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 811-5912
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MFS SPECIAL VALUE TRUST
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(Exact name of registrant as specified in charter)
500 Boylston Street, Boston, Massachusetts 02116
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(Address of principal executive offices) (Zip code)
Susan S. Newton
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
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(Name and address of agents for service)
Registrant's telephone number, including area code: (617) 954-5000
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Date of fiscal year end: October 31
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Date of reporting period: April 30, 2005
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ITEM 1. REPORT TO STOCKHOLDERS.
MFS(R) SPECIAL VALUE TRUST 4/30/05
SEMIANNUAL REPORT
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M F S(SM)
INVESTMENT MANAGEMENT(R)
SEMIANNUAL REPORT
LETTER FROM THE CEO 1
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PORTFOLIO COMPOSITION 2
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MANAGEMENT REVIEW 3
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PERFORMANCE SUMMARY 6
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DIVIDEND REINVESTMENT AND
CASH PURCHASE PLAN 9
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PORTFOLIO OF INVESTMENTS 10
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FINANCIAL STATEMENTS 23
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NOTES TO FINANCIAL STATEMENTS 29
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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM 40
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RESULTS OF SHAREHOLDER MEETING 41
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PROXY VOTING POLICIES AND INFORMATION 42
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QUARTERLY PORTFOLIO DISCLOSURE 42
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CONTACT INFORMATION BACK COVER
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LETTER FROM THE CEO
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Dear Shareholders,
[Photo of Robert J. Manning]
As a professional investor for more than 20 years, I've often been asked to
name the single most important factor in investment success. My answer is
always the same: diversification. At MFS we talk about applying a disciplined
diversification(SM) strategy to a portfolio as a three step process: allocate
among the major asset classes; diversify within each asset class; and
rebalance regularly to avoid unnecessary risk.
Individual investors sometimes assume that the amount they're putting away is
too small to allow for diversification. My response would be that a good
investment plan, developed with the help of an investment professional, should
provide a way to properly diversify your contributions.
Remember that the purpose of diversification is to own investments that
historically have not moved in sync with each other - in the hope that, in any
given period, underperforming holdings will be somewhat counteracted by other
outperforming holdings. If none of your asset classes did badly in the past
year or so, you're probably not properly diversified.
Americans today have more of their wealth tied up in the markets than in any
previous period of our history, but we are not yet making the most of our
opportunities. While neither asset allocation nor diversification can
guarantee a profit or protect against a loss, I would voice the opinion that,
to a large extent, a failure to have a plan, diversify contributions, and
rebalance a portfolio annually has been behind many U.S. investors' failure to
reach their long-term financial goals.
For more information on how to apply a disciplined diversification(SM)
strategy to your portfolio, I would urge you to contact your own investment
professional. You may also want to refer to information on the subject on our
Website, MFS.COM.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
June 15, 2005
The opinions expressed in this letter are those of MFS, and no forecasts can
be guaranteed.
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PORTFOLIO COMPOSITION
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PORTFOLIO STRUCTURE*
Bonds 68.2%
Stocks 26.4%
Preferred Stock 3.9%
Cash & Other Net Assets 1.4%
Convertible Preferred Stock 0.1%
MARKET SECTORS*
High Yield Corporates 58.7%
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Domestic Equities 27.7%
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Emerging Market Bonds 5.4%
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International Equities 2.6%
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Commercial Mortgage-Backed
Securities 2.2%
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High Grade Corporates 1.9%
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Cash & Other Net Assets 1.4%
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Domestic Convertibles 0.1%
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CREDIT QUALITY OF BONDS**
AAA 0.3%
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A 0.3%
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BBB 2.3%
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BB 10.6%
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B 41.6%
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CCC 34.0%
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CC 4.2%
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D 1.2%
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Not Rated 5.5%
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PORTFOLIO FACTS
Average Duration 4.6
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Average Life 8.4 yrs.
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Average Maturity*** 9.0 yrs.
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Average Credit Quality**** B-
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Average Short Term Credit Quality A-1
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* For purposes of this graphical presentation, the bond component includes
both accrued interest amounts and the equivalent exposure from any
derivative holdings, if applicable.
** Each security is assigned a rating from Moody's Investors Service. If not
rated by Moody's, the rating will be that assigned by Standard & Poor's.
Likewise, if not assigned a rating by Standard & Poor's, it will be based
on the rating assigned by Fitch, Inc. For those portfolios that hold a
security which is not rated by any of the three agencies, the security is
considered Not Rated. Holdings in U.S. Treasuries and government agency
mortgage-backed securities, if any, are included in a "AAA"-rating
category. Percentages are based on the total market value of investments
as of 4/30/05.
*** The average maturity shown is calculated using the final stated maturity
on the portfolio's holdings without taking into account any holdings
which have been pre-refunded to an earlier date or which have a mandatory
put date prior to the stated maturity. The average life shown takes into
account these earlier dates.
**** The Portfolio Average Credit Quality rating is based upon a market
weighted average of portfolio holdings.
Percentages are based on net assets as of 4/30/05, unless otherwise noted.
The portfolio is actively managed, and current holdings may be different.
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MANAGEMENT REVIEW
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SUMMARY OF RESULTS
For the six months ended April 30, 2005, the MFS Special Value Trust provided
a total return of 1.09%, at net asset value. In comparison, the trust's equity
benchmark, the Russell 1000 Value Index (the Russell Index), returned 6.72%
and its fixed income benchmark, the Lehman Brothers High Yield Index (the
Lehman Index), returned 0.08%. The trust's investment objective is to maintain
an annual distribution rate of 10% based on its average daily net asset value
(NAV), while seeking opportunities for capital appreciation. The trust may
invest its assets in securities issued or guaranteed by the U.S. government,
its agencies, authorities and instrumentalities. As opportunities arise in the
marketplace, the trust may invest its assets in securities that the trust
believes represent uncommon value by having the potential for significant
capital appreciation over a period of twelve months or longer.
MARKET ENVIRONMENT
Stocks experienced considerable volatility during the six months ended
April 30, 2005. Investors endured another rise in oil prices, a volatile U.S.
dollar, record U.S. budget and trade deficits, and war in Iraq. Fundamental
economic factors, however, such as corporate spending and earnings, continued
to improve around the globe. Over the course of the period, investors seemed
to conclude that the global economic recovery, although modest, was still
intact. However, in March and April, high oil prices and concerns about the
credit quality of some major U.S. corporations chipped away at investor
confidence. As a result, major U.S. stock indices finished the period lower.
The U.S. fixed-income market experienced a flattening of the yield curve
during the six-month period. (A yield curve for bonds shows the relationship
between yield and time to maturity; in a majority of market environments,
longer-maturity bonds offer higher yields.) The U.S. Federal Reserve Board
raised its target federal funds rate four times, continuing its steady
drumbeat of quarter-point rate hikes that had begun on June 30, 2004. But
while the Fed seemed committed to a course of gradually raising short-term
rates, several factors caused long-term rates to stagnate or retreat.
Job growth, which had shot up in the spring of 2004, ebbed and flowed during
the period; uncertainty about the employment situation helped to push down
yields on longer-dated bonds. Another factor that held long-term rates down
was overseas demand for U.S. Treasuries, especially from foreign central
banks. However, moderate GDP growth and inflation concerns kept shorter-term
interest rates moving up. For the period as a whole, the net effect was a
substantial flattening of the yield curve as short-term rates rose
significantly while long-term rates were generally flat to down.
In addition, performance in the corporate bond market slowed dramatically in
the final months of the period as investors anticipated that General Motors,
one of the largest issuers of corporate high-grade bonds, would see its debt
downgraded to junk status.
DETRACTORS FROM PERFORMANCE
While the overall trust outperformed its fixed income benchmark, there were
some negative factors which hurt relative performance. The trust's credit
exposure to lower-rated "CCC" bonds also detracted, although this was
partially offset by a positive contribution from "BB"-rated bonds. Relative
detractors, at the security level, included Nortek Holdings, JSG Funding, and
Charter Communications.
In the equity portion of the portfolio, stock selection and an overweighted
position in the technology sector detracted from relative performance. Our
positioning in telecommunications equipment provider Nortel Networks, which is
not a constituent of the equity benchmark, the Russell 1000 Value Index, held
back relative results.
