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 811-05912
MFS SPECIAL VALUE 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: October 31, 2023
ITEM 1. REPORTS TO STOCKHOLDERS.
Item 1(a):
Annual Report
October 31, 2023
MANAGED DISTRIBUTION POLICY
DISCLOSURE
The MFS Special Value Trust’s
(the fund) Board of Trustees adopted a managed distribution policy. The fund seeks to pay monthly distributions based on an annual rate of 10.00% of the fund’s average monthly net asset value. The primary
purpose of the managed distribution policy is to provide shareholders with a constant, but not guaranteed, fixed rate of distribution each month. You should not draw any conclusions about the fund’s investment
performance from the amount of the current distribution or from the terms of the fund’s managed distribution policy. The Board may amend or terminate the managed distribution policy at any time without prior
notice to fund shareholders. The amendment or termination of the managed distribution policy could have an adverse effect on the market price of the fund’s shares.
With each distribution, the fund
will issue a notice to shareholders and an accompanying press release which will provide detailed information regarding the amount and composition of the distribution and other related information. The amounts and
sources of distributions reported in the notice to shareholders are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will
depend upon the fund’s investment experience during its fiscal year and may be subject to changes based on tax regulations. The fund will send you a Form 1099-DIV for the calendar year that will tell you how to
report these distributions for federal income tax purposes. Please refer to “Tax Matters and Distributions” under Note 2 of the Notes to Financial Statements for information regarding the tax character of
the fund’s distributions.
Under a managed distribution policy
the fund may at times distribute more than its net investment income and net realized capital gains; therefore, a portion of your distribution may result in a return of capital. A return of capital may occur, for
example, when some or all of the money that you invested in the fund is paid back to you. Any such returns of capital will decrease the fund’s total assets and, therefore, could have the effect of increasing the
fund’s expense ratio. In addition, in order to make the level of distributions called for under its managed distribution policy, the fund may have to sell portfolio securities at a less than opportune time. A
return of capital does not necessarily reflect the fund’s investment performance and should not be confused with ‘yield’ or ‘income’. The fund’s total return in relation to changes
in net asset value is presented in the Financial Highlights.
New York Stock Exchange Symbol: MFV
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NOT FDIC INSURED
• MAY LOSE VALUE • NO BANK GUARANTEE
Portfolio structure (i)
Top ten holdings (i)
| Progressive Corp.
| 2.6%
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| Cigna Group
| 2.2%
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| JPMorgan Chase & Co.
| 2.0%
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| Northrop Grumman Corp.
| 1.9%
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| Pioneer Natural Resources Co.
| 1.9%
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| Marsh & McLennan Cos., Inc.
| 1.7%
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| Aon PLC
| 1.7%
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| Comcast Corp., “A”
| 1.7%
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| McKesson Corp.
| 1.7%
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| Nestle S.A., ADR
| 1.6%
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GICS equity sectors (g)
| Financials
| 12.9%
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| Health Care
| 6.0%
|
| Utilities
| 4.4%
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| Industrials
| 4.3%
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| Energy
| 3.2%
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| Consumer Discretionary
| 2.7%
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| Information Technology
| 2.3%
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| Consumer Staples
| 2.3%
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| Communication Services
| 1.8%
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| Real Estate
| 1.3%
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Fixed income sectors (i)
| High Yield Corporates
| 47.4%
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| Emerging Markets Bonds
| 6.7%
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| U.S. Treasury Securities
| 0.6%
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| Investment Grade Corporates
| 0.5%
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Composition including fixed income
credit quality (a)(i)
| BBB
| 0.5%
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| BB
| 25.2%
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| B
| 22.7%
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| CCC
| 6.0%
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| U.S. Government
| 0.3%
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| Not Rated
| 0.5%
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| Non-Fixed Income
| 41.2%
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| Cash & Cash Equivalents
| 3.9%
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| Other
| (0.3)%
|
| (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. Not Rated includes fixed income securities and fixed income derivatives that have not been rated by any rating
|
Portfolio Composition - continued
agency. Non-Fixed Income
includes equity securities (including convertible bonds and equity derivatives), ETFs and Options on ETFs, and/or commodity-linked derivatives. The fund may or may not have held all of these instruments on this date.
The fund is not rated by these agencies.
| (g)
| The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market
Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity
securities and non-equity securities that are unclassified by GICS.
|
| (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.
|
Where the fund holds convertible
bonds, they are treated as part of the equity portion of the portfolio.
Cash & Cash Equivalents includes
any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash
position and other assets and liabilities.
Other includes equivalent exposure
from currency derivatives and/or any offsets to derivative positions and may be negative.
Percentages are based on net assets
as of October 31, 2023.
The portfolio is actively managed
and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended October
31, 2023, the MFS Special Value Trust (fund) provided a total return of 3.30%, at net asset value, and a total return of 0.61%, at market value. This compares with a return of 6.23% for the fund’s benchmark, the
Bloomberg U.S. Corporate High-Yield 2% Issuer Capped Index (Bloomberg Index). The fund’s other benchmark, the MFS Special Value Trust Blended Index (Blended Index), generated a return of 4.22%. The Blended Index
reflects the blended returns of various equity and fixed income market indices, with percentage allocations to each index designed to resemble the allocations of the fund. The market indices and related percentage
allocations used to compile the Blended Index are set forth in the Performance Summary.
The performance commentary below is
based on the net asset value performance of the fund, which reflects the performance of the underlying pool of assets held by the fund. The total return at market value represents the return earned by owners of the
shares of the fund, which are traded publicly on the exchange.
Market Environment
During the reporting period, central
banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming
from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains
resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields
on their savings. Additionally, activity in the US housing sector has slowed as a result of higher mortgage rates. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in
the world’s second-largest economy in early 2023, although its momentum soon stalled as the focus turned to the country’s highly indebted property development sector. In developed markets, consumer demand
for services remained stronger than the demand for goods.
Policymakers found themselves in the
difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks remained focused on controlling price
pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools to keep banking systems liquid, a potentially
difficult balancing act, and one that suggested that we may be nearing a peak in policy rates.
Against an environment of relatively
tight labor markets, tighter global financial conditions and volatile materials prices, investor anxiety appeared to have increased over the potential that corporate profit margins may be past peak for this cycle.
That said, signs that supply chains have generally normalized, coupled with low levels of unemployment across developed markets and hopes that inflation levels have peaked, were supportive factors for the
macroeconomic backdrop.
Management Review - continued
Detractors from Performance
Within the equity portion of the
fund, stock selection and an overweight position in the utilities sector held back performance relative to the equity portion of the Blended Index. Within this sector, an overweight position in integrated utility
company Dominion Energy held back relative returns. The stock price of Dominion Energy fell as the passage of a utility reform bill in Virginia resulted in a revenue and cash flow headwind that challenged the
company’s balance sheet.
Stock selection within both the
industrials and information technology sectors also detracted from relative results. Within the industrials sector, the fund’s overweight position in global defense company Northrop Grumman and not holding
shares of diversified industrial conglomerate General Electric held back relative returns. Within the information technology sector, the timing of the fund’s ownership in shares of semiconductor manufacturing
company Analog Devices dampened relative performance.
An underweight position in the
communication services sector also hindered relative results, led by not owning shares of strong-performing social networking service provider Meta Platforms. The stock price of Meta Platforms climbed as the company
cited plans to cut costs and invest in artificial intelligence (AI), including adding generative AI to text, image, and video generators across its network of apps, including Facebook and Instagram.
Stocks in other sectors that
weakened relative performance included the fund's overweight positions in securities exchange services provider NASDAQ, diversified financial services firm Citigroup and global financial services firm Morgan Stanley.
Additionally, the timing of the fund’s ownership in shares of real estate investment trust Prologis and not holding shares of insurance and investment firm Berkshire Hathaway further weighed on relative
results.
Within the fixed income portion of
the fund, yield curve positioning(y) and a longer duration(d) stance detracted from the fund’s performance relative to the Bloomberg Index as interest rates rose over the reporting period.
Contributors to Performance
Within the equity portion of the
fund, stock selection within the financials sector contributed to performance relative to the equity portion of the Blended Index. Within this sector, the fund’s overweight positions in insurance company
Progressive Corp, professional services firm Marsh McLennan and risk management and human capital consulting services provider Aon aided relative results. The stock price of Progressive Corp advanced as the company
posted better-than-expected top-line growth supported by margin expansion and strong net interest income. Additionally, not owning shares of financial services firm Bank of America and the timing of the fund’s
ownership in shares of investment management company BlackRock(h) also supported relative performance.
Stock selection and an underweight
position in both the health care and energy sectors strengthened relative results. Within the health care sector, the timing of the fund’s ownership in shares of health services company McKesson benefited
relative performance. Within the energy sector, the timing of the fund’s ownership in shares of oil and gas company ConocoPhillips and not owning shares of integrated energy
Management Review - continued
company Chevron contributed to relative returns.
The share price of ConocoPhillips appreciated as oil prices climbed to yearly highs on Russian and Saudi Arabian production cuts and rising demand from China. In addition, the company announced better-than-expected
production volumes in both natural gas and petroleum and lowered operating expenses, which further supported the stock.
Stock selection in the consumer
discretionary sector further aided relative performance, led by holding shares of hospitality service provider Marriott International(b).
Elsewhere, the fund’s
overweight position in cable services provider Comcast supported relative results.
Within the fixed income portion of
the fund, security selection within the industrials sector, notably within “CCC” and “B” rated(r) bonds, and security selection within the utilities sector, particularly within “BB”
rated bonds, contributed to the fund’s performance relative to the Bloomberg Index.
The fund has a managed distribution
policy, the primary purpose of which is to provide shareholders with a constant, but not guaranteed, fixed rate of distribution each month. This policy had no material impact on the fund's investment strategies during
its most recent fiscal year. The level of distributions paid by the fund pursuant to its managed distribution policy may cause the fund's net asset value (NAV) per share to decline more so than if the policy were not
in place, including if distributions are in excess of fund returns. However, the adviser believes the policy may benefit the fund’s market price and premium/discount to the fund’s NAV. For the twelve
months ended October 31, 2023, the tax character of dividends paid pursuant to the managed distribution policy includes an ordinary income distribution of $1,078,073, a long-term capital gain distribution of
$1,165,872, and a tax return of capital distribution of $993,392. See “Managed Distribution Policy Disclosure” in the inside cover page of this Annual Report for additional details regarding the policy and
related implications for the fund and shareholders.
Respectfully,
Portfolio Manager(s)
Ward Brown, Katherine Cannan, Nevin
Chitkara, David Cole, Matt Ryan, and Michael Skatrud
Note to Shareholders: Effective
April 30, 2024, Matt Ryan will no longer be a Portfolio Manager of the fund.
| (b)
| Security is not a benchmark constituent.
|
| (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.
|
| (h)
| Security was not held in the portfolio at period end.
|
| (r)
| Securities rated “BBB”, “Baa”, or higher are considered investment grade; securities rated “BB”, “Ba”, or below are considered
non-investment grade. Ratings are assigned to underlying securities utilizing ratings from Moody's, Fitch, and Standard & Poor's 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
|
Management Review - continued
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). For securities that are not
rated by any of the rating agencies, the security is considered Not Rated.
| (y)
| A yield curve graphically depicts the yields of different maturity bonds of the same credit quality and type; a normal yield curve is upward sloping, with short-term rates lower than
long-term rates.
|
The views expressed in this report
are those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views
are subject to change at any time based on market or other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading
intent on behalf of any MFS portfolio. References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio’s current or future investments.
Performance Summary THROUGH 10/31/23
The following chart illustrates the
fund’s historical performance in comparison to its benchmark(s). Performance results reflect the percentage change in net asset value and market value, including reinvestment of fund distributions. Benchmarks
are unmanaged and may not be invested in directly. Benchmark returns do not reflect commissions or expenses. (See Notes to Performance Summary.)
Performance data shown represents past
performance and is no guarantee of future results. Investment return and principal value fluctuate so your shares, when sold, may be worth more or less than the original cost; current performance may be lower or
higher than quoted. The performance shown does not reflect the deduction of taxes, if any, that a shareholder would pay on fund distributions or the sale of fund shares.
Growth of a Hypothetical $10,000
Investment
Average Annual Total Returns
through 10/31/23
|
| Inception Date
| 1-yr
| 5-yr
| 10-yr
|
| Market Value (r)
| 11/16/1989
| 0.61%
| 2.84%
| 3.73%
|
| Net Asset Value (r)
| 11/16/1989
| 3.30%
| 4.37%
| 4.73%
|
Comparative benchmark(s)
|
|
|
|
|
| Bloomberg U.S. Corporate High-Yield 2% Issuer Capped Index (f)
| 6.23%
| 3.04%
| 3.86%
|
| MFS Special Value Trust Blended Index (f)(w)
| 4.22%
| 4.24%
| 5.13%
|
| JPMorgan Emerging Markets Bond Index Global (f)
| 6.94%
| 0.07%
| 1.82%
|
| Russell 1000® Value Index (f)
| 0.13%
| 6.60%
| 7.60%
|
| (f)
| Source: FactSet Research Systems Inc.
|
| (r)
| Includes reinvestment of all distributions. Market value references New York Stock Exchange Price.
|
Performance Summary - continued
| (w)
| The MFS Special Value Trust Blended Index (a custom index) was comprised of the following at the beginning and at the end of the reporting period:
|
|
| 10/31/23
|
| Bloomberg U.S. Corporate High-Yield 2% Issuer Capped Index
| 57.5%
|
| Russell 1000® Value Index
| 35.0%
|
| JPMorgan Emerging Markets Bond Index Global
| 7.5%
|
Benchmark Definition(s)
Bloomberg U.S. Corporate High-Yield
2% Issuer Capped Index(a) – a component of the Bloomberg U.S. Corporate High-Yield Bond Index, which measures performance of non-investment grade, fixed rate debt.
The index limits the maximum exposure to any one issuer to 2%.
JPMorgan Emerging Markets Bond Index
Global – measures the performance of U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans, Eurobonds.
Russell 1000® Value Index(h) – constructed to provide a comprehensive barometer for the value securities in the large-cap segment of the U.S. equity universe. Companies
in this index generally have lower price-to-book ratios and lower forecasted growth values.
It is not possible to invest
directly in an index.
| (a)
| Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg's
licensors own all proprietary rights in the Bloomberg Indices. Bloomberg neither approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express
or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.
|
| (h)
| Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell
Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this document. No further distribution of Russell Data is
permitted without Russell's express written consent. Russell does not promote, sponsor, or endorse the content of this document.
|
Notes to Performance Summary
The fund’s shares may trade at
a discount or premium to net asset value. When fund shares trade at a premium, buyers pay more than the net asset value of the underlying fund shares, and shares purchased at a premium would receive less than the
amount paid for them in the event of the fund’s concurrent liquidation.
The fund's target annual
distribution rate is calculated based on an annual rate of 10.00% of the fund's average monthly net asset value, not a fixed share price, and the fund's dividend amount will fluctuate with changes in the fund's
average monthly net assets.
Performance results based on net
asset value per share do not include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and may differ from amounts reported in the Statement of Assets
and Liabilities or the Financial Highlights.
Performance Summary - continued
From time to time the fund may
receive proceeds from litigation settlements, without which performance would be lower.
In accordance with Section 23(c)
of the Investment Company Act of 1940, the fund hereby gives notice that it may from time to time repurchase shares of the fund in the open market at the option of the Board of Trustees and on such terms as the
Trustees shall determine.
Investment Objective, Principal Investment
Strategies and Principal Risks
Investment Objective
The fund’s investment
objective is to seek high current income, but may also consider capital appreciation. The fund’s objective may be changed without shareholder approval.
Principal Investment Strategies
MFS (Massachusetts Financial
Services Company, the fund's investment adviser) normally invests the majority of the fund's assets in debt instruments, including below investment grade quality debt instruments. In addition, MFS normally invests a
portion of the fund's assets in equity securities.
MFS may invest the fund’s
assets in foreign securities.
MFS may invest up to 100% of the
fund’s assets in below investment grade quality debt instruments.
The fund seeks to make a monthly
distribution at an annual fixed rate of 10% of the fund’s average monthly net asset value.
MFS normally invests the fund's
assets across different industries and sectors, but MFS may invest a significant percentage of the fund's assets in issuers in a single industry or sector.
While MFS may use derivatives for
any investment purpose, to the extent MFS uses derivatives, MFS expects to use derivatives primarily to increase or decrease exposure to a particular market, segment of the market, or security, to increase or decrease
interest rate exposure, or as alternatives to direct investments.
MFS uses an active bottom-up
investment approach to buying and selling investments for the fund. Investments are selected primarily based on fundamental analysis of individual issuers and/or instruments in light of the issuer’s financial
condition and market, economic, political, and regulatory conditions. Factors considered for debt instruments may include the instrument’s credit quality, collateral characteristics, and indenture provisions,
and the issuer’s management ability, capital structure, leverage, and ability to meet its current obligations. Factors considered for equity securities may include analysis of an issuer’s earnings, cash
flows, competitive position, and management ability. MFS may also consider environmental, social, and governance (ESG) factors in its fundamental investment analysis where MFS believes such factors could
materially impact the economic value of an issuer or instrument. ESG factors considered may include, but are not limited to, climate change, resource depletion, an issuer's governance structure and practices, data
protection and privacy issues, and diversity and labor practices. Quantitative screening tools that systematically evaluate the structure of a debt instrument and its features or the valuation, price and
earnings momentum, earnings quality, and other factors of the issuer of an equity security may also be considered.
Investment Objective, Principal Investment
Strategies and Principal Risks - continued
If approved by the fund’s
Board of Trustees, the fund may use leverage through the issuance of preferred shares, borrowing from banks, and/or other methods of creating leverage, and investing the proceeds pursuant to its investment
strategies.
Principal Investment Types
The principal investment types in
which the fund may invest are:
Debt Instruments: Debt instruments represent obligations of corporations, governments, and other entities to repay money borrowed, or other instruments believed to have debt-like characteristics. The issuer
or borrower usually pays a fixed, variable, or floating rate of interest, and must repay the amount borrowed, usually at the maturity of the instrument. Debt instruments generally trade in the over-the-counter market
and can be less liquid than other types of investments, particularly during adverse market and economic conditions. During certain market conditions, debt instruments in some or many segments of the debt market
can trade at a negative interest rate (i.e., the price to purchase the debt instrument is more than the present value of expected interest payments and principal due at the maturity of the instrument). Some debt
instruments, such as zero coupon bonds or payment-in-kind bonds, do not pay current interest. Other debt instruments, such as certain mortgage-backed securities and other securitized instruments, make periodic
payments of interest and/or principal. Some debt instruments are partially or fully secured by collateral supporting the payment of interest and principal.
Corporate Bonds: Corporate bonds are debt instruments issued by corporations or similar entities.
U.S. Government Securities: U.S. Government securities are securities issued or guaranteed as to the payment of principal and interest by the U.S. Treasury, by an agency or instrumentality of the U.S. Government, or
by a U.S. Government-sponsored entity. Certain U.S. Government securities are not supported as to the payment of principal and interest by the full faith and credit of the U.S. Treasury or the ability to borrow from
the U.S. Treasury. Some U.S. Government securities are supported as to the payment of principal and interest only by the credit of the entity issuing or guaranteeing the security. U.S. Government securities include
mortgage-backed securities and other types of securitized instruments guaranteed by the U.S. Treasury, by an agency or instrumentality of the U.S. Government, or by a U.S. Government-sponsored entity.
Foreign Government Securities: Foreign government securities are debt instruments issued, guaranteed, or supported, as to the payment of principal and interest, by foreign governments, foreign government agencies,
foreign semi-governmental entities or supranational entities, or debt instruments issued by entities organized and operated for the purpose of restructuring outstanding foreign government securities. Foreign
government securities may not be supported as to the payment of principal and interest by the full faith and credit of the foreign government.
Equity Securities: Equity securities represent an ownership interest, or the right to acquire an ownership interest, in a company or other issuer. Different types of equity securities provide different
voting and dividend rights and priorities in the event of bankruptcy of the issuer. Equity securities include common stocks, preferred stocks, securities convertible into stocks, equity interests in real estate
investment trusts (REITs), and depositary receipts for such securities.
Investment Objective, Principal Investment
Strategies and Principal Risks - continued
Derivatives: Derivatives are financial contracts whose value is based on the value of one or more underlying indicators or the difference between underlying indicators. Underlying indicators may include
a security or other financial instrument, asset, currency, interest rate, credit rating, commodity, volatility measure, or index. Derivatives often involve a counterparty to the transaction. Derivatives include
futures, forward contracts, options, swaps, and certain complex structured securities.
Principal Risks
The share price of the fund will
change daily based on changes in market, economic, industry, political, regulatory, geopolitical, environmental, public health, and other conditions. As with any mutual fund, the fund may not achieve its objective
and/or you could lose money on your investment in the fund. An investment in the fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental
agency. The significance of any specific risk to an investment in the fund will vary over time depending on the composition of the fund's portfolio, market conditions, and other factors. You should read all of the
risk information below carefully, because any one or more of these risks may result in losses to the fund.
The principal risks of investing in
the fund are:
Investment Selection Risk: MFS' investment analysis and its selection of investments may not produce the intended results and/or can lead to an investment focus that results in the fund underperforming other
funds with similar investment strategies and/or underperforming the markets in which the fund invests. In addition, to the extent MFS considers quantitative tools in managing the fund, such tools may not work as
expected or produce the intended results. In addition, MFS or the fund's other service providers may experience disruptions or operating errors that could negatively impact the fund.
Debt Market Risk: Debt markets can be volatile and can decline significantly in response to changes in, or investor perceptions of, issuer, market, economic, industry, political, regulatory, geopolitical,
environmental, public health, and other conditions. These conditions can affect a single instrument, issuer, or borrower, a particular type of instrument, issuer, or borrower, a segment of the debt markets, or
debt markets generally. Certain changes or events, such as political, social, or economic developments, including increasing and negative interest rates or the U.S. government's inability at times to agree on a
long-term budget and deficit reduction plan (which has in the past resulted and may in the future result in a government shutdown); market closures and/or trading halts; government or regulatory actions, including the
imposition of tariffs or other protectionist actions and changes in fiscal, monetary, or tax policies; natural disasters; outbreaks of pandemic and epidemic diseases; terrorist attacks; war; and other geopolitical
changes or events can have a dramatic adverse effect on debt markets and may lead to periods of high volatility and reduced liquidity in a debt market or a segment of a debt market.
Interest Rate Risk: The price of a debt instrument typically changes in response to interest rate changes. Interest rates can change in response to the supply and demand for credit, government and/or central
bank monetary policy and action, inflation rates, and other factors. In general, the price of a debt instrument falls when interest rates rise and rises when interest rates fall. Inflationary price movements may cause
fixed
Investment Objective, Principal Investment
Strategies and Principal Risks - continued
income securities markets to experience heightened
levels of interest rate volatility and liquidity risk. The risks associated with rising interest rates may be particularly acute in the current market environment because the Federal Reserve Board recently raised
interest rates and may continue to do so. Interest rate risk is generally greater for fixed-rate instruments than floating-rate instruments and for instruments with longer maturities or durations, or that do not
pay current interest. In addition, short-term and long-term interest rates, and interest rates in different countries, do not necessarily move in the same direction or by the same amount. An instrument’s
reaction to interest rate changes depends on the timing of its interest and principal payments and the current interest rate for each of those time periods. The price of an instrument trading at a negative interest
rate responds to interest rate changes like other debt instruments; however, an instrument purchased at a negative interest rate is expected to produce a negative return if held to maturity. Changes in government
and/or central bank monetary policy may affect the level of interest rates. Fluctuations in the market price of fixed-rate instruments held by the fund may not affect interest income derived from those instruments,
but may nonetheless affect the fund's share price, especially if an instrument has a longer maturity or duration and is therefore more sensitive to changes in interest rates.
Credit Risk: The price of a debt instrument depends, in part, on the issuer's or borrower's credit quality or ability to pay principal and interest when due. The price of a debt instrument is likely to
fall if an issuer or borrower defaults on its obligation to pay principal or interest, if the instrument's credit rating is downgraded by a credit rating agency, or based on other changes in, or perceptions of, the
financial condition of the issuer or borrower. For certain types of instruments, including derivatives, the price of the instrument depends in part on the credit quality of the counterparty to the transaction.
For other types of debt instruments, including securitized instruments, the price of the debt instrument also depends on the credit quality and adequacy of the underlying assets or collateral as well as whether there
is a security interest in the underlying assets or collateral. Enforcing rights, if any, against the underlying assets or collateral may be difficult.
Below investment grade quality debt
instruments can involve a substantially greater risk of default or can already be in default, and their values can decline significantly over short periods of time. Below investment grade quality debt instruments are
regarded as having predominantly speculative characteristics with respect to capacity to pay interest and principal. Below investment grade quality debt instruments tend to be more sensitive to adverse news about the
issuer, or the market or economy in general, than higher quality debt instruments. The market for below investment grade quality debt instruments can be less liquid, especially during periods of recession or general
market decline.
Foreign Risk: Investments in securities of foreign issuers, securities of companies with significant foreign exposure, and foreign currencies can involve additional risks relating to market,
economic, industry, political, regulatory, geopolitical, environmental, public health, and other conditions. Political, social, diplomatic, and economic developments, U.S. and foreign government action, or the threat
thereof, such as the imposition of currency or capital blockages, controls, or tariffs, economic and trade sanctions or embargoes, security trading suspensions, entering or exiting trade or other intergovernmental
agreements, or the expropriation or nationalization of assets in a particular country, can cause dramatic declines in certain or all securities with exposure
Investment Objective, Principal Investment
Strategies and Principal Risks - continued
to that country and other countries. Sanctions, or
the threat of sanctions, may cause volatility in regional and global markets and may negatively impact the performance of various sectors and industries, as well as companies in other countries, which could have a
negative effect on the performance of the fund. In the event of nationalization, expropriation, confiscation or other government action, intervention, or restriction, the fund could lose its entire investment in a
particular foreign issuer or country. Civil unrest, geopolitical tensions, wars, and acts of terrorism are other potential risks that could adversely affect an investment in a foreign security or in foreign markets or
issuers generally. Economies and financial markets are interconnected, which increases the likelihood that conditions in one country or region can adversely impact issuers in different countries and regions. Less
stringent regulatory, accounting, auditing, and disclosure requirements for issuers and markets are more common in certain foreign countries. Enforcing legal rights can be difficult, costly, and slow in certain
foreign countries and with respect to certain types of investments, and can be particularly difficult against foreign governments. Changes in currency exchange rates can significantly impact the financial condition of
a company or other issuer with exposure to multiple countries as well as affect the U.S. dollar value of foreign currency investments and investments denominated in foreign currencies. Additional risks of foreign
investments include trading, settlement, custodial, and other operational risks, and withholding and other taxes. These factors can make foreign investments, especially those tied economically to emerging markets,
more volatile and less liquid than U.S. investments. In addition, foreign markets can react differently to market, economic, industry, political, regulatory, geopolitical, environmental, public health, and other
conditions than the U.S. market.
