||
| Mizuho Financial Group, 5.754%, 5/27/2034 | 2,000,000 | 1,994,721 | ||
| Morgan Stanley, 3.875%, 1/27/2026 | 5,400,000 | 5,245,770 | ||
| Morgan Stanley, 3.625%, 1/20/2027 | 824,000 | 787,723 | ||
| Morgan Stanley, 3.95%, 4/23/2027 | 290,000 | 277,710 | ||
| Morgan Stanley, 1.512% to 7/20/2026, FLR (SOFR - 1 day + 0.858%) to 7/20/2027 | 977,000 | 892,196 | ||
| Standard Chartered PLC, 6.17% to 1/09/2026, FLR (CMT - 1yr. + 2.05%) to 1/09/2027 (n) | 1,750,000 | 1,754,056 | ||
| UBS Group Funding (Switzerland) AG, 4.253%, 3/23/2028 (n) | 2,449,000 | 2,320,998 | ||
| Issuer | Shares/Par | Value ($) | ||
| Bonds – continued | ||||
| Major Banks – continued | ||||
| UniCredit S.p.A., 2.569% to 9/22/2025, FLR (CMT - 1yr. + 2.3%) to 9/22/2026 (n) | $ | 2,088,000 | $1,991,137 | |
| $35,921,435 | ||||
| Medical & Health Technology & Services – 0.6% | ||||
| IQVIA Holdings, Inc., 6.25%, 2/01/2029 | $ | 353,000 | $358,746 | |
| Iqvia, Inc., 5.7%, 5/15/2028 | 472,000 | 471,905 | ||
| ProMedica Toledo Hospital, “B”, AGM, 5.75%, 11/15/2038 | 1,250,000 | 1,237,052 | ||
| $2,067,703 | ||||
| Metals & Mining – 1.8% | ||||
| Anglo American Capital PLC, 4.75%, 4/10/2027 (n) | $ | 1,547,000 | $1,506,072 | |
| Anglo American Capital PLC, 2.25%, 3/17/2028 (n) | 744,000 | 656,101 | ||
| Anglo American Capital PLC, 2.875%, 3/17/2031 (n) | 870,000 | 729,968 | ||
| Glencore Funding LLC, 1.625%, 4/27/2026 (n) | 1,191,000 | 1,099,643 | ||
| Glencore Funding LLC, 3.875%, 10/27/2027 (n) | 1,887,000 | 1,778,036 | ||
| $5,769,820 | ||||
| Midstream – 1.7% | ||||
| Enbridge, Inc., 3.125%, 11/15/2029 | $ | 1,506,000 | $1,338,028 | |
| MPLX LP, 4%, 3/15/2028 | 1,395,000 | 1,322,237 | ||
| Plains All American Pipeline LP, 3.8%, 9/15/2030 | 1,510,000 | 1,353,229 | ||
| Targa Resources Corp., 4.2%, 2/01/2033 | 357,000 | 315,119 | ||
| Targa Resources Corp., 6.125%, 3/15/2033 | 577,000 | 584,182 | ||
| Targa Resources Partners LP/Targa Resources Finance Corp., 6.875%, 1/15/2029 | 499,000 | 507,963 | ||
| $5,420,758 | ||||
| Mortgage-Backed – 0.6% | ||||
| Fannie Mae, 6.5%, 11/01/2031 | $ | 236,865 | $238,707 | |
| Freddie Mac, 3.064%, 8/25/2024 | 1,227,676 | 1,217,696 | ||
| Freddie Mac, 0.362%, 10/25/2033 (i) | 11,614,030 | 210,011 | ||
| Freddie Mac, 6%, 8/01/2034 | 3,700 | 3,745 | ||
| Ginnie Mae, 6%, 6/15/2033 - 10/15/2036 | 195,788 | 201,062 | ||
| $1,871,221 | ||||
| Municipals – 4.2% | ||||
| Bridgeview, IL, Stadium and Redevelopment Projects, Taxable, AAC, 5.06%, 12/01/2025 | $ | 1,835,000 | $1,801,655 | |
| Gainesville, TX, Hospital District, Taxable, “A”, 5.711%, 8/15/2033 | 2,330,000 | 2,284,771 | ||
| Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Taxable, “B”, 3%, 6/01/2046 | 605,000 | 552,983 | ||
| Guam International Airport Authority Rev., Taxable (A.B. Won Pat Airport), “A”, 3.839%, 10/01/2036 | 110,000 | 89,210 | ||
| Issuer | Shares/Par | Value ($) | ||
| Bonds – continued | ||||
| Municipals – continued | ||||
| Massachusetts Educational Financing Authority, Education Loan Rev., Taxable, Issue M, “A”, 2.641%, 7/01/2037 | $ | 2,000,000 | $1,756,741 | |
| Michigan Finance Authority Hospital Refunding Rev., Taxable (Trinity Health Credit Group), “T”, 3.084%, 12/01/2034 | 2,500,000 | 2,105,346 | ||
| Michigan Finance Authority Tobacco Settlement Asset-Backed Rev., Taxable (2006 Sold Tobacco Receipts), “A-1”, 2.326%, 6/01/2030 | 106,766 | 104,089 | ||
| Rhode Island Student Loan Authority, Education Loan Rev., Taxable, “2”, 2.348%, 12/01/2040 | 260,000 | 233,191 | ||
| Syracuse, NY, Industrial Development Agency PILOT Rev., Taxable (Carousel Center Project), “B”, 5%, 1/01/2036 (n) | 3,635,000 | 2,724,502 | ||
| University of California, General Taxable Rev., Taxable, “BG”, 1.614%, 5/15/2030 | 2,010,000 | 1,652,456 | ||
| $13,304,944 | ||||
| Other Banks & Diversified Financials – 1.3% | ||||
| AIB Group PLC, 6.608% to 9/13/2028, FLR (SOFR - 1 day + 2.33%) to 9/13/2029 (n) | $ | 352,000 | $358,785 | |
| CaixaBank S.A., 5.673% to 3/15/2029, FLR (SOFR - 1 day + 1.78%) to 3/15/2030 (n) | 637,000 | 625,944 | ||