Stock selection in the utilities and communications sector also hurt relative
returns. Our holdings of poor-performing electric utility company Calpine,
which is not in the index, and not holding strong-performing Texas-based
utility company TXU detracted from relative results.
Our overweighted position in Southwest Airlines also dampened relative
performance during the period. Stocks in other sectors that detracted from
relative returns included our overweighted position in energy company BJ
Services, which underperformed the benchmark, and not holding strong-
performing Exxon Mobil, ConocoPhillips, Valero Energy, or tobacco company
Altria Group.
CONTRIBUTORS TO PERFORMANCE
For the fixed income portion of the portfolio, security selection was the
principal contributor to the portfolio's performance relative to the Lehman
Index. Consumer products company Revlon, chemical company Rhodia, Continental
Airlines, and mining company Doe Run Resources were among the trust's top
individual contributors. Relative to the fixed income benchmark, our exposure
to securities with higher yields also delivered strong results.
On the equity side, the sectors contributing most to returns relative to the
equity benchmark, the Russell Index, were basic materials, financial services,
and leisure. In basic materials, strong stock selection contributed to the
trust's relative performance. Glass and plastic container company Owen-
Illinois was the strongest contributor in the sector.
Our avoidance of the weak-performing financial services sector also boosted
relative performance. Not owning index constituents JPMorgan Chase and
American International Group, which both underperformed the broad benchmark,
aided relative results.
Stock selection in the leisure sector also boosted relative returns. Our
heavily weighted position in Comcast helped lift relative performance. Two
strong-performing energy stocks, GlobalSantaFe and Cooper Cameron, were also
among the top individual contributors for the period.
Stocks in other sectors that aided relative results included drug company
Wyeth and Tenet Healthcare, owner and operator of hospitals and related health
care services. Not holding telecom services provider Verizon Communications or
IBM also contributed to the Trust's relative performance.
Respectfully,
/s/ John F. Addeo /s/ Scott B. Richards
John F. Addeo Scott B. Richards
Portfolio Manager Portfolio Manager
The views expressed in this report are those of the portfolio managers 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 and
other conditions, and MFS disclaims any responsibility to update such views.
These views may not be relied upon as investment advice or as an indication of
trading intent on behalf of any MFS fund. References to specific securities are
not recommendations of such securities and may not be representative of any MFS
fund's current or future investments.
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PERFORMANCE SUMMARY THROUGH 4/30/05
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All results are historical. Investment return and principal value will
fluctuate, and shares, when sold, may be worth more or less than their
original cost. More recent returns may be more or less than those shown. Past
performance is no guarantee of future results.
PRICE SUMMARY
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Six months ended 4/30/05
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Date Price
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Net asset value 10/31/04 $10.12
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4/30/05 $9.76
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New York Stock Exchange price 10/31/04 $11.60
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2/03/05 (high)* $12.20
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4/20/05 (low)* $10.42
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4/30/05 $10.91
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* For the period November 1, 2004 through April 30, 2005.
TOTAL RETURN VS BENCHMARKS
--------------------------
Six months ended 4/30/05
--------------------------
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New York Stock Exchange price** -1.42%
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Net asset value** 1.09%
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Lehman Brothers High Yield Index# 0.08%
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Russell 1000 Value Index# 6.72%
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** Includes reinvestment of dividends and capital gains distributions.
# Source: Standard & Poor's Micropal, Inc.
INDEX DEFINITIONS
Lehman Brothers High Yield Index - measures the universe of non-investment
grade, fixed rate debt. Eurobonds and debt issues from countries designated as
emerging markets (e.g., Argentina, Brazil, Venezuela, etc.) are excluded.
Russell 1000 Value Index - is 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.
NOTES TO PERFORMANCE SUMMARY
The trust's shares may trade at a discount to net asset value. Shareholders do
not have the right to cause the trust to repurchase their shares at net asset
value. The trust's shares also may trade at a premium to their net asset value.
When trust shares trade at a premium, buyers pay more than the asset value
underlying trust shares, and shares purchased at a premium would receive less
than the amount paid for them in the event of the trust's liquidation. As a
result, the total return that is calculated based on the net asset value and
New York Stock Exchange price can be different.
The trust's monthly distributions may include a return of capital to
shareholders. Distributions that are treated for federal income tax purposes as
a return of capital will reduce each shareholder's basis in his or her shares
and, to the extent the return of capital exceeds such basis, will be treated as
gain to the shareholder from a sale of shares. Returns of shareholder capital
have the effect of reducing the trust's assets and increasing the trust's
expense ratio.
The trust's target annual distribution rate is calculated based on the trust's
average daily net asset value, not a fixed share price, and the trust's
dividend amount will fluctuate with changes in the trust's average daily net
asset value.
From time to time the trust may receive proceeds from litigation settlements,
without which performance would be lower.
KEY RISK CONSIDERATIONS
The portfolio may invest in derivative securities, which may include futures,
options and swaps. These types of instruments can increase price fluctuation.
The portfolio invests in government guaranteed securities. These guarantees
apply to the underlying securities only and not to the prices and yields of
the portfolio.
The portfolio invests in high yield or lower-rated securities, which may
provide greater returns but are subject to greater-than-average risk.
Because the portfolio invests in a limited number of companies a change in one
security's value may have a more significant effect on the portfolio's value.
The trust limits investment in securities of foreign issuers which are not
traded on a U.S. exchange (excluding American Depository Receipts) to 10% of its
total assets. For purposes of determining this investment limitation, foreign
securities traded in U.S. markets which are well established and liquid (such as
Rule 144A and Yankee Bond markets) are considered as being equivalent to U.S.
exchange-traded securities, and therefore are not subject to this 10%
limitation.
These risks may increase share price volatility.
In accordance with Section 23(c) of the Investment Company Act of 1940, the
trust hereby gives notice that it may from time to time repurchase shares of
the trust in the open market at the option of the Board of Trustees and on
such terms as the Trustees shall determine.
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DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
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The trust offers a Dividend Reinvestment and Cash Purchase Plan that allows you
to reinvest either all of the distributions paid by the trust or only the
long-term capital gains. 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, purchases will be made at a discounted price of
either the net asset value or 95% of the market price, whichever is greater.
Twice each year you can also buy shares. Investments may be made in any amount
over $100 in January and July on the 15th of the month or shortly thereafter.
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 trust. 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 commissions. 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.
To enroll in or withdraw from the plan, or if you have any questions, call
1-800-637-2304 any business day from 8 a.m. to 8 p.m. Eastern time. Please have
available the name of the trust and your account and Social Security numbers.
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 two ways: a check for the value of the full and fractional shares, or a
certificate for the full shares and a check for the fractional shares.
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PORTFOLIO OF INVESTMENTS (unaudited) - 4/30/05
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The Portfolio of Investments is a complete list of all securities owned by your trust.
It is categorized by broad-based asset classes.