Prepayment/Extension Risk: Many types of debt instruments, including mortgage-backed securities, securitized instruments, certain corporate bonds, and municipal housing bonds, and certain derivatives, are subject to
the risk of prepayment and/or extension. Prepayment occurs when unscheduled payments of principal are made or the instrument is called or redeemed prior to an instrument’s maturity. When interest rates decline,
the instrument is called, or for other reasons, these debt instruments may be repaid more quickly than expected. As a result, the holder of the debt instrument may not be able to reinvest the proceeds at the same
interest rate or on the same terms, reducing the potential for gain. When interest rates increase or for other reasons, these debt instruments may be repaid more slowly than expected, increasing the potential for
loss. In addition, prepayment rates are difficult to predict and the potential impact of prepayment on the price of a debt instrument depends on the terms of the instrument.
Equity Market Risk: Equity markets can be volatile and can decline significantly in response to changes in, or investor perceptions of, issuer, market, economic, industry, political, regulatory, geopolitical,
environmental, public health, and other conditions. These conditions can affect a single issuer or type of security, issuers within a broad market sector, industry or geographic region, or the equity markets in
general. Different parts of the market and different types of securities can react differently to these conditions. For example, the stocks of growth companies can react differently from the stocks of value companies,
and the stocks of large cap companies can react differently from the stocks of small cap companies. Certain changes or events, such as political, social, or economic developments, including increasing or negative
interest rates or the U.S. government's inability at times to agree on a long-term budget and deficit reduction plan (which has in the past resulted and may in the future result in a
Investment Objective, Principal Investment
Strategies and Principal Risks - continued
government shutdown); market closures and/or
trading halts; government or regulatory actions, including sanctions, the imposition of tariffs or other protectionist actions and changes in fiscal, monetary, or tax policies; natural disasters; outbreaks of pandemic
and epidemic diseases; terrorist attacks; war; and other geopolitical changes or events, can have a dramatic adverse effect on equity markets and may lead to periods of high volatility in an equity market or a segment
of an equity market.
Company Risk: Changes in the financial condition of a company or other issuer, changes in specific market, economic, industry, political, regulatory, geopolitical, environmental, public health, and other
conditions that affect a particular type of investment or issuer, and changes in general market, economic, political, regulatory, geopolitical, environmental, public health, and other conditions can adversely affect
the prices of investments. The value of an investment held by the fund may decline due to factors directly related to the issuer, such as competitive pressures, cybersecurity incidents, financial leverage, historical
and/or prospective earnings, management performance, labor and supply shortages, investor perceptions, and other factors. The prices of securities of smaller, less well-known issuers can be more volatile than the
prices of securities of larger issuers or the market in general.
Value Company Risk: The stocks of value companies can continue to be undervalued for long periods of time and not realize their expected value and can be more volatile than the market in general.
Managed Distribution Plan Risk: The fund may not be able to maintain a monthly distribution at an annual fixed rate of up to 10% of the fund’s average monthly net asset value due to many factors, including but
not limited to, changes in market returns, fluctuations in market interest rates, and other factors. If income from the fund’s investments is less than the amount needed to make a monthly distribution, the fund
may distribute a return of capital to pay the distribution. In certain cases, the fund may sell portfolio investments at less opportune times in order to pay such distribution. Distributions that are
treated as tax return of capital will have the effect of reducing the fund’s assets and could increase the fund’s expense ratio. If a portion of the fund’s distributions represents returns of
capital over extended periods, the fund’s assets may be reduced over time to levels where the fund is no longer viable and might be liquidated. Please see “Managed Distribution Policy
Disclosure” in this report for additional information regarding the plan.
Market Discount/Premium Risk: The market price of shares of the fund will be based on factors such as the supply and demand for shares in the market and general market, economic, industry, political or regulatory
conditions. Whether shareholders will realize gains or losses upon the sale of shares of the fund will depend on the market price of shares at the time of the sale, not on the fund’s net asset value.
The market price may be lower or higher than the fund’s net asset value. Shares of closed-end funds frequently trade at a discount to their net asset value.
Leveraging Risk: If the fund utilizes investment leverage, there can be no assurance that such a leveraging strategy will be successful during any period in which it is employed. The use of leverage
is a speculative investment technique that results in greater volatility in the fund’s net asset value. To the extent that investments are purchased with the proceeds from the borrowings from a bank, the
issuance of preferred shares, or the creation of tender option bonds, the fund’s net asset value will increase or decrease at a greater rate than a comparable unleveraged fund. If the
Investment Objective, Principal Investment
Strategies and Principal Risks - continued
investment income or gains earned from the
investments purchased with the proceeds from the borrowings from a bank, the issuance of preferred shares, or the creation of tender option bonds, fails to cover the expenses of leveraging, the fund’s net asset
value is likely to decrease more quickly than if the fund was not leveraged. In addition, the fund’s distributions could be reduced. The fund is currently required under the 1940 Act to maintain asset coverage
of at least 200% on outstanding preferred shares and at least 300% on outstanding indebtedness; however, the fund may be required to abide by asset coverage or other requirements that are more stringent than those
imposed by the 1940 Act. The fund may be required to sell a portion of its investments at a time when it may be disadvantageous to do so in order to redeem preferred shares or to reduce outstanding indebtedness to
comply with asset coverage or other restrictions including those imposed by the 1940 Act, any applicable loan agreement, any applicable offering documents for preferred shares issued by the fund, and the rating
agencies that rate the preferred shares. The fund may be prohibited from declaring and paying common share dividends and distributions if the fund fails to satisfy the 1940 Act’s asset coverage requirements or
other agreed upon asset coverage requirements. In these situations, the fund may choose to repurchase or redeem any outstanding leverage to the extent necessary in order to maintain compliance with such asset coverage
requirements. The expenses of leveraging are paid by the holders of common shares. Borrowings from a bank or preferred shares may have a stated maturity. If this leverage is not extended prior to maturity or replaced
with the same or a different form of leverage, distributions to common shareholders may be decreased.
Certain transactions and investment
strategies can result in leverage. Because movements in a fund’s share price generally correlate over time with the fund’s net asset value, the market price of a leveraged fund will also tend to be more
volatile than that of a comparable unleveraged fund. The costs of an offering of preferred shares and/or borrowing program would be borne by shareholders.
Under the terms of any loan
agreement or of a purchase agreement between the fund and the investor in the preferred shares, as the case may be, the fund may be required to, among other things, limit its ability to pay dividends and distributions
on common shares in certain circumstances, incur additional debts, engage in certain transactions, and pledge some or all of its assets at an inopportune time. Such agreements could limit the fund’s ability to
pursue its investment strategies. The terms of any loan agreement or purchase agreement could be more or less restrictive than those described.
Under guidelines generally required
by a rating agency providing a rating for any preferred shares, the fund may be required to, among other things, maintain certain asset coverage requirements, restrict certain investments and practices, and adopt
certain redemption requirements relating to preferred shares. Such guidelines or the terms of a purchase agreement between a fund and the investor in the preferred shares could limit the fund’s ability to
pursue its investment strategies. The guidelines imposed with respect to preferred shares by a rating agency or an investor in the preferred shares could be more or less restrictive than those described.
Focus Risk: Issuers in a single industry, sector, country, or region can react similarly to market, currency, political, economic, regulatory, geopolitical, environmental, public health, and
other conditions. These conditions include business environment changes;
Investment Objective, Principal Investment
Strategies and Principal Risks - continued
economic factors such as fiscal, monetary, and tax
policies; inflation and unemployment rates; and government and regulatory changes. The fund's performance will be affected by the conditions in the industries, sectors, countries, and regions to which the fund
is exposed.
Derivatives Risk: Derivatives can be highly volatile and involve risks in addition to, and potentially greater than, the risks of the underlying indicator(s). Gains or losses from derivatives can be
substantially greater than the derivatives’ original cost and can sometimes be unlimited. Derivatives can involve leverage. Derivatives can be complex instruments and can involve analysis and processing
that differs from that required for other investment types used by the fund. If the value of a derivative does not change as expected relative to the value of the market or other indicator to which the derivative is
intended to provide exposure, the derivative may not have the effect intended. Derivatives can also reduce the opportunity for gains or result in losses by offsetting positive returns in other investments. Derivatives
can be less liquid than other types of investments.
Counterparty and Third Party Risk:
Transactions involving a counterparty other than the issuer of the instrument, including clearing organizations, or a third party responsible for servicing the instrument or effecting the
transaction, are subject to the credit risk of the counterparty or third party, and to the counterparty’s or third party’s ability or willingness to perform in accordance with the terms of the
transaction. If a counterparty or third party fails to meet its contractual obligations, goes bankrupt, or otherwise experiences a business interruption, the fund could miss investment opportunities, lose value
on its investments, or otherwise hold investments it would prefer to sell, resulting in losses for the fund.
Liquidity Risk: Certain investments and types of investments are subject to restrictions on resale, may trade in the over-the-counter market, or may not have an active trading market due to adverse market,
economic, industry, political, regulatory, geopolitical, environmental, public health, and other conditions, including trading halts, sanctions, or wars. Investors trying to sell large quantities of a particular
investment or type of investment, or lack of market makers or other buyers for a particular investment or type of investment may also adversely affect liquidity. At times, all or a significant portion of a
market may not have an active trading market. Without an active trading market, it may be difficult to value, and it may not be possible to sell, these investments and the fund could miss other investment
opportunities and hold investments it would prefer to sell, resulting in losses for the fund. In addition, the fund may have to sell certain of these investments at prices or times that are not advantageous in
order to meet redemptions or other cash needs, which could result in dilution of remaining investors' interests in the fund. The prices of illiquid securities may be more volatile than more liquid
investments.
Anti-Takeover Provisions Risk: The fund’s declaration of trust includes provisions that could limit the ability of other persons or entities to acquire control of the fund, to convert the fund to an open-end
fund, or to change the composition of the fund’s Board of Trustees. These provisions could reduce the opportunities for shareholders to sell their shares at a premium over the then-current market
price.
Investment Objective, Principal Investment
Strategies and Principal Risks - continued
Other Investment Strategies and
Risks
Active and Frequent Trading: MFS may engage in active and frequent trading in pursuing the fund's principal investment strategies. Frequent trading may increase transaction costs, which can reduce the fund's
return. Frequent trading can also increase the possibility of capital gain and ordinary distributions. Frequent trading can also result in the realization of a higher percentage of short-term capital gains and a lower
percentage of long-term capital gains as compared to a fund that trades less frequently. Because short-term capital gains are distributed as ordinary income, this would generally increase your tax liability
unless you hold your shares through a tax-advantaged or tax-exempt vehicle.
Operational and Cybersecurity Risk:
The fund and its service providers, and your ability to transact in fund shares, may be negatively impacted due to operational matters arising from, among other issues, human errors,
systems and technology disruptions or failures, fraudulent activities, or cybersecurity incidents. Operational issues and cybersecurity incidents may cause the fund or its service providers, as well as
securities trading venues and other market participants, to suffer data corruption and/or lose operational functionality, and could, among other things, impair the ability to calculate the fund's net asset value per
share, impede trading of portfolio securities, and result in the theft, misuse, and/or improper release of confidential information relating to the fund or its shareholders. Such operational issues and
cybersecurity incidents may result in losses to the fund and its shareholders. Because technology is frequently changing, new ways to carry out cyberattacks continue to develop. Therefore, there is a chance that
certain risks have not been identified or prepared for, or that an attack may not be detected, which puts limitations on the ability of the fund and its service providers to plan for or respond to a cyberattack.
Furthermore, geopolitical tensions could increase the scale and sophistication of deliberate cybersecurity attacks, particularly those from nation-states or from entities with nation-state backing.
Temporary Defensive Strategy: In response to adverse market, economic, industry, political, or other conditions, MFS may depart from the fund’s principal investment strategies by temporarily investing for
defensive purposes. When MFS invests defensively, different factors could affect the fund’s performance and the fund may not achieve its investment objective. In addition, the defensive strategy may not work as
intended.
Investment Restrictions
The Fund has adopted the following
policies which cannot be changed without the approval of the holders of a majority of its shares as defined currently in the 1940 Act to be the lesser of (i) 67% or more of the voting securities present at a meeting
at which holders of voting securities representing more than 50% of the outstanding voting securities are present or represented by proxy, or (ii) more than 50% of the outstanding voting securities (“Majority
Shareholder Vote”). Except for fundamental investment restriction (1), these investment restrictions are adhered to at the time of purchase or utilization of assets; a subsequent change in circumstances will not
be considered to result in a violation of policy.
The Fund may not:
Investment Objective, Principal Investment
Strategies and Principal Risks - continued
| (1)
| borrow money except to the extent not prohibited by the 1940 Act and exemptive orders granted under such Act.
|
| (2)
| underwrite securities issued by other persons, except that all or any portion of the assets of the Fund may be invested in one or more investment companies, to the extent not prohibited by the 1940 Act
and exemptive orders granted under such Act, and except insofar as the Fund may technically be deemed an underwriter under the Securities Act of 1933, as amended, in selling a portfolio security.
|
| (3)
| issue any senior securities except to the extent not prohibited by the 1940 Act and exemptive orders granted under such Act. For purposes of this restriction, collateral arrangements with respect to any
type of swap, option, Forward Contracts and Futures Contracts and collateral arrangements with respect to initial and variation margin are not deemed to be the issuance of a senior security.
|
| (4)
| make loans except to the extent not prohibited by the 1940 Act and exemptive orders granted under such Act.
|
| (5)
| purchase or sell real estate (excluding securities secured by real estate or interests therein and securities of companies, such as real estate investment trusts, which deal in real estate or interests
therein), interests in oil, gas or mineral leases, commodities or commodity contacts (excluding currencies and any type of option, Futures Contracts and Forward Contracts) in the ordinary course of its business. The
Fund reserves the freedom of action to hold and to sell real estate, mineral leases, commodities or commodity contracts (including currencies and any type of option, Futures Contracts and Forward Contracts) acquired
as a result of the ownership of securities.
|
| (6)
| purchase any securities of an issuer in a particular industry if as a result 25% or more of its total assets (taken at market value at the time of purchase) would be invested in securities of issuers
whose principal business activities are in the same industry.
|
For purposes of investment
restriction (5), investments in certain types of derivative instruments whose value is related to commodities or commodity contracts, including swaps and structured notes, are not considered commodities or commodity
contracts.
For purposes of fundamental
investment restriction (6), investments in securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities and tax-exempt obligations issued or guaranteed by a U.S. territory or possession,
a state or local government, or a political subdivision of any of the foregoing, are not considered an investment in any particular industry.
For purposes of fundamental
investment restriction (6), investments in other investment companies are not considered an investment in any particular industry and portfolio securities held by an underlying fund in which the Fund may invest are
not considered to be securities purchased by the Fund.
For purposes of fundamental
investment restriction (6), MFS uses a customized set of industry groups for classifying securities based on classifications developed by third party providers.
Portfolio Managers' Profiles
| Portfolio Manager
| Primary Role
| Since
| Title and Five Year History
|
| Ward Brown
| Emerging Markets Debt Instruments Portfolio Manager
| 2012
| Investment Officer of MFS; employed in the investment management area of MFS since 2005.
|
| Katherine Cannan
| Equity Securities Portfolio Manager
| 2019
| Investment Officer of MFS; employed in the investment management area of MFS since 2013.
|
| Nevin Chitkara
| Equity Securities Portfolio Manager
| 2012
| Investment Officer of MFS; employed in the investment management area of MFS since 1997.
|
| David Cole
| Below Investment Grade Debt Instruments Portfolio Manager
| 2006
| Investment Officer of MFS; employed in the investment management area of MFS since 2004.
|
| Matt Ryan
| Emerging Markets Debt Instruments Portfolio Manager
| 2012
| Investment Officer of MFS; employed in the investment management area of MFS since 1997.
|
| Michael Skatrud
| Below Investment Grade Debt Instruments Portfolio Manager
| 2018
| Investment Officer of MFS; employed in the investment management area of MFS since 2013.
|
The following information in this
annual report is a summary of certain changes since October 31, 2022. This information may not reflect all of the changes that have occurred since you purchased this fund.
Effective April 30, 2024, Matt Ryan
will no longer be a Portfolio Manager of the fund.
Dividend Reinvestment And Cash Purchase Plan
The fund offers a Dividend
Reinvestment and Cash Purchase Plan (the “Plan”) that allows common shareholders to reinvest either all of the distributions paid by the fund or only the long-term capital gains. Generally, purchases are
made at the market price unless that price exceeds the net asset value (the shares are trading at a premium). If the shares are trading at a premium, the fund will issue shares at a price of either the net asset value
or 95% of the market price, whichever is greater. You can also buy shares on a quarterly basis in any amount $100 and over. Computershare Trust Company, N.A. (the Transfer Agent for the fund) (the “Plan
Agent”) will purchase shares under the Plan on the 15th of January, April, July, and October or shortly thereafter. You may obtain a copy of the Plan by contacting the Plan Agent at 1-800-637-2304 any business
day from 9 a.m. to 5 p.m. Eastern time or by visiting the Plan Agent's Web site at www.computershare.com/investor.
If shares are registered in your own
name, new shareholders will automatically participate in the Plan, unless you have indicated that you do not wish to participate. If your shares are in the name of a brokerage firm, bank, or other nominee, you can ask
the firm or nominee to participate in the Plan on your behalf. If the nominee does not offer the Plan, you may wish to request that your shares be re-registered in your own name so that you can participate. There is
no service charge to reinvest distributions, nor are there brokerage charges for shares issued directly by the fund. However, when shares are bought on the New York Stock Exchange or otherwise on the open market, each
participant pays a pro rata share of the transaction expenses, including commissions. The tax status of dividends and capital gain distributions does not change whether received in cash or reinvested in additional
shares – the automatic reinvestment of distributions does not relieve you of any income tax that may be payable (or required to be withheld) on the distributions.
If your shares are held directly
with the Plan Agent, you may withdraw from the Plan at any time by contacting the Plan Agent. Please have available the name of the fund and your account number. For certain types of registrations, such as corporate
accounts, instructions must be submitted in writing. Please call for additional details. When you withdraw from the Plan, you can receive the value of the reinvested shares in one of three ways: your full shares will
be held in your account, the Plan Agent will sell your shares and send the proceeds to you, or you may transfer your full shares to your investment professional who can hold or sell them. Additionally, the Plan Agent
will sell your fractional shares and send the proceeds to you.
If you have any questions, contact
the Plan Agent by calling 1-800-637-2304, visit the Plan Agent’s Web site at www.computershare.com/investor, or by writing to the Plan Agent at P.O. Box 43078, Providence, RI 02940-3078.