| Macquarie Group Ltd., 1.34% to 1/12/2026, FLR (SOFR - 1 day + 1.069%) to 1/12/2027 (n) | 1,784,000 | 1,652,410 | ||
| Macquarie Group Ltd., 6.255% to 12/07/2033, FLR (SOFR - 1 day + 2.303%) to 12/07/2034 (n) | 819,000 | 829,812 | ||
| Truist Financial Corp., 5.435% to 1/24/2029, FLR (SOFR - 1 day + 1.62%) to 1/24/2030 | 789,000 | 772,884 | ||
| $4,239,835 | ||||
| Pharmaceuticals – 0.6% | ||||
| Bayer US Finance LLC, 6.375%, 11/21/2030 (n) | $ | 2,000,000 | $2,005,372 | |
| Real Estate - Retail – 2.6% | ||||
| Brixmor Operating Partnership LP, REIT, 4.05%, 7/01/2030 | $ | 2,349,000 | $2,126,737 | |
| NNN REIT, Inc., 5.6%, 10/15/2033 | 675,000 | 662,235 | ||
| Realty Income Corp., REIT, 3.4%, 1/15/2028 | 2,875,000 | 2,678,327 | ||
| Regency Centers Corp., 3.7%, 6/15/2030 | 3,000,000 | 2,698,585 | ||
| $8,165,884 | ||||
| Specialty Stores – 0.7% | ||||
| DICK'S Sporting Goods, 3.15%, 1/15/2032 | $ | 2,631,000 | $2,170,512 | |
| Telecommunications - Wireless – 1.8% | ||||
| Crown Castle, Inc., REIT, 3.65%, 9/01/2027 | $ | 947,000 | $887,516 | |
| Crown Castle, Inc., REIT, 2.25%, 1/15/2031 | 1,000,000 | 804,168 | ||
| Rogers Communications, Inc., 3.2%, 3/15/2027 | 1,739,000 | 1,631,316 | ||
| Issuer | Shares/Par | Value ($) | ||
| Bonds – continued | ||||
| Telecommunications - Wireless – continued | ||||
| T-Mobile USA, Inc., 3.875%, 4/15/2030 | $ | 2,500,000 | $2,287,513 | |
| $5,610,513 | ||||
| Tobacco – 1.2% | ||||
| B.A.T. Capital Corp., 4.7%, 4/02/2027 | $ | 2,000,000 | $1,948,821 | |
| Philip Morris International, Inc., 5.75%, 11/17/2032 | 1,773,000 | 1,785,026 | ||
| $3,733,847 | ||||
| Transportation - Services – 2.3% | ||||
| Element Fleet Management Corp., 6.271%, 6/26/2026 (n) | $ | 1,685,000 | $1,693,831 | |
| Element Fleet Management Corp., 5.643%, 3/13/2027 (n) | 653,000 | 648,442 | ||
| GXO Logistics, Inc., 6.25%, 5/06/2029 (w) | 625,000 | 625,711 | ||
| Penske Truck Leasing Co. LP, 5.35%, 1/12/2027 (n) | 648,000 | 641,609 | ||
| Penske Truck Leasing Co. LP, 5.35%, 3/30/2029 (n) | 911,000 | 895,147 | ||
| Toll Road Investors Partnership II LP, Capital Appreciation, NPFG, 0%, 2/15/2026 (n) | 480,000 | 415,808 | ||
| Toll Road Investors Partnership II LP, Capital Appreciation, NPFG, 0%, 2/15/2027 (n) | 1,525,000 | 1,206,541 | ||
| Toll Road Investors Partnership II LP, Capital Appreciation, NPFG, 0%, 2/15/2029 (n) | 1,392,000 | 942,381 | ||
| Toll Road Investors Partnership II LP, Capital Appreciation, NPFG, 0%, 2/15/2031 (n) | 480,000 | 275,857 | ||
| $7,345,327 | ||||
| U.S. Government Agencies and Equivalents – 0.0% | ||||
| Small Business Administration, 5.36%, 11/01/2025 | $ | 29,291 | $28,927 | |
| Small Business Administration, 5.39%, 12/01/2025 | 18,886 | 18,709 | ||
| $47,636 | ||||
| U.S. Treasury Obligations – 25.2% | ||||
| U.S. Treasury Notes, 2.375%, 8/15/2024 | $ | 9,230,000 | $9,149,328 | |
| U.S. Treasury Notes, 2%, 2/15/2025 (f) | 9,900,000 | 9,642,929 | ||
| U.S. Treasury Notes, 2%, 8/15/2025 | 5,225,000 | 5,019,674 | ||
| U.S. Treasury Notes, 2.25%, 11/15/2025 | 5,086,000 | 4,869,249 | ||
| U.S. Treasury Notes, 2%, 11/15/2026 | 6,254,000 | 5,819,640 | ||
| U.S. Treasury Notes, 1.625%, 11/30/2026 | 7,750,000 | 7,135,449 | ||
| U.S. Treasury Notes, 1.875%, 2/28/2027 | 10,066,500 | 9,269,831 | ||
| U.S. Treasury Notes, 2.375%, 5/15/2027 | 4,075,000 | 3,790,387 | ||
| U.S. Treasury Notes, 0.5%, 6/30/2027 | 6,500,000 | 5,678,359 | ||
| U.S. Treasury Notes, 0.375%, 9/30/2027 | 5,672,000 | 4,883,902 | ||
| U.S. Treasury Notes, 1.75%, 11/15/2029 | 4,500,000 | 3,868,945 | ||
| U.S. Treasury Notes, 1.5%, 2/15/2030 | 5,043,500 | 4,229,251 | ||
| U.S. Treasury Notes, 4.625%, 4/30/2031 | 1,626,000 | 1,618,378 | ||
| U.S. Treasury Notes, 1.875%, 2/15/2032 | 2,705,500 | 2,211,324 | ||
| Issuer | Shares/Par | Value ($) | ||
| Bonds – continued | ||||
| U.S. Treasury Obligations – continued | ||||
| U.S. Treasury Notes, 4.125%, 11/15/2032 | $ | 3,400,000 | $3,264,531 | |
| $80,451,177 | ||||
| Utilities - Electric Power – 4.4% | ||||
| Algonquin Power & Utilities Corp., 5.365%, 6/15/2026 | $ | 364,000 | $360,198 | |