Bonds - 66.8%
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ISSUER PAR AMOUNT $ VALUE
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Advertising & Broadcasting - 4.3%
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Allbritton Communications Co., 7.75%, 2012 $ 350,000 $ 333,375
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Granite Broadcasting Corp., 9.75%, 2010 655,000 597,687
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Intelsat Ltd., 6.5%, 2013 55,000 43,588
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Intelsat Ltd., 8.625%, 2015## 135,000 137,025
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Intelsat Ltd., 0% to 2010, 9.25% to 2015## 105,000 63,525
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LBI Media Holdings, Inc., 0% to 2008, 11% to 2013 875,000 637,656
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Panamsat Holding Corp., 0% to 2009, 10.375% to 2014## 515,000 329,600
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Worldspan LP, 9.0244%, 2011## 330,000 280,500
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XM Satellite Radio Holdings Inc., 0% to 2005, 14% to 2009 212,267 215,451
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XM Satellite Radio, Inc., 12%, 2010 174,000 198,360
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$ 2,836,767
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Aerospace - 0.3%
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BE Aerospace, Inc., 8.875%, 2011 $ 175,000 $ 176,312
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Airlines - 1.4%
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Continental Airlines, Inc., 7.568%, 2006 $ 500,000 $ 406,861
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Continental Airlines, Inc., 6.795%, 2018 335,354 275,026
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Continental Airlines, Inc., 8.307%, 2018 224,139 179,946
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Continental Airlines, Inc., 7.566%, 2020 56,849 46,219
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$ 908,052
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Apparel Manufacturers - 1.2%
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Levi Strauss & Co., 9.75%, 2015## $ 440,000 $ 420,200
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Propex Fabrics, Inc., 10%, 2012 395,000 375,250
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$ 795,450
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Asset Backed & Securitized - 3.3%
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Anthracite CDO Ltd., 6%, 2037## $ 450,000 $ 403,515
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Asset Securitization Corp., 8.7805%, 2029## 700,000 613,895
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Falcon Franchise Loan LLC, FRN, 3.81%, 2025^^ 670,038 116,955
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GMAC Commercial Mortgage Securities, Inc., 6.02%, 2033 250,000 237,625
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Morgan Stanley Capital I, Inc., 1.6%, 2039##^^ 697,506 59,288
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Preferred Term Securities XII Ltd., 9.8%, 2033##+ 225,000 232,875
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Preferred Term Securities XVI Ltd., 13.75%, 2035##+ 300,000 317,100
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Preferred Term Securities XVII Ltd., 9.3%, 2035##+ 187,000 189,805
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$ 2,171,058
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Automotive - 2.1%
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Advanced Accessory Systems LLC, 10.75%, 2011 $ 60,000 $ 42,600
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Affinia Group, Inc., 9%, 2014## 130,000 115,700
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Ford Motor Credit Co., 5.625%, 2008 90,000 84,888
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General Motors Acceptance Corp., 6.75%, 2014 105,000 87,963
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General Motors Corp., 8.375%, 2033 440,000 334,919
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INTERMET Corp., 9.75%, 2009* 255,000 127,500
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Metaldyne Corp., 11%, 2012 435,000 330,600
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TRW Automotive, Inc., 11%, 2013 13,000 13,975
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TRW Automotive, Inc., 11.75%, 2013 EUR 163,000 239,085
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$ 1,377,230
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Banks & Credit Companies - 0.4%
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ATF Bank Kazakstan, 9.25%, 2012## $ 279,000 $ 276,269
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Basic Industry - 0.3%
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Thermadyne Holdings Corp., 9.25%, 2014 $ 110,000 $ 101,750
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Trimas Corp., 9.875%, 2012 80,000 78,800
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$ 180,550
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Broadcast & Cable TV - 5.8%
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CSC Holdings, Inc., 8.125%, 2009 $ 155,000 $ 158,875
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CSC Holdings, Inc., 6.75%, 2012## 110,000 106,425
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Cablevision Systems Corp., 8%, 2012## 180,000 179,550
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Charter Communications, Inc., 8.625%, 2009 575,000 415,437
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Charter Communications, Inc., 9.92%, 2011 1,150,000 810,750
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FrontierVision Holdings LP, 11.875%, 2007* 300,000 405,000
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Frontiervision Operating Partners LP, 11%, 2006* 115,000 151,800
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Grande Communications, 14%, 2011 305,000 305,000
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Kabel Deutschland, 10.625%, 2014## 230,000 242,650
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Mediacom Broadband LLC, 9.5%, 2013 285,000 272,888
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Mediacom Broadband LLC, 11%, 2013 150,000 157,500
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Telenet Group Holdings N.V., 0% to 2008, 11.5% to 2014## 780,000 593,775
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$ 3,799,650
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Building - 1.6%
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Building Materials Corp. of America, 7.75%, 2014 $ 180,000 $ 174,375
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Goodman Global Holdings, Inc., 7.875%, 2012## 155,000 136,400
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Interface, Inc., 10.375%, 2010 180,000 192,600
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Interface, Inc., 9.5%, 2014 150,000 150,000
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Nortek Holdings, Inc., 8.5%, 2014 65,000 57,525
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Nortek Holdings, Inc., 0% to 2009, 10.75% to 2014## 632,000 316,000
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$ 1,026,900
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Business Services - 0.6%
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Lucent Technologies, Inc., 6.45%, 2029 $ 100,000 $ 84,375
-------------------------------------------------------------------------------------
Northern Telecom Corp., 6.875%, 2023 75,000 68,625
-------------------------------------------------------------------------------------
Northern Telecom Corp., 7.875%, 2026 45,000 44,775
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Telcordia Technologies, Inc., 10%, 2013## 210,000 202,650
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$ 400,425
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Chemicals - 4.4%
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ARCO Chemical Co., 9.8%, 2020 $ 80,000 $ 88,400
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Crystal U.S. Holdings LLC, 0% to 2009, 10.5% to 2014## 390,000 253,500
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Crystal U.S. Holdings LLC, 0% to 2010, 10% to 2014## 36,000 24,120
-------------------------------------------------------------------------------------
Equistar Chemicals LP, 10.625%, 2011 210,000 234,150
-------------------------------------------------------------------------------------
Huntsman International LLC, 10.125%, 2009 1,000 1,038
-------------------------------------------------------------------------------------
Huntsman International LLC, 7.375%, 2015## 55,000 54,863
-------------------------------------------------------------------------------------
IMC Global, Inc., 10.875%, 2013 70,000 82,600
-------------------------------------------------------------------------------------
KI Holdings, Inc., 0% to 2009, 9.875% to 2014## 547,000 322,730
-------------------------------------------------------------------------------------
Lyondell Chemical Co., 11.125%, 2012 340,000 388,450
-------------------------------------------------------------------------------------
Nalco Finance Holdings LLC, 0% to 2009, 9% to 2014 259,000 190,365
-------------------------------------------------------------------------------------
Polypore, Inc., 8.75%, 2012 195,000 164,775
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Resolution Performance Products LLC, 13.5%, 2010 340,000 368,050
-------------------------------------------------------------------------------------
Rhodia S.A., 8.875%, 2011 460,000 430,100
-------------------------------------------------------------------------------------
Rockwood Specialties Group, Inc., 10.625%, 2011 300,000 328,875
-------------------------------------------------------------------------------------
$ 2,932,016
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Conglomerates - 0.3%
-------------------------------------------------------------------------------------
Invensys PLC, 9.875%, 2011## $ 200,000 $ 198,000
-------------------------------------------------------------------------------------
Consumer Goods & Services - 2.6%
-------------------------------------------------------------------------------------
Church & Dwight Co., Inc., 6%, 2012## $ 75,000 $ 72,750
-------------------------------------------------------------------------------------
Integrated Electrical Services, Inc., 9.375%, 2009 245,000 194,775
-------------------------------------------------------------------------------------
K2, Inc., 7.375%, 2014 20,000 20,350
-------------------------------------------------------------------------------------
Leiner Health Products, Inc., 11%, 2012 75,000 79,125
-------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.5%, 2011## 600,000 577,500
-------------------------------------------------------------------------------------
Safilo Capital International S.A., 9.625%, 2013## EUR 525,000 675,491
-------------------------------------------------------------------------------------
Werner Holding Co., Inc., 10%, 2007 $ 125,000 86,875
-------------------------------------------------------------------------------------
$ 1,706,866
-------------------------------------------------------------------------------------
Containers - 1.2%
-------------------------------------------------------------------------------------