Portfolio of Investments
10/31/23
The Portfolio of Investments is a
complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer
|
|
| Shares/Par
| Value ($)
|
| Bonds – 54.0%
|
| Aerospace & Defense – 1.6%
|
| Bombardier, Inc., 7.5%, 3/15/2025 (n)
|
| $
| 13,000
| $12,986
|
| Bombardier, Inc., 7.125%, 6/15/2026 (n)
|
|
| 33,000
| 31,752
|
| Bombardier, Inc., 7.5%, 2/01/2029 (n)
|
|
| 25,000
| 23,156
|
| Moog, Inc., 4.25%, 12/15/2027 (n)
|
|
| 61,000
| 54,306
|
| Spirit AeroSystems, Inc., 4.6%, 6/15/2028
|
|
| 65,000
| 51,425
|
| TransDigm, Inc., 6.25%, 3/15/2026 (n)
|
|
| 57,000
| 55,658
|
| TransDigm, Inc., 5.5%, 11/15/2027
|
|
| 64,000
| 59,581
|
| TransDigm, Inc., 6.75%, 8/15/2028 (n)
|
|
| 48,000
| 46,607
|
| TransDigm, Inc., 4.625%, 1/15/2029
|
|
| 55,000
| 47,423
|
| TransDigm, Inc., 6.875%, 12/15/2030 (n)
|
|
| 101,000
| 97,522
|
|
|
|
|
| $480,416
|
| Airlines – 0.4%
|
| Air Canada, 3.875%, 8/15/2026 (n)
|
| $
| 84,000
| $76,429
|
| American Airlines, Inc./AAdvantage Loyalty IP Ltd., 5.75%, 4/20/2029 (n)
|
|
| 35,527
| 32,047
|
|
|
|
|
| $108,476
|
| Automotive – 0.9%
|
| Clarios Global LP/Clarios U.S. Finance Co., 8.5%, 5/15/2027 (n)
|
| $
| 55,000
| $54,152
|
| Clarios Global LP/Clarios U.S. Finance Co., 6.75%, 5/15/2028 (n)
|
|
| 25,000
| 24,372
|
| Dana, Inc., 5.375%, 11/15/2027
|
|
| 46,000
| 42,320
|
| Dana, Inc., 4.25%, 9/01/2030
|
|
| 32,000
| 25,327
|
| Dornoch Debt Merger Sub, Inc., 6.625%, 10/15/2029 (n)
|
|
| 52,000
| 40,899
|
| Real Hero Merger Sub 2, Inc., 6.25%, 2/01/2029 (n)
|
|
| 42,000
| 33,410
|
| Wabash National Corp., 4.5%, 10/15/2028 (n)
|
|
| 50,000
| 41,375
|
|
|
|
|
| $261,855
|
| Broadcasting – 0.7%
|
| Midas OpCo Holdings LLC, 5.625%, 8/15/2029 (n)
|
| $
| 64,000
| $52,895
|
| Summer (BC) Bidco B LLC, 5.5%, 10/31/2026 (n)
|
|
| 200,000
| 174,170
|
|
|
|
|
| $227,065
|
| Brokerage & Asset Managers – 1.1%
|
| AG Issuer LLC, 6.25%, 3/01/2028 (n)
|
| $
| 10,000
| $9,206
|
| AG TTMT Escrow Issuer LLC, 8.625%, 9/30/2027 (n)
|
|
| 56,000
| 56,254
|
| Aretec Escrow Issuer 2, Inc., 10%, 8/15/2030 (n)(w)
|
|
| 51,000
| 51,574
|
| Aretec Escrow Issuer, Inc., 7.5%, 4/01/2029 (n)
|
|
| 61,000
| 51,752
|
| LPL Holdings, Inc., 4%, 3/15/2029 (n)
|
|
| 35,000
| 30,095
|
| LPL Holdings, Inc., 4.375%, 5/15/2031 (n)
|
|
| 40,000
| 33,501
|
| NFP Corp., 4.875%, 8/15/2028 (n)
|
|
| 55,000
| 48,156
|
Portfolio of Investments –
continued
| Issuer
|
|
| Shares/Par
| Value ($)
|
| Bonds – continued
|
| Brokerage & Asset Managers – continued
|
| NFP Corp., 6.875%, 8/15/2028 (n)
|
| $
| 56,000
| $47,819
|
| NFP Corp., 8.5%, 10/01/2031 (n)
|
|
| 15,000
| 14,749
|
|
|
|
|
| $343,106
|
| Building – 1.7%
|
| Foundation Building Materials LLC, 6%, 3/01/2029 (n)
|
| $
| 62,000
| $51,143
|
| GYP Holding III Corp., 4.625%, 5/01/2029 (n)
|
|
| 78,000
| 63,960
|
| Interface, Inc., 5.5%, 12/01/2028 (n)
|
|
| 75,000
| 63,053
|
| MIWD Holdco II LLC/MIWD Finance Co., 5.5%, 2/01/2030 (n)
|
|
| 51,000
| 40,481
|
| New Enterprise Stone & Lime Co., Inc., 5.25%, 7/15/2028 (n)
|
|
| 33,000
| 29,122
|
| New Enterprise Stone & Lime Co., Inc., 9.75%, 7/15/2028 (n)
|
|
| 22,000
| 21,945
|
| Patrick Industries, Inc., 7.5%, 10/15/2027 (n)
|
|
| 70,000
| 66,675
|
| SRS Distribution, Inc., 6.125%, 7/01/2029 (n)
|
|
| 36,000
| 30,150
|
| Standard Industries, Inc., 4.75%, 1/15/2028 (n)
|
|
| 33,000
| 29,532
|
| Standard Industries, Inc., 4.375%, 7/15/2030 (n)
|
|
| 83,000
| 67,813
|
| White Cap Buyer LLC, 6.875%, 10/15/2028 (n)
|
|
| 59,000
| 51,488
|
|
|
|
|
| $515,362
|
| Business Services – 0.6%
|
| Entegris Escrow Corp., 5.95%, 6/15/2030 (n)
|
| $
| 31,000
| $28,360
|
| Iron Mountain, Inc., 4.875%, 9/15/2027 (n)
|
|
| 45,000
| 41,136
|
| Iron Mountain, Inc., 5.25%, 3/15/2028 (n)
|
|
| 46,000
| 42,074
|
| Verscend Escrow Corp., 9.75%, 8/15/2026 (n)
|
|
| 70,000
| 69,484
|
|
|
|
|
| $181,054
|
| Cable TV – 4.2%
|
| Cable One, Inc., 4%, 11/15/2030 (n)
|
| $
| 89,000
| $66,305
|
| CCO Holdings LLC/CCO Holdings Capital Corp., 5.125%, 5/01/2027 (n)
|
|
| 46,000
| 42,352
|
| CCO Holdings LLC/CCO Holdings Capital Corp., 4.75%, 3/01/2030 (n)
|
|
| 204,000
| 168,284
|
| CCO Holdings LLC/CCO Holdings Capital Corp., 4.5%, 8/15/2030 (n)
|
|
| 108,000
| 86,598
|
| CCO Holdings LLC/CCO Holdings Capital Corp., 4.25%, 2/01/2031 (n)
|
|
| 73,000
| 56,808
|
| CCO Holdings LLC/CCO Holdings Capital Corp., 4.25%, 1/15/2034 (n)
|
|
| 50,000
| 36,115
|
| CSC Holdings LLC, 5.375%, 2/01/2028 (n)
|
|
| 200,000
| 159,267
|
| DISH DBS Corp., 7.75%, 7/01/2026
|
|
| 35,000
| 23,453
|
| DISH DBS Corp., 5.25%, 12/01/2026 (n)
|
|
| 50,000
| 40,333
|
| DISH DBS Corp., 5.125%, 6/01/2029
|
|
| 35,000
| 18,025
|
| DISH Network Corp., 11.75%, 11/15/2027 (n)
|
|
| 25,000
| 24,764
|
| Sirius XM Radio, Inc., 4%, 7/15/2028 (n)
|
|
| 47,000
| 39,970
|
| Sirius XM Radio, Inc., 5.5%, 7/01/2029 (n)
|
|
| 115,000
| 101,899
|
| Sirius XM Radio, Inc., 3.875%, 9/01/2031 (n)
|
|
| 37,000
| 27,868
|
| Videotron Ltd., 5.125%, 4/15/2027 (n)
|
|
| 39,000
| 36,297
|
| Videotron Ltd., 3.625%, 6/15/2029 (n)
|
|
| 35,000
| 29,498
|
| Virgin Media Finance PLC, 5%, 7/15/2030 (n)
|
|
| 200,000
| 157,237
|
Portfolio of Investments –
continued
| Issuer
|
|
| Shares/Par
| Value ($)
|
| Bonds – continued
|
| Cable TV – continued
|
| Ziggo Bond Finance B.V., 5.125%, 2/28/2030 (n)
|
| $
| 200,000
| $145,719
|
|
|
|
|
| $1,260,792
|
| Chemicals – 2.3%
|
| Axalta Coating Systems Ltd., 4.75%, 6/15/2027 (n)
|
| $
| 150,000
| $138,141
|
| Chemours Co., 4.625%, 11/15/2029 (n)
|
|
| 16,000
| 12,358
|
| Element Solutions, Inc., 3.875%, 9/01/2028 (n)
|
|
| 55,000
| 46,797
|
| Ingevity Corp., 3.875%, 11/01/2028 (n)
|
|
| 86,000
| 69,818
|
| LSF11 A5 HoldCo LLC, 6.625%, 10/15/2029 (n)
|
|
| 60,000
| 48,676
|
| Sasol Financing (USA) LLC, 5.5%, 3/18/2031
|
|
| 200,000
| 153,124
|
| SCIH Salt Holdings, Inc., 6.625%, 5/01/2029 (n)
|
|
| 51,000
| 42,749
|
| SCIL IV LLC/SCIL USA Holdings LLC, 9.5%, 7/15/2028 (n)
|
| EUR
| 100,000
| 106,996
|
| Windsor Holdings III, LLC, 8.5%, 6/15/2030 (n)
|
| $
| 76,000
| 73,983
|
|
|
|
|
| $692,642
|
| Computer Software – 0.6%
|
| Camelot Finance S.A., 4.5%, 11/01/2026 (n)
|
| $
| 42,000
| $38,824
|
| Central Parent LLC/CDK Global II LLC/CDK Financing Co., Inc., 8%, 6/15/2029 (n)
|
|
| 30,000
| 29,632
|
| Clarivate Science Holdings Corp., 3.875%, 7/01/2028 (n)
|
|
| 15,000
| 12,879
|
| Dun & Bradstreet Corp., 5%, 12/15/2029 (n)
|
|
| 57,000
| 49,037
|
| Neptune Bidco U.S., Inc., 9.29%, 4/15/2029 (n)
|
|
| 60,000
| 52,953
|
|
|
|
|
| $183,325
|
| Computer Software - Systems – 0.9%
|
| Fair Isaac Corp., 5.25%, 5/15/2026 (n)
|
| $
| 108,000
| $103,929
|
| Sabre GLBL, Inc., 8.625%, 6/01/2027 (n)
|
|
| 24,000
| 19,904
|
| Sabre GLBL, Inc., 11.25%, 12/15/2027 (n)
|
|
| 25,000
| 22,262
|
| SS&C Technologies Holdings, Inc., 5.5%, 9/30/2027 (n)
|
|
| 101,000
| 94,766
|
| Virtusa Corp., 7.125%, 12/15/2028 (n)
|
|
| 42,000
| 33,235
|
|
|
|
|
| $274,096
|
| Conglomerates – 1.8%
|
| BWX Technologies, Inc., 4.125%, 6/30/2028 (n)
|
| $
| 68,000
| $59,839
|
| BWX Technologies, Inc., 4.125%, 4/15/2029 (n)
|
|
| 76,000
| 64,980
|
| Chart Industries, Inc., 9.5%, 1/01/2031 (n)
|
|
| 60,000
| 61,798
|
| Emerald Debt Merger, 6.625%, 12/15/2030 (n)
|
|
| 92,000
| 87,515
|
| Gates Global LLC, 6.25%, 1/15/2026 (n)
|
|
| 44,000
| 43,094
|
| Griffon Corp., 5.75%, 3/01/2028
|
|
| 63,000
| 56,893
|
| Madison IAQ LLC, 5.875%, 6/30/2029 (n)
|
|
| 54,000
| 41,830
|
| Regal Rexnord Corp., 6.3%, 2/15/2030 (n)
|
|
| 42,000
| 39,522
|
| TriMas Corp., 4.125%, 4/15/2029 (n)
|
|
| 110,000
| 91,359
|
|
|
|
|
| $546,830
|
Portfolio of Investments –
continued
| Issuer
|
|
| Shares/Par
| Value ($)
|
| Bonds – continued
|
| Construction – 0.6%
|
| Dream Finders Homes, Inc., 8.25%, 8/15/2028 (n)
|
| $
| 39,000
| $38,584
|
| Empire Communities Corp., 7%, 12/15/2025 (n)
|
|
| 31,000
| 28,812
|
| Mattamy Group Corp., 5.25%, 12/15/2027 (n)
|
|
| 30,000
| 26,954
|
| Mattamy Group Corp., 4.625%, 3/01/2030 (n)
|
|
| 40,000
| 32,658
|
| Weekley Homes LLC/Weekley Finance Corp., 4.875%, 9/15/2028 (n)
|
|
| 59,000
| 50,666
|
|
|
|
|
| $177,674
|
| Consumer Products – 1.0%
|
| Energizer Gamma Acquisition B.V., 3.5%, 6/30/2029
|
| EUR
| 100,000
| $83,084
|
| HFC Prestige Products, Inc. / HFC Prestige International US LLC, 6.625%, 7/15/2030 (n)
|
| $
| 60,000
| 57,163
|
| Newell Brands, Inc., 6.375%, 9/15/2027
|
|
| 48,000
| 44,953
|
| Prestige Consumer Healthcare, Inc., 5.125%, 1/15/2028 (n)
|
|
| 66,000
| 60,850
|
| Prestige Consumer Healthcare, Inc., 3.75%, 4/01/2031 (n)
|
|
| 31,000
| 24,622
|
| SWF Escrow Issuer Corp., 6.5%, 10/01/2029 (n)
|
|
| 33,000
| 19,548
|
|
|
|
|
| $290,220
|
| Consumer Services – 2.2%
|
| Allied Universal Holdco LLC, 9.75%, 7/15/2027 (n)
|
| $
| 96,000
| $83,388
|
| ANGI Group LLC, 3.875%, 8/15/2028 (n)
|
|
| 62,000
| 46,500
|
| Arches Buyer, Inc., 6.125%, 12/01/2028 (n)
|
|
| 56,000
| 45,232
|
| Cushman & Wakefield PLC, 6.75%, 5/15/2028 (n)
|
|
| 46,000
| 41,955
|
| GoDaddy, Inc., 3.5%, 3/01/2029 (n)
|
|
| 101,000
| 84,785
|
| GW B-CR Security Corp., 9.5%, 11/01/2027 (n)
|
|
| 49,000
| 44,526
|
| Match Group Holdings II LLC, 5%, 12/15/2027 (n)
|
|
| 69,000
| 63,641
|
| Match Group Holdings II LLC, 4.625%, 6/01/2028 (n)
|
|
| 60,000
| 53,873
|
| Match Group Holdings II LLC, 4.125%, 8/01/2030 (n)
|
|
| 20,000
| 16,251
|
| Match Group Holdings II LLC, 3.625%, 10/01/2031 (n)
|
|
| 5,000
| 3,838
|
| Realogy Group LLC/Realogy Co-Issuer Corp., 5.75%, 1/15/2029 (n)
|
|
| 42,000
| 26,468
|
| Realogy Group LLC/Realogy Co-Issuer Corp., 5.25%, 4/15/2030 (n)
|
|
| 45,000
| 28,019
|
| TriNet Group, Inc., 3.5%, 3/01/2029 (n)
|
|
| 89,000
| 73,491
|
| WASH Multi-Family Acquisition, Inc., 5.75%, 4/15/2026 (n)
|
|
| 49,000
| 45,325
|
|
|
|
|
| $657,292
|
| Containers – 1.6%
|
| Ardagh Metal Packaging Finance USA LLC, 4%, 9/01/2029 (n)
|
| $
| 200,000
| $150,014
|
| Can-Pack S.A./Eastern PA Land Investment Holding LLC, 3.875%, 11/15/2029 (n)
|
|
| 200,000
| 157,000
|
| Crown Americas LLC, 5.25%, 4/01/2030
|
|
| 23,000
| 20,786
|
| Crown Americas LLC/Crown Americas Capital Corp. V, 4.25%, 9/30/2026
|
|
| 53,000
| 50,107
|
| Crown Americas LLC/Crown Americas Capital Corp. VI, 4.75%, 2/01/2026
|
|
| 55,000
| 52,889
|
| LABL, Inc., 5.875%, 11/01/2028 (n)
|
|
| 50,000
| 42,312
|
Portfolio of Investments –
continued
| Issuer
|
|
| Shares/Par
| Value ($)
|
| Bonds – continued
|
| Containers – continued
|
| Mauser Packaging Solutions, 7.875%, 8/15/2026 (n)
|
| $
| 25,000
| $23,415
|
|
|
|
|
| $496,523
|
| Electronics – 0.8%
|
| Entegris, Inc., 4.375%, 4/15/2028 (n)
|
| $
| 46,000
| $41,041
|
| Entegris, Inc., 3.625%, 5/01/2029 (n)
|
|
| 27,000
| 22,580
|
| Sensata Technologies B.V., 5.625%, 11/01/2024 (n)
|
|
| 25,000
| 24,751
|
| Sensata Technologies B.V., 5%, 10/01/2025 (n)
|
|
| 80,000
| 77,781
|
| Sensata Technologies, Inc., 4.375%, 2/15/2030 (n)
|
|
| 51,000
| 43,106
|
| Synaptics, Inc., 4%, 6/15/2029 (n)
|
|
| 56,000
| 46,200
|
|
|
|
|
| $255,459
|
| Emerging Market Quasi-Sovereign – 0.3%
|
| Petroleos Mexicanos, 6.49%, 1/23/2027
|
| $
| 100,000
| $88,563
|
| Energy - Independent – 2.0%
|
| Callon Petroleum Co., 8%, 8/01/2028 (n)
|
| $
| 45,000
| $44,467
|
| Callon Petroleum Co., 7.5%, 6/15/2030 (n)
|
|
| 15,000
| 14,528
|
| Civitas Resources, Inc., 8.375%, 7/01/2028 (n)
|
|
| 48,000
| 48,296
|
| Civitas Resources, Inc., 8.625%, 11/01/2030 (n)
|
|
| 15,000
| 15,267
|
| Civitas Resources, Inc., 8.75%, 7/01/2031 (n)
|
|
| 30,000
| 30,278
|
| Comstock Resources, Inc., 6.75%, 3/01/2029 (n)
|
|
| 75,000
| 68,252
|
| CrownRock LP/CrownRock Finance, Inc., “F”, 5%, 5/01/2029 (n)
|
|
| 78,000
| 73,570
|
| Encino Acquisition Partners Holdings LLC, 8.5%, 5/01/2028 (n)
|
|
| 40,000
| 39,000
|
| Matador Resources Co., 6.875%, 4/15/2028 (n)
|
|
| 57,000
| 55,859
|
| Moss Creek Resources Holdings, Inc., 7.5%, 1/15/2026 (n)
|
|
| 44,000
| 42,029
|
| Permian Resources Operating LLC, 7.75%, 2/15/2026 (n)
|
|
| 5,000
| 4,996
|
| Permian Resources Operating LLC, 5.875%, 7/01/2029 (n)
|
|
| 85,000
| 79,112
|
| Permian Resources Operating LLC, 7%, 1/15/2032 (n)
|
|
| 18,000
| 17,449
|
| Sitio Royalties Operating Partnership, LP, 7.875%, 11/01/2028 (n)
|
|
| 40,000
| 39,456
|
| SM Energy Co., 6.5%, 7/15/2028
|
|
| 41,000
| 39,471
|
|
|
|
|
| $612,030
|
| Energy - Integrated – 0.1%
|
| Citgo Petroleum Corp., 8.375%, 1/15/2029 (n)
|
| $
| 31,000
| $30,701
|
| Entertainment – 1.4%
|
| Carnival Corp. PLC, 7.625%, 3/01/2026 (n)
|
| $
| 48,000
| $46,675
|
| Carnival Corp. PLC, 5.75%, 3/01/2027 (n)
|
|
| 89,000
| 79,465
|
| Carnival Corp. PLC, 4%, 8/01/2028 (n)
|
|
| 15,000
| 13,047
|
| Carnival Corp. PLC, 6%, 5/01/2029 (n)
|
|
| 17,000
| 14,361
|
| NCL Corp. Ltd., 5.875%, 3/15/2026 (n)
|
|
| 46,000
| 41,285
|
| Royal Caribbean Cruises Ltd., 5.375%, 7/15/2027 (n)
|
|
| 42,000
| 38,706
|
| Royal Caribbean Cruises Ltd., 5.5%, 4/01/2028 (n)
|
|
| 63,000
| 57,447
|
| SeaWorld Parks & Entertainment, 5.25%, 8/15/2029 (n)
|
|
| 61,000
| 53,133
|
Portfolio of Investments –
continued
| Issuer
|
|
| Shares/Par
| Value ($)
|
| Bonds – continued
|
| Entertainment – continued
|
| Viking Cruises Ltd. Co., 5.875%, 9/15/2027 (n)
|
| $
| 35,000
| $31,531
|
| Viking Ocean Cruises Ship VII Ltd., 5.625%, 2/15/2029 (n)
|
|
| 20,000
| 17,725
|
| VOC Escrow Ltd., 5%, 2/15/2028 (n)
|
|
| 30,000
| 26,953
|
|
|
|
|
| $420,328
|
| Financial Institutions – 2.3%
|
| Credit Acceptance Corp., 5.125%, 12/31/2024 (n)
|
| $
| 65,000
| $62,842
|
| Credit Acceptance Corp., 6.625%, 3/15/2026
|
|
| 8,000
| 7,596
|
| Freedom Mortgage Corp., 7.625%, 5/01/2026 (n)
|
|
| 35,000
| 32,210
|
| Global Aircraft Leasing Co. Ltd., 6.5% (6.5% Cash or 7.25% PIK), 9/15/2024 (n)(p)
|
|
| 124,495
| 112,508
|
| Howard Hughes Corp., 4.125%, 2/01/2029 (n)
|
|
| 84,000
| 67,410
|
| Macquarie AirFinance Holdings Ltd., 8.125%, 3/30/2029 (n)
|
|
| 11,000
| 10,836
|
| Macquarie AirFinance Ltd., 8.375%, 5/01/2028 (n)
|
|
| 64,000
| 63,792
|
| Nationstar Mortgage Holdings, Inc., 6%, 1/15/2027 (n)
|
|
| 89,000
| 82,727
|
| Nationstar Mortgage Holdings, Inc., 5.75%, 11/15/2031 (n)
|
|
| 12,000
| 9,994
|
| OneMain Finance Corp., 6.875%, 3/15/2025
|
|
| 52,000
| 51,303
|
| OneMain Finance Corp., 7.125%, 3/15/2026
|
|
| 69,000
| 67,013
|
| OneMain Finance Corp., 5.375%, 11/15/2029
|
|
| 25,000
| 20,556
|
| Rocket Mortgage Co-Issuer, Inc., 3.625%, 3/01/2029 (n)
|
|
| 43,000
| 34,946
|
| SLM Corp., 3.125%, 11/02/2026
|
|
| 70,000
| 60,854
|
|
|
|
|
| $684,587
|
| Food & Beverages – 2.0%
|
| B&G Foods, Inc., 5.25%, 9/15/2027
|
| $
| 15,000
| $12,345
|
| B&G Foods, Inc., 8%, 9/15/2028 (n)
|
|
| 29,000
| 28,260
|
| Central America Bottling Co., 5.25%, 4/27/2029 (n)
|
|
| 200,000
| 176,000
|
| Performance Food Group Co., 5.5%, 10/15/2027 (n)
|
|
| 73,000
| 68,260
|
| Post Holdings, Inc., 5.625%, 1/15/2028 (n)
|
|
| 57,000
| 52,974
|
| Post Holdings, Inc., 4.625%, 4/15/2030 (n)
|
|
| 77,000
| 64,479
|
| Primo Water Holding, Inc., 4.375%, 4/30/2029 (n)
|
|
| 91,000
| 76,778
|
| TreeHouse Foods, Inc., 4%, 9/01/2028
|
|
| 45,000
| 36,608
|
| U.S. Foods Holding Corp., 4.75%, 2/15/2029 (n)
|
|
| 71,000
| 62,633
|
| United Natural Foods, Inc., 6.75%, 10/15/2028 (n)
|
|
| 25,000
| 19,672
|
|
|
|
|
| $598,009
|
| Gaming & Lodging – 1.2%
|
| Caesars Entertainment, Inc., 4.625%, 10/15/2029 (n)
|
| $
| 13,000
| $10,684
|
| Caesars Entertainment, Inc., 7%, 2/15/2030 (n)
|
|
| 52,000
| 50,185
|
| Caesars Resort Collection LLC/CRC Finco, Inc., 8.125%, 7/01/2027 (n)
|
|
| 56,000
| 55,489
|
| CCM Merger, Inc., 6.375%, 5/01/2026 (n)
|
|
| 54,000
| 51,115
|
| CDI Escrow Issuer, Inc., 5.75%, 4/01/2030 (n)
|
|
| 51,000
| 45,563
|
| Penn National Gaming, Inc., 4.125%, 7/01/2029 (n)
|
|
| 50,000
| 38,848
|
| Wyndham Hotels & Resorts, Inc., 4.375%, 8/15/2028 (n)
|
|
| 66,000
| 58,248
|
Portfolio of Investments –
continued
| Issuer
|
|
| Shares/Par
| Value ($)
|
| Bonds – continued
|
| Gaming & Lodging – continued
|
| Wynn Resorts Finance LLC/Wynn Resorts Capital Corp., 5.125%, 10/01/2029 (n)
|
| $
| 63,000
| $53,727
|
|
|
|
|
| $363,859
|
| Industrial – 0.5%
|
| APi Escrow Corp., 4.75%, 10/15/2029 (n)
|
| $
| 85,000
| $72,695
|
| Williams Scotsman International, Inc., 4.625%, 8/15/2028 (n)
|
|
| 80,000
| 71,070
|
|
|
|
|
| $143,765
|
| Insurance - Property & Casualty – 1.4%
|
| Acrisure LLC/Acrisure Finance, Inc., 7%, 11/15/2025 (n)
|
| $
| 34,000
| $32,964
|
| Acrisure LLC/Acrisure Finance, Inc., 4.25%, 2/15/2029 (n)
|
|
| 25,000
| 20,499
|
| Acrisure LLC/Acrisure Finance, Inc., 6%, 8/01/2029 (n)
|
|
| 55,000
| 44,366
|
| Alliant Holdings Intermediate LLC/Alliant Holdings Co-Issuer, 6.75%, 10/15/2027 (n)
|
|
| 44,000
| 40,183
|
| Alliant Holdings Intermediate LLC/Alliant Holdings Co-Issuer, 5.875%, 11/01/2029 (n)
|
|
| 71,000
| 58,947
|
| AmWINS Group Benefits, Inc., 4.875%, 6/30/2029 (n)
|
|
| 50,000
| 42,802
|
| AssuredPartners, Inc., 5.625%, 1/15/2029 (n)
|
|
| 40,000
| 33,933
|
| GTCR (AP) Finance, Inc., 8%, 5/15/2027 (n)
|
|
| 45,000
| 43,817
|
| Hub International Ltd., 5.625%, 12/01/2029 (n)
|
|
| 61,000
| 52,535
|
| Hub International Ltd., 7.25%, 6/15/2030 (n)
|
|
| 41,000
| 39,994
|
|
|
|
|
| $410,040
|
| Machinery & Tools – 0.4%
|
| Ritchie Bros Holdings, Inc., 7.75%, 3/15/2031 (n)
|
| $
| 83,000
| $83,207
|
| Terex Corp., 5%, 5/15/2029 (n)
|
|
| 60,000
| 52,521
|
|
|
|
|
| $135,728
|
| Medical & Health Technology & Services – 2.6%
|
| Avantor Funding, Inc., 4.625%, 7/15/2028 (n)
|
| $
| 87,000
| $77,440
|
| Bausch & Lomb Escrow Corp., 8.375%, 10/01/2028 (n)
|
|
| 38,000
| 37,743
|
| Charles River Laboratories International, Inc., 3.75%, 3/15/2029 (n)
|
|
| 90,000
| 75,966
|
| CHS/Community Health Systems, Inc., 8%, 12/15/2027 (n)
|
|
| 35,000
| 29,686
|
| CHS/Community Health Systems, Inc., 6.125%, 4/01/2030 (n)
|
|
| 71,000
| 27,512
|
| CHS/Community Health Systems, Inc., 5.25%, 5/15/2030 (n)
|
|
| 61,000
| 43,319
|
| Encompass Health Corp., 5.75%, 9/15/2025
|
|
| 10,000
| 9,721
|
| Encompass Health Corp., 4.75%, 2/01/2030
|
|
| 68,000
| 58,764
|
| Encompass Health Corp., 4.625%, 4/01/2031
|
|
| 10,000
| 8,324
|
| IQVIA, Inc., 5%, 5/15/2027 (n)
|
|
| 200,000
| 188,157
|
| Legacy LifePoint Health LLC, 4.375%, 2/15/2027 (n)
|
|
| 25,000
| 20,673
|
| Star Parent, Inc., 9%, 10/01/2030 (n)
|
|
| 15,000
| 14,886
|
| Tenet Healthcare Corp., 6.125%, 10/01/2028
|
|
| 44,000
| 40,810
|
| Tenet Healthcare Corp., 4.375%, 1/15/2030
|
|
| 35,000
| 29,607
|
Portfolio of Investments –
continued
| Issuer
|
|
| Shares/Par
| Value ($)
|
| Bonds – continued
|
| Medical & Health Technology & Services – continued
|
| Tenet Healthcare Corp., 6.125%, 6/15/2030
|
| $
| 61,000
| $56,457
|
| Tenet Healthcare Corp., 6.75%, 5/15/2031 (n)
|
|
| 25,000
| 23,741
|
| U.S. Acute Care Solutions LLC, 6.375%, 3/01/2026 (n)
|
|
| 50,000
| 42,538
|
|
|
|
|
| $785,344
|
| Medical Equipment – 0.5%
|
| Embecta Corp., 5%, 2/15/2030 (n)
|
| $
| 60,000
| $47,644
|
| Garden SpinCo Corp., 8.625%, 7/20/2030 (n)
|
|
| 54,000
| 55,716
|
| Mozart Debt Merger Sub, Inc., 5.25%, 10/01/2029 (n)
|
|
| 35,000
| 29,793
|
| Teleflex, Inc., 4.625%, 11/15/2027
|
|
| 30,000
| 27,450
|
|
|
|
|
| $160,603
|
| Metals & Mining – 1.6%
|
| Baffinland Iron Mines Corp./Baffinland Iron Mines LP, 8.75%, 7/15/2026 (n)
|
| $
| 53,000
| $50,945
|
| FMG Resources Ltd., 4.375%, 4/01/2031 (n)
|
|
| 119,000
| 95,904
|
| GrafTech Finance, Inc., 4.625%, 12/15/2028 (n)
|
|
| 72,000
| 52,779
|
| GrafTech Finance, Inc., 9.875%, 12/15/2028 (n)
|
|
| 15,000
| 13,432
|
| Kaiser Aluminum Corp., 4.625%, 3/01/2028 (n)
|
|
| 50,000
| 41,663
|
| Kaiser Aluminum Corp., 4.5%, 6/01/2031 (n)
|
|
| 75,000
| 55,418
|
| Novelis Corp., 3.25%, 11/15/2026 (n)
|
|
| 19,000
| 16,913
|
| Novelis Corp., 4.75%, 1/30/2030 (n)
|
|
| 61,000
| 51,757
|
| Novelis Corp., 3.875%, 8/15/2031 (n)
|
|
| 59,000
| 46,079
|
| Petra Diamonds US$ Treasury PLC, 9.75%, 3/08/2026 (n)
|
|
| 30,688
| 26,085
|
| Taseko Mines Ltd., 7%, 2/15/2026 (n)
|
|
| 45,000
| 40,820
|
|
|
|
|
| $491,795
|
| Midstream – 2.8%
|
| DT Midstream, Inc., 4.125%, 6/15/2029 (n)
|
| $
| 49,000
| $42,131
|
| DT Midstream, Inc., 4.375%, 6/15/2031 (n)
|
|
| 80,000
| 66,437
|
| EQM Midstream Partners LP, 5.5%, 7/15/2028
|
|
| 105,000
| 97,992
|
| Genesis Energy LP/Genesis Energy Finance Corp., 8%, 1/15/2027
|
|
| 20,000
| 19,205
|
| Genesis Energy LP/Genesis Energy Finance Corp., 8.875%, 4/15/2030
|
|
| 25,000
| 24,168
|
| Kinetik Holdings, Inc., 5.875%, 6/15/2030 (n)
|
|
| 55,000
| 50,465
|
| NuStar Logistics, LP, 6.375%, 10/01/2030
|
|
| 50,000
| 46,250
|
| Peru LNG, 5.375%, 3/22/2030
|
|
| 200,000
| 153,209
|
| Tallgrass Energy Partners LP, 6%, 3/01/2027 (n)
|
|
| 22,000
| 20,128
|
| Tallgrass Energy Partners LP, 5.5%, 1/15/2028 (n)
|
|
| 86,000
| 75,340
|
| Venture Global Calcasieu Pass LLC, 3.875%, 8/15/2029 (n)
|
|
| 73,000
| 60,749
|
| Venture Global Calcasieu Pass LLC, 6.25%, 1/15/2030 (n)
|
|
| 27,000
| 25,471
|
| Venture Global Calcasieu Pass LLC, 4.125%, 8/15/2031 (n)
|
|
| 50,000
| 40,200
|
| Venture Global LNG, Inc., 8.125%, 6/01/2028 (n)
|
|
| 53,000
| 51,454
|
| Venture Global LNG, Inc., 9.5%, 2/01/2029 (n)
|
|
| 34,000
| 34,542
|
Portfolio of Investments –
continued
| Issuer
|
|
| Shares/Par
| Value ($)
|
| Bonds – continued
|
| Midstream – continued
|
| Venture Global LNG, Inc., 8.375%, 6/01/2031 (n)
|
| $
| 48,000
| $45,804
|
|
|
|
|
| $853,545
|
| Network & Telecom – 0.6%
|
| Iliad Holding S.A.S., 7%, 10/15/2028 (n)
|
| $
| 200,000
| $180,991
|
| Oil Services – 0.8%
|
| MV24 Capital B.V., 6.748%, 6/01/2034 (n)
|
| $
| 168,118
| $146,086
|
| Nabors Industries Ltd., 7.25%, 1/15/2026 (n)
|
|
| 65,000
| 61,065
|
| Solaris Midstream Holding LLC, 7.625%, 4/01/2026 (n)
|
|
| 22,000
| 20,987
|
|
|
|
|
| $228,138
|
| Oils – 0.5%
|
| Parkland Corp., 4.625%, 5/01/2030 (n)
|
| $
| 110,000
| $93,775
|
| PBF Holding Co. LLC/PBF Finance Corp., 6%, 2/15/2028
|
|
| 52,000
| 47,804
|
|
|
|
|
| $141,579
|
| Personal Computers & Peripherals – 0.3%
|
| NCR Corp., 5%, 10/01/2028 (n)
|
| $
| 60,000
| $51,804
|
| NCR Corp., 5.125%, 4/15/2029 (n)
|
|
| 46,000
| 39,556
|
|
|
|
|
| $91,360
|
| Pharmaceuticals – 0.8%
|
| 1375209 BC Ltd., 9%, 1/30/2028 (n)
|
| $
| 35,000
| $33,929
|
| Bausch Health Co., Inc., 11%, 9/30/2028 (n)
|
|
| 37,000
| 22,570
|
| Bausch Health Co., Inc., 14%, 10/15/2030 (n)
|
|
| 6,000
| 3,231
|
| Organon Finance 1 LLC, 4.125%, 4/30/2028 (n)
|
|
| 200,000
| 172,752
|
|
|
|
|
| $232,482
|
| Pollution Control – 0.6%
|
| GFL Environmental, Inc., 4.25%, 6/01/2025 (n)
|
| $