| Enel Americas S.A., 4%, 10/25/2026 | 252,000 | 240,839 | ||
| Enel Finance International N.V., 6.8%, 10/14/2025 (n) | 895,000 | 910,005 | ||
| FirstEnergy Corp., 4.15%, 7/15/2027 | 2,827,000 | 2,663,515 | ||
| ITC Holdings Corp., 2.95%, 5/14/2030 (n) | 3,000,000 | 2,583,174 | ||
| Liberty Utilities Finance Co., 2.05%, 9/15/2030 (n) | 3,000,000 | 2,367,331 | ||
| Pacific Gas & Electric Co., 5.45%, 6/15/2027 | 401,000 | 398,446 | ||
| Pacific Gas & Electric Co., 2.1%, 8/01/2027 | 952,000 | 847,923 | ||
| Pacific Gas & Electric Co., 6.1%, 1/15/2029 | 326,000 | 328,655 | ||
| Southern California Edison Co., 6.65%, 4/01/2029 | 816,000 | 845,786 | ||
| Transelec S.A., 4.25%, 1/14/2025 (n) | 228,000 | 225,120 | ||
| Vistra Operations Co. LLC, 4.875%, 5/13/2024 (n) | 2,446,000 | 2,444,832 | ||
| $14,215,824 | ||||
| Total Bonds (Identified Cost, $313,031,315) | $292,170,421 | |||
| Investment Companies (h) – 8.5% | ||||
| Money Market Funds – 8.5% | ||||
| MFS Institutional Money Market Portfolio, 5.38% (v) (Identified Cost, $27,040,850) | 27,040,853 | $27,040,853 | ||
| Other Assets, Less Liabilities – (0.0)% | (29,266) | |||
| Net Assets – 100.0% | $319,182,008 | |||
| (f) | All or a portion of the security has been segregated as collateral for open futures contracts. |
| (h) | An affiliated issuer, which may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $27,040,853 and $292,170,421, respectively. |
| (i) | Interest only security for which the fund receives interest on notional principal (Par amount). Par amount shown is the notional principal and does not reflect the cost of the security. |
| (n) | Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $77,801,689, representing 24.4% of net assets. |
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. |
| (w) | When-issued security. |
| (z) | Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities: |
| Restricted Securities | Acquisition Date | Cost | Value |
| ReadyCap Commercial Mortgage Trust, 2021-FL7, “A”, FLR, 6.631% ((SOFR - 1mo. + 0.11448%) + 1.2%), 11/25/2036 | 11/12/21 | $431,567 | $428,463 |
| ReadyCap Commercial Mortgage Trust, 2021-FL7, “AS”, FLR, 6.931% ((SOFR - 1mo. + 0.11448%) + 1.5%), 11/25/2036 | 11/12/21 | 199,500 | 197,778 |
| Total Restricted Securities | $626,241 | ||
| % of Net assets | 0.2% |
| The following abbreviations are used in this report and are defined: | |
| AAC | Ambac Assurance Corp. |
| AGM | Assured Guaranty Municipal |
| CLO | Collateralized Loan Obligation |
| CMT | Constant Maturity Treasury |
| FLR | Floating Rate. Interest rate resets periodically based on the parenthetically disclosed reference rate plus a spread (if any). The period-end rate reported may not be the current rate. All reference rates are USD unless otherwise noted. |
| NPFG | National Public Finance Guarantee Corp. |
| REIT | Real Estate Investment Trust |
| SOFR | Secured Overnight Financing Rate |
| Futures Contracts | ||||||
| Description | Long/ Short | Currency | Contracts | Notional Amount | Expiration Date | Value/Unrealized Appreciation (Depreciation) |
| Asset Derivatives | ||||||
| Interest Rate Futures | ||||||
| U.S. Treasury Ultra Bond 30 yr | Short | USD | 29 | $3,467,313 | June – 2024 | $141,671 |
| U.S. Treasury Ultra Note 10 yr | Short | USD | 70 | 7,715,312 | June – 2024 | 276,534 |
| $418,205 | ||||||
| Liability Derivatives | ||||||
| Interest Rate Futures | ||||||
| U.S. Treasury Note 10 yr | Long | USD | 116 | $12,462,750 | June – 2024 | $(322,463) |
| U.S. Treasury Note 2 yr | Long | USD | 9 | 1,823,906 | June – 2024 | (3,829) |
| U.S. Treasury Note 5 yr | Long | USD | 517 | 54,151,711 | June – 2024 | (935,985) |
| $(1,262,277) | ||||||
| Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $313,031,315) | $292,170,421 |
| Investments in affiliated issuers, at value (identified cost, $27,040,850) | 27,040,853 |
| Receivables for | |
| Investments sold | 70,744 |
| Interest | 2,458,637 |
| Other assets | 75,097 |
| Total assets | $321,815,752 |
| Liabilities | |
| Payables for | |
| Distributions | $88,798 |
| Net daily variation margin on open futures contracts | 170,395 |