Crown European Holdings S.A., 10.875%, 2013 $ 190,000 $ 217,075
-------------------------------------------------------------------------------------
Owens-Illinois, Inc., 7.8%, 2018 90,000 89,775
-------------------------------------------------------------------------------------
Pliant Corp., 13%, 2010 510,000 382,500
-------------------------------------------------------------------------------------
Portola Packaging, Inc., 8.25%, 2012 130,000 86,450
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$ 775,800
-------------------------------------------------------------------------------------
Defense Electronics - 0.2%
-------------------------------------------------------------------------------------
L-3 Communications Holdings, Inc., 6.125%, 2014 $ 130,000 $ 127,725
-------------------------------------------------------------------------------------
Electronics - 0%
-------------------------------------------------------------------------------------
Magnachip Semiconductor S.A., 8%, 2014## $ 20,000 $ 17,300
-------------------------------------------------------------------------------------
Emerging Market Quasi-Sovereign - 0.5%
-------------------------------------------------------------------------------------
Gazprom OAO, 9.625%, 2013## $ 150,000 $ 175,875
-------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 8.625%, 2022 143,000 165,523
-------------------------------------------------------------------------------------
$ 341,398
-------------------------------------------------------------------------------------
Emerging Market Sovereign - 2.6%
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Federal Republic of Brazil, 8%, 2014 $ 161,490 $ 160,985
-------------------------------------------------------------------------------------
Federal Republic of Brazil, 8.875%, 2019 966,000 956,340
-------------------------------------------------------------------------------------
Federal Republic of Brazil, 4.25%, 2024 54,000 49,140
-------------------------------------------------------------------------------------
Republic of Argentina, 10%, 2007* EUR 430,000 163,212
-------------------------------------------------------------------------------------
Republic of Argentina, 8%, 2008* EUR 207,000 78,569
-------------------------------------------------------------------------------------
Republic of Panama, 9.375%, 2023 $ 43,000 50,525
-------------------------------------------------------------------------------------
Republic of Panama, 9.375%, 2029 185,000 218,300
-------------------------------------------------------------------------------------
Republic of Panama, 8.875%, 2027 43,000 48,160
-------------------------------------------------------------------------------------
$ 1,725,231
-------------------------------------------------------------------------------------
Energy - Independent - 0.7%
-------------------------------------------------------------------------------------
Belden & Blake Corp., 8.75%, 2012 $ 280,000 $ 253,400
-------------------------------------------------------------------------------------
Chesapeake Energy Corp., 7%, 2014 52,000 53,300
-------------------------------------------------------------------------------------
Chesapeake Energy Corp., 6.875%, 2016 130,000 129,350
-------------------------------------------------------------------------------------
$ 436,050
-------------------------------------------------------------------------------------
Energy - Integrated - 0.3%
-------------------------------------------------------------------------------------
Siberian Oil Co., 10.75%, 2009 $ 130,000 $ 144,586
-------------------------------------------------------------------------------------
Tyumen Oil Co., 11%, 2007 79,000 87,591
-------------------------------------------------------------------------------------
$ 232,177
-------------------------------------------------------------------------------------
Entertainment - 1.7%
-------------------------------------------------------------------------------------
AMF Bowling Worldwide, Inc., 10%, 2010 $ 45,000 $ 45,000
-------------------------------------------------------------------------------------
Loews Cineplex Entertainment Corp., 9%, 2014## 130,000 124,800
-------------------------------------------------------------------------------------
Marquee Holdings, Inc., 0% to 2009, 12% to 2014## 415,000 267,675
-------------------------------------------------------------------------------------
Six Flags, Inc., 9.75%, 2013 485,000 424,375
-------------------------------------------------------------------------------------
Universal City Florida Holding Co., 8.375%, 2010## 240,000 243,600
-------------------------------------------------------------------------------------
$ 1,105,450
-------------------------------------------------------------------------------------
Food & Non-Alcoholic Beverages - 0.9%
-------------------------------------------------------------------------------------
Burns, Philp & Co. Ltd., 9.75%, 2012 $ 245,000 $ 267,050
-------------------------------------------------------------------------------------
Chaoda Modern Agriculture Holdings, 7.75%, 2010## 359,000 330,280
-------------------------------------------------------------------------------------
$ 597,330
-------------------------------------------------------------------------------------
Forest & Paper Products - 2.8%
-------------------------------------------------------------------------------------
Corporacion Durango S.A. de C.V., 7.5%, 2012 $ 111,300 $ 93,492
-------------------------------------------------------------------------------------
Georgia-Pacific Corp., 7.75%, 2029 485,000 501,975
-------------------------------------------------------------------------------------
JSG Funding LLC, 11.5%, 2015(+)## EUR 451,722 501,670
-------------------------------------------------------------------------------------
NewPage Corp., 12%, 2013## $ 125,000 120,000
-------------------------------------------------------------------------------------
Newark Group, Inc., 9.75%, 2014 390,000 384,150
-------------------------------------------------------------------------------------
Norske Skog Canada Ltd., 7.375%, 2014 125,000 117,500
-------------------------------------------------------------------------------------
Sino-Forest Corp., 9.125%, 2011## 23,000 24,093
-------------------------------------------------------------------------------------
Stone Container Corp., 7.375%, 2014 90,000 82,800
-------------------------------------------------------------------------------------
$ 1,825,680
-------------------------------------------------------------------------------------
Gaming & Lodging - 1.4%
-------------------------------------------------------------------------------------
Herbst Gaming, Inc., 7%, 2014## $ 15,000 $ 14,700
-------------------------------------------------------------------------------------
NCL Corp., 10.625%, 2014## 360,000 369,000
-------------------------------------------------------------------------------------
Penn National Gaming, Inc., 6.75%, 2015## 95,000 90,963
-------------------------------------------------------------------------------------
Resorts International Hotel & Casino, Inc., 11.5%, 2009 400,000 455,000
-------------------------------------------------------------------------------------
Scientific Games Corp., 6.25%, 2012## 30,000 29,400
-------------------------------------------------------------------------------------
$ 959,063
-------------------------------------------------------------------------------------
Industrial - 1.8%
-------------------------------------------------------------------------------------
Amsted Industries, Inc., 10.25%, 2011## $ 195,000 $ 208,650
-------------------------------------------------------------------------------------
Da Lite Screen Co., Inc., 9.5%, 2011 125,000 136,562
-------------------------------------------------------------------------------------
JohnsonDiversey Holdings, Inc., 0% to 2007, 10.67% to 2013 335,000 264,650
-------------------------------------------------------------------------------------
Knowledge Learning Corp., 7.75%, 2015## 85,000 80,750
-------------------------------------------------------------------------------------
Milacron Escrow Corp., 11.5%, 2011 390,000 417,300
-------------------------------------------------------------------------------------
Williams Scotsman, Inc., 9.875%, 2007 110,000 108,075
-------------------------------------------------------------------------------------
$ 1,215,987
-------------------------------------------------------------------------------------
Machinery & Tools - 2.2%
-------------------------------------------------------------------------------------
Case New Holland, Inc., 9.25%, 2011## $ 205,000 $ 209,100
-------------------------------------------------------------------------------------
Columbus McKinnon Corp., 8.5%, 2008 225,000 225,000
-------------------------------------------------------------------------------------
Manitowoc Co., Inc., 10.375%, 2011 EUR 125,000 177,316
-------------------------------------------------------------------------------------
Sunstate Equipment Co. LLC, 10.5%, 2013## $ 190,000 191,425
-------------------------------------------------------------------------------------
United Rentals, Inc., 7.75%, 2013 700,000 656,250
-------------------------------------------------------------------------------------
$ 1,459,091
-------------------------------------------------------------------------------------
Medical & Health Technology & Services - 2.1%
-------------------------------------------------------------------------------------
CDRV Investors, Inc., 0% to 2010, 9.625% to 2015## $ 370,000 $ 192,400
-------------------------------------------------------------------------------------
DaVita, Inc., 6.625%, 2013## 80,000 79,200
-------------------------------------------------------------------------------------
DaVita, Inc., 7.25%, 2015## 95,000 92,387
-------------------------------------------------------------------------------------
Healthsouth Corp., 8.5%, 2008 150,000 150,000
-------------------------------------------------------------------------------------
InSight Health Services Corp., 9.875%, 2011 345,000 327,750
-------------------------------------------------------------------------------------
Select Medical Corp., 7.625%, 2015## 115,000 112,988
-------------------------------------------------------------------------------------
U.S. Oncology, Inc., 10.75%, 2014 275,000 295,625
-------------------------------------------------------------------------------------
Universal Hospital Services, Inc., 10.125%, 2011 140,000 141,750
-------------------------------------------------------------------------------------
$ 1,392,100
-------------------------------------------------------------------------------------
Medical Equipment - 0.5%
-------------------------------------------------------------------------------------
Warner Chilcott Corp., 8.75%, 2015## $ 375,000 $ 367,500
-------------------------------------------------------------------------------------
Metals & Mining - 0.9%
-------------------------------------------------------------------------------------
Doe Run Resources Corp., 11.75%, 2008(+) $ 541,714 $ 498,377
-------------------------------------------------------------------------------------
Foundation PA Coal Co., 7.25%, 2014 90,000 92,475
-------------------------------------------------------------------------------------