| 20,000
| $19,225
|
| GFL Environmental, Inc., 4%, 8/01/2028 (n)
|
|
| 55,000
| 47,333
|
| GFL Environmental, Inc., 4.75%, 6/15/2029 (n)
|
|
| 20,000
| 17,508
|
| GFL Environmental, Inc., 4.375%, 8/15/2029 (n)
|
|
| 25,000
| 21,320
|
| Stericycle, Inc., 3.875%, 1/15/2029 (n)
|
|
| 75,000
| 63,724
|
|
|
|
|
| $169,110
|
| Precious Metals & Minerals – 0.4%
|
| Coeur Mining, Inc., 5.125%, 2/15/2029 (n)
|
| $
| 54,000
| $44,955
|
| Eldorado Gold Corp., 6.25%, 9/01/2029 (n)
|
|
| 27,000
| 23,152
|
| IAMGOLD Corp., 5.75%, 10/15/2028 (n)
|
|
| 66,000
| 51,990
|
|
|
|
|
| $120,097
|
| Printing & Publishing – 0.5%
|
| Cimpress PLC, 7%, 6/15/2026
|
| $
| 150,000
| $138,813
|
Portfolio of Investments –
continued
| Issuer
|
|
| Shares/Par
| Value ($)
|
| Bonds – continued
|
| Real Estate - Other – 0.4%
|
| RHP Hotel Properties, LP/RHP Finance Corp., 7.25%, 7/15/2028 (n)
|
| $
| 65,000
| $63,008
|
| XHR LP, REIT, 4.875%, 6/01/2029 (n)
|
|
| 68,000
| 57,533
|
|
|
|
|
| $120,541
|
| Restaurants – 0.2%
|
| Fertitta Entertainment LLC, 4.625%, 1/15/2029 (n)
|
| $
| 15,000
| $12,605
|
| Fertitta Entertainment LLC, 6.75%, 1/15/2030 (n)
|
|
| 52,000
| 41,327
|
|
|
|
|
| $53,932
|
| Retailers – 1.3%
|
| Asbury Automotive Group, Inc., 4.625%, 11/15/2029 (n)
|
| $
| 68,000
| $57,521
|
| Bath & Body Works, Inc., 5.25%, 2/01/2028
|
|
| 99,000
| 90,778
|
| Lithia Motors, Inc., 3.875%, 6/01/2029 (n)
|
|
| 50,000
| 41,355
|
| Macy's Retail Holdings LLC, 5.875%, 4/01/2029 (n)
|
|
| 59,000
| 52,014
|
| NMG Holding Co. Inc./Neiman Marcus Group LLC, 7.125%, 4/01/2026 (n)
|
|
| 32,000
| 29,933
|
| Penske Automotive Group Co., 3.75%, 6/15/2029
|
|
| 69,000
| 56,928
|
| Victoria's Secret & Co., 4.625%, 7/15/2029 (n)
|
|
| 69,000
| 50,725
|
|
|
|
|
| $379,254
|
| Specialty Stores – 0.1%
|
| Michael Cos., Inc., 5.25%, 5/01/2028 (n)
|
| $
| 35,000
| $25,360
|
| Michael Cos., Inc., 7.875%, 5/01/2029 (n)
|
|
| 37,000
| 20,627
|
|
|
|
|
| $45,987
|
| Telecommunications - Wireless – 0.9%
|
| Millicom International Cellular S.A., 4.5%, 4/27/2031 (n)
|
| $
| 200,000
| $150,855
|
| SBA Communications Corp., 3.875%, 2/15/2027
|
|
| 51,000
| 46,446
|
| SBA Communications Corp., 3.125%, 2/01/2029
|
|
| 95,000
| 78,546
|
|
|
|
|
| $275,847
|
| Tobacco – 0.1%
|
| Vector Group Ltd., 5.75%, 2/01/2029 (n)
|
| $
| 31,000
| $26,270
|
| U.S. Treasury Obligations – 0.3%
|
| U.S. Treasury Notes, 3%, 6/30/2024
|
| $
| 85,000
| $83,606
|
| Utilities - Electric Power – 4.1%
|
| Adani Green Energy (UP) Ltd./Prayatna Developers Private Ltd., 6.25%, 12/10/2024 (n)
|
| $
| 200,000
| $191,604
|
| Calpine Corp., 4.5%, 2/15/2028 (n)
|
|
| 71,000
| 64,021
|
| Calpine Corp., 5.125%, 3/15/2028 (n)
|
|
| 78,000
| 69,805
|
| Clearway Energy Operating LLC, 4.75%, 3/15/2028 (n)
|
|
| 49,000
| 43,740
|
| Clearway Energy Operating LLC, 3.75%, 2/15/2031 (n)
|
|
| 117,000
| 91,230
|
| Greenko Dutch B.V. (Republic of India), 3.85%, 3/29/2026 (n)
|
|
| 185,000
| 164,650
|
Portfolio of Investments –
continued
| Issuer
|
|
| Shares/Par
| Value ($)
|
| Bonds – continued
|
| Utilities - Electric Power – continued
|
| Investment Energy Resources Ltd., 6.25%, 4/26/2029 (n)
|
| $
| 200,000
| $176,110
|
| Mercury Chile Holdco LLC, 6.5%, 1/24/2027 (n)
|
|
| 200,000
| 179,121
|
| NextEra Energy, Inc., 4.25%, 7/15/2024 (n)
|
|
| 6,000
| 5,885
|
| NextEra Energy, Inc., 4.25%, 9/15/2024 (n)
|
|
| 10,000
| 9,450
|
| NextEra Energy, Inc., 4.5%, 9/15/2027 (n)
|
|
| 50,000
| 44,770
|
| Pacific Gas & Electric Co., 6.1%, 1/15/2029
|
|
| 24,000
| 23,091
|
| Pacific Gas & Electric Co., 6.4%, 6/15/2033
|
|
| 30,000
| 28,153
|
| TerraForm Global Operating LLC, 6.125%, 3/01/2026 (n)
|
|
| 50,000
| 48,066
|
| TerraForm Power Operating LLC, 5%, 1/31/2028 (n)
|
|
| 86,000
| 78,786
|
| TerraForm Power Operating LLC, 4.75%, 1/15/2030 (n)
|
|
| 32,000
| 27,040
|
|
|
|
|
| $1,245,522
|
| Total Bonds (Identified Cost, $18,133,351)
|
| $16,264,613
|
| Common Stocks – 41.1%
|
| Aerospace & Defense – 2.8%
|
|
| Honeywell International, Inc.
|
| 1,464
| $268,293
|
| Northrop Grumman Corp.
|
| 1,200
| 565,716
|
|
|
|
|
| $834,009
|
| Brokerage & Asset Managers – 2.2%
|
|
| Citigroup, Inc.
|
| 7,797
| $307,903
|
| NASDAQ, Inc.
|
| 6,846
| 339,562
|
|
|
|
|
| $647,465
|
| Business Services – 1.3%
|
|
| Accenture PLC, “A”
|
| 985
| $292,634
|
| Equifax, Inc.
|
| 670
| 113,612
|
|
|
|
|
| $406,246
|
| Cable TV – 1.7%
|
|
| Comcast Corp., “A” (f)
|
| 12,363
| $510,468
|
| Intelsat Emergence S.A. (a)
|
| 705
| 16,215
|
|
|
|
|
| $526,683
|
| Consumer Products – 0.7%
|
|
| Kenvue, Inc.
|
| 11,514
| $214,160
|
| Electronics – 1.4%
|
|
| Analog Devices, Inc.
|
| 2,642
| $415,666
|
| Energy - Independent – 3.1%
|
|
| ConocoPhillips
|
| 3,211
| $381,467
|
| Pioneer Natural Resources Co.
|
| 2,338
| 558,782
|
|
|
|
|
| $940,249
|
Portfolio of Investments –
continued
| Issuer
|
|
| Shares/Par
| Value ($)
|
| Common Stocks – continued
|
| Food & Beverages – 1.6%
|
|
| Nestle S.A., ADR
|
| 4,415
| $475,760
|
| Gaming & Lodging – 1.2%
|
|
| Marriott International, Inc., “A”
|
| 1,861
| $350,910
|
| Health Maintenance Organizations – 2.2%
|
|
| Cigna Group
|
| 2,128
| $657,978
|
| Insurance – 6.0%
|
|
| Aon PLC
|
| 1,667
| $515,770
|
| Marsh & McLennan Cos., Inc.
|
| 2,734
| 518,503
|
| Progressive Corp.
|
| 4,951
| 782,703
|
|
|
|
|
| $1,816,976
|
| Machinery & Tools – 1.1%
|
|
| Illinois Tool Works, Inc.
|
| 1,519
| $340,438
|
| Major Banks – 3.2%
|
|
| JPMorgan Chase & Co.
|
| 4,271
| $593,925
|
| Morgan Stanley
|
| 5,425
| 384,199
|
|
|
|
|
| $978,124
|
| Medical & Health Technology & Services – 1.7%
|
|
| McKesson Corp.
|
| 1,103
| $502,262
|
| Medical Equipment – 0.3%
|
|
| Thermo Fisher Scientific, Inc.
|
| 199
| $88,509
|
| Oil Services – 0.1%
|
|
| LTRI Holdings LP (a)(u)
|
| 60
| $21,370
|
| Other Banks & Diversified Financials – 1.5%
|
|
| American Express Co.
|
| 3,098
| $452,401
|
| Pharmaceuticals – 1.9%
|
|
| Johnson & Johnson
|
| 1,598
| $237,047
|
| Pfizer, Inc.
|
| 10,914
| 333,532
|
|
|
|
|
| $570,579
|
| Real Estate – 1.3%
|
|
| Prologis, Inc., REIT
|
| 3,974
| $400,381
|
| Specialty Stores – 1.5%
|
|
| Lowe's Cos., Inc.
|
| 2,375
| $452,604
|
Portfolio of Investments –
continued
| Issuer
|
|
| Shares/Par
| Value ($)
|
| Common Stocks – continued
|
| Utilities - Electric Power – 4.3%
|
|
| Dominion Energy, Inc.
|
| 9,631
| $388,322
|
| Duke Energy Corp.
|
| 4,879
| 433,694
|
| Southern Co.
|
| 6,886
| 463,428
|
|
|
|
|
| $1,285,444
|
| Total Common Stocks (Identified Cost, $9,896,637)
|
| $12,378,214
|
| Convertible Bonds – 0.1%
|
| Energy - Renewables – 0.1%
|
|
| NextEra Energy Partners LP, 0%, 11/15/2025 (Identified Cost, $35,103)(n)
|
| $
| 42,000
| $35,637
|
| Contingent Value Rights – 0.0%
|
| Cable TV – 0.0%
|
| Intelsat Jackson Holdings S.A. - Series A, 12/05/2025 (a)
|
|
| 73
| $511
|
| Intelsat Jackson Holdings S.A. - Series B, 12/05/2025 (a)
|
|
| 73
| 438
|
| Total Contingent Value Rights (Identified Cost, $0)
|
| $949
|
| Investment Companies (h) – 3.7%
|
| Money Market Funds – 3.7%
|
|
| MFS Institutional Money Market Portfolio, 5.43% (v) (Identified Cost, $1,111,423)
|
|
| 1,111,477
| $1,111,588
|
|
|
|
|
| Other Assets, Less Liabilities – 1.1%
|
| 326,726
|
| Net Assets – 100.0%
| $30,117,727
|
| (a)
| Non-income producing security.
|
|
|
|
| (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 $1,111,588 and $28,679,413, respectively.
|
|
|
|
| (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 $14,020,429, representing 46.6% of net assets.
|
|
|
|
| (p)
| Payment-in-kind (PIK) security for which interest income may be received in additional securities and/or cash.
|
|
|
|
| (u)
| The security was valued using significant unobservable inputs and is considered level 3 under the fair value hierarchy. For further information about the
fund’s level 3 holdings, please see Note 2 in the Notes to Financial Statements.
|
|
|
|
| (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.
|
|
|
|
Portfolio of Investments –
continued
| The following abbreviations are used in this report and are defined:
|
| ADR
| American Depositary Receipt
|
| CDI
| Interbank Deposit Certificates
|
| REIT
| Real Estate Investment Trust
|
| Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below:
|
| EUR
| Euro
|
Derivative Contracts at 10/31/23
| Forward Foreign Currency Exchange Contracts
|
Currency
Purchased
| Currency
Sold
| Counterparty
| Settlement
Date
| Unrealized
Appreciation
(Depreciation)
|
| Asset Derivatives
|
| USD
| 188,621
| EUR
| 177,514
| State Street Bank Corp.
| 1/19/2024
| $89
|
| Futures Contracts
|
| Description
| Long/
Short
| Currency
| Contracts
| Notional
Amount
| Expiration
Date
| Value/Unrealized
Appreciation
(Depreciation)
|
| Liability Derivatives
|
| Interest Rate Futures
|
|
|
| U.S. Treasury Bond 30 yr
| Long
| USD
| 1
| $109,438
| December – 2023
| $(10,612)
|
At October 31, 2023, the fund had
liquid securities with an aggregate value of $6,028 to cover any collateral or margin obligations for certain derivative contracts.
See Notes to Financial Statements
Financial Statements
Statement of Assets and
Liabilities
At 10/31/23
This statement represents your
fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.
| Assets
|
|
| Investments in unaffiliated issuers, at value (identified cost, $28,065,091)
| $28,679,413
|
| Investments in affiliated issuers, at value (identified cost, $1,111,423)
| 1,111,588
|
| Receivables for
|
|
| Forward foreign currency exchange contracts
| 89
|
| Net daily variation margin on open futures contracts
| 161
|
| Investments sold
| 239,691
|
| Interest and dividends
| 274,745
|
| Other assets
| 3,984
|
| Total assets
| $30,309,671
|
| Liabilities
|
|
| Payables for
|
|
| Distributions
| $15,924
|
| Investments purchased
| 26,511
|
| When-issued investments purchased
| 51,000
|
| Payable to affiliates
|
|
| Investment adviser
| 1,535
|
| Administrative services fee
| 94
|
| Transfer agent and dividend disbursing costs
| 124
|
| Payable for independent Trustees' compensation
| 45
|
| Payable for audit and tax fees
| 74,929
|
| Accrued expenses and other liabilities
| 21,782
|
| Total liabilities
| $191,944
|
| Net assets
| $30,117,727
|
| Net assets consist of
|
|
| Paid-in capital
| $29,641,554
|
| Total distributable earnings (loss)
| 476,173
|
| Net assets
| $30,117,727
|
| Shares of beneficial interest outstanding
| 7,289,242
|
| Net asset value per share (net assets of $30,117,727 / 7,289,242 shares of beneficial interest
outstanding)
| $4.13
|
See Notes to Financial Statements
Financial Statements
Statement of Operations
Year ended 10/31/23
This statement describes how much
your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.
| Net investment income (loss)
|
|
| Income
|
|
| Interest
| $1,124,270
|
| Dividends
| 344,417
|
| Dividends from affiliated issuers
| 45,623
|
| Other
| 219
|
| Foreign taxes withheld
| (2,048)
|
| Total investment income
| $1,512,481
|
| Expenses
|
|
| Management fee
| $272,642
|
| Transfer agent and dividend disbursing costs
| 13,979
|
| Administrative services fee
| 17,500
|
| Independent Trustees' compensation
| 5,756
|
| Stock exchange fee
| 23,858
|
| Custodian fee
| 4,789
|
| Shareholder communications
| 37,416
|
| Audit and tax fees
| 89,610
|
| Legal fees
| 817
|
| Miscellaneous
| 34,776
|
| Total expenses
| $501,143
|
| Net investment income (loss)
| $1,011,338
|
| Realized and unrealized gain (loss)
|
| Realized gain (loss) (identified cost basis)
|
|
| Unaffiliated issuers
| $1,320,038
|
| Affiliated issuers
| 136
|
| Futures contracts
| (3,075)
|
| Forward foreign currency exchange contracts
| 1,905
|
| Foreign currency
| (526)
|
| Net realized gain (loss)
| $1,318,478
|
| Change in unrealized appreciation or depreciation
|
|
| Unaffiliated issuers
| $(1,328,203)
|
| Affiliated issuers
| 86
|
| Futures contracts
| (21,647)
|
| Forward foreign currency exchange contracts
| 89
|
| Translation of assets and liabilities in foreign currencies
| (88)
|
| Net unrealized gain (loss)
| $(1,349,763)
|
| Net realized and unrealized gain (loss)
| $(31,285)
|
| Change in net assets from operations
| $980,053
|
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.
|
| Year ended
|
|
| 10/31/23
| 10/31/22
|
| Change in net assets
|
|
|
| From operations
|
|
|
| Net investment income (loss)
| $1,011,338
| $843,924
|
| Net realized gain (loss)
| 1,318,478
| 1,287,045
|
| Net unrealized gain (loss)
| (1,349,763)
| (6,293,001)
|
| Change in net assets from operations
| $980,053
| $(4,162,032)
|
| Distributions to shareholders
| $(2,243,945)
| $(2,171,339)
|
| Tax return of capital distributions to shareholders
| $(993,392)
| $(1,486,857)
|
| Change in net assets from fund share transactions
| $(55,613)
| $188,978
|
| Total change in net assets
| $(2,312,897)
| $(7,631,250)
|
| Net assets
|
|
|
| At beginning of period
| 32,430,624
| 40,061,874
|
| At end of period
| $30,117,727
| $32,430,624
|
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 past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
|
| Year ended
|
|
| 10/31/23
| 10/31/22
| 10/31/21
| 10/31/20
| 10/31/19
|
| Net asset value, beginning of period
| $4.44
| $5.51
| $5.15
| $5.60
| $5.43
|
| Income (loss) from investment operations
|
| Net investment income (loss) (d)
| $0.14
| $0.12
| $0.12
| $0.15
| $0.16
|
| Net realized and unrealized gain (loss)
| (0.01)
| (0.69)
| 0.79
| (0.07)
| 0.56
|
| Total from investment operations
| $0.13
| $(0.57)
| $0.91
| $0.08
| $0.72
|
| Less distributions declared to shareholders
|
| From net investment income
| $(0.15)
| $(0.13)
| $(0.16)
| $(0.16)
| $(0.17)
|
| From net realized gain
| (0.16)
| (0.17)
| (0.21)
| (0.36)
| (0.03)
|
| From tax return of capital
| (0.13)
| (0.20)
| (0.18)
| (0.01)
| (0.35)
|
| Total distributions declared to shareholders
| $(0.44)
| $(0.50)
| $(0.55)
| $(0.53)
| $(0.55)
|
| Net increase from repurchase of capital shares
| $0.00(w)
| $—
| $—
| $0.00(w)
| $—
|
| Net asset value, end of period (x)
| $4.13
| $4.44
| $5.51
| $5.15
| $5.60
|
| Market value, end of period
| $3.88
| $4.28
| $6.77
| $5.25
| $6.48
|
| Total return at market value (%)
| 0.61
| (30.40)
| 41.18
| (10.63)
| 30.24
|
| Total return at net asset value (%) (j)(r)(s)(x)
| 3.30
| (11.35)
| 17.13
| 1.44
| 13.80
|
Ratios (%) (to average net assets)
and Supplemental data:
|
| Expenses
| 1.55
| 1.49
| 1.38
| 1.44
| 1.41
|
| Net investment income (loss)
| 3.13
| 2.35
| 2.27
| 2.76
| 2.89
|
| Portfolio turnover
| 32
| 24
| 38
| 48
| 34
|
| Net assets at end of period (000 omitted)
| $30,118
| $32,431
| $40,062
| $37,202
| $40,258
|
| (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.
|
| (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.
|
See Notes to Financial Statements
Notes to Financial Statements
(1) Business and
Organization
MFS Special Value Trust (the fund)
is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as a diversified closed-end management investment company.
The fund is an investment company
and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment
Companies.
(2) Significant Accounting
Policies
General — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s
Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests in high-yield securities rated below investment grade. Investments in below investment grade quality securities can involve a substantially greater risk of default or can
already be in default, and their values can decline significantly. Below investment grade quality securities tend to be more sensitive to adverse news about the issuer, or the market or economy in general, than higher
quality debt instruments. The fund invests in foreign securities. Investments in foreign securities are vulnerable to the effects of changes in the relative values of the local currency and the U.S. dollar and to
the effects of changes in each country’s market, economic, industrial, political, regulatory, geopolitical, environmental, public health, and other conditions.
Balance Sheet Offsetting — The fund's accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International
Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and
Liabilities across transactions between the fund and the applicable counterparty. The fund's right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which
a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note
under the captions for each of the fund’s in-scope financial instruments and transactions.
Investment Valuations — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as
the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of
1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the
Notes to Financial Statements -
continued
adviser, as valuation designee, determines that
reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy
and procedures.
Under the fund's valuation policy
and procedures, equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing
service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing
service. Debt instruments and floating rate loans, including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Short-term instruments with
a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value.
Futures contracts are generally valued at last
posted settlement price on their primary exchange as provided by a third-party pricing service. Futures contracts for which there were no trades that day for a particular position are generally valued at the closing
bid quotation on their primary exchange as provided by a third-party pricing service.
Forward foreign currency exchange contracts are
generally valued at the mean of bid and asked prices for the time period interpolated from rates provided by a third-party pricing service for proximate time periods. Open-end investment companies are generally valued
at net asset value per share. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided
by a third-party pricing service.
Under the fund’s valuation
policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based
on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. Securities and other assets generally valued on the
basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. In determining values, third-party pricing services can utilize both transaction data and market information
such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the
investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the
determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally
traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be
deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on
third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the
business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes
of calculating the fund’s net asset value can differ depending on the source and method used to determine
Notes to Financial Statements -
continued
value. When fair valuation is used, the value of an
investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an
investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in
determining the value of the fund's assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value
hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund's assessment of the significance of a
particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or
liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes significant
unobservable inputs, which may include the adviser's own assumptions in determining the fair value of investments. Other financial instruments are derivative instruments, such as futures contracts and forward foreign
currency exchange contracts. The following is a summary of the levels used as of October 31, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments
| Level 1
| Level 2
| Level 3
| Total
|
| Equity Securities:
|
|
|
|
|
| United States
| $11,864,869
| $35,637
| $21,370
| $11,921,876
|
| Switzerland
| 475,760
| —
| —
| 475,760
|
| Luxembourg
| —
| 17,164
| —
| 17,164
|
| U.S. Treasury Bonds & U.S. Government Agencies & Equivalents
| —
| 83,606
| —
| 83,606
|
| Non - U.S. Sovereign Debt
| —
| 88,563
| —
| 88,563
|
| U.S. Corporate Bonds
| —
| 12,561,684
| —
| 12,561,684
|
| Foreign Bonds
| —
| 3,530,760
| —
| 3,530,760
|
| Mutual Funds
| 1,111,588
| —
| —
| 1,111,588
|
| Total
| $13,452,217
| $16,317,414
| $21,370
| $29,791,001
|
| Other Financial Instruments
|
|
|
|
|
| Futures Contracts – Liabilities
| $(10,612)
| $—
| $—
| $(10,612)
|
| Forward Foreign Currency Exchange Contracts – Assets
| —
| 89
| —
| 89
|
For further information regarding
security characteristics, see the Portfolio of Investments.
Notes to Financial Statements -
continued
The following is a reconciliation of
level 3 assets for which significant unobservable inputs were used to determine fair value. The table presents the activity of level 3 securities held at the beginning and the end of the period.
|
| Equity
Securities
|
| Balance as of 10/31/22
| $33,721
|
| Realized gain (loss)
| 9,939
|
| Change in unrealized appreciation or depreciation
| (12,351)
|
| Sales
| (9,939)
|
| Balance as of 10/31/23
| $21,370
|
The net change in unrealized
appreciation or depreciation from investments held as level 3 at October 31, 2023 is $(3,306). At October 31, 2023, the fund held one level 3 security.
Derivatives — The fund uses derivatives primarily to increase or decrease exposure to a particular market or segment of the market, or security, to increase or decrease interest rate exposure,
or as alternatives to direct investments. Derivatives are used for hedging or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives
as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.
The derivative instruments used by
the fund during the period were futures contracts and forward foreign currency exchange contracts. Depending on the type of derivative, a fund may exit a derivative position by entering into an offsetting
transaction with a counterparty or exchange, negotiating an agreement with the derivative counterparty, or novating the position to a third party. The fund may be unable to promptly close out a futures position in
instances where the daily fluctuation in the price for that type of future exceeds the daily limit set by the exchange. The fund's period end derivatives, as presented in the Portfolio of Investments and the
associated Derivative Contract tables, generally are indicative of the volume of its derivative activity during the period.