| Investments purchased | 1,617,763 |
| When-issued investments purchased | 621,619 |
| Payable to affiliates | |
| Investment adviser | 9,704 |
| Administrative services fee | 306 |
| Transfer agent and dividend disbursing costs | 2,600 |
| Payable for independent Trustees' compensation | 1,122 |
| Accrued expenses and other liabilities | 121,437 |
| Total liabilities | $2,633,744 |
| Net assets | $319,182,008 |
| Net assets consist of | |
| Paid-in capital | $362,012,936 |
| Total distributable earnings (loss) | (42,830,928) |
| Net assets | $319,182,008 |
| Shares of beneficial interest outstanding (114,011,570 shares issued less 213,332 capital shares to be retired) (unlimited number of shares authorized) | 113,798,238 |
| Net asset value per share (net assets of $319,182,008 / 113,798,238 shares of beneficial interest outstanding) | $2.80 |
| Net investment income (loss) | |
| Income | |
| Interest | $5,466,679 |
| Dividends from affiliated issuers | 792,767 |
| Total investment income | $6,259,446 |
| Expenses | |
| Management fee | $882,707 |
| Transfer agent and dividend disbursing costs | 38,564 |
| Administrative services fee | 28,225 |
| Independent Trustees' compensation | 5,359 |
| Stock exchange fee | 55,504 |
| Custodian fee | 11,630 |
| Shareholder communications | 71,113 |
| Audit and tax fees | 48,742 |
| Legal fees | 6,202 |
| Miscellaneous | 22,978 |
| Total expenses | $1,171,024 |
| Net investment income (loss) | $5,088,422 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $(1,272,305) |
| Affiliated issuers | (153) |
| Futures contracts | (421,063) |
| Net realized gain (loss) | $(1,693,521) |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $9,737,832 |
| Affiliated issuers | (1,950) |
| Futures contracts | (5,101) |
| Net unrealized gain (loss) | $9,730,781 |
| Net realized and unrealized gain (loss) | $8,037,260 |
| Change in net assets from operations | $13,125,682 |
| Six months ended | Year ended | |
| 4/30/24 (unaudited) | 10/31/23 | |
| Change in net assets | ||
| From operations | ||
| Net investment income (loss) | $5,088,422 | $9,217,321 |
| Net realized gain (loss) | (1,693,521) | (6,701,513) |
| Net unrealized gain (loss) | 9,730,781 | 7,131,199 |
| Change in net assets from operations | $13,125,682 | $9,647,007 |
| Distributions to shareholders | $(5,246,933) | $(9,780,059) |
| Tax return of capital distributions to shareholders | $— | $(19,197,187) |
| Distributions from other sources | $(8,647,656) | $— |
| Change in net assets from fund share transactions | $(554,096) | $(2,444,698) |
| Total change in net assets | $(1,323,003) | $(21,774,937) |
| Net assets | ||
| At beginning of period | 320,505,011 | 342,279,948 |
| At end of period | $319,182,008 | $320,505,011 |
| Six months ended | Year ended | |||||
| 4/30/24 (unaudited) | 10/31/23 | 10/31/22 | 10/31/21 | 10/31/20 | 10/31/19 | |
| Net asset value, beginning of period | $2.81 | $2.98 | $3.64 | $3.95 | $4.04 | $4.03 |
| Income (loss) from investment operations | ||||||
| Net investment income (loss) (d) | $0.04 | $0.08 | $0.07 | $0.08 | $0.09 | $0.10 |
| Net realized and unrealized gain (loss) | 0.07 | 0.00(w) | (0.44) | (0.06) | 0.16 | 0.25 |
| Total from investment operations | $0.11 | $0.08 | $(0.37) | $0.02 | $0.25 | $0.35 |
| Less distributions declared to shareholders | ||||||
| From net investment income | $(0.05) | $(0.08) | $(0.08) | $(0.10) | $(0.11) | $(0.10) |
| From net realized gain | — | — | — | (0.03) | (0.04) | — |
| From tax return of capital | — | (0.17) | (0.21) | (0.20) | (0.19) | (0.24) |
| From other sources | (0.07) | — | — | — | — | — |
| Total distributions declared to shareholders | $(0.12) | $(0.25) | $(0.29) | $(0.33) | $(0.34) | $(0.34) |
| Net increase from repurchase of capital shares | $0.00(w) | $0.00(w) | $0.00(w) | $— | $0.00(w) | $0.00(w) |
| Net asset value, end of period (x) | $2.80 | $2.81 | $2.98 | $3.64 | $3.95 | $4.04 |
| Market value, end of period | $2.60 | $2.58 | $2.75 | $3.63 | $3.73 | $3.77 |
| Total return at market value (%) | 5.41(n) | 2.73 | (16.98) | 6.18 | 8.24 | 11.87 |