$ 590,852
-------------------------------------------------------------------------------------
Natural Gas - Pipeline - 1.3%
-------------------------------------------------------------------------------------
ANR Pipeline Co., 9.625%, 2021 $ 175,000 $ 216,186
-------------------------------------------------------------------------------------
Colorado Interstate Gas Co., 5.95%, 2015## 20,000 19,300
-------------------------------------------------------------------------------------
El Paso Energy Corp., 7%, 2011 300,000 283,500
-------------------------------------------------------------------------------------
El Paso Energy Corp., 7.75%, 2013 235,000 236,762
-------------------------------------------------------------------------------------
Markwest Energy Partners LP, 6.875%, 2014## 90,000 88,200
-------------------------------------------------------------------------------------
$ 843,948
-------------------------------------------------------------------------------------
Oil Services - 0.5%
-------------------------------------------------------------------------------------
Hanover Compressor Co., 9%, 2014 $ 125,000 $ 131,563
-------------------------------------------------------------------------------------
Ocean Rig Norway S.A., 10.25%, 2008 175,000 178,500
-------------------------------------------------------------------------------------
$ 310,063
-------------------------------------------------------------------------------------
Precious Metals & Minerals - 0.4%
-------------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc., 6.875%, 2014 $ 254,000 $ 238,760
-------------------------------------------------------------------------------------
Printing & Publishing - 2.1%
-------------------------------------------------------------------------------------
Dex Media, Inc., 0% to 2008, 9% to 2013 $ 975,000 $ 731,250
-------------------------------------------------------------------------------------
Hollinger, Inc., 12.875%, 2011## 50,000 54,250
-------------------------------------------------------------------------------------
Houghton Mifflin Co., 0% to 2008, 11.5% to 2013 385,000 256,025
-------------------------------------------------------------------------------------
Lighthouse International Co. S.A., 8%, 2014## EUR 160,000 203,805
-------------------------------------------------------------------------------------
WDAC Subsidiary Corp., 8.375%, 2014## $ 145,000 131,588
-------------------------------------------------------------------------------------
$ 1,376,918
-------------------------------------------------------------------------------------
Restaurants - 0.5%
-------------------------------------------------------------------------------------
Carrols Holdings Corp., 9%, 2013## $ 130,000 $ 133,250
-------------------------------------------------------------------------------------
Uno Restarant Corp., 10%, 2011## 195,000 193,050
-------------------------------------------------------------------------------------
$ 326,300
-------------------------------------------------------------------------------------
Retailers - 2.0%
-------------------------------------------------------------------------------------
Buhrmann U.S., Inc., 7.875%, 2015## $ 95,000 $ 92,625
-------------------------------------------------------------------------------------
Couche-Tard, Inc., 7.5%, 2013 170,000 174,250
-------------------------------------------------------------------------------------
Duane Reade, Inc., 9.75%, 2011 220,000 189,200
-------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 10.75%, 2015## 215,000 199,950
-------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375%, 2012 100,000 88,000
-------------------------------------------------------------------------------------
Mothers Work, Inc., 11.25%, 2010 145,000 145,000
-------------------------------------------------------------------------------------
Rite Aid Corp., 6.875%, 2013 270,000 232,875
-------------------------------------------------------------------------------------
Rite Aid Corp., 9.25%, 2013 130,000 120,900
-------------------------------------------------------------------------------------
Rite Aid Corp., 7.7%, 2027 95,000 73,150
-------------------------------------------------------------------------------------
$ 1,315,950
-------------------------------------------------------------------------------------
Steel - 0.1%
-------------------------------------------------------------------------------------
AK Steel Holding Corp., 7.75%, 2012 $ 90,000 $ 80,100
-------------------------------------------------------------------------------------
Northwestern Steel & Wire, 9.5%, 2001** 300,000 0
-------------------------------------------------------------------------------------
$ 80,100
-------------------------------------------------------------------------------------
Telecommunications - Wireless - 3.0%
-------------------------------------------------------------------------------------
Alamosa Holdings, Inc., 0% to 2005, 12% to 2009 $ 129,000 $ 140,610
-------------------------------------------------------------------------------------
Centennial Communications Corp., 10.125%, 2013 185,000 202,112
-------------------------------------------------------------------------------------
Dobson Cellular Systems, Inc., 9.875%, 2012## 35,000 35,350
-------------------------------------------------------------------------------------
Dobson Communications Corp., 8.875%, 2013 235,000 191,525
-------------------------------------------------------------------------------------
Dolphin Telecom PLC, 11.5%, 2008** 750,000 0
-------------------------------------------------------------------------------------
IWO Escrow Co., FRN, 6.8906%, 2012## 15,000 15,000
-------------------------------------------------------------------------------------
Inmarsat Finance II PLC, 0% to 2008, 10.375% to 2012 360,000 266,400
-------------------------------------------------------------------------------------
MetroPCS, Inc., 10.75%, 2011 335,000 390,275
-------------------------------------------------------------------------------------
Rogers Wireless, Inc., 7.5%, 2015 65,000 66,706
-------------------------------------------------------------------------------------
Rural Cellular Corp., 9.75%, 2010 508,000 459,740
-------------------------------------------------------------------------------------
U.S. Unwired, Inc., 10%, 2012 100,000 109,750
-------------------------------------------------------------------------------------
Ubiquitel Operating Co., 9.875%, 2011 100,000 108,250
-------------------------------------------------------------------------------------
$ 1,985,718
-------------------------------------------------------------------------------------
Telecommunications - Wireline - 4.6%
-------------------------------------------------------------------------------------
Axtel S.A. de C.V., 11%, 2013 $ 565,000 $ 584,775
-------------------------------------------------------------------------------------
Cincinnati Bell, Inc., 8.375%, 2014 130,000 123,825
-------------------------------------------------------------------------------------
Cincinnati Bell, Inc., 8.375%, 2014## 25,000 23,812
-------------------------------------------------------------------------------------
Citizens Communications Co., 9.25%, 2011 170,000 184,025
-------------------------------------------------------------------------------------
Citizens Communications Co., 6.25%, 2013 65,000 60,612
-------------------------------------------------------------------------------------
Global Crossing Ltd., 10.75%, 2014## 80,000 72,800
-------------------------------------------------------------------------------------
Hawaiian Telecom Communications, Inc., 9.75%, 2013## 80,000 79,500
-------------------------------------------------------------------------------------
Hawaiian Telecom Communications, Inc., 12.5%, 2015## 190,000 188,100
-------------------------------------------------------------------------------------
MCI, Inc., 6.908%, 2007 100,000 101,500
-------------------------------------------------------------------------------------
MCI, Inc., 7.688%, 2009 110,000 113,575
-------------------------------------------------------------------------------------
Qwest Capital Funding, Inc., 7.25%, 2011 175,000 156,625
-------------------------------------------------------------------------------------
Qwest Corp., 7.875%, 2011## 180,000 182,700
-------------------------------------------------------------------------------------
Qwest Corp., 8.875%, 2012## 175,000 185,500
-------------------------------------------------------------------------------------
Qwest Services Corp., 13.5%, 2010## 540,000 607,500
-------------------------------------------------------------------------------------
Time Warner Telecom Holdings, Inc., 10.125%, 2011 80,000 74,400
-------------------------------------------------------------------------------------
Time Warner Telecom Holdings, Inc., 9.25%, 2014 210,000 191,100
-------------------------------------------------------------------------------------
Time Warner Telecom Holdings, Inc., 9.25%, 2014## 125,000 113,750
-------------------------------------------------------------------------------------
$ 3,044,099
-------------------------------------------------------------------------------------
Tire & Rubber - 0.2%
-------------------------------------------------------------------------------------
Cooper-Standard Automotive, Inc., 8.375%, 2014## $ 180,000 $ 131,400
-------------------------------------------------------------------------------------
Transportation - Services - 0.4%
-------------------------------------------------------------------------------------
TFM S.A. de C.V., 9.375%, 2012## $ 241,000 $ 242,205
-------------------------------------------------------------------------------------
Utilities - Electric Power - 3.3%
-------------------------------------------------------------------------------------
Calpine Corp., 8.75%, 2013## $ 100,000 $ 69,000
-------------------------------------------------------------------------------------
Calpine Corp., 9.625%, 2014## 350,000 339,500
-------------------------------------------------------------------------------------
Dynegy Holdings, Inc., 6.875%, 2011 90,000 74,475
-------------------------------------------------------------------------------------
FirstEnergy Corp., 6.45%, 2011 199,000 213,725
-------------------------------------------------------------------------------------
Midwest Generation LLC, 8.75%, 2034 145,000 158,050
-------------------------------------------------------------------------------------
Mission Energy Holding Co., 13.5%, 2008 250,000 293,125
-------------------------------------------------------------------------------------
NGC Corp. Capital Trust, 8.316%, 2027 275,000 192,500
-------------------------------------------------------------------------------------
PSEG Power LLC, 7.75%, 2011 185,000 212,393
-------------------------------------------------------------------------------------
Reliant Energy, Inc., 6.75%, 2014 60,000 53,100
-------------------------------------------------------------------------------------
Reliant Resources, Inc., 9.25%, 2010 200,000 204,500
-------------------------------------------------------------------------------------
Sierra Pacific Resources, 8.625%, 2014 215,000 227,900
-------------------------------------------------------------------------------------
Texas Genco LLC, 6.875%, 2014## 120,000 117,600