The following table presents, by
major type of derivative contract, the fair value, on a gross basis, of the asset and liability components of derivatives held by the fund at October 31, 2023 as reported in the Statement of Assets and Liabilities:
|
|
| Fair Value (a)
|
| Risk
| Derivative Contracts
| Asset Derivatives
| Liability Derivatives
|
| Interest Rate
| Futures Contracts
| $—
| $(10,612)
|
| Foreign Exchange
| Forward Foreign Currency Exchange Contracts
| 89
| —
|
| Total
|
| $89
| $(10,612)
|
| (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.
|
Notes to Financial Statements -
continued
The following table presents, by
major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the year ended October 31, 2023 as reported in the Statement of Operations:
| Risk
| Futures
Contracts
| Forward Foreign
Currency
Exchange
Contracts
|
| Interest Rate
| $(3,075)
| $—
|
| Foreign Exchange
| —
| 1,905
|
| Total
| $(3,075)
| $1,905
|
The following table presents, by
major type of derivative contract, the change in unrealized appreciation or depreciation on derivatives held by the fund for the year ended October 31, 2023 as reported in the Statement of Operations:
| Risk
| Futures
Contracts
| Forward Foreign
Currency
Exchange
Contracts
|
| Interest Rate
| $(21,647)
| $—
|
| Foreign Exchange
| —
| 89
|
| Total
| $(21,647)
| $89
|
Derivative counterparty credit risk
is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain, but not all, uncleared derivatives, the fund attempts to reduce its exposure to counterparty credit risk
whenever possible by entering into an ISDA Master Agreement on a bilateral basis. The ISDA Master Agreement gives each party to the agreement the right to terminate all transactions traded under such agreement if
there is a specified deterioration in the credit quality of the other party. Upon an event of default or a termination of the ISDA Master Agreement, the non-defaulting party has the right to close out all transactions
traded under such agreement and to net amounts owed under each agreement to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the ISDA
Master Agreement could result in a reduction of the fund's credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any.
Collateral and margin requirements
differ by type of derivative. For cleared derivatives (e.g., futures contracts, cleared swaps, and exchange-traded options), margin requirements are set by the clearing broker and the clearing house and collateral, in
the form of cash or securities, is posted by the fund directly with the clearing broker. Collateral terms are counterparty agreement specific for uncleared derivatives (e.g., forward foreign currency exchange
contracts, uncleared swap agreements, and uncleared options) and collateral, in the form of cash and securities, is held in segregated accounts with the fund's custodian in connection with these agreements. For
derivatives traded under an ISDA Master Agreement, which contains a credit support annex, the collateral requirements are netted across all transactions traded under such counterparty-specific agreement and an amount
is posted from one party to the other to collateralize such obligations. Cash that has been segregated or
Notes to Financial Statements -
continued
delivered to cover the fund's collateral or margin
obligations under derivative contracts, if any, will be reported separately in the Statement of Assets and Liabilities as restricted cash for uncleared derivatives and/or deposits with brokers for cleared derivatives.
Securities pledged as collateral or margin for the same purpose, if any, are noted in the Portfolio of Investments. The fund may be required to make payments of interest on uncovered collateral or margin obligations
with the broker. Any such payments are included in “Miscellaneous” expense in the Statement of Operations.
Futures Contracts — The fund entered into futures contracts which may be used to hedge against or obtain broad market exposure, interest rate exposure, currency exposure, or to manage duration. A
futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.
Upon entering into a futures
contract, the fund is required to deposit with the broker, either in cash or securities, an initial margin in an amount equal to a specified percentage of the notional amount of the contract. Subsequent payments
(variation margin) are made or received by the fund each day, depending on the daily fluctuations in the value of the contract, and are recorded for financial statement purposes as unrealized gain or loss by the fund
until the contract is closed or expires at which point the gain or loss on futures contracts is realized.
The fund bears the risk of interest
rates, exchange rates or securities prices moving unexpectedly, in which case, the fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. While futures contracts may present
less counterparty risk to the fund since the contracts are exchange traded and the exchange’s clearinghouse guarantees payments to the broker, there is still counterparty credit risk due to the insolvency of the
broker. The fund’s maximum risk of loss due to counterparty credit risk is equal to the margin posted by the fund to the broker plus any gains or minus any losses on the outstanding futures contracts.
Forward Foreign Currency Exchange
Contracts — The fund entered into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. These contracts may be
used to hedge the fund’s currency risk or for non-hedging purposes. For hedging purposes, the fund may enter into contracts to deliver or receive foreign currency that the fund will receive from or use in its
normal investment activities. The fund may also use contracts to hedge against declines in the value of foreign currency denominated securities due to unfavorable exchange rate movements. For non-hedging purposes, the
fund may enter into contracts with the intent of changing the relative exposure of the fund’s portfolio of securities to different currencies to take advantage of anticipated exchange rate changes.
Forward foreign currency exchange
contracts are adjusted by the daily exchange rate of the underlying currency and any unrealized gains or losses are recorded as a receivable or payable for forward foreign currency exchange contracts until the
contract settlement date. On contract settlement date, any gain or loss on the contract is recorded as realized gains or losses on forward foreign currency exchange contracts.
Risks may arise upon entering into
these contracts from unanticipated movements in the value of the contract and from the potential inability of counterparties to meet the terms of their contracts. Generally, the fund’s maximum risk due to
counterparty credit risk is the unrealized gain on the contract due to the use of Continuous Linked Settlement, a multicurrency cash settlement system for the centralized settlement of
Notes to Financial Statements -
continued
foreign transactions. This risk is mitigated in
cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above and, where applicable, by the posting of collateral by the counterparty to the fund to cover
the fund’s exposure to the counterparty under such ISDA Master Agreement.
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 — 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. 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. Debt obligations may be placed on non-accrual status or set to accrue at a rate of interest less than the contractual coupon when the collection of all or a portion of interest has become
doubtful. Interest income for those debt obligations may be further reduced by the write-off of the related interest receivables when deemed uncollectible.
The fund may receive proceeds from
litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in
unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Investment transactions are recorded
on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
The fund may purchase or sell
securities on a when-issued or delayed delivery basis. In these extended settlement transactions, the receipt or delivery of the securities by the fund and related payments occur at a future date, usually beyond
the customary settlement period. The price of such security and the date that the security will be settled are generally fixed at the time the transaction is negotiated. The value of the security varies with market
fluctuations and for debt securities no interest accrues to the fund until settlement takes place. When the fund sells securities on a when-issued or delayed delivery basis, the fund typically owns or has the right to
acquire securities equivalent in kind and amount to the securities sold. Purchase and sale commitments for when-issued or delayed delivery securities are held at carrying amount, which approximates fair value and are
categorized as level 2 within the fair value hierarchy, and included in When-issued investments purchased and When-issued investments sold in the Statement of Assets and Liabilities, as applicable. Losses may arise
due to changes in the value of the underlying securities prior to settlement date or if the counterparty does not perform under the contract’s terms, or if the issuer does not issue the securities due to
political, economic or other factors.
Notes to Financial Statements -
continued
Tax Matters and Distributions — The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including
realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three
year period. Management has analyzed the fund’s tax positions taken on federal and state tax returns for all open tax years and does not believe that there are any uncertain tax positions that require
recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in accordance with the applicable foreign tax law. Foreign income taxes may be withheld by
certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be subject to capital gains tax imposed by those
countries.
Distributions to shareholders are
recorded on the ex-dividend date. The fund employs a managed distribution policy whereby the fund seeks to pay monthly distributions based on an annual rate of 10.00% of the fund’s average monthly net asset
value. As a result, distributions may exceed actual earnings which may result in a tax return of capital. Distributions in any year may include a substantial return of capital component. Please refer to the Financial
Highlights for distributions of tax returns of capital made during the prior five years. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S.
generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no
impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will
reverse at some time in the future.
Book/tax differences primarily
relate to amortization and accretion of debt securities.
The tax character of distributions
declared to shareholders for the last two fiscal years is as follows:
|
| Year ended
10/31/23
| Year ended
10/31/22
|
| Ordinary income (including any short-term capital gains)
| $1,078,073
| $916,437
|
| Long-term capital gains
| 1,165,872
| 1,254,902
|
| Tax return of capital (b)
| 993,392
| 1,486,857
|
| Total distributions
| $3,237,337
| $3,658,196
|
| (b)
| Distributions in excess of tax basis earnings and profits are reported in the financial statements as a tax return of capital.
|
Notes to Financial Statements -
continued
The federal tax cost and the tax
basis components of distributable earnings were as follows:
| As of 10/31/23
|
|
| Cost of investments
| $29,288,293
|
| Gross appreciation
| 3,335,190
|
| Gross depreciation
| (2,843,005)
|
| Net unrealized appreciation (depreciation)
| $492,185
|
| Other temporary differences
| (16,012)
|
| Total distributable earnings (loss)
| $476,173
|
(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 0.68% of the fund’s average daily net assets and 3.40% of gross income. Gross income is calculated based on
tax elections that generally include the accretion of discount and exclude the amortization of premium, which may differ from investment income reported in the Statement of Operations. MFS has agreed to reduce its
management fee to the lesser of the contractual management fee as set forth above or 0.90% of the fund's average daily net assets. This written agreement will continue until modified by the fund's Board of Trustees,
but such agreement will continue at least until October 31, 2024. For the year ended October 31, 2023, the fund’s average daily net assets and gross income fees did not meet the thresholds required to waive the
management fee under this agreement. The management fee, from net assets and gross income, incurred for the year ended October 31, 2023 was equivalent to an annual effective rate of 0.85% of the fund’s average
daily net assets.
Transfer Agent — The fund engages Computershare Trust Company, N.A. (“Computershare”) as the sole transfer agent for the fund. MFS Service Center, Inc. (MFSC) monitors and supervises
the activities of Computershare for an agreed upon fee approved by the Board of Trustees. For the year ended October 31, 2023, these fees paid to MFSC amounted to $2,236.
Administrator — MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the
fund reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee is
computed daily and paid monthly. The administrative services fee incurred for the year ended October 31, 2023 was equivalent to an annual effective rate of 0.0542% of the fund's average daily net
assets.
Trustees’ and Officers’
Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee
chairpersons. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. The fund does not pay compensation directly to Trustees or officers of the fund who
are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS and
MFSC.
Notes to Financial Statements -
continued
Other — The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money
market fund does not pay a management fee to MFS but does incur investment and operating costs.
The adviser has voluntarily
undertaken to reimburse the fund from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time.
For the year ended October 31, 2023, this reimbursement amounted to $143, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended October 31, 2023,
purchases and sales of investments, other than short-term obligations, aggregated $10,045,769 and $12,997,888, 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. The Trustees have authorized the repurchase by the fund of up to 10% annually of its own shares of
beneficial interest. The fund repurchased 17,845 shares of beneficial interest during the year ended October 31, 2023 at an average price per share of $4.25 and a weighted average discount of 8.08% per share. The fund
did not repurchase any shares for the year ended October 31, 2022. Transactions in fund shares were as follows:
|
| Year ended
10/31/23
|
| Year ended
10/31/22
|
|
| Shares
| Amount
|
| Shares
| Amount
|
| Shares issued to shareholders in reinvestment of distributions
| 3,067
| $14,139
|
| 34,187
| $188,978
|
| Capital shares repurchased
| (17,845)
| (69,752)
|
| —
| —
|
| Net change
| (14,778)
| $(55,613)
|
| 34,187
| $188,978
|
(6) Line of Credit
The fund and certain other funds
managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate of
banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the highest of 1) Daily Simple SOFR
(Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each plus an agreed upon spread. A commitment fee, based on the average daily unused portion
of the committed line of credit, is allocated among the participating funds. The line of credit expires on March 14, 2024 unless extended or renewed. In addition, the fund and other funds managed by MFS have
established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at rates equal to customary reference rates plus an
agreed upon spread. For the year ended October 31, 2023, the fund’s commitment fee and interest expense were $178 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of
Operations.
Notes to Financial Statements -
continued
(7) Investments in Affiliated
Issuers
An affiliated issuer may be
considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
| Affiliated Issuers
| Beginning
Value
| Purchases
| Sales
Proceeds
| Realized
Gain
(Loss)
| Change in
Unrealized
Appreciation or
Depreciation
| Ending
Value
|
| MFS Institutional Money Market Portfolio
| $728,206
| $6,476,652
| $6,093,492
| $136
| $86
| $1,111,588
|
| Affiliated Issuers
| Dividend
Income
| Capital Gain
Distributions
|
| MFS Institutional Money Market Portfolio
| $45,623
| $—
|
Report of Independent Registered Public
Accounting Firm
To the Shareholders and the Board
of Trustees of MFS Special Value Trust
Opinion on the Financial Statements
We have audited the accompanying
statement of assets and liabilities of MFS Special Value Trust (the “Fund”), including the portfolio of investments, as of October 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial
highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in
all material respects, the financial position of the Fund at October 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended
and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express
no such opinion.
Report of Independent Registered Public
Accounting Firm – continued
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one
or more MFS investment companies since 1993.
Boston, Massachusetts
December 14, 2023
Results of Shareholder Meeting (unaudited)
At the annual meeting of
shareholders of MFS Special Value Trust, which was held on October 5, 2023, the following action was taken:
Item 1: To elect the following individuals as Trustees:
|
|
| Number of Shares
|
| Nominee
|
| For
|
| Against/Withheld
|
| Steven E. Buller
|
| 4,374,391.406
|
| 304,604.075
|
| Peter D. Jones
|
| 4,379,749.406
|
| 299,246.075
|
| John P. Kavanaugh
|
| 4,368,417.406
|
| 310,578.075
|
| Michael W. Roberge
|
| 4,382,103.406
|
| 296,892.075
|
Trustees and
Officers — Identification and Background
The Trustees and Officers of the
Trust, as of December 1, 2023, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and
Officer is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.
| Name, Age
|
| Position(s) Held with Fund
|
| Trustee/Officer Since(h)
|
| Term
Expiring
|
| Number
of MFS
Funds
overseen
by the
Trustee
|
| Principal
Occupations
During
the Past
Five Years
|
| Other
Directorships
During
the Past
Five Years (j)
|
| INTERESTED TRUSTEE
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael W. Roberge (k)
(age 57)
|
| Trustee
|
| January 2021
|
| 2026
|
| 136
|
| Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022); President
(until December 2018); Chief Investment Officer (until December 2018)
|
| N/A
|
| INDEPENDENT TRUSTEES
|
|
|
|
|
|
|
|
|
|
|
|
|
John P. Kavanaugh
(age 69)
|
| Trustee and Chair of Trustees
|
| January 2009
|
| 2026
|
| 136
|
| Private investor
|
| N/A
|
Steven E. Buller
(age 72)
|
| Trustee
|
| February 2014
|
| 2026
|
| 136
|
| Private investor
|
| N/A
|
John A. Caroselli
(age 69)
|
| Trustee
|
| March 2017
|
| 2024
|
| 136
|
| Private investor; JC Global Advisors, LLC (management consulting), President (since 2015)
|
| N/A
|
Maureen R. Goldfarb
(age 68)
|
| Trustee
|
| January 2009
|
| 2025
|
| 136
|
| Private investor
|
| N/A
|
Peter D. Jones
(age 68)
|
| Trustee
|
| January 2019
|
| 2026
|
| 136
|
| Private investor
|
| N/A
|
James W. Kilman, Jr.
(age 62)
|
| Trustee
|
| January 2019
|
| 2024
|
| 136
|
| Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital
LLC (family office), Chief Executive Officer (since 2016)
|
| Alpha-En Corporation, Director (2016-2019)
|
Trustees and Officers - continued
| Name, Age
|
| Position(s) Held with Fund
|
| Trustee/Officer Since(h)
|
| Term
Expiring
|
| Number
of MFS
Funds
overseen
by the
Trustee
|
| Principal
Occupations
During
the Past
Five Years
|
| Other
Directorships
During
the Past
Five Years (j)
|
Clarence Otis, Jr.
(age 67)
|
| Trustee
|
| March 2017
|
| 2024
|
| 136
|
| Private investor
|
| VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director
|
Maryanne L. Roepke
(age 67)
|
| Trustee
|
| May 2014
|
| 2025
|
| 136
|
| Private investor
|
| N/A
|
Laurie J. Thomsen
(age 66)
|
| Trustee
|
| March 2005
|
| 2025
|
| 136
|
| Private investor
|
| The Travelers Companies, Director; Dycom Industries, Inc., Director
|
| Name, Age
|
| Position(s) Held with
Fund
|
| Trustee/Officer Since(h)
|
| Term Expiring
|
| Number
of MFS
Funds
overseen
by the
Trustee
|
| Principal
Occupations
During
the Past
Five Years
|
| OFFICERS
|
|
|
Christopher R. Bohane (k)
(age 49)
|
| Assistant Secretary and Assistant Clerk
|
| July 2005
|
| N/A
|
| 136
|
| Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel
|
Kino Clark (k)
(age 55)
|
| Assistant Treasurer
|
| January 2012
|
| N/A
|
| 136
|
| Massachusetts Financial Services Company, Vice President
|
John W. Clark, Jr. (k)
(age 56)
|
| Assistant Treasurer
|
| April 2017
|
| N/A
|
| 136
|
| Massachusetts Financial Services Company, Vice President
|
David L. DiLorenzo (k)
(age 55)
|
| President
|
| July 2005
|
| N/A
|
| 136
|
| Massachusetts Financial Services Company, Senior Vice President
|
Heidi W. Hardin (k)
(age 56)
|
| Secretary and Clerk
|
| April 2017
|
| N/A
|
| 136
|
| Massachusetts Financial Services Company, Executive Vice President and General Counsel
|
Brian E. Langenfeld (k)
(age 50)
|
| Assistant Secretary and Assistant Clerk
|
| June 2006
|
| N/A
|
| 136
|
| Massachusetts Financial Services Company, Vice President and Managing Counsel
|
Trustees and Officers - continued
| Name, Age
|
| Position(s) Held with
Fund
|
| Trustee/Officer Since(h)
|
| Term Expiring
|
| Number
of MFS
Funds
overseen
by the
Trustee
|
| Principal
Occupations
During
the Past
Five Years
|
Rosa E. Licea-Mailloux (k)
(age 47)
|
| Chief Compliance Officer
|
| March 2022
|
| N/A
|
| 136
|
| Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American
Compliance & Chief Compliance Officer (since March 2022); Natixis Investment Managers (investment management), Funds Chief Compliance Officer, Deputy General Counsel & Senior Vice President (until 2018)
|
Amanda S. Mooradian (k)
(age 44)
|
| Assistant Secretary and Assistant Clerk
|
| September 2018
|
| N/A
|
| 136
|
| Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel
|
Susan A. Pereira (k)
(age 53)
|
| Assistant Secretary and Assistant Clerk
|
| July 2005
|
| N/A
|
| 136
|
| Massachusetts Financial Services Company, Vice President and Managing Counsel
|
Kasey L. Phillips (k)
(age 52)
|
| Assistant Treasurer
|
| September 2012
|
| N/A
|
| 136
|
| Massachusetts Financial Services Company, Vice President
|
Matthew A. Stowe (k)
(age 49)
|
| Assistant Secretary and Assistant Clerk
|
| October 2014
|
| N/A
|
| 136
|
| Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel
|
William B. Wilson (k)
(age 41)
|
| Assistant Secretary and Assistant Clerk
|
| October 2022
|
| N/A
|
| 136
|
| Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel
|
Trustees and Officers - continued
| Name, Age
|
| Position(s) Held with
Fund
|
| Trustee/Officer Since(h)
|
| Term Expiring
|
| Number
of MFS
Funds
overseen
by the
Trustee
|
| Principal
Occupations
During
the Past
Five Years
|
James O. Yost (k)
(age 63)
|
| Treasurer
|
| September 1990
|
| N/A
|
| 136
|
| Massachusetts Financial Services Company, Senior Vice President
|
| (h)
| Date first appointed to serve as Trustee/Officer of an MFS Fund. Each Trustee has served continuously since appointment unless indicated otherwise. From January 2012 through December
2016, Messrs. DiLorenzo and Yost served as Treasurer and Deputy Treasurer of the Funds, respectively.
|
| (j)
| Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”).
|
| (k)
| “Interested person” of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing
investment companies like the fund, as a result of a position with MFS. The address of MFS is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.
|
The Trust holds annual shareholder
meetings for the purpose of electing Trustees, and Trustees are elected for fixed terms. The Board of Trustees is currently divided into three classes, each having a term of three years which term expires on the date
of the third annual meeting following the election to office of the Trustee’s class. Each year the term of one class expires. Each Trustee and officer will serve until next elected or his or her earlier death,
resignation, retirement or removal. Under the terms of the Board's retirement policy, an Independent Trustee shall retire at the end of the calendar year in which he or she reaches the earlier of 75 years of age or 15
years of service on the Board (or, in the case of any Independent Trustee who joined the Board prior to 2015, 20 years of service on the Board).
Messrs. Buller, Kilman and Otis and
Ms. Roepke are members of the Trust’s Audit Committee.
Each of the Interested Trustees and
certain Officers hold comparable officer positions with certain affiliates of MFS.
| Investment Adviser
| Custodian
|
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618
| State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016
|
| Portfolio Manager(s)
| Independent Registered Public Accounting Firm
|
Ward Brown
Katherine Cannan
Nevin Chitkara
David Cole
Matt Ryan
Michael Skatrud
| Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
|
Board Review of Investment Advisory
Agreement
MFS Special Value Trust
The Investment Company Act of 1940
requires that both the full Board of Trustees and a majority of the non-interested (“independent”) Trustees, voting separately, annually approve the continuation of the Fund’s investment advisory
agreement with MFS. The Trustees consider matters bearing on the Fund and its advisory arrangements at their meetings throughout the year, including a review of performance data at each regular meeting. In
addition, the independent Trustees met several times over the course of three months beginning in May and ending in July, 2023 (“contract review meetings”) for the specific purpose of considering whether
to approve the continuation of the investment advisory agreement for the Fund and the other investment companies that the Board oversees (the “MFS Funds”). The independent Trustees were assisted in
their evaluation of the Fund’s investment advisory agreement by independent legal counsel, from whom they received separate legal advice and with whom they met separately from MFS during various contract review
meetings. The independent Trustees were also assisted in this process by an independent consultant who was retained by and reported to the independent Trustees.
In connection with their
deliberations regarding the continuation of the investment advisory agreement, the Trustees, including the independent Trustees, considered such information and factors as they believed, in light of the legal advice
furnished to them and their own business judgment, to be relevant. The investment advisory agreement for the Fund was considered separately, although the Trustees also took into account the common interests of all MFS
Funds in their review. As described below, the Trustees considered the nature, quality, and extent of the various investment advisory, administrative, and shareholder services performed by MFS under the existing
investment advisory agreement and other arrangements with the Fund.
In connection with their contract
review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third
party, on the investment performance (based on net asset value) of the Fund for various time periods ended December 31, 2022 and the investment performance (based on net asset value) of a group of funds with
substantially similar investment classifications/ objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s advisory fees and other expenses and the
advisory fees and other expenses of comparable funds identified by Broadridge as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (iii)
information provided by MFS on the advisory fees of portfolios of other clients of MFS, including institutional separate accounts and other clients, (iv) information as to whether and to what extent applicable expense
waivers, reimbursements or fee “breakpoints” are observed for the Fund, (v) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its
affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (vi) MFS’ views regarding the outlook for the
mutual fund industry and the strategic business plans of MFS, (vii) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (viii)
information regarding the overall organization of
Board Review of Investment Advisory
Agreement - continued
MFS, including information about MFS’ senior
management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided
by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.
The Trustees’ conclusion as to
the continuation of the investment advisory agreement was based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that
figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to
various factors. It is also important to recognize that the fee arrangements for the Fund and other MFS Funds are the result of years of review and discussion between the independent Trustees and MFS, that
certain aspects of such arrangements may receive greater scrutiny in some years than in others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements during
the course of the year and in prior years.
Based on information provided by
Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on
the total return performance of the Fund’s common shares in comparison to the performance of funds in its Broadridge performance universe over the five-year period ended December 31, 2022, which the Trustees
believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s common shares ranked 1st out of a total of 2 funds in the Broadridge performance universe for the five-year period (a ranking of first place out of the total number of
funds in the performance universe indicating the best performer and a ranking of last place out of the total number of funds in the performance universe indicating the worst performer). The total return
performance of the Fund’s common shares ranked 2nd out of a total of 2 funds for the one-year period and 1st out of a total of 2 funds for the three-year period ended December 31, 2022. Given the size of the Broadridge performance universe and
information previously provided by MFS regarding differences between the Fund and other funds in its Broadridge performance universe, the Trustees also reviewed the Fund’s performance in comparison to a custom
benchmark developed by MFS. The Fund outperformed its custom benchmark for each of the one- and five-year periods ended December 31, 2022 and underperformed its custom benchmark for the three-year period ended
December 31, 2022 (one-year: -9.6% total return for the Fund versus -10.2% total return for the benchmark; three-year: 1.5% total return for the Fund versus 1.9% total return for the benchmark; five-year: 4.0% total
return for the Fund versus 3.7% total return for the benchmark). Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown
elsewhere in this report.
In the course of their
deliberations, the Trustees took into account information provided by MFS in connection with the contract review meetings, as well as during investment review meetings conducted with portfolio management personnel
during the course of
Board Review of Investment Advisory
Agreement - continued
the year regarding the Fund’s performance.
After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that they were satisfied with MFS’ responses and
efforts relating to investment performance.
In assessing the reasonableness of
the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s common shares as a percentage of average daily net assets
and the advisory fee and total expense ratios of the Broadridge expense group based on information provided by Broadridge. The Trustees considered that MFS has agreed in writing to reduce its advisory fee, which
may not be changed without the Trustees’ approval. The Trustees also considered that, according to the data provided by Broadridge (which takes into account any fee reductions or expense limitations that
were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate and total expense ratio were each higher than the Broadridge expense group median.
The Trustees also considered the
advisory fees charged by MFS to any institutional separate accounts advised by MFS (“separate accounts”) and unaffiliated investment companies for which MFS serves as subadviser (“subadvised
funds”) that have comparable investment strategies to the Fund, if any. In comparing these fees, the Trustees considered information provided by MFS as to the generally broader scope of services provided by MFS
to the Fund, as well as the more extensive regulatory burdens imposed on MFS in managing the Fund, in comparison to separate accounts and subadvised funds.
The Trustees considered that, as a
closed-end fund, the Fund is unlikely to experience meaningful asset growth. As a result, the Trustees did not view the potential for realization of economies of scale as the Fund’s assets grow to be a
material factor in their deliberations. The Trustees noted that they would consider economies of scale in the future in the event the Fund experiences significant asset growth, such as through an offering of
preferred shares (which is not currently contemplated) or a material increase in the market value of the Fund’s portfolio securities.
The Trustees also considered
information prepared by MFS relating to MFS’ costs and profits with respect to the Fund, the MFS Funds considered as a group, and other investment companies and accounts advised by MFS, as well as MFS’
methodologies used to determine and allocate its costs to the MFS Funds, the Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other
factors described herein, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that the advisory fees charged to the Fund represent reasonable
compensation in light of the services being provided by MFS to the Fund.