| Total return at net asset value (%) (j)(r)(s)(x) | 4.23(n) | 3.26 | (10.29) | 0.54 | 6.96 | 9.77 |
| Ratios (%) (to average net assets) and Supplemental data: | ||||||
| Expenses | 0.72(a) | 0.69 | 0.65 | 0.62 | 0.64 | 0.65 |
| Net investment income (loss) | 3.13(a) | 2.72 | 2.16 | 2.08 | 2.33 | 2.58 |
| Portfolio turnover | 9(n) | 15 | 16 | 20 | 43 | 18 |
| Net assets at end of period (000 omitted) | $319,182 | $320,505 | $342,280 | $422,382 | $457,844 | $472,422 |
| (a) | Annualized. |
| (d) | Per share data is based on average shares outstanding. |
| (j) | Total return at net asset value is calculated using the net asset value of the fund, not the publicly traded price and therefore may be different than the total return at market value. |
| (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. |
| (w) | Per share amount was less than $0.01. |
| (x) | The net asset values and total returns at net asset value have been calculated on net assets which include adjustments made in accordance with U.S. generally accepted accounting principles required at period end for financial reporting purposes. |
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| U.S. Treasury Bonds & U.S. Government Agencies & Equivalents | $— | $80,498,813 | $— | $80,498,813 |
| Non - U.S. Sovereign Debt | — | 4,097,489 | — | 4,097,489 |
| Municipal Bonds | — | 13,304,944 | — | 13,304,944 |
| U.S. Corporate Bonds | — | 116,767,265 | — | 116,767,265 |
| Residential Mortgage-Backed Securities | — | 4,959,294 | — | 4,959,294 |
| Commercial Mortgage-Backed Securities | — | 6,000,368 | — | 6,000,368 |
| Asset-Backed Securities (including CDOs) | — | 15,026,687 | — | 15,026,687 |
| Foreign Bonds | — | 51,515,561 | — | 51,515,561 |
| Mutual Funds | 27,040,853 | — | — | 27,040,853 |
| Total | $27,040,853 | $292,170,421 | $— | $319,211,274 |
| Other Financial Instruments | ||||
| Futures Contracts – Assets | $418,205 | $— | $— | $418,205 |
| Futures Contracts – Liabilities | (1,262,277) | — | — | (1,262,277) |
| Fair Value (a) | |||
| Risk | Derivative Contracts | Asset Derivatives | Liability Derivatives |
| Interest Rate | Futures Contracts | $418,205 | $(1,262,277) |
| (a) | Values presented in this table for futures contracts correspond to the values reported in the Portfolio of Investments. Only the current day net variation margin for futures contracts is reported separately within the Statement of Assets and Liabilities. |
| Risk | Futures Contracts |
| Interest Rate | $(421,063) |
| Risk | Futures Contracts |
| Interest Rate | $(5,101) |
| Year ended 10/31/23 | |
| Ordinary income (including any short-term capital gains) | $9,780,059 |
| Tax return of capital (b) | 19,197,187 |
| Total distributions | $28,977,246 |
| (b) | Distributions in excess of tax basis earnings and profits are reported in the financial statements as a tax return of capital. |
| As of 4/30/24 | |
| Cost of investments | $341,128,216 |
| Gross appreciation | 387,114 |
| Gross depreciation | (22,304,056) |
| Net unrealized appreciation (depreciation) | $(21,916,942) |
| As of 10/31/23 | |
| Capital loss carryforwards | (10,419,949) |
| Other temporary differences | (88,400) |
| Net unrealized appreciation (depreciation) | (31,553,672) |
| Short-Term | $(1,856,481) |
| Long-Term | (8,563,468) |
| Total | $(10,419,949) |
| Purchases | Sales | |
| U.S. Government securities | $1,829,424 | $8,455,634 |
| Non-U.S. Government securities | 24,778,304 | 27,177,565 |
| Six months ended 4/30/24 | Year ended 10/31/23 | ||||
| Shares | Amount | Shares | Amount | ||
| Capital shares repurchased | (213,332) | $(554,096) | (886,201) | $(2,444,698) | |
| Affiliated Issuers | Beginning Value | Purchases | Sales Proceeds | Realized Gain (Loss) | Change in Unrealized Appreciation or Depreciation | Ending Value |
| MFS Institutional Money Market Portfolio | $30,216,448 | $40,508,333 | $43,681,825 | $(153) | $(1,950) | $27,040,853 |
| Affiliated Issuers | Dividend Income | Capital Gain Distributions |
| MFS Institutional Money Market Portfolio | $792,767 | $— |
and Exchange Commission and the PCAOB.