-------------------------------------------------------------------------------------
$ 2,155,868
-------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $44,621,224) $44,005,608
-------------------------------------------------------------------------------------
Stocks - 26.4%
-------------------------------------------------------------------------------------
ISSUER SHARES $ VALUE
-------------------------------------------------------------------------------------
Airlines - 1.4%
-------------------------------------------------------------------------------------
Southwest Airlines Co.^ 60,500 $ 900,240
-------------------------------------------------------------------------------------
Automotive - 0.9%
-------------------------------------------------------------------------------------
Magna International, Inc., "A" 9,500 $ 580,735
-------------------------------------------------------------------------------------
Broadcast & Cable TV - 3.1%
-------------------------------------------------------------------------------------
Comcast Corp., "Special A"^* 43,100 $ 1,367,563
-------------------------------------------------------------------------------------
NTL, Inc.* 6,812 435,832
-------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., "A"^ 30,000 229,800
-------------------------------------------------------------------------------------
$ 2,033,195
-------------------------------------------------------------------------------------
Business Services - 0%
-------------------------------------------------------------------------------------
Anacomp, Inc.^* 30 $ 315
-------------------------------------------------------------------------------------
Containers - 3.6%
-------------------------------------------------------------------------------------
Owens-Illinois, Inc.* 97,000 $ 2,378,440
-------------------------------------------------------------------------------------
Energy - Independent - 0.3%
-------------------------------------------------------------------------------------
NRG Energy, Inc.* 6,073 $ 188,870
-------------------------------------------------------------------------------------
Engineering - Construction - 0.1%
-------------------------------------------------------------------------------------
Intergrated Electrical Services, Inc.^* 35,000 $ 52,500
-------------------------------------------------------------------------------------
Forest & Paper Products - 0%
-------------------------------------------------------------------------------------
Corporacion Durango S.A. de C.V.* 8,698 $ 5,482
-------------------------------------------------------------------------------------
Medical & Health Technology & Services - 2.0%
-------------------------------------------------------------------------------------
Tenet Healthcare Corp.^* 110,500 $ 1,322,685
-------------------------------------------------------------------------------------
Metals & Mining - 0%
-------------------------------------------------------------------------------------
International Utility Structures, Inc.* 254,700 $ 0
-------------------------------------------------------------------------------------
Natural Gas - Distribution - 0.6%
-------------------------------------------------------------------------------------
Ferrell Gas Partners LP 6,088 $ 128,761
-------------------------------------------------------------------------------------
Northwestern Corp.^ 10,109 283,355
-------------------------------------------------------------------------------------
$ 412,116
-------------------------------------------------------------------------------------
Oil Services - 5.3%
-------------------------------------------------------------------------------------
BJ Services Co.^ 14,500 $ 706,875
-------------------------------------------------------------------------------------
Cooper Cameron Corp.^* 16,530 908,158
-------------------------------------------------------------------------------------
GlobalSantaFe Corp.^ 36,830 1,237,488
-------------------------------------------------------------------------------------
Noble Corp.^ 13,390 681,551
-------------------------------------------------------------------------------------
$ 3,534,072
-------------------------------------------------------------------------------------
Pharmaceuticals - 1.9%
-------------------------------------------------------------------------------------
Merck & Co., Inc.^ 3,900 $ 132,210
-------------------------------------------------------------------------------------
Wyeth 24,600 1,105,524
-------------------------------------------------------------------------------------
$ 1,237,734
-------------------------------------------------------------------------------------
Printing & Publishing - 0%
-------------------------------------------------------------------------------------
Golden Books Family Entertainment, Inc.* 53,266 $ 0
-------------------------------------------------------------------------------------
Specialty Chemicals - 0%
-------------------------------------------------------------------------------------
Sterling Chemicals, Inc.* 55 $ 1,650
-------------------------------------------------------------------------------------
Telecommunications - Wireless - 0.1%
-------------------------------------------------------------------------------------
Vodafone Group PLC, ADR^ 2,682 $ 70,107
-------------------------------------------------------------------------------------
Telecommunications - Wireline - 4.1%
-------------------------------------------------------------------------------------
Nokia Corp., ADR^ 100,200 $ 1,601,196
-------------------------------------------------------------------------------------
Nortel Networks Corp.* 439,300 1,093,857
-------------------------------------------------------------------------------------
$ 2,695,053
-------------------------------------------------------------------------------------
Telephone Services - 2.1%
-------------------------------------------------------------------------------------
Sprint Corp. 62,300 $ 1,386,798
-------------------------------------------------------------------------------------
Telcove* 40,000 0
-------------------------------------------------------------------------------------
$ 1,386,798
-------------------------------------------------------------------------------------
Utilities - Electric Power - 0.9%
-------------------------------------------------------------------------------------
Calpine Corp.* 331,670 $ 593,689
-------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $18,884,342) $17,393,681
-------------------------------------------------------------------------------------
Convertible Preferred Stocks - 0.1%
-------------------------------------------------------------------------------------
Automotive - 0.1%
-------------------------------------------------------------------------------------
General Motors Corp., 5.25% 3,608 $ 59,785
-------------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Identified Cost,
$62,554) $ 59,785
-------------------------------------------------------------------------------------
Preferred Stocks - 3.9%
-------------------------------------------------------------------------------------
Broadcast & Cable TV - 3.7%
-------------------------------------------------------------------------------------
Paxson Communications Corp., 13.25%^* 214 $ 1,583,600
-------------------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc., "B", 10.75%#* 755 811,625
-------------------------------------------------------------------------------------
$ 2,395,225
-------------------------------------------------------------------------------------
Consumer Goods & Services - 0%
-------------------------------------------------------------------------------------
Renaissance Cosmetics, Inc., 14%, 2006* 1,266 $ 0
-------------------------------------------------------------------------------------
Printing & Publishing - 0.2%
-------------------------------------------------------------------------------------
PRIMEDIA, Inc., 8.625% 1,400 $ 135,800
-------------------------------------------------------------------------------------
Real Estate - 0%
-------------------------------------------------------------------------------------
HRPT Properties Trust, "B", 8.75%^ 200 $ 5,312
-------------------------------------------------------------------------------------
Telephone Services - 0%
-------------------------------------------------------------------------------------
PTV, Inc., "A", 10% 8 $ 24
-------------------------------------------------------------------------------------
Total Preferred Stocks (Identified Cost, $2,560,773) $ 2,536,361
-------------------------------------------------------------------------------------
Warrants - 0%
-------------------------------------------------------------------------------------
ISSUER STRIKE PRICE 1st EXERCISE SHARES $ VALUE
---------------------------------------------------------------------------------------------------------
Anacomp, Inc. (Business Services)* $61.54 12/10/01 5,841 $ 117
---------------------------------------------------------------------------------------------------------
Grande Communications Holdings (Broadcast &
Cable TV)* 0.01 10/01/04 305 30
---------------------------------------------------------------------------------------------------------
Metricom, Inc. (Telecommunications -
Wireline)* 87.00 8/15/00 775 0
---------------------------------------------------------------------------------------------------------
Ono Finance (Broadcast & Cable TV)* 0.00 5/31/09 1,000 0
---------------------------------------------------------------------------------------------------------
Renaissance Cosmetics, Inc. (Consumer Goods
& Services)* 0.01 8/08/96 1,024 0
---------------------------------------------------------------------------------------------------------
Sirius Satellite (Advertising &
Broadcasting)##* 24.92 5/15/09 2,700 0
---------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc. (Specialty
Chemicals)* 52.00 12/31/02 90 144
---------------------------------------------------------------------------------------------------------
Thermadyne Holdings Corp. (Machinery &
Tools)* 20.78 5/29/03 3,330 666
---------------------------------------------------------------------------------------------------------
Total Warrants (Identified Cost, $38,821) $ 957
---------------------------------------------------------------------------------------------------------
Short-Term Obligation - 2.9%
-------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
-------------------------------------------------------------------------------------
General Electric Capital Corp., 2.95%, due 5/02/05,
at Amortized Cost< $ 1,893,000 $ 1,892,845
-------------------------------------------------------------------------------------
Collateral for Securities Loaned - 11.2%
-------------------------------------------------------------------------------------
ISSUER SHARES $ VALUE
-------------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio, at Cost and
Net Asset Value 7,378,629 $ 7,378,629
-------------------------------------------------------------------------------------
Repurchase Agreement - 0%
-------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
-------------------------------------------------------------------------------------
Morgan Stanley, 2.95%, dated 4/30/05, due 5/02/05,
total to be received $1,001 (secured by various U.S.