In addition, the Trustees considered
MFS’ resources and related efforts to continue to retain, attract and motivate capable personnel to serve the Fund. The Trustees also considered current and developing conditions in the financial services
industry, including the presence of large and well-capitalized companies which are spending, and appear to be prepared to continue to spend, substantial sums to engage personnel and to provide services to competing
investment companies. In this regard, the
Board Review of Investment Advisory
Agreement - continued
Trustees also considered the financial resources of
MFS and its ultimate parent, Sun Life Financial Inc. The Trustees also considered the advantages and possible disadvantages to the Fund of having an adviser that also serves other investment companies as well as
other accounts.
The Trustees also considered the
nature, quality, cost, and extent of administrative services provided to the Fund by MFS under agreements other than the investment advisory agreement. The Trustees also considered the nature, extent and quality
of certain other services MFS performs or arranges for on the Fund’s behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’
interaction with third-party service providers, principally custodians and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund
were satisfactory.
The Trustees considered so-called
“fall-out benefits” to MFS such as reputational value derived from serving as investment manager to the MFS Funds. The Trustees also considered that MFS discontinued its historic practice of obtaining
investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses a Fund, if applicable, for the costs of external research acquired
through the use of the Fund’s portfolio brokerage commissions.
Based on their evaluation of factors
that they deemed to be material, including those factors described above, the Board of Trustees, including the independent Trustees, concluded that the Fund’s investment advisory agreement with MFS should be
continued for an additional one-year period, commencing August 1, 2023.
Proxy Voting Policies and
Information
MFS votes proxies on behalf of the
fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund
voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio
Disclosure
The fund files a complete schedule
of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s Web site at
http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/closedendfunds by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
From time to time, MFS may post
important information about the fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at mfs.com/closedendfunds by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Additional information about the
fund (e.g., performance, dividends and the fund’s price history) is also available at mfs.com/closedendfunds by choosing the fund's name, if any.
INFORMATION ABOUT FUND
CONTRACTS AND LEGAL CLAIMS
The fund has entered into
contractual arrangements with an investment adviser, administrator, transfer agent, and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended
beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them
against the service providers, either directly or on behalf of the fund.
Under the Trust’s By-Laws and
Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of
Massachusetts.
Federal Tax Information
(unaudited)
The fund will notify shareholders of
amounts for use in preparing 2023 income tax forms in January 2024. The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund designates the maximum
amount allowable as qualified dividend income eligible to be taxed at the same rate as long-term capital gain.
The fund designates $1,283,000 as
capital gain dividends paid during the fiscal year.
Federal Tax Information (unaudited) - continued
For corporate shareholders, 16.47%
of the ordinary income dividends paid during the prior calendar year qualify for the corporate dividends received deduction.
The fund intends to pass through the
maximum amount allowable as Section 163(j) Interest Dividends as defined in Treasury Regulation §1.163(j)-1(b).
| FACTS
| WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION?
|
| Why?
| Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you
how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
|
| What?
| The types of personal information we collect and share depend on the product or service you have with us. This information can include:
|
| • Social Security number and account balances
|
| • Account transactions and transaction history
|
| • Checking account information and wire transfer instructions
|
| When you are no longer our customer, we continue to share your information as described in this notice.
|
| How?
| All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their
customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing.
|
Reasons we can share your
personal information
| Does MFS share?
| Can you limit
this sharing?
|
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus
| Yes
| No
|
For our marketing purposes –
to offer our products and services to you
| No
| We don't share
|
For joint marketing with other
financial companies
| No
| We don't share
|
For our affiliates' everyday business purposes –
information about your transactions and experiences
| No
| We don't share
|
For our affiliates' everyday business purposes –
information about your creditworthiness
| No
| We don't share
|
| For nonaffiliates to market to you
| No
| We don't share
|
| Questions?
| Call 800-225-2606 or go to mfs.com.
|
| Who we are
|
| Who is providing this notice?
| MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., and MFS Heritage Trust Company.
|
| What we do
|
How does MFS
protect my personal
information?
| To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures
include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
|
How does MFS
collect my personal
information?
| We collect your personal information, for example, when you
|
| • open an account or provide account information
|
| • direct us to buy securities or direct us to sell your securities
|
| • make a wire transfer
|
| We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
|
| Why can't I limit all sharing?
| Federal law gives you the right to limit only
|
| • sharing for affiliates' everyday business purposes – information about your creditworthiness
|
| • affiliates from using your information to market to you
|
| • sharing for nonaffiliates to market to you
|
| State laws and individual companies may give you additional rights to limit sharing.
|
| Definitions
|
| Affiliates
| Companies related by common ownership or control. They can be financial and nonfinancial companies.
|
| • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.
|
| Nonaffiliates
| Companies not related by common ownership or control. They can be financial and nonfinancial companies.
|
| • MFS does not share with nonaffiliates so they can market to you.
|
| Joint marketing
| A formal agreement between nonaffiliated financial companies that together market financial products or services to you.
|
| • MFS doesn't jointly market.
|
| Other important information
|
| If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of
ours.
|
CONTACT US
TRANSFER AGENT, REGISTRAR, AND
DIVIDEND DISBURSING AGENT
CALL
1-800-637-2304
9 a.m. to 5 p.m. Eastern time
WRITE
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078
New York Stock Exchange Symbol:
MFV
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.
A copy of the Code is attached hereto as EX-99.COE.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Messrs. Steven E. Buller, James Kilman, and Clarence Otis, Jr. and Ms. Maryanne L. Roepke, members of the Audit Committee, have been determined by the Board of Trustees in their reasonable business judgment to meet the definition of "audit committee financial expert" as such term is defined in Form N-CSR. In addition, Messrs. Buller, Kilman, and Otis and Ms. Roepke are "independent" members of the Audit Committee (as such term has been defined by the Securities and Exchange Commission in regulations implementing Section 407 of the Sarbanes-Oxley Act of 2002). The Securities and Exchange Commission has stated that the designation of a person as an audit committee financial expert pursuant to this Item 3 on the Form N-CSR does not impose on such a person any duties, obligations or liability that are greater than the duties, obligations or liability imposed on such person as a member of the Audit Committee and the Board of Trustees in the absence of such designation or identification.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Items 4(a) through 4(d) and 4(g):
The Board of Trustees has appointed Ernst & Young LLP ("E&Y") to serve as independent accountants to the Registrant (hereinafter the "Registrant" or the "Fund"). The tables below set forth the audit fees billed to the Fund as well as fees for non-audit services provided to the Fund and/or to the Fund's investment adviser, Massachusetts Financial Services Company ("MFS") and to various entities either controlling, controlled by, or under common control with MFS that provide ongoing services to the Fund ("MFS Related Entities").
For the fiscal years ended October 31, 2023 and 2022, audit fees billed to the Fund by E&Y were as follows:
|
Fees billed by E&Y:
|
|
Audit Fees
|
|
|
2023
|
|
2022
|
|
MFS Special Value Trust
|
62,662
|
|
57,973
|
For the fiscal years ended October 31, 2023 and 2022, fees billed by E&Y for audit-related, tax and other services provided to the Fund and for audit-related, tax and other services provided to MFS and MFS Related Entities were as follows:
|
Fees billed by E&Y:
|
Audit-Related Fees1
|
|
Tax Fees2
|
All Other Fees3
|
|
|
2023
|
2022
|
|
2023
|
2022
|
2023
|
|
2022
|
|
To MFS Special Value Trust
|
13,965
|
12,907
|
|
259
|
632
|
0
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees billed by E&Y:
|
Audit-Related Fees1
|
|
Tax Fees2
|
All Other Fees3
|
|
|
2023
|
2022
|
|
2023
|
2022
|
2023
|
|
2022
|
|
To MFS and MFS Related
|
|
|
|
|
|
|
|
|
|
|
|
Entities of MFS Special Value
|
0
|
662,511
|
|
0
|
0
|
|
3,600
|
|
111,415
|
|
Trust*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Billed by E&Y:
|
|
|
|
Aggregate Fees for Non-audit Services
|
|
|
|
|
|
|
2023
|
|
|
2022
|
|
|
To MFS Special Value Trust, MFS and MFS
|
|
|
|
|
|
|
|
|
|
|
Related Entities#
|
|
|
|
312,574
|
|
|
917,903
|
|
*This amount reflects the fees billed to MFS and MFS Related Entities for non-audit services relating directly to the operations and financial reporting of the Fund (portions of which services also related to the operations and financial reporting of other funds within the MFS Funds complex).
# This amount reflects the aggregate fees billed by E&Y for non-audit services rendered to the Fund and for non-audit services rendered to MFS and the MFS Related Entities.
1 The fees included under "Audit-Related Fees" are fees related to assurance and related services that are reasonably related to the performance of the audit or review of financial statements, but not reported under ''Audit Fees,'' including accounting consultations, agreed-upon procedure reports, attestation reports, comfort letters and internal control reviews.
2 The fees included under "Tax Fees" are fees associated with tax compliance, tax advice and tax planning, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews and tax distribution and analysis.
3 The fees included under "All Other Fees" are fees for products and services provided by E&Y other than those reported under "Audit Fees," "Audit-Related Fees" and "Tax Fees," including fees for services related to review of internal controls and review of Rule 38a- 1 compliance program.
Item 4(e)(1):
Set forth below are the policies and procedures established by the Audit Committee of the Board of Trustees relating to the pre- approval of audit and non-audit related services:
To the extent required by applicable law, pre-approval by the Audit Committee of the Board is needed for all audit and permissible non-audit services rendered to the Fund and all permissible non-audit services rendered to MFS or MFS Related Entities if the services relate directly to the operations and financial reporting of the Registrant. Pre-approval is currently on an engagement-by-engagement basis. In the event pre-approval of such services is necessary between regular meetings of the Audit Committee and it is not practical to wait to seek pre-approval at the next regular meeting of the Audit Committee, pre-approval of such services may be referred to the Chair of the Audit Committee for approval; provided that the Chair may not pre-approve any individual engagement for such services exceeding $50,000 or multiple engagements for such services in the aggregate exceeding $100,000 between such regular meetings of
the Audit Committee. Any engagement pre-approved by the Chair between regular meetings of the Audit Committee shall be presented for ratification by the entire Audit Committee at its next regularly scheduled meeting.
Item 4(e)(2):
None, or 0%, of the services relating to the Audit-Related Fees, Tax Fees and All Other Fees paid by the Fund and MFS and MFS Related Entities relating directly to the operations and financial reporting of the Registrant disclosed above were approved by the audit committee pursuant to paragraphs (c)(7)(i)(C) of Rule 2-01 of Regulation S-X (which permits audit committee approval after the start of the engagement with respect to services other than audit, review or attest services, if certain conditions are satisfied).
Item 4(f):
Not applicable.
Item 4(h):
The Registrant's Audit Committee has considered whether the provision by a Registrant's independent registered public accounting firm of non-audit services to MFS and MFS Related Entities that were not pre-approved by the Committee (because such services were provided prior to the effectiveness of SEC rules requiring pre-approval or because such services did not relate directly to the operations and financial reporting of the Registrant) was compatible with maintaining the independence of the independent registered public accounting firm as the Registrant's principal auditors.
Item 4(i):
Not applicable.
Item 4(j):
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The Registrant has an Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the Audit Committee are Messrs. Steven E. Buller, James Kilman, and Clarence Otis, Jr. and Ms. Maryanne L. Roepke.
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.
A copy of the proxy voting policies and procedures are attached hereto as Ex-99.PROXYPOL.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Portfolio Manager(s)
Information regarding the portfolio manager(s) of the MFS Special Value Trust (the "Fund") is set forth below. Each portfolio manager is primarily responsible for the day-to-day management of the Fund.
Effective April 30, 2024, Matt Ryan will no longer be a portfolio manager of the Fund.
|
|
Primary Role
|
Since
|
Title and Five Year History
|
|
Ward Brown
|
Emerging Markets Debt Instruments Portfolio
|
2012
|
Investment Officer of MFS; employed in the investment area
|
|
|
Manager
|
|
of MFS since 2005
|
|
Katherine Cannan
|
Equity Securities Portfolio Manager
|
2019
|
Investment Officer of MFS; employed in the investment area
|
|
|
|
|
of MFS since 2013
|
|
Nevin Chitkara
|
Equity Securities Portfolio Manager
|
2012
|
Investment Officer of MFS; employed in the investment area
|
|
|
|
|
of MFS since 1997
|
|
David Cole
|
Below Investment Grade Debt Instruments Portfolio
|
2006
|
Investment Officer of MFS; employed in the investment area
|
|
|
Manager
|
|
of MFS since 2004
|
|
Matt Ryan
|
Emerging Markets Debt Instruments Portfolio
|
2012
|
Investment Officer of MFS; employed in the investment area
|
|
|
Manager
|
|
of MFS since 1997
|
|
Michael Skatrud
|
Below Investment Grade Debt Instruments Portfolio
|
2018
|
Investment Officer of MFS; employed in the investment area
|
|
|
Manager
|
|
of MFS since 2013
|
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, 2022, 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, 2022, the following benchmarks were used to measure the following portfolio manager's performance for the Fund:
|
Fund
|
Portfolio Manager
|
Benchmark(s)
|
|
|
|
|
|
MFS Special Value Trust
|
Ward Brown
|
JPMorgan Emerging Markets Bond Index Global
|
|
|
|
|
|
|
Katherine Cannan
|
Russell 1000® Value Index
|
|
|
|
Lipper Large-Cap Value Funds
|
|
|
|
Morningstar US Large Value
|
|
|
|
|
|
|
Nevin Chitkara
|
Russell 1000® Value Index
|
|
|
|
Lipper Large-Cap Value Funds
|
|
|
|
Morningstar US Large Value
|
|
|
|
|
|
|
David Cole
|
Bloomberg U.S. Corporate High-Yield 2% Issuer Capped Index
|
|
|
|
JPMorgan Emerging Markets Bond Index Global
|
|
|
|
Russell 1000® Value Index
|
|
|
Matt Ryan
|
JPMorgan Emerging Markets Bond Index Global
|
|
|
|
|
|
|
Michael Skatrud
|
Bloomberg U.S. Corporate High-Yield 2% Issuer Capped Index
|
|
|
|
JPMorgan Emerging Markets Bond Index Global
|
|
|
|
|
Russell 1000® Value 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.
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
|
|
Ward Brown
|
N
|
|
Katherine Cannan
|
N
|
|
Nevin Chitkara
|
N
|
|
David Cole
|
N
|
|
Matt Ryan
|
N
|
|
Michael Skatrud
|
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
|
|
|
Number of
|
Total
|
Number of
|
Total Assets
|
Number of
|
Total Assets
|
|
Name
|
Accounts
|
Assets
|
Accounts
|
|
Accounts
|
|
|
Ward Brown
|
6
|
$8.1 billion
|
8
|
$2.8 billion
|
6
|
$2.0 billion
|
|
Katherine Cannan
|
11
|
$64.1 billion
|
3
|
$5.3 billion
|
16
|
$5.7 billion
|
|
Nevin Chitkara
|
11
|
$64.1 billion
|
3
|
$5.3 billion
|
16
|
$5.7 billion
|
|
David Cole
|
14
|
$9.2 billion
|
10
|
$7.0 billion
|
7
|
$658.5 million
|
|
Matt Ryan
|
8
|
$10.5 billion
|
10
|
$3.1 billion
|
7
|
$2.2 billion
|
|
Michael Skatrud
|
12
|
$9.1 billion
|
6
|
$901.7 million
|
4
|
$368.3 million
|
|
* 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 Special Value 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
|
|
|
|
|
|
|
|
|
|
11/01/22-11/30/22
|
0
|
N/A
|
0
|
730,402
|
|
|
12/01/22-12/31/22
|
0
|
N/A
|
0
|
730,402
|
|
|
1/01/23-1/31/23
|
0
|
N/A
|
0
|
730,402
|
|
|
2/01/23-2/28/23
|
0
|
N/A
|
0
|
730,402
|
|
|
3/01/23-3/31/23
|
0
|
N/A
|
0
|
730,402
|
|
|
4/01/23-4/30/23
|
0
|
N/A
|
0
|
730,402
|
|
|
5/01/23-5/31/23
|
3,000
|
4.03
|
3,000
|
727,402
|
|
|
6/01/23-6/30/23
|
0
|
N/A
|
0
|
727,402
|
|
|
7/01/23-7/31/23
|
0
|
N/A
|
0
|
727,402
|
|
|
8/01/23-8/31/23
|
964
|
4.04
|
964
|
726,438
|
|
|
9/01/23-9/30/23
|
4,103
|
3.99
|
4,103
|
722,335
|
|
|
10/1/23-10/31/23
|
9,778
|
3.83
|
9,778
|
720,124
|
|
|
Total
|
17,845
|
3.91
|
17,845
|
|
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 729,902.
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.
During the fiscal year ended October 31, 2023, there were no fees or income related to securities lending activities of the Registrant.
ITEM 13. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION.
Not Applicable.
ITEM 14. EXHIBITS.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Attached hereto as EX-99.COE.
(2)A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2): Attached hereto as EX-99.302CERT.
(3)Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable.
(4)Change in the registrant's independent public accountant. Not applicable.
(b)If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Attached hereto as EX-99.906CERT.
(c)Registrant's Rule 30e-3 Notice pursuant to Item 1(b) of Form N-CSR. Attached hereto as EX-99.30e-3Notice.
(d)Proxy Voting Policies and Procedures pursuant to Item 7 of Form N-CSR. Attached hereto as EX-99.PROXYPOL.
(e) 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 SPECIAL VALUE TRUST
By (Signature and Title)*
/S/ DAVID L. DILORENZO
David L. DiLorenzo, President
Date: December 14, 2023
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: December 14, 2023
By (Signature and Title)*
/S/ JAMES O. YOST
James O. Yost, Treasurer (Principal Financial Officer and Accounting Officer) Date: December 14, 2023
* Print name and title of each signing officer under his or her signature.
EX-99.COE
Code of Ethics for Principal Executive and Principal Financial Officers
Effective February 13, 2018
I.Policy Purpose and Summary
Section 406 of the Sarbanes-Oxley Act requires that each MFS Fund registered under the Investment Company Act of 1940 disclose whether or not it has adopted a code of ethics for senior financial officers, applicable to its principal financial officer and principal accounting officer.
II.Overview
A. Covered Officers/Purpose of the Code
This code of ethics (this "Code") has been adopted by the funds (collectively, "Funds" and each, "Fund") under supervision of the MFS Funds Board (the "Board") and applies to the Funds' Principal Executive Officer and Principal Financial Officer (the "Covered Officers" each of whom is set forth in Exhibit A) for the purpose of promoting:
∙honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
∙full, fair, accurate, timely and understandable disclosure in reports and documents that the Funds file with, or submit to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Funds;
∙compliance by the Funds with applicable laws and governmental rules and regulations;
∙the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and
∙accountability for adherence to the Code.
B. Conduct Guidelines
Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. In addition, each Covered Officer should not place his or her personal interests ahead of the Funds' interests and should endeavor to act honestly and ethically. In furtherance of the foregoing, each Covered Officer must:
∙not use his or her personal influence or personal relationships improperly to influence investment decisions or financial reporting for any Fund whereby the Covered Officer would benefit personally to the detriment of the Fund; and
∙not cause a Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the Fund.
The following activities, which could create the appearance of a conflict of interest, are permitted only with the approval of the Funds' Chief Legal Officer ("CLO"):
∙service as a director on the board of any "for profit" company other than the board of the Funds' investment adviser or its subsidiaries or board of a pooled investment vehicle sponsored by the Funds' investment adviser or its subsidiaries;
∙running for political office;
∙the receipt of any Fund business-related gift or any entertainment from any company with which a Fund has current or prospective business dealings unless such gift or entertainment is permitted by the gifts and entertainment policy of the Funds' investment adviser;
∙any material ownership interest in, or any consulting or employment relationship with, any Fund service providers (e.g., custodian banks, audit firms), other than the Funds' investment adviser, principal underwriter, administrator or any affiliated person thereof;
∙a direct or indirect financial interest in commissions, transaction charges or spreads paid by a Fund for effecting portfolio transactions or for selling or redeeming shares, other than an interest arising from the Covered Officer's employment or securities ownership.
C.Disclosure and Compliance
∙Each Covered Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Funds;
∙each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about a Fund to others, whether within or outside the Fund, including to the Fund's trustees and auditors, and to governmental regulators and self-regulatory organizations;
∙each Covered Officer should, to the extent appropriate within his or her area of Fund responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and
∙it is the responsibility of each Covered Officer to promote compliance within his or her area of Fund responsibility with the standards and restrictions imposed by applicable laws, rules and regulations.
D. Reporting and Accountability
Each Covered Officer must:
∙upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he or she has received, read, and understands the Code;
∙annually thereafter affirm to the Board that he or she has complied with the requirements of the Code;
∙annually report to the CLO affiliations and relationships which are or may raise the appearance of a conflict of interest with the Covered Officer's duties to the Funds, as identified in the annual Trustee and Officer Questionnaire;
∙not retaliate against any other Covered Officer or any officer or employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and
∙notify the CLO promptly if he or she knows of any violation of this Code. Failure to do so is itself a violation of this Code.
The CLO is responsible for applying this Code to specific situations in which questions are presented under it, granting waivers upon consultation with the Board or its designee, investigating violations, and has the authority to interpret this Code in any particular situation. The CLO will report requests for waivers to the Board (or a designee thereof) promptly upon receipt of a waiver request and will periodically report to the Board any approvals granted since the last report.
The CLO will take all appropriate action to investigate any potential violations reported to him or her and to report any violations to the Board. If the Board concurs that a violation has occurred, it will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer.
Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.
E. Confidentiality
All reports and records prepared or maintained pursuant to this Code and under the direction of the CLO will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Funds' Board, its counsel, counsel to the Board's independent trustees and senior management and the board of directors of the Fund's investment adviser and its counsel.
F. Internal Use
The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion.
III.Supervision
The Board of Trustees of the Funds, including a majority of the Trustees who are not "interested persons" (as defined in the 1940 Act) of the Funds, shall review no less frequently than annually, a report from the CLO regarding the affirmations of the principal executive officer and the principal financial officer as to compliance with this Code.
IV. |
Interpretation and Escalation |
|
Breaches of the Code are reviewed by the CLO and communicated to the Board of |
|
Trustees of the affected Fund(s). Interpretations of this Policy shall be made from time |
|
to time by the CLO, as needed, and questions regarding the application of this Policy to |
|
a specific set of facts are escalated to the CLO. |
V.Authority
Section 406 of the Sarbanes-Oxley Act.
VI. Monitoring
Adherence to this policy is monitored by the CLO.
VII. Related Policies
This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds' adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds' and their investment adviser's codes of ethics under Rule 17j-1 under the Investment Company Act and any other codes or policies or procedures adopted by the Funds or their investment adviser or other service providers are separate requirements and are not part of this Code.
VIII. Amendment
Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Board, including a majority of independent trustees.
IX. Recordkeeping
All required books, records and other documentation shall be retained in accordance with MFS' related record retention policy.
Additional procedures may need to be implemented by departments to properly comply with this policy.
Exhibit A
As of January 1, 2017
Persons Covered by this Code of Ethics
Funds' Principal Executive Officer: David L. DiLorenzo
Funds' Principal Financial Officer: James O. Yost
EX-99.302CERT
MFS SPECIAL VALUE TRUST
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
I, James O. Yost, certify that:
1.I have reviewed this report on Form N-CSR of MFS Special Value Trust;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by the report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: December 14, 2023
/S/ JAMES O. YOST
James O. Yost
Treasurer (Principal Financial Officer and Accounting Officer)
EX-99.302CERT
MFS SPECIAL VALUE TRUST
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
I, David L. DiLorenzo, certify that:
1.I have reviewed this report on Form N-CSR of MFS Special Value Trust;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by the report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: December 14, 2023
/S/ DAVID L. DILORENZO
David L. DiLorenzo
President (Principal Executive Officer)
EX-99.906CERT
MFS SPECIAL VALUE TRUST
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
I, James O. Yost, certify that, to my knowledge:
1.The Form N-CSR (the "Report") of MFS Special Value Trust (the "Registrant") fully complies for the period covered by the Report with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Date: December 14, 2023
/S/ JAMES O. YOST
James O. Yost
Treasurer (Principal Financial Officer and Accounting Officer)
A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.
EX-99.906CERT
MFS SPECIAL VALUE TRUST
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
I, David L. DiLorenzo, certify that, to my knowledge:
1.The Form N-CSR (the "Report") of MFS Special Value Trust (the "Registrant") fully complies for the period covered by the Report with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Date: December 14, 2023
/S/ DAVID L. DILORENZO
David L. DiLorenzo
President (Principal Executive Officer)
A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.
MFS Special Value Trust
Thank you for being a shareholder. You are encouraged to access and review this important report containing information about the fund, including portfolio holdings and financial statements.
The report is available at:
closedendfunds.mfs.com
This report is available by mail or email upon request free of charge. Reports for the prior reporting period and the fund's portfolio holdings for its most recent fi rst and third fiscal quarters are also available online and in print by request.
Current and future report delivery requests can be submitted at any time using the options in the right panel.
Why am I receiving this Notice?
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In accordance with Section 23(c) of the Investment Company Act of 1940, the fund hereby gives notice that it may from time to time repurchase shares of the fund in the open market at the option of the Board of Trustees and on such terms as the Trustees shall determine.
EX-99.PROXYPOL
MASSACHUSETTS FINANCIAL SERVICES COMPANY
PROXY VOTING POLICIES AND PROCEDURES
January 1, 2023
At MFS Investment Management, our core purpose is to create value responsibly. In serving the long-term economic interests of our clients, we rely on deep fundamental research, risk awareness, engagement, and effective stewardship to generate long-term risk-adjusted returns for our clients. A core component of this approach is our proxy voting activity. We believe that robust ownership practices can help protect and enhance long-term shareholder value. Such ownership practices include diligently exercising our voting rights as well as engaging with our issuers on a variety of proxy voting topics. We recognize that environmental, social and governance ("ESG") issues may impact the long-term value of an investment, and, therefore, we consider ESG issues in light of our fiduciary obligation to vote proxies in what we believe to be in the best long- term economic interest of our clients.
MFS Investment Management and its subsidiaries that perform discretionary investment activities (collectively, "MFS") have adopted these proxy voting policies and procedures ("MFS Proxy Voting Policies and Procedures") with respect to securities owned by the clients for which MFS serves as investment adviser and has been delegated the power to vote proxies on behalf of such clients. These clients include pooled investment vehicles sponsored by MFS (an "MFS Fund" or collectively, the "MFS Funds").