June 14, 2024
DIVIDEND DISBURSING AGENT
Item 1(b):
A copy of the notice transmitted to the Registrant’s shareholders in reliance on Rule 30e-3 of the Investment Company Act of 1940, as amended that contains disclosure specified by paragraph (c)(3) of Rule 30e-3 is attached hereto as EX-99.30e-3Notice.
ITEM 2. CODE OF ETHICS.
The Registrant has adopted a Code of Ethics (the “Code”) pursuant to Section 406 of the Sarbanes-Oxley Act and as defined in Form N-CSR that applies to the Registrant’s principal executive officer and principal financial and accounting officer. During the period covered by this report, the Registrant has not amended any provision in the Code that relates to an element of the Code’s definition enumerated in paragraph
(b)of Item 2 of this Form N-CSR. During the period covered by this report, the Registrant did not grant a waiver, including an implicit
waiver, from any provision of the Code. David L. DiLorenzo (Principal Executive Officer) and James O. Yost (Principal Financial Officer) were the two persons covered by the Code prior to April 1, 2024. Beginning April 1, 2024, David L. DiLorenzo (Principal Executive Officer) and Kasey L. Phillips (Principal Financial Officer) are the two persons covered by the Code.
A copy of the Code is attached hereto as EX-99.COE.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable for semi-annual reports.
ITEM 6. INVESTMENTS
A schedule of investments of the Registrant is included as part of the report to shareholders of the Registrant under Item 1(a) of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable for semi-annual reports.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Portfolio Manager(s)
Information regarding the portfolio manager(s) of the MFS Intermediate Income Trust (the "Fund") is set forth below. Each portfolio manager is primarily responsible for the day-to-day management of the Fund.
Geoffrey Schechter has announced his intention to retire effective September 30, 2025, and he will no longer be a portfolio manager of the fund as of that date.
|
Portfolio Manager |
Primary Role |
Since |
Title and Five Year History |
|
Geoffrey Schechter |
Lead Portfolio Manager |
2017 |
Investment Officer of MFS; employed in the investment |
|
|
|
|
area of MFS since 1993 |
|
Alexander Mackey |
Investment Grade Debt Instruments Portfolio |
2017 |
Co-Chief Investment Officer-Global Fixed Income of MFS; |
|
|
Manager |
|
employed in the investment area of MFS since 2001 |
|
Jake Stone |
U.S. Government Securities Portfolio Manager |
2023 |
Investment Officer of MFS; employed in the investment |
|
|
|
|
area of MFS since 2018 |
Compensation
MFS’ philosophy is to align portfolio manager compensation with the goal to provide shareholders with long-term value through a collaborative investment process. Therefore, MFS uses long-term investment performance as well as contribution to the overall investment process and collaborative culture as key factors in determining portfolio manager compensation. In addition, MFS seeks to maintain total compensation programs that are competitive in the asset management industry in each geographic market where it has employees. MFS uses competitive compensation data to ensure that compensation practices are aligned with its goals of attracting, retaining, and motivating the highest-quality professionals.
MFS reviews portfolio manager compensation annually. In determining portfolio manager compensation, MFS uses quantitative means and qualitative means to help ensure a durable investment process. As of December 31, 2023, portfolio manager total cash compensation is a combination of base salary and performance bonus:
Base Salary – Base salary generally represents a smaller percentage of portfolio manager total cash compensation than performance bonus. Performance Bonus – Generally, the performance bonus represents more than a majority of portfolio manager total cash compensation.