Treasury and Federal Agency obligations in a jointly
traded account), at Cost $ 1,000 $ 1,000
-------------------------------------------------------------------------------------
Total Investments (Identified Cost, $75,440,188)(++) $73,268,866
-------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (11.3)% (7,424,334)
-------------------------------------------------------------------------------------
Net Assets - 100.0% $65,844,532
-------------------------------------------------------------------------------------
* Non-income producing security.
** Non-income producing security - in default.
^ All or a portion of this security is on loan.
^^ Interest only security for which the trust receives interest on notional principal
(Par amount). Par amount shown is the notional principal and does not reflect the cost
of the security.
(+) Payment-in-kind security.
## SEC Rule 144A restriction.
+ The rate shown represents a current effective yield.
< The rate shown represents an annualized yield at time of purchase.
(++) As of April 30, 2005, the trust held ten securities representing $0 and 0% of net
assets that were fair valued in accordance with the policies adopted by the Board of
Trustees.
All amounts are stated in U.S. dollars unless otherwise indicated.
Abbreviations have been used throughout this report to indicate amounts shown
in currencies other than the U.S. dollar. A list of abbreviations is shown
below:
EUR = Euro
SEK = Swedish Krona
Abbreviations:
ADR = American Depository Receipt
FRN = Floating Rate Note. The interest rate is the rate in effect as of period end.
SEE NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES (unaudited)
--------------------------------------------------------------------------------------------------
This statement represents your trust's balance sheet, which details the assets
and liabilities composing the total value of your trust.
AT 4/30/05
ASSETS
Investments, at value, including $7,198,371 of securities on
loan (identified cost, $75,440,188) $73,268,866
--------------------------------------------------------------------------------------------------
Cash 167
--------------------------------------------------------------------------------------------------
Receivable for forward foreign currency exchange contracts 2,982
--------------------------------------------------------------------------------------------------
Receivable for investments sold 22,601
--------------------------------------------------------------------------------------------------
Interest and dividends receivable 1,016,946
--------------------------------------------------------------------------------------------------
Other assets 584
--------------------------------------------------------------------------------------------------
Total assets $74,312,146
--------------------------------------------------------------------------------------------------
LIABILITIES
Payable to dividend disbursing agent $53,968
--------------------------------------------------------------------------------------------------
Payable for forward foreign currency exchange contracts 8,616
--------------------------------------------------------------------------------------------------
Payable for investments purchased 817,337
--------------------------------------------------------------------------------------------------
Collateral for securities loaned, at value 7,378,629
--------------------------------------------------------------------------------------------------
Payable to affiliates
--------------------------------------------------------------------------------------------------
Management fee 3,696
--------------------------------------------------------------------------------------------------
Transfer agent and dividend disbursing costs 7,140
--------------------------------------------------------------------------------------------------
Administrative fee 56
--------------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 198,172
--------------------------------------------------------------------------------------------------
Total liabilities $8,467,614
--------------------------------------------------------------------------------------------------
Net assets $65,844,532
--------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Paid-in capital $73,570,181
--------------------------------------------------------------------------------------------------
Unrealized depreciation on investments and translation of
assets and liabilities in foreign currencies (2,178,028)
--------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (3,752,946)
--------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income (1,794,675)
--------------------------------------------------------------------------------------------------
Net assets $65,844,532
--------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding
(7,002,434 issued, less 256,600 treasury shares) 6,745,834
--------------------------------------------------------------------------------------------------
Net asset value per share
(net assets of $65,844,532/6,745,834 shares of
beneficial interest outstanding) $9.76
--------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
---------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF OPERATIONS (unaudited)
---------------------------------------------------------------------------------------------------
This statement describes how much your trust received in investment income and
paid in expenses. It also describes any gains and/or losses generated by trust
operations.
SIX MONTHS ENDED 4/30/05
NET INVESTMENT INCOME
Income
---------------------------------------------------------------------------------------------------
Interest $2,217,759
---------------------------------------------------------------------------------------------------
Dividends 262,838
---------------------------------------------------------------------------------------------------
Foreign taxes withheld (7,422)
---------------------------------------------------------------------------------------------------
Total investment income $2,473,175
---------------------------------------------------------------------------------------------------
Expenses
---------------------------------------------------------------------------------------------------
Management fee $317,826
---------------------------------------------------------------------------------------------------
Trustees' compensation 5,602
---------------------------------------------------------------------------------------------------
Transfer agent and dividend disbursing costs 17,690
---------------------------------------------------------------------------------------------------
Administrative fee 3,122
---------------------------------------------------------------------------------------------------
Custodian fee 26,627
---------------------------------------------------------------------------------------------------
Printing 12,439
---------------------------------------------------------------------------------------------------
Postage 24,480
---------------------------------------------------------------------------------------------------
Auditing fees 35,087
---------------------------------------------------------------------------------------------------
Legal fees 1,367
---------------------------------------------------------------------------------------------------
Miscellaneous 51,838
---------------------------------------------------------------------------------------------------
Total expenses $496,078
---------------------------------------------------------------------------------------------------
Fees paid indirectly (15,832)
---------------------------------------------------------------------------------------------------
Reduction of expenses by investment adviser (212)
---------------------------------------------------------------------------------------------------
Net expenses $480,034
---------------------------------------------------------------------------------------------------
Net investment income $1,993,141
---------------------------------------------------------------------------------------------------
Statement of Operations (unaudited) - continued
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) (identified cost basis)
---------------------------------------------------------------------------------------------------
Investment transactions $1,166,727
---------------------------------------------------------------------------------------------------
Foreign currency transactions (216,177)
---------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions $950,550
---------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
---------------------------------------------------------------------------------------------------
Investments $(2,073,212)
---------------------------------------------------------------------------------------------------
Translation of assets and liabilities in foreign currencies 175,847
---------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments and foreign
currency translation $(1,897,365)
---------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and
foreign currency $(946,815)
---------------------------------------------------------------------------------------------------
Change in net assets from operations $1,046,326
---------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------------------------
This statement describes the increases and/or decreases in net assets
resulting from operations, any distributions, and any shareholder transactions.