Our approach to proxy voting is guided by the overall principle that proxy voting decisions are made in what MFS believes to be the best long-term economic interests of our clients, and not in the interests of any other party, including company management, or in MFS' corporate interests, including interests such as the distribution of MFS Fund shares and institutional client relationships. These Proxy Voting Policies and Procedures include voting guidelines that govern how MFS generally will vote on specific matters as well as how we monitor potential material conflicts of interest on the part of MFS that could arise in connection with the voting of proxies on behalf of MFS' clients.
Our approach to proxy voting is guided by the following additional principles:
1.Consistency in application of the policy across multiple client portfolios: While MFS generally votes consistently on the same matter when securities of an issuer are held by multiple client portfolios, MFS may vote differently on the matter for different client portfolios under certain circumstances. For example, we may vote differently for a client portfolio if we have received explicit voting instructions to vote differently from such client for its own account. Likewise, MFS may vote differently if the portfolio management team responsible for a particular client account believes that a different voting instruction is in the best long-term economic interest of such account.
2.Consistency in application of policy across shareholder meetings in most instances: As a general matter, MFS seeks to vote consistently on similar proxy proposals across all shareholder meetings. However, as many proxy proposals (e.g., mergers, acquisitions, and
environmental, social and governance shareholder proposals) are analyzed on a case-by- case basis in light of all the relevant facts and circumstances of the issuer and proposal MFS may vote similar proposals differently at different shareholder meetings. In addition, MFS also reserves the right to override the guidelines with respect to a particular proxy proposal when such an override is, in MFS' best judgment, consistent with the overall principle of voting proxies in the best long-term economic interests of MFS' clients.
3.Consideration of company specific context and informed by engagement: As noted above MFS will seek to consider a company's specific context in determining its voting decision. Where there are significant, complex or unusual voting items we may seek to engage with a company before making the vote to further inform our decision. Where sufficient progress has not been made on a particular issue of engagement, MFS may determine a vote against management may be warranted to reflect our concerns and influence for change in the best long-term economic interests of our clients.
4.Clear decisions to best support issuer processes and decision making: To best support improved issuer decision making we strive to generally provide clear decisions by voting either For or Against each item. We may however vote to Abstain in certain situations if we believe a vote either For or Against may produce a result not in the best long-term economic interests of our clients.
5.Transparency in approach and implementation: In addition to the publication of the MFS Proxy Voting Policies and Procedures on our website, we are open to communicating our vote intention with companies, including ahead of the annual meeting. We may do this proactively where we wish to make our view or corresponding rationale clearly known to the company. Our voting data is reported to clients upon request and publicly on a quarterly and annual basis on our website (under Proxy Voting Records & Reports). For more information about reporting on our proxy voting activities, please refer to Section F below.
A.VOTING GUIDELINES
The following guidelines govern how MFS will generally vote on specific matters presented for shareholder vote. These guidelines are not exhaustive, and MFS may vote on matters not identified below. In such circumstances, MFS will be governed by its general policy to vote in what MFS believes to be in the best long-term economic interest of its clients.
These guidelines are written to apply to the markets and companies where MFS has significant assets invested. There will be markets and companies, such as controlled companies and smaller markets, where local governance practices are taken into consideration and exceptions may need to be applied that are not explicitly stated below. There are also markets and companies where transparency and related data limit the ability to apply these guidelines.
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Board structure and performance
MFS generally supports the election and/or discharge of directors proposed by the board in uncontested or non-contentious elections, unless concerns have been identified, such as in relation to:
Director independence
MFS believes that good governance is enabled by a board with at least a simple majority of directors who are "independent" (as determined by MFS in its sole discretion)1 of management, the company and each other. MFS may not support the non-independent nominees, or other relevant director (e.g., chair of the board or the chair of the nominations committee), where insufficient independence is identified and determined to be a risk to the board's and/or company's effectiveness.
As a general matter we will not support a nominee to a board if, as a result of such nominee being elected to the board, the board will consist of less than a simple majority of members who are "independent." However, there are also governance structures and markets where we may accept lower levels of independence, such as companies required to have non- shareholder representatives on the board, controlled companies, and companies in certain Asian or emerging markets. In these circumstances we generally expect the board to be at least one-third independent or at least half of shareholder representatives to be independent, and as a general matter we will not support the nominee to the board if as a result of such nominee's elections these expectations are not met. In certain circumstances, we may not support another relevant director's election. For example, in Japan, we will generally not support the most senior director where the board is not comprised of at least one-third independent directors.
MFS also believes good governance is enabled by a board whose key committees, in particular audit, nominating and compensation/remuneration, consist entirely of "independent" directors. For US and Canadian companies, MFS generally votes against any non-independent nominee that would cause any of the audit, compensation, nominating committee to not be fully independent. For Switzerland and UK issuers MFS generally votes against any non-independent nominee which would cause the audit or compensation/remuneration committee to not be fully independent.
In other markets MFS generally votes against non-independent nominees or other relevant director if a majority of committee members or the chair of the audit committee are not independent. However, there are also governance structures (e.g., controlled companies or boards with non-shareholder representatives) and markets where we may accept lower levels of independence for these key committees.
Tenure in leadership roles
For a board with a lead independent director whose overall tenure on the board equals or exceeds twenty (20) years, we will generally engage with the company to encourage
1MFS' determination of "independence" may be different than that of the company, the exchange on which the company is listed, or of third party (e.g., proxy advisory firm).
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refreshment of that role, and we may vote against the long tenured lead director if progress on refreshment is not made or being considered by the company's board.
Overboarding
All directors on a board should have sufficient time and attention to fulfil their duties and play their part in achieving effective oversight, both in normal and exceptional circumstances. As a general matter, we vote against a director's election if they:
•Are not a CEO of a public company, but serve on more than four (4) public company boards in total at US companies and more than five (5) in other markets.
•Are a CEO of a public company, and serve on more than two (2) public company boards in total at US companies and two (2) outside companies in other markets. In these cases, MFS would only apply a vote against at the meetings of the companies where the director is non-executive.
MFS may also vote against any director if we deem such nominee to have board roles or outside time commitments that we believe would impair their ability to dedicate sufficient time and attention to their director role. MFS may consider exceptions to this policy if: (i) the company has disclosed the director's plans to step down from the number of public company boards exceeding the above limits, as applicable, within a reasonable time; or (ii) the director exceeds the permitted number of public company board seats solely due to either his/her board service on an affiliated company (e.g., a subsidiary), or service on more than one investment company within the same investment company complex (as defined by applicable law).
Diversity
MFS believes that a well-balanced board with diverse perspectives is a foundation for sound corporate governance, and this is best spread across the board rather than concentrated in one or a few individuals. We take a holistic view on the dimensions of diversity that can lead to diversity of perspectives and stronger oversight and governance.
Gender diversity is one such dimension and where good disclosure and data enables a specific expectation and voting policy.
On gender representation specifically MFS wishes to see companies in all markets achieve a consistent minimum representation of women of at least a third of the board, and we are likely to increase our voting policy towards this over time.
Currently, MFS will generally vote against the chair of the nominating and governance committee or other most relevant position at any company whose board is comprised of an insufficient representation of directors who are women for example:
•At US, Canadian, European, Australian companies: less than 22%.
•At Japanese companies: less than 10%.
As a general matter, MFS will vote against the chair of the nominating committee of US S&P 500 companies and UK FTSE 100 companies that have failed to appoint at least one director who identifies as either an underrepresented ethnic/racial minority or a member of the LGBTQ+ community.
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MFS may consider exceptions to these guidelines if we believe that the company is transitioning towards these goals or has provided clear and compelling reasons for why they have been unable to comply with these goals.
For other markets, we will engage on board diversity and may vote against the election of directors where we fail to see progress.
Board size
MFS believes that the size of the board can have an effect on the board's ability to function efficiently and effectively. While MFS may evaluate board size on a case-by-case basis, we will typically vote against the chair of the nominating and governance committee in instances where the size of the board is greater than sixteen (16) members. An exception to this is companies with requirements to have equal representation of employees on the board where we expect a maximum of twenty (20) members.
Other concerns related to director election:
MFS may also not support some or all nominees standing for election to a board if we determine:
•There are concerns with a director or board regarding performance, governance or oversight, which may include:
o Clear failures in oversight or execution of duties, including the identification, management and reporting of material risks and information, at the company or any other at which the nominee has served. This may include climate-related risks;
o A failure by the director or board of the issuer to take action to eliminate shareholder unfriendly provisions in the issuer's charter documents;
o Allowing the hedging and/or significant pledging of company shares by executives.
•A director attended less than 75% of the board and/or relevant committee meetings in the previous year without a valid reason stated in the proxy materials or other annual governance reporting;
•The board or relevant committee has not adequately responded to an issue that received majority support or significant dissent from shareholders;
•The board has implemented a poison pill without shareholder approval since the last annual meeting and such poison pill is not on the subsequent shareholder meeting's agenda (including those related to net-operating loss carry-forwards); or
•In Japan, the company allocates a significant portion of its net assets to cross- shareholdings.
Unless the concern is commonly accepted market practice, MFS may also not support some or all nominees standing for election to a nominations committee if we determine the chair is not independent and there is no strong lead independent director role in place or an executive director is a member of a key board committee.
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Where individual directors are not presented for election in the year MFS may apply the same vote position to votes on the discharge of the director. Where the election of directors is bundled MFS may vote against the whole group if there is concern with an individual director and no other vote related to that director.
Proxy contests
From time to time, a shareholder may express alternative points of view in terms of a company's strategy, capital allocation, or other issues. Such a shareholder may also propose a slate of director nominees different than the slate of director nominees proposed by the company (a "Proxy Contest"). MFS will analyze Proxy Contests on a case-by-case basis, taking into consideration the track record and current recommended initiatives of both company management and the dissident shareholder(s). MFS will support the slate of director nominees that we believe is in the best, long-term economic interest of our clients.
Other items related to board accountability:
Majority voting for the election of directors: MFS generally supports reasonably crafted proposals calling for directors to be elected with an affirmative majority of votes cast and/or the elimination of the plurality standard for electing directors (including binding resolutions requesting that the board amend the company's bylaws), provided the proposal includes a carve-out for a plurality voting standard when there are more director nominees than board seats (e.g., contested elections).
Declassified boards: MFS generally supports proposals to declassify a board (i.e., a board in which only a sub-set of board members is elected each year) for all issuers other than for certain closed-end investment companies. MFS generally opposes proposals to classify a board for issuers other than for certain closed-end investment companies.
The right to call a special meeting or act by written consent: MFS will generally support management proposals to establish these rights. We will also support shareholder proposals to establish the right for shareholders to call a special meeting.
If a company already provides shareholders the right to call a special meeting at a threshold of 15% or below, MFS will generally vote against shareholder proposals to establish or amend the threshold at a lower level.
MFS will support shareholder proposals to establish the right to act by majority written consent if shareholders do not have the right to call a special meeting at a 15% or lower threshold.
Independent chairs: MFS believes boards should include some form of independent leadership responsible for amplifying the views of independent directors and setting meeting agendas, and this is often best positioned as an independent chair of the board. We review the merits of a change in leadership structure on a case-by-case basis.
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Proxy access: MFS believes that the ability of qualifying shareholders to nominate a certain number of directors on the company's proxy statement ("Proxy Access") may have corporate governance benefits. However, such potential benefits must be balanced by its potential misuse by shareholders. Therefore, MFS generally supports Proxy Access proposals at U.S. issuers that establish ownership criteria of 3% of the company held continuously for a period of 3 years. In our view, such qualifying shareholders should have the ability to nominate at least 2 directors. We also believe companies should be mindful of imposing any undue impediments within their bylaws that may render Proxy Access impractical, including re-submission thresholds for director nominees via Proxy Access.
Items related to shareholder rights:
Anti-takeover measures: In general, MFS votes against any measure that inhibits capital appreciation in a stock, including proposals that protect management from action by shareholders. These types of proposals take many forms, ranging from "poison pills" and "shark repellents" to super-majority requirements. While MFS may consider the adoption of a prospective "poison pill" or the continuation of an existing "poison pill" on a case-by- case basis, MFS generally votes against such anti-takeover devices.
MFS will consider any poison pills designed to protect a company's net-operating loss carryforwards on a case-by-case basis, weighing the accounting and tax benefits of such a pill against the risk of deterring future acquisition candidates. MFS will also consider, on
acase-by-case basis, proposals designed to prevent tenders which are disadvantageous to shareholders such as tenders at below market prices and tenders for substantially less than all shares of an issuer.
MFS generally supports proposals that seek to remove governance structures that insulate management from shareholders. MFS generally votes for proposals to rescind existing "poison pills" and proposals that would require shareholder approval to adopt prospective "poison pills."
Cumulative voting: MFS generally opposes proposals that seek to introduce cumulative voting and supports proposals that seek to eliminate cumulative voting. In either case, MFS will consider whether cumulative voting is likely to enhance the interests of MFS' clients as minority shareholders.
One-share one-vote: As a general matter, MFS supports proportional alignment of voting rights with economic interest, and may not support a proposal that deviates from this approach. Where multiple share classes or other forms of disproportionate control are in place, we expect these to have sunset provisions of generally no longer than seven years after which the structure becomes single class one-share one-vote.
Reincorporation and reorganization proposals: When presented with a proposal to reincorporate a company under the laws of a different state, or to effect some other type of corporate reorganization, MFS considers the underlying purpose and ultimate effect of such a proposal in determining whether or not to support such a measure. MFS generally
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votes with management in regards to these types of proposals, however, if MFS believes the proposal is not in the best long-term economic interests of its clients, then MFS may vote against management (e.g., the intent or effect would be to create additional inappropriate impediments to possible acquisitions or takeovers).
Other business: MFS generally votes against "other business" proposals as the content of any such matter is not known at the time of our vote.
Items related to capitalization proposals, capital allocation and corporate actions:
Issuance of stock: There are many legitimate reasons for the issuance of stock. Nevertheless, as noted above under "Stock Plans," when a stock option plan (either individually or when aggregated with other plans of the same company) would substantially dilute the existing equity (e.g., by more than approximately 10-15%), MFS generally votes against the plan.
MFS typically votes against proposals where management is asking for authorization to issue common or preferred stock with no reason stated (a "blank check") because the unexplained authorization could work as a potential anti-takeover device. MFS may also vote against the authorization or issuance of common or preferred stock if MFS determines that the requested authorization is excessive or not warranted. MFS will consider the duration of the authority and the company's history in using such authorities in making its decision.
Repurchase programs: MFS generally supports proposals to institute share repurchase plans in which all shareholders have the opportunity to participate on an equal basis. Such plans may include a company acquiring its own shares on the open market, or a company making a tender offer to its own shareholders.
Mergers, acquisitions & other special transactions: MFS considers proposals with respect to mergers, acquisitions, sale of company assets, share and debt issuances and other transactions that have the potential to affect ownership interests on a case-by-case basis.
Independent Auditors
MFS generally supports the election of auditors but may determine to vote against the election of a statutory auditor and/or members of the audit committee in certain markets if MFS reasonably believes that the statutory auditor is not truly independent, sufficiently competent or there are concerns related to the auditor's work or opinion. To inform this view, MFS may evaluate the use of non-audit services in voting decisions when the percentage of non-audit fees to total auditor fees exceeds 40%, in particular if recurring.
Executive Compensation
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MFS believes that competitive compensation packages are necessary to attract, motivate and retain executives. We seek compensation plans that are geared towards durable long- term value creation and aligned with shareholder interests and experience, such as where:
•The plan is aligned with the company's strategic priorities with clear, suitably challenging and measurable performance conditions such that future pay is likely to reflect performance;
•Substantial portions of awards paid in deferred shares and based on long performance periods (e.g., at least three years);
•Potential awards, and any increases to this, reflect the role and business; and
•Awards reflect the policies approved by shareholders at previous meetings with appropriate use of discretion (positive and negative).
MFS will analyze votes on executive compensation on a case-by-case basis. MFS will vote against an issuer's executive compensation practices if MFS determines that such practices are misaligned with shareholders or include incentive metrics or structures that are poorly aligned with the best, long-term economic interest of its clients. When analyzing whether an issuer's compensation practices are geared towards durable long-term value creation, we use a variety of materials and information, including our own internal research and engagement with issuers as well as the research of third-party service providers. We also have identified the following practices in compensation plans that we believe may be problematic and we review any plan that contains four (4) or more of these practices with extra scrutiny:
•Relative total shareholder return (TSR) performance thresholds requiring less than median performance.
•Qualitative (i.e., strategic or individual) goals that account for 30% or more of a given short- or long-term award.
•Performance-based long-term incentives that have less than a 3-year performance period.
•CEO perks of more than $100,000.
•A long-term performance plan that has no financial performance requirements.
•Executive or director pledging of shares.
•CEO pay that is four times the average pay of the company's next named executive officers (NEO).
MFS may also vote against an issuer's executive compensation practices if there is insufficient disclosure about the issuer's practices.
MFS generally supports proposals to include an advisory shareholder vote on an issuer's executive compensation practices on an annual basis.
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MFS does not have formal voting guideline in regards to the inclusion of ESG incentives in a company's compensation plan; however, where such incentives are included, we believe:
•The incentives should be tied to quantitative or other externally verifiable outcomes rather than qualitative measures.
•The weighting of incentives should be appropriately balanced with other strategic priorities.
We believe non-executive directors may be compensated in cash or stock but these should not be performance-based.
Stock Plans
MFS may oppose stock option programs and restricted stock plans if they:
•Provide unduly generous compensation for officers, directors or employees, or could result in excessive dilution to other shareholders. As a general guideline, MFS votes against restricted stock, stock option, non-employee director, omnibus stock plans and any other stock plan if all such plans for a particular company involve potential excessive dilution (which we typically consider to be, in the aggregate, of more than 15%). MFS will generally vote against stock plans that involve potential dilution, in aggregate, of more than 10% at U.S. issuers that are listed in the Standard and Poor's 100 index as of December 31 of the previous year.
•Allow the board or the compensation committee to re-price underwater options or to automatically replenish shares without shareholder approval.
•Do not require an investment by the optionee, give "free rides" on the stock price, or permit grants of stock options with an exercise price below fair market value on the date the options are granted.
In the cases where a stock plan amendment is seeking qualitative changes and not additional shares, MFS will vote on a case-by-case basis.
MFS will consider proposals to exchange existing options for newly issued options, restricted stock or cash on a case-by-case basis, taking into account certain factors, including, but not limited to, whether there is a reasonable value-for-value exchange and whether senior executives are excluded from participating in the exchange.
From time to time, MFS may evaluate a separate, advisory vote on severance packages or "golden parachutes" to certain executives at the same time as a vote on a proposed merger or acquisition. MFS will vote on a severance package on a case- by-case basis, and MFS may vote against the severance package regardless of whether MFS supports the proposed merger or acquisition.
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MFS supports the use of a broad-based employee stock purchase plans to increase company stock ownership by employees, provided that shares purchased under the plan are acquired for no less than 85% of their market value and do not result in excessive dilution.
MFS may also not support some or all nominees standing for election to a compensation/remuneration committee if:
•MFS votes against consecutive pay votes;
•MFS determines that a particularly egregious executive compensation practice has occurred. This may include use of discretion to award excessive payouts. MFS believes compensation committees should have flexibility to apply discretion to ensure final payments reflect long-term performance as long as this is used responsibly; or
•An advisory pay vote is not presented to shareholders, or the company has not implemented the advisory vote frequency supported by a plurality/majority of shareholders.
Shareholder Proposals on Executive Compensation
MFS generally opposes shareholder proposals that seek to set rigid restrictions on executive compensation as MFS believes that compensation committees should retain flexibility to determine the appropriate pay package for executives.
MFS may support reasonably crafted shareholder proposals that:
•Require shareholder approval of any severance package for an executive officer that exceeds a certain multiple of such officer's annual compensation that is not determined in MFS' judgment to be excessive;
•Require the issuer to adopt a policy to recover the portion of performance-based bonuses and awards paid to senior executives that were not earned based upon a significant negative restatement of earnings, or other significant misconduct or corporate failure, unless the company already has adopted a satisfactory policy on the matter;
•Expressly prohibit the backdating of stock options; or,
•Prohibit the acceleration of vesting of equity awards upon a broad definition of a "change-in-control" (e.g., single or modified single-trigger).
Environmental and Social Proposals
Where management presents climate action/transition plans to shareholder vote, we will evaluate the level of ambition over time, scope, credibility and transparency of the plan in determining our support. Where companies present climate action progress reports to shareholder vote we will evaluate evidence of implementation of and progress against the plan and level of transparency in determining our support.
Most vote items related to environmental and social topics are presented by shareholders. As these proposals, even on the same topic, can vary significantly in scope and action requested, many must be assessed on a case-by-case basis.
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For example, MFS may support proposals reasonably crafted proposals:
•On climate change: that seek disclosure consistent with the recommendations of a generally accepted global framework (e.g., Task Force on Climate-related Financial Disclosures) that is appropriately audited and that is presented in a way that enables shareholders to assess and analyze the company's data; or request appropriately robust and ambitious plans or targets.
•Other environmental: that request the setting of targets for reduction of environmental impact or disclosure of key performance indicators or risks related to the impact, where materially relevant to the business. An example of such a proposal could be reporting on the impact of plastic use or waste stemming from company products or packaging.
•On diversity: that seek to amend a company's equal employment opportunity policy to prohibit discrimination; that request good practice employee-related DEI disclosure; or that seek external input and reviews on specific related areas of performance.
•On lobbying: that request good practice disclosure regarding a company's political contributions and lobbying payments and policy (including trade organizations and lobbying activity).
•On tax: that request reporting in line with the GRI 207 Standard on Tax.
•On corporate culture and/or human/worker rights: that request additional disclosure on corporate culture factors like employee turnover and/or management of human and labor rights.
MFS is unlikely to support a proposal if we believe that the proposal is unduly costly, restrictive, unclear, burdensome, has potential unintended consequences, is unlikely to lead to tangible outcomes or we don't believe the issue is material or the action a priority for the business. MFS is also unlikely to support a proposal where the company already provides publicly available information that we believe is sufficient to enable shareholders to evaluate the potential opportunities and risks on the subject of the proposal, if the request of the proposal has already been substantially implemented, or if through engagement we gain assurances that it will be substantially implemented.
The laws of various states or countries may regulate how the interests of certain clients subject to those laws (e.g., state pension plans) are voted with respect to environmental, social and governance issues. Thus, it may be necessary to cast ballots differently for certain clients than MFS might normally do for other clients.
B. GOVERNANCE OF PROXY VOTING ACTIVITIES
From time to time, MFS may receive comments on the MFS Proxy Voting Policies and Procedures from its clients. These comments are carefully considered by MFS when it reviews these MFS Proxy Voting Policies and Procedures and revises them as appropriate, in MFS' sole judgment.
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1. MFS Proxy Voting Committee
The administration of these MFS Proxy Voting Policies and Procedures is overseen by the MFS Proxy Voting Committee, which includes senior personnel from the MFS Legal and Global Investment and Client Support Departments as well as members of the investment team. The Proxy Voting Committee does not include individuals whose primary duties relate to client relationship management, marketing, or sales. The MFS Proxy Voting Committee:
a.Reviews these MFS Proxy Voting Policies and Procedures at least annually and recommends any amendments considered to be necessary or advisable;
b.Determines whether any potential material conflict of interest exists with respect to instances in which MFS (i) seeks to override these MFS Proxy Voting Policies and Procedures; (ii) votes on ballot items not governed by these MFS Proxy Voting Policies and Procedures; (iii) evaluates an excessive executive compensation issue in relation to the election of directors; or (iv) requests a vote recommendation from an MFS portfolio manager or investment analyst (e.g., mergers and acquisitions);
c.Considers special proxy issues as they may arise from time to time; and
d.Determines engagement priorities and strategies with respect to MFS' proxy voting activities
The day-to-day application of the MFS Proxy Voting Policies and Procedures are conducted by the MFS stewardship team led by MFS' Director of Global Stewardship. The stewardship team are members of MFS' investment team.
2. Potential Conflicts of Interest
These policies and procedures are intended to address any potential material conflicts of interest on the part of MFS or its subsidiaries that are likely to arise in connection with the voting of proxies on behalf of MFS' clients. If such potential material conflicts of interest do arise, MFS will analyze, document and report on such potential material conflicts of interest (see below) and shall ultimately vote the relevant ballot items in what MFS believes to be the best long-term economic interests of its clients. The MFS Proxy Voting Committee is responsible for monitoring and reporting with respect to such potential material conflicts of interest.
The MFS Proxy Voting Committee is responsible for monitoring potential material conflicts of interest on the part of MFS or its subsidiaries that could arise in connection with the voting of proxies on behalf of MFS' clients. Due to the client focus of our investment management business, we believe that the potential for actual material conflict of interest issues is small. Nonetheless, we have developed precautions to assure that all
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votes are cast in the best long-term economic interest of its clients.2 Other MFS internal policies require all MFS employees to avoid actual and potential conflicts of interests between personal activities and MFS' client activities. If an employee (including investment professionals) identifies an actual or potential conflict of interest with respect to any voting decision (including the ownership of securities in their individual portfolio), then that employee must recuse himself/herself from participating in the voting process. Any significant attempt by an employee of MFS or its subsidiaries to unduly influence MFS' voting on a particular proxy matter should also be reported to the MFS Proxy Voting Committee.
In cases where ballots are voted in accordance with these MFS Proxy Voting Policies and Procedures, no material conflict of interest will be deemed to exist. In cases where (i) MFS is considering overriding these MFS Proxy Voting Policies and Procedures, (ii) matters presented for vote are not governed by these MFS Proxy Voting Policies and Procedures,
(iii)MFS evaluates a potentially excessive executive compensation issue in relation to the election of directors or advisory pay or severance package vote, or (iv) a vote recommendation is requested from an MFS portfolio manager or investment analyst (e.g., mergers and acquisitions); (collectively, "Non-Standard Votes"); the MFS Proxy Voting Committee will follow these procedures:
a.Compare the name of the issuer of such ballot or the name of the shareholder making such proposal against a list of significant current (i) distributors of MFS Fund shares, and (ii) MFS institutional clients (the "MFS Significant Distributor and Client List");
b.If the name of the issuer does not appear on the MFS Significant Distributor and Client List, then no material conflict of interest will be deemed to exist, and the proxy will be voted as otherwise determined by the MFS Proxy Voting Committee;
c.If the name of the issuer appears on the MFS Significant Distributor and Client List, then the MFS Proxy Voting Committee will be apprised of that fact and each member of the MFS Proxy Voting Committee (with the participation of MFS' Conflicts Officer) will carefully evaluate the proposed vote in order to ensure that the proxy ultimately is voted in what MFS believes to be the best long-term economic interests of MFS' clients, and not in MFS' corporate interests; and
d.For all potential material conflicts of interest identified under clause (c) above, the MFS Proxy Voting Committee will document: the name of the issuer, the issuer's relationship to MFS, the analysis of the matters submitted for proxy vote, the votes as to be cast and the reasons why the MFS Proxy Voting Committee determined that the votes were cast in the best long-term economic interests of MFS' clients, and not in MFS' corporate interests. A copy of the foregoing documentation will be provided to MFS' Conflicts Officer.