The performance bonus is based on a combination of quantitative and qualitative factors, generally with more weight given to the former and less weight given to the latter. The quantitative portion is primarily based on the pre-tax performance of accounts managed by the portfolio manager over a range of fixed-length time periods, intended to provide the ability to assess performance over time periods consistent with a full market cycle and a strategy's investment horizon. The fixed-length time periods include the portfolio manager's full tenure on each Fund/strategy and, when available, 10-, 5-, and 3-year periods. For portfolio managers who have served for less than three years, shorter- term periods, including the one-year period, will also be considered, as will performance in previous roles, if any, held at the firm. Emphasis is generally placed on longer performance periods when multiple performance periods are available. Performance is evaluated across the full set of strategies and portfolios managed by a given portfolio manager, relative to appropriate peer group universes and/or representative indices (“benchmarks”). As of December 31, 2023, the following benchmarks were used to measure the following portfolio manager's performance for the Fund, unless otherwise indicated:
|
Fund |
Portfolio Manager |
Benchmark(s) |
|
MFS Intermediate Income Trust |
Geoffrey Schechter |
Bloomberg U.S. Intermediate Government/Credit Bond Index |
|
|
Jake Stone |
Bloomberg U.S. Intermediate Government/Credit Bond Index |
Benchmarks may include versions and components of indices, custom indices, and linked indices that combine performance of different indices for different portions of the time period, where appropriate.
The qualitative portion is based on the results of an annual internal peer review process (where portfolio managers are evaluated by other portfolio managers, analysts, and traders) and management’s assessment of overall portfolio manager contributions to the MFS investment process and the client experience (distinct from fund and other account performance).
The performance bonus may be in the form of cash and/or a deferred cash award, at the discretion of management. A deferred cash award is issued for a cash value and becomes payable over a three-year vesting period if the portfolio manager remains in the continuous employ of MFS or its affiliates. During the vesting period, the value of the unfunded deferred cash award will fluctuate as though the portfolio manager had invested the cash value of the award in an MFS fund(s) selected by the portfolio manager. A selected fund may, but is not required to, be a fund that is managed by the portfolio manager.
With respect to Mr. Alexander Mackey, his compensation reflects his broader role within MFS as Co-Chief Investment Officer-Global Fixed Income in addition to being a portfolio manager. His performance bonus is based on a combination of quantitative and qualitative factors, generally with more weight given to the former and less weight given to the latter. The quantitative portion is based on overall group investment performance and business performance metrics. The qualitative portion is based on the results of an annual internal review process conducted by the Chief Investment Officer which takes into account his broad leadership responsibilities. This performance bonus may be in the form of cash and/or a deferred cash award, at the discretion of management. A deferred cash award is issued for a cash value and becomes payable over a three-year vesting period if the portfolio manager remains in the continuous employ of MFS or its affiliates. During the vesting period, the value of the unfunded deferred cash award will fluctuate as though the portfolio manager had invested the cash
value of the award in an MFS fund(s) selected by the portfolio manager. A selected fund may, but is not required to, be a fund that is managed by the portfolio manager.
MFS Equity Plan – Portfolio managers also typically benefit from the opportunity to participate in the MFS Equity Plan. Equity interests are awarded by management, on a discretionary basis, taking into account tenure at MFS, contribution to the investment process, and other factors.
Finally, portfolio managers also participate in benefit plans (including a defined contribution plan and health and other insurance plans) and programs available generally to other employees of MFS. The percentage such benefits represent of any portfolio manager’s compensation depends upon the length of the individual’s tenure at MFS and salary level, as well as other factors.
Ownership of Fund Shares
The following table shows the dollar range of equity securities of the Fund beneficially owned by the Fund’s portfolio manager(s) as of the Fund's fiscal year ended October 31, 2023. The following dollar ranges apply:
N. None
A. $1 – $10,000
B. $10,001 – $50,000
C. $50,001 – $100,000
D. $100,001 – $500,000
E. $500,001 – $1,000,000
F. Over $1,000,000
|
Name of Portfolio Manager |
Dollar Range of Equity Securities in Fund |
|
Geoffrey Schechter |
N |
|
Alexander Mackey |
N |
|
Jake Stone |
N |
Other Accounts
In addition to the Fund, each portfolio manager of the Fund is named as a portfolio manager of certain other accounts managed or sub- advised by MFS or an affiliate. The number and assets of these accounts were as follows as of the Fund's fiscal year ended October 31, 2023:
|
|
Registered Investment Companies* |
Other Pooled Investment Vehicles |
Other Accounts |
|||
|
Name |
Number of Accounts |
Total |
Number of |
Total Assets |
Number of |
Total Assets |
|
|
|
Assets |
Accounts |
|
Accounts |
|
|
Geoffrey Schechter |
15 |
$19.6 billion |
4 |
$696.9 million |
5 |
$829.9 million |
|
|
|
|
|
|
|
|
|
Alexander Mackey |
18 |
$32.7 billion |
5 |
$2.8 billion |
6 |
$464.6 million |
|
|
|
|
|
|
|
|
|
Jake Stone |
5 |
$5.0 billion |
2 |
$409.3 million |
0 |
N/A |
*Includes the Fund
Advisory fees are not based upon performance of any of the accounts identified in the table above.
Potential Conflicts of Interest
MFS seeks to identify potential conflicts of interest resulting from a portfolio manager’s management of both the Fund and other accounts, and has adopted policies and procedures designed to address such potential conflicts. There is no guarantee that MFS will be successful in identifying or mitigating conflicts of interest.
The management of multiple funds and accounts (including accounts in which MFS or an affiliate has an interest) gives rise to conflicts of interest if the funds and accounts have different objectives and strategies, benchmarks, time horizons, and fees, as a portfolio manager must allocate his or her time and investment ideas across multiple funds and accounts. In certain instances, there are securities which are suitable for the Fund’s portfolio as well as for one or more other accounts advised by MFS or its subsidiaries (including accounts in which MFS or an affiliate has an interest) with similar investment objectives. MFS' trade allocation policies could have a detrimental effect on the Fund if the Fund’s orders do not get fully executed or are delayed in getting executed due to being aggregated with those of other accounts advised by MFS or its subsidiaries. A portfolio manager may execute transactions for another fund or account that may adversely affect the value of the Fund’s investments. Investments selected for funds or accounts other than the Fund may outperform investments selected for the Fund.
When two or more accounts are simultaneously engaged in the purchase or sale of the same security, the securities are allocated among clients in a manner believed by MFS to be fair and equitable to each over time. Allocations may be based on many factors and may not always be pro rata based on assets managed. The allocation methodology could have a detrimental effect on the price or availability of a security with respect to the Fund.
MFS and/or a portfolio manager may have a financial incentive to allocate favorable or limited opportunity investments or structure the
timing of investments to favor accounts other than the Fund; for instance, those that pay a higher advisory fee and/or have a performance adjustment, those that include an investment by the portfolio manager, and/or those in which MFS, its officers and/or employees, and/or its affiliates own or have an interest.
To the extent permitted by applicable law, certain accounts may invest their assets in other accounts advised by MFS or its affiliates, including accounts that are advised by one or more of the same portfolio manager(s), which could result in conflicts of interest relating to asset allocation, timing of purchases and redemptions, and increased profitability for MFS, its affiliates, and/or its personnel, including portfolio managers.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
MFS Intermediate Income Trust
|
|
|
|
|
(c) Total Number of |
(d) Maximum Number |
|
|
|
|
|
Shares Purchased as |
(or Approximate |
|
|
|
(a) Total number of |
(b) Average |
Part of Publicly |
Dollar Value) of |
|
|
Period |
Shares Purchased |
Price Paid |
Announced Plans or |
Shares that May Yet |
|
|
|
|
per Share |
Programs |
Be Purchased under |
|
|
|
|
|
|
the Plans or Programs |
|
|
|
|
|
|
|
|
|
11/01/23-11/30/23 |
0 |
N/A |
0 |
11,224,711 |
|
|
12/01/23-12/31/23 |
0 |
N/A |
0 |
11,224,711 |
|
|
01/01/24-01/31/24 |
0 |
N/A |
0 |
11,224,711 |
|
|
02/01/24-02/28/24 |
0 |
N/A |
0 |
11,224,711 |
|
|
03/01/24-03/31/24 |
0 |
N/A |
0 |
11,224,711 |
|
|
04/01/24-04/30/24 |
213,332 |
2.60 |
213,332 |
11,011,379 |
|
|
Total |
213,332 |
2.60 |
213,332 |
|
|
|
|
|
|
|
|
Note: The Board approved procedures to repurchase shares and reviews the results periodically. The notification to shareholders of the program is part of the semi-annual and annual reports sent to shareholders. These annual programs begin on October 1st of each year. The programs conform to the conditions of Rule 10b-18 of the Securities Exchange Act of 1934 and limit the aggregate number of shares that may be purchased in each annual period (October 1 through the following September 30) to 10% of the Registrant’s outstanding shares as of the first day of the plan year (October 1). The aggregate number of shares available for purchase for the October 1, 2023 plan year is 11,420,762.
86121
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no material changes to the procedures by which shareholders may send recommendations to the Board for nominees to the Registrant’s Board since the Registrant last provided disclosure as to such procedures in response to the requirements of Item 407 (c)(2)(iv) of Regulation S-K or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a)Based upon their evaluation of the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as conducted within 90 days of the filing date of this report on Form N-CSR, the Registrant’s principal financial officer and principal executive officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the Registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
(b)There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the period covered by the report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable for semi-annual reports.
ITEM 13. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION.
Not Applicable.
ITEM 14. EXHIBITS.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Attached hereto as EX-99.COE.
(2)A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2): Attached hereto as EX-99.302CERT.
(3)Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable.
(4)Change in the registrant’s independent public accountant. Not applicable.
(b)If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Attached hereto as EX-99.906CERT.
(c)Registrant’s Rule 30e-3 Notice pursuant to Item 1(b) of Form N-CSR. Attached hereto as EX-99.30e-3Notice.
(d)Notices to Trust’s common shareholders in accordance with Investment Company Act Section 19(a) and Rule 19a-1. Attached hereto as Ex-99.19a-1.
Notice
A copy of the Amended and Restated Declaration of Trust, as amended, of the Registrant is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually, but are binding only upon the assets and property of the respective constituent series of the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) MFS INTERMEDIATE INCOME TRUST
By (Signature and Title)*
/S/ DAVID L. DILORENZO
David L. DiLorenzo, President
Date: June 14, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)*
/S/ DAVID L. DILORENZO
David L. DiLorenzo, President (Principal Executive Officer)
Date: June 14, 2024
By (Signature and Title)*
/S/ KASEY L. PHILLIPS
Kasey L. Phillips, Treasurer (Principal Financial Officer and Accounting Officer) Date: June 14, 2024
* Print name and title of each signing officer under his or her signature.