2For clarification purposes, note that MFS votes in what we believe to be the best, long-term economic interest of our clients entitled to vote at the shareholder meeting, regardless of whether other MFS clients hold "short" positions in the same issuer or whether other MFS clients hold an interest in the company that is not entitled to vote at the shareholder meeting (e.g., bond holder).
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The members of the MFS Proxy Voting Committee are responsible for creating and maintaining the MFS Significant Distributor and Client List, in consultation with MFS' distribution and institutional business units. The MFS Significant Distributor and Client List will be reviewed and updated periodically, as appropriate.
For instances where MFS is evaluating a director nominee who also serves as a director/trustee of the MFS Funds, then the MFS Proxy Voting Committee will adhere to the procedures described in section (c) above regardless of whether the portfolio company appears on our Significant Distributor and Client List. In doing so, the MFS Proxy Voting Committee will adhere to such procedures for all Non-Standard Votes at the company's shareholder meeting at which the director nominee is standing for election.
If an MFS client has the right to vote on a matter submitted to shareholders by Sun Life Financial, Inc. or any of its affiliates (collectively "Sun Life"), MFS will cast a vote on behalf of such MFS client as such client instructs or in the event that a client instruction is unavailable pursuant to the recommendations of Institutional Shareholder Services, Inc.'s ("ISS") benchmark policy, or as required by law. Likewise, if an MFS client has the right to vote on a matter submitted to shareholders by a public company for which an MFS Fund director/trustee serves as an executive officer, MFS will cast a vote on behalf of such MFS client as such client instructs or in the event that client instruction is unavailable pursuant to the recommendations of ISS or as required by law.
Except as described in the MFS Fund's Prospectus, from time to time, certain MFS Funds (the "top tier fund") may own shares of other MFS Funds (the "underlying fund"). If an underlying fund submits a matter to a shareholder vote, the top tier fund will generally vote its shares in the same proportion as the other shareholders of the underlying fund. If there are no other shareholders in the underlying fund, the top tier fund will vote in what MFS believes to be in the top tier fund's best long-term economic interest. If an MFS client has the right to vote on a matter submitted to shareholders by a pooled investment vehicle advised by MFS (excluding those vehicles for which MFS' role is primarily portfolio management and is overseen by another investment adviser), MFS will cast a vote on behalf of such MFS client in the same proportion as the other shareholders of the pooled investment vehicle.
3. Review of Policy
The MFS Proxy Voting Policies and Procedures are available on www.mfs.com and may be accessed by both MFS' clients and the companies in which MFS' clients invest. The MFS Proxy Voting Policies and Procedures are reviewed by the Proxy Voting Committee annually. From time to time, MFS may receive comments on the MFS Proxy Voting Policies and Procedures from its clients. These comments are carefully considered by MFS when it reviews these MFS Proxy Voting Policies and Procedures and revises them as appropriate, in MFS' sole judgment.
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C. OTHER ADMINISTRATIVE MATTERS & USE OF PROXY ADVISORY FIRMS
1. Use of Proxy Advisory Firms
MFS, on behalf of itself and certain of its clients (including the MFS Funds) has entered into an agreement with an independent proxy administration firm pursuant to which the proxy administration firm performs various proxy vote related administrative services such as vote processing and recordkeeping functions. Except as noted below, the proxy administration firm for MFS and its clients, including the MFS Funds, is ISS. The proxy administration firm for MFS Development Funds, LLC is Glass, Lewis & Co., Inc. ("Glass Lewis"; Glass Lewis and ISS are each hereinafter referred to as the "Proxy Administrator").
The Proxy Administrator receives proxy statements and proxy ballots directly or indirectly from various custodians, logs these materials into its database and matches upcoming meetings with MFS Fund and client portfolio holdings, which are inputted into the Proxy Administrator's system by an MFS holdings data-feed. The Proxy Administrator then reconciles a list of all MFS accounts that hold shares of a company's stock and the number of shares held on the record date by these accounts with the Proxy Administrator's list of any upcoming shareholder's meeting of that company. If a proxy ballot has not been received, the Proxy Administrator and/or MFS may contact the client's custodian requesting the reason as to why a ballot has not been received. Through the use of the Proxy Administrator system, ballots and proxy material summaries for all upcoming shareholders' meetings are available on-line to certain MFS employees and members of the MFS Proxy Voting Committee.
MFS also receives research reports and vote recommendations from proxy advisory firms. These reports are only one input among many in our voting analysis, which includes other sources of information such as proxy materials, company engagement discussions, other third-party research and data. MFS has due diligence procedures in place to help ensure that the research we receive from our proxy advisory firms is materially accurate and that we address any material conflicts of interest involving these proxy advisory firms. This due diligence includes an analysis of the adequacy and quality of the advisory firm staff, its conflict of interest policies and procedures and independent audit reports. We also review the proxy policies, methodologies and peer-group-composition methodology of our proxy advisory firms at least annually. Additionally, we also receive reports from our proxy advisory firms regarding any violations or changes to conflict of interest procedures.
2. Analyzing and Voting Proxies
Proxies are voted in accordance with these MFS Proxy Voting Policies and Procedures. The Proxy Administrator, at the prior direction of MFS, automatically votes all proxy matters that do not require the particular exercise of discretion or judgment with respect to these MFS Proxy Voting Policies and Procedures as determined by MFS. In these circumstances, if the Proxy Administrator, based on MFS' prior direction, expects to vote
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against management with respect to a proxy matter and MFS becomes aware that the issuer has filed or will file additional soliciting materials sufficiently in advance of the deadline for casting a vote at the meeting, MFS will consider such information when casting its vote. With respect to proxy matters that require the particular exercise of discretion or judgment, the MFS Proxy Voting Committee or its representatives considers and votes on those proxy matters. In analyzing all proxy matters, MFS uses a variety of materials and information, including, but not limited to, the issuer's proxy statement and other proxy solicitation materials (including supplemental materials), our own internal research and research and recommendations provided by other third parties (including research of the Proxy Administrator). As described herein, MFS may also determine that it is beneficial in analyzing a proxy voting matter for members of the Proxy Voting Committee or its representatives to engage with the company on such matter. MFS also uses its own internal research, the research of Proxy Administrators and/or other third party research tools and vendors to identify (i) circumstances in which a board may have approved an executive compensation plan that is excessive or poorly aligned with the portfolio company's business or its shareholders, (ii) environmental, social and governance proposals that warrant further consideration, or (iii) circumstances in which a company is not in compliance with local governance or compensation best practices. Representatives of the MFS Proxy Voting Committee review, as appropriate, votes cast to ensure conformity with these MFS Proxy Voting Policies and Procedures.
For certain types of votes (e.g. mergers and acquisitions, proxy contests and capitalization matters), MFS' stewardship team will seek a recommendation from the MFS investment analyst that is responsible for analyzing the company and/or portfolio managers that holds the security in their portfolio.3 For certain other votes that require a case-by-case analysis per these policies (e.g., potentially excessive executive compensation issues, or certain shareholder proposals), the stewardship team will likewise consult with MFS investment analysts and/or portfolio managers.3 However, the MFS Proxy Voting Committee will ultimately be responsible for the manner in which all ballots are voted.
As noted above, MFS reserves the right to override the guidelines when such an override is, in MFS' best judgment, consistent with the overall principle of voting proxies in the best long-term economic interests of MFS' clients. Any such override of the guidelines shall be analyzed, documented and reported in accordance with the procedures set forth in these policies.
In accordance with its contract with MFS, the Proxy Administrator also generates a variety of reports for the MFS Proxy Voting Committee and makes available on-line various other types of information so that the MFS Proxy Voting Committee or its representatives may review and monitor the votes cast by the Proxy Administrator on behalf of MFS' clients.
3From time to time, due to travel schedules and other commitments, an appropriate portfolio manager or research analyst may not be available to provide a vote recommendation. If such a recommendation cannot be obtained within a reasonable time prior to the cut-off date of the shareholder meeting, the MFS Proxy Voting Committee may determine to abstain from voting.
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For those markets that utilize a "record date" to determine which shareholders are eligible to vote, MFS generally will vote all eligible shares pursuant to these guidelines regardless of whether all (or a portion of) the shares held by our clients have been sold prior to the meeting date.
3. Securities Lending
From time to time, certain MFS Funds may participate in a securities lending program. In the event MFS or its agent receives timely notice of a shareholder meeting for a U.S. security, MFS and its agent will attempt to recall any securities on loan before the meeting's record date so that MFS will be entitled to vote these shares. However, there may be instances in which MFS is unable to timely recall securities on loan for a U.S. security, in which cases MFS will not be able to vote these shares. MFS will report to the appropriate board of the MFS Funds those instances in which MFS is not able to timely recall the loaned securities. MFS generally does not recall non-U.S. securities on loan because there may be insufficient advance notice of proxy materials, record dates, or vote cut-off dates to allow MFS to timely recall the shares in certain markets on an automated basis. As a result, non-U.S. securities that are on loan will not generally be voted. If MFS receives timely notice of what MFS determines to be an unusual, significant vote for a non- U.S. security whereas MFS shares are on loan and determines that voting is in the best long-term economic interest of shareholders, then MFS will attempt to timely recall the loaned shares.
4. Potential impediments to voting
In accordance with local law or business practices, some companies or custodians prevent the sale of shares that have been voted for a certain period beginning prior to the shareholder meeting and ending on the day following the meeting ("share blocking"). Depending on the country in which a company is domiciled, the blocking period may begin a stated number of days prior or subsequent to the meeting (e.g., one, three or five days) or on a date established by the company. While practices vary, in many countries the block period can be continued for a longer period if the shareholder meeting is adjourned and postponed to a later date. Similarly, practices vary widely as to the ability of a shareholder to have the "block" restriction lifted early (e.g., in some countries shares generally can be "unblocked" up to two days prior to the meeting whereas in other countries the removal of the block appears to be discretionary with the issuer's transfer agent). Due to these restrictions, MFS must balance the benefits to its clients of voting proxies against the potentially serious portfolio management consequences of a reduced flexibility to sell the underlying shares at the most advantageous time. For companies in countries with share blocking periods or in markets where some custodians may block shares, the disadvantage of being unable to sell the stock regardless of changing conditions generally outweighs the advantages of voting at the shareholder meeting for routine items. Accordingly, MFS will not vote those proxies in the absence of an unusual, significant vote that outweighs the disadvantage of being unable to sell the stock.
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From time to time, governments may impose economic sanctions which may prohibit us from transacting business with certain companies or individuals. These sanctions may also prohibit the voting of proxies at certain companies or on certain individuals. In such instances, MFS will not vote at certain companies or on certain individuals if it determines that doing so is in violation of the sanctions.
In limited circumstances, other market specific impediments to voting shares may limit our ability to cast votes, including, but not limited to, late delivery of proxy materials, untimely vote cut-off dates, power of attorney and share re-registration requirements, or any other unusual voting requirements. In these limited instances, MFS votes securities on a best- efforts basis in the context of the guidelines described above.
D. ENGAGEMENT
As part of its approach to stewardship MFS engages with companies in which it invests on a range of priority issues. Where sufficient progress has not been made on a particular issue of engagement, MFS may determine a vote against management may be warranted to reflect our concerns and influence for change in the best long-term economic interests of our clients.
MFS may determine that it is appropriate and beneficial to engage in a dialogue or written communication with a company or other shareholders specifically regarding certain matters on the company's proxy statement that are of concern to shareholders, including environmental, social and governance matters. This may be to discuss and build our understanding of a certain proposal, or to provide further context to the company on our vote decision.
A company or shareholder may also seek to engage with members of the MFS Proxy Voting Committee or Stewardship Team in advance of the company's formal proxy solicitation to review issues more generally or gauge support for certain contemplated proposals. For further information on requesting engagement with MFS on proxy voting issues or information about MFS' engagement priorities, please contact dlstewardshipteam@mfs.com .
E. RECORDS RETENTION
MFS will retain copies of these MFS Proxy Voting Policies and Procedures in effect from time to time and will retain all proxy voting reports submitted to the Board of Trustees of the MFS Funds for the period required by applicable law. Proxy solicitation materials, including electronic versions of the proxy ballots completed by representatives of the MFS Proxy Voting Committee, together with their respective notes and comments, are maintained in an electronic format by the Proxy Administrator and are accessible on-line by the MFS Proxy Voting Committee and other MFS employees. All proxy voting materials and supporting documentation, including records generated by the Proxy Administrator's system as to proxies processed, including the dates when proxy ballots
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were received and submitted, and the votes on each company's proxy issues, are retained as required by applicable law.
F. REPORTS
U.S. Registered MFS Funds
MFS publicly discloses the proxy voting records of the U.S. registered MFS Funds on a quarterly basis. MFS will also report the results of its voting to the Board of Trustees of the U.S. registered MFS Funds. These reports will include: (i) a summary of how votes were cast (including advisory votes on pay and "golden parachutes"); (ii) a summary of votes against management's recommendation; (iii) a review of situations where MFS did not vote in accordance with the guidelines and the rationale therefore; (iv) a review of the procedures used by MFS to identify material conflicts of interest and any matters identified as a material conflict of interest; (v) a review of these policies and the guidelines; (vi) a review of our proxy engagement activity; (vii) a report and impact assessment of instances in which the recall of loaned securities of a U.S. issuer was unsuccessful; and (viii) as necessary or appropriate, any proposed modifications thereto to reflect new developments in corporate governance and other issues. Based on these reviews, the Trustees of the U.S. registered MFS Funds will consider possible modifications to these policies to the extent necessary or advisable.
Other MFS Clients
MFS may publicly disclose the proxy voting records of certain other clients (including certain MFS Funds) or the votes it casts with respect to certain matters as required by law. A report can also be printed by MFS for each client who has requested that MFS furnish a record of votes cast. The report specifies the proxy issues which have been voted for the client during the year and the position taken with respect to each issue and, upon request, may identify situations where MFS did not vote in accordance with the MFS Proxy Voting Policies and Procedures.
Firm-wide Voting Records
MFS also publicly discloses its firm-wide proxy voting records on a quarterly basis.
Except as described above, MFS generally will not divulge actual voting practices to any party other than the client or its representatives because we consider that information to be confidential and proprietary to the client. However, as noted above, MFS may determine that it is appropriate and beneficial to engage in a dialogue with a company regarding certain matters. During such dialogue with the company, MFS may disclose the vote it intends to cast in order to potentially effect positive change at a company in regards to environmental, social or governance issues.
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MFS® Special Value Trust
P.O. Box 43078
Providence, RI 02940-3078
Notice to shareholders — Source of distribution
Distribution period |
October-2023 |
Distribution amount per share |
$0.03590 |
The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year to date from the following sources: net investment income, net realized short-term capital gains, net realized long-term capital gains and return of capital or other capital source. The fund's fiscal year begins each November 1st. All amounts are expressed per common share.
|
Current |
% Breakdown of |
Total cumulative |
% Breakdown of the total |
|
distributions for the |
cumulative distributions |
|
distribution |
current distribution |
fiscal year to date |
for the fiscal year to date |
Net Investment Income |
0.01113 |
31% |
0.14627 |
33% |
Net Realized ST Cap Gains |
0.00000 |
0% |
0.00000 |
0% |
Net Realized LT Cap Gains |
0.02477 |
69% |
0.15957 |
36% |
Return of Capital or |
0.00000 |
0% |
0.13740 |
31% |
Other Capital Source |
Total (per common share) |
0.03590 |
100% |
0.44324 |
100% |
Average annual total return (in relation to NAV) for the five years ended 9-30-2023 |
4.10% |
Annualized current distribution rate expressed as a percentage of month end NAV as of 9-30-2023 |
10.18% |
Cumulative total return (in relation to NAV) for the fiscal year through 9-30-2023 |
4.85% |
Cumulative fiscal year distributions as a percentage of NAV as of 9-30-2023 |
10.48% |
You should not draw any conclusions about the fund's investment performance from the amount of this distribution or from the terms of the fund's managed distribution plan.
The fund estimates that it has distributed more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the fund is paid back to you. A return of capital distribution does not necessarily reflect the fund's investment performance and should not be confused with "yield" or "income."
The amounts and sources of distributions reported in this notice are only estimates and are not being provided for tax- reporting purposes. The actual amounts and sources of the amounts for tax-reporting purposes will depend upon the fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
If you have any questions regarding this information, please call our fund service department at 1-800-637-2304 any business day from 9 a.m. to 5 p.m. Eastern time.
MFVSN-1023
MFS® Special Value Trust
P.O. Box 43078
Providence, RI 02940-3078
Notice to shareholders — Source of distribution
Distribution period |
September-2023 |
Distribution amount per share |
$0.03632 |
The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year to date from the following sources: net investment income, net realized short-term capital gains, net realized long-term capital gains and return of capital or other capital source. The fund's fiscal year begins each November 1st. All amounts are expressed per common share.
|
Current |
% Breakdown of |
Total cumulative |
% Breakdown of the total |
|
distributions for the |
cumulative distributions |
|
distribution |
current distribution |
fiscal year to date |
for the fiscal year to date |
Net Investment Income |
0.00835 |
23% |
0.13442 |
33% |
Net Realized ST Cap Gains |
0.00000 |
0% |
0.00407 |
1% |
Net Realized LT Cap Gains |
0.02797 |
77% |
0.12628 |
31% |
Return of Capital or |
0.00000 |
0% |
0.14257 |
35% |
Other Capital Source |
Total (per common share) |
0.03632 |
100% |
0.40734 |
100% |
Average annual total return (in relation to NAV) for the five years ended 8-31-2023 |
4.49% |
Annualized current distribution rate expressed as a percentage of month end NAV as of 8-31-2023 |
10.00% |
Cumulative total return (in relation to NAV) for the fiscal year through 8-31-2023 |
7.08% |
Cumulative fiscal year distributions as a percentage of NAV as of 8-31-2023 |
9.34% |
You should not draw any conclusions about the fund's investment performance from the amount of this distribution or from the terms of the fund's managed distribution plan.
The fund estimates that it has distributed more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the fund is paid back to you. A return of capital distribution does not necessarily reflect the fund's investment performance and should not be confused with "yield" or "income."
The amounts and sources of distributions reported in this notice are only estimates and are not being provided for tax- reporting purposes. The actual amounts and sources of the amounts for tax-reporting purposes will depend upon the fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
If you have any questions regarding this information, please call our fund service department at 1-800-637-2304 any business day from 9 a.m. to 5 p.m. Eastern time.
MFVSN-0923
MFS® Special Value Trust
P.O. Box 43078
Providence, RI 02940-3078
Notice to shareholders — Source of distribution
Distribution period |
August-2023 |
Distribution amount per share |
$0.03679 |
The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year to date from the following sources: net investment income, net realized short-term capital gains, net realized long-term capital gains and return of capital or other capital source. The fund's fiscal year begins each November 1st. All amounts are expressed per common share.
|
Current |
% Breakdown of |
Total cumulative |
% Breakdown of the total |
|
distributions for the |
cumulative distributions |
|
distribution |
current distribution |
fiscal year to date |
for the fiscal year to date |
Net Investment Income |
0.01140 |
31% |
0.12244 |
33% |
Net Realized ST Cap Gains |
0.00295 |
8% |
0.00371 |
1% |
Net Realized LT Cap Gains |
0.01803 |
49% |
0.07791 |
21% |
Return of Capital or |
0.00441 |
12% |
0.16696 |
45% |
Other Capital Source |
Total (per common share) |
0.03679 |
100% |
0.37102 |
100% |
Average annual total return (in relation to NAV) for the five years ended 7-31-2023 |
4.86% |
Annualized current distribution rate expressed as a percentage of month end NAV as of 7-31-2023 |
9.94% |
Cumulative total return (in relation to NAV) for the fiscal year through 7-31-2023 |
8.07% |
Cumulative fiscal year distributions as a percentage of NAV as of 7-31-2023 |
8.36% |
You should not draw any conclusions about the fund's investment performance from the amount of this distribution or from the terms of the fund's managed distribution plan.
The fund estimates that it has distributed more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the fund is paid back to you. A return of capital distribution does not necessarily reflect the fund's investment performance and should not be confused with "yield" or "income."
The amounts and sources of distributions reported in this notice are only estimates and are not being provided for tax- reporting purposes. The actual amounts and sources of the amounts for tax-reporting purposes will depend upon the fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
If you have any questions regarding this information, please call our fund service department at 1-800-637-2304 any business day from 9 a.m. to 5 p.m. Eastern time.
MFVSN-0823
MFS® Special Value Trust
P.O. Box 43078
Providence, RI 02940-3078
Notice to shareholders — Source of distribution
Distribution period |
July-2023 |
Distribution amount per share |
$0.03648 |
The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year to date from the following sources: net investment income, net realized short-term capital gains, net realized long-term capital gains and return of capital or other capital source. The fund's fiscal year begins each November 1st. All amounts are expressed per common share.
|
Current |
% Breakdown of |
Total cumulative |
% Breakdown of the total |
|
distributions for the |
cumulative distributions |
|
distribution |
current distribution |
fiscal year to date |
for the fiscal year to date |
Net Investment Income |
$0.01094 |
30% |
$0.11030 |
33% |
Net Realized ST Cap Gains |
0.00000 |
0% |
0.00334 |
1% |
Net Realized LT Cap Gains |
0.00474 |
13% |
0.06016 |
18% |
Return of Capital or |
0.02080 |
57% |
0.16043 |
48% |
Other Capital Source |
Total (per common share) |
$0.03648 |
100% |
$0.33423 |
100% |
Average annual total return (in relation to NAV) for the five years ended 6-30-2023 |
5.00% |
Annualized current distribution rate expressed as a percentage of month end NAV as of 6-30-2023 |
9.95% |
Cumulative total return (in relation to NAV) for the fiscal year through 6-30-2023 |
6.16% |
Cumulative fiscal year distributions as a percentage of NAV as of 6-30-2023 |
7.60% |
You should not draw any conclusions about the fund's investment performance from the amount of this distribution or from the terms of the fund's managed distribution plan.
The fund estimates that it has distributed more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the fund is paid back to you. A return of capital distribution does not necessarily reflect the fund's investment performance and should not be confused with "yield" or "income."
The amounts and sources of distributions reported in this notice are only estimates and are not being provided for tax- reporting purposes. The actual amounts and sources of the amounts for tax-reporting purposes will depend upon the fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
If you have any questions regarding this information, please call our fund service department at 1-800-637-2304 any business day from 9 a.m. to 5 p.m. Eastern time.
MFVSN-0723
MFS® Special Value Trust
P.O. Box 43078
Providence, RI 02940-3078
Notice to shareholders — Source of distribution
Distribution period |
June-2023 |
Distribution amount per share |
$0.03645 |
The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year to date from the following sources: net investment income, net realized short-term capital gains, net realized long-term capital gains and return of capital or other capital source. The fund's fiscal year begins each November 1st. All amounts are expressed per common share.
|
Current |
% Breakdown of |
Total cumulative |
% Breakdown of the total |
|
distributions for the |
cumulative distributions |
|
distribution |
current distribution |
fiscal year to date |
for the fiscal year to date |
Net Investment Income |
$0.01349 |
37% |
$0.09826 |
33% |
Net Realized ST Cap Gains |
0.00000 |
0% |
0.00298 |
1% |
Net Realized LT Cap Gains |
0.00000 |
0% |
0.05657 |
19% |
Return of Capital or |
0.02296 |
63% |
0.13994 |
47% |
Other Capital Source |
Total (per common share) |
$0.03645 |
100% |
$0.29775 |
100% |
Average annual total return (in relation to NAV) for the five years ended 5-31-2023 |
4.48% |
Annualized current distribution rate expressed as a percentage of month end NAV as of 5-31-2023 |
10.15% |
Cumulative total return (in relation to NAV) for the fiscal year through 5-31-2023 |
3.07% |
Cumulative fiscal year distributions as a percentage of NAV as of 5-31-2023 |
6.91% |
You should not draw any conclusions about the fund's investment performance from the amount of this distribution or from the terms of the fund's managed distribution plan.
The fund estimates that it has distributed more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the fund is paid back to you. A return of capital distribution does not necessarily reflect the fund's investment performance and should not be confused with "yield" or "income."
The amounts and sources of distributions reported in this notice are only estimates and are not being provided for tax- reporting purposes. The actual amounts and sources of the amounts for tax-reporting purposes will depend upon the fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
If you have any questions regarding this information, please call our fund service department at 1-800-637-2304 any business day from 9 a.m. to 5 p.m. Eastern time.
MFVSN-0623
MFS® Special Value Trust
P.O. Box 43078
Providence, RI 02940-3078
Notice to shareholders — Source of distribution
Distribution period |
May-2023 |
Distribution amount per share |
$0.03718 |
The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year to date from the following sources: net investment income, net realized short-term capital gains, net realized long-term capital gains and return of capital or other capital source. The fund's fiscal year begins each November 1st. All amounts are expressed per common share.
|
Current |
% Breakdown of |
Total cumulative |
% Breakdown of the total |
|
distributions for the |
cumulative distributions |
|
distribution |
current distribution |
fiscal year to date |
for the fiscal year to date |
Net Investment Income |
$0.00744 |
20% |
$0.08362 |
32% |
Net Realized ST Cap Gains |
0.00037 |
1% |
0.00261 |
1% |
Net Realized LT Cap Gains |
0.00000 |
0% |
0.05749 |
22% |
Return of Capital or |
0.02937 |
79% |
0.11758 |
45% |
Other Capital Source |
Total (per common share) |
$0.03718 |
100% |
$0.26130 |
100% |
Average annual total return (in relation to NAV) for the five years ended 4-30-2023 |
5.00% |
Annualized current distribution rate expressed as a percentage of month end NAV as of 4-30-2023 |
10.00% |
Cumulative total return (in relation to NAV) for the fiscal year through 4-30-2023 |
5.71% |
Cumulative fiscal year distributions as a percentage of NAV as of 4-30-2023 |
5.86% |
You should not draw any conclusions about the fund's investment performance from the amount of this distribution or from the terms of the fund's managed distribution plan.
The fund estimates that it has distributed more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the fund is paid back to you. A return of capital distribution does not necessarily reflect the fund's investment performance and should not be confused with "yield" or "income."
The amounts and sources of distributions reported in this notice are only estimates and are not being provided for tax- reporting purposes. The actual amounts and sources of the amounts for tax-reporting purposes will depend upon the fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
If you have any questions regarding this information, please call our fund service department at 1-800-637-2304 any business day from 9 a.m. to 5 p.m. Eastern time.
MFVSN-0523
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