SIX MONTHS ENDED YEAR ENDED
4/30/05 10/31/04
(UNAUDITED)
CHANGE IN NET ASSETS
FROM OPERATIONS
Net investment income $1,993,141 $3,937,607
--------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions 950,550 (874,157)
--------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments and foreign
currency translation (1,897,365) 5,782,913
-------------------------------------------------------- ------------- ------------
Change in net assets from operations $1,046,326 $8,846,363
-------------------------------------------------------- ------------- ------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income $(3,464,324) $(3,870,737)
--------------------------------------------------------------------------------------------------
From paid-in capital -- (2,877,470)
-------------------------------------------------------- ------------- ------------
Total distributions declared to shareholders $(3,464,324) $(6,748,207)
-------------------------------------------------------- ------------- ------------
Net change in net assets from trust share transactions $323,080 $645,801
-------------------------------------------------------- ------------- ------------
Total change in net assets $(2,094,918) $2,743,957
-------------------------------------------------------- ------------- ------------
NET ASSETS
At beginning of period $67,939,450 $65,195,493
--------------------------------------------------------------------------------------------------
At end of period (including accumulated distributions in
excess of net investment income of $1,794,675 and
$323,492, respectively) $65,844,532 $67,939,450
--------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the trust's financial performance for the semiannual period
and the past 5 fiscal years (or, if shorter, the period of the trust's operation). Certain information reflects financial
results for a single trust share. The total returns in the table represent the rate by which an investor would have earned (or
lost) on an investment in the trust (assuming reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 10/31
ENDED -------------------------------------------------------------------
4/30/05 2004 2003 2002 2001 2000
(UNAUDITED)
Net asset value, beginning of period 10.12 $9.80 $7.50 $8.63 $11.67 $14.34
------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS#(S)(S)
Net investment income $0.30 $0.59 $0.59 $0.71 $0.77 $1.01
------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments and
foreign currency (0.15) 0.74 2.56 (0.86) (2.16) (1.53)
----------------------------------------- ------ ------ ------ ----- ------ ------
Total from investment operations $0.15 $1.33 $3.15 $(0.15) $(1.39) $(0.52)
----------------------------------------- ------ ------ ------ ----- ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $(0.51) $(0.58) $(0.57) $(0.98) $(0.83) $(1.02)
------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments and foreign
currency transactions -- -- (0.28) -- -- (0.95)
------------------------------------------------------------------------------------------------------------------------------
From paid-in capital -- (0.43) -- -- (0.82) (0.18)
----------------------------------------- ------ ------ ------ ----- ------ ------
Total distributions declared
to shareholders $(0.51) $(1.01) $(0.85) $(0.98) $(1.65) $(2.15)
----------------------------------------- ------ ------ ------ ----- ------ ------
Net asset value, end of period $9.76 $10.12 $9.80 $7.50 $8.63 $11.67
----------------------------------------- ------ ------ ------ ----- ------ ------
Per share market value,
end of period $10.91 $11.60 $10.40 $7.25 $14.30 $13.75
----------------------------------------- ------ ------ ------ ----- ------ ------
Total return at market value (%)& (1.42)++ 22.56^^ 58.07 (43.54) 16.99 (4.33)
------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31
ENDED -----------------------------------------------------------------
4/30/05 2004 2003 2002 2001 2000
(UNAUDITED)
RATIOS (%) TO AVERAGE
NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 1.44+ 1.28 1.34 1.56 1.53 1.35
------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 5.81+ 5.82 6.75 8.39 7.49 7.46
------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 28 72 94 137 49 32
------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $65,845 $67,939 $65,195 $49,622 $56,598 $75,545
------------------------------------------------------------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the trust for its proportional share of
substantially all of Independent Chief Compliance Officer service fees paid to Tarantino LLC. If this fee had been incurred
by the trust, the net investment income per share and the ratios would have been:
Net investment income $0.30^ $0.59^ $-- $-- $-- $--
------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
Expenses## 1.44+^ 1.28^ -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
Net investment income 5.81+^ 5.82^ -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
& From time to time the trust may receive proceeds from litigation settlements, without which performance would be lower.
^ The reimbursement impact per share amount and ratios were less than $0.01 and 0.01%, respectively.
^^ The trust's net asset value and total return calculation include a non-recurring accrual recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales, as
described in the Legal Proceedings and Transactions with Affiliates footnote. The non-recurring accrual did not have a
material impact on the net asset value per share based on the shares outstanding on the day the proceeds were recorded.
(S)(S) As required, effective November 1, 2001, the trust adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and began amortizing premium and accreting discount on all debt securities. The effect of this change
for the year ended October 31, 2002 was to increase net investment income per share by $0.02, decrease net realized and
unrealized gains and losses per share by $0.02, and increase the ratio of net investment income to average net assets by
0.49%. Per share, ratios, and supplemental data for periods prior to November 1, 2001 have not been restated to reflect
this change in presentation.
SEE NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
-------------------------------------------------------------------------------
(1) BUSINESS AND ORGANIZATION
MFS Special Value Trust (the trust) is a non-diversified trust that is organized
as a Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as a closed-end management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The trust
can invest in foreign securities. Investments in foreign securities are
vulnerable to the effects of changes in the relative values of the local
currency and the U.S. dollar and to the effects of changes in each country's
legal, political, and economic environment.
INVESTMENT VALUATIONS - Bonds and other fixed income securities (other than
short-term obligations) in the trust's portfolio are valued at an evaluated bid
price as reported by an independent pricing service, or to the extent a
valuation is not reported by a pricing service, such securities are valued on
the basis of quotes from brokers and dealers. Prices obtained from pricing
services utilize both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data without exclusive reliance upon quoted prices or exchange or over-the-
counter prices, since such valuations are believed to reflect more accurately
the fair value of such securities. Equity securities in the trust's portfolio
for which market quotations are available are valued at the last sale or
official closing price as reported by an independent pricing service on the
primary market or exchange on which they are primarily traded, or at the last
quoted bid price for securities in which there were no sales during the day.
Equity securities traded over the counter are valued at the last sales price
traded each day as reported by an independent pricing service, or to the extent
there are no sales reported, such securities are valued on the basis of
quotations obtained from brokers and dealers. Forward foreign currency contracts
are valued using spot rates and forward points as reported by an independent
pricing source. Short-term obligations with a remaining maturity in excess of 60
days will be valued upon dealer-supplied valuations. All other short-term
obligations in the trust's portfolio are valued at amortized cost, which
approximates market value as determined by the Board of Trustees. Money market
mutual funds are valued at net asset value. Investment valuations, other assets,
and liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. When pricing
service information or market quotations are not readily available, securities
are priced at fair value as determined under the direction of the Board of
Trustees. For example, significant events (such as movement in the U.S.
securities market, or other regional and local developments) may occur between
the time that foreign markets close (where the security is principally traded)
and the time that the trust calculates its net asset value (generally, the close
of the NYSE) that may impact the value of securities traded in these foreign
markets. In these cases, the trust may utilize information from an external
vendor or other sources to adjust closing market quotations of foreign equity
securities to reflect what it believes to be the fair value of the securities as
of the trust's valuation time. Because the frequency of significant events is
not predictable, fair valuation of foreign equity securities may occur on a
frequent basis.
REPURCHASE AGREEMENTS - The trust may enter into repurchase agreements with
institutions that the trust's investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The trust requires
that the securities collateral in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the trust to obtain those securities
in the event of a default under the repurchase agreement. The trust monitors, on
a daily basis, the value of the collateral to ensure that its value, including
accrued interest, is greater than amounts owed to the trust under each such
repurchase agreement. The trust, along with other affiliated entities of
Massachusetts Financial Services Company (MFS), may utilize a joint trading
account for the purpose of entering into one or more repurchase agreements.
FOREIGN CURRENCY TRANSLATION - Purchases and sales of foreign investments,
income, and expenses are converted into U.S. dollars based upon currency
exchange rates prevailing on the respective dates of such transactions. Gains
and losses attributable to foreign currency exchange rates on sales of
securities are recorded for financial statement purposes as net realized gains
and losses on investments. Gains and losses attributable to foreign exchange
rate movements on income and expenses are recorded for financial statement
purposes as foreign currency transaction gains and losses. That portion of both
realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed.
DEFERRED TRUSTEE COMPENSATION - Under a Deferred Compensation Plan (the Plan)
independent Trustees may elect to defer receipt of all or a portion of their
annual compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the trust or other MFS funds selected by
the Trustee. Deferred amounts represent an unsecured obligation of the trust
until distributed in accordance with the Plan. Included in accrued expenses and
other liabilities, is $9,900 of Deferred Trustees' Compensation.
SECURITY LOANS - State Street Bank and Trust Company ("State Street"), as
lending agent, may loan the securities of the trust to certain qualified
institutions (the "Borrowers") approved by the trust. The loans are
collateralized at all times by cash and/or U.S. Treasury securities in an amount
at least equal to the market value of the securities loaned. State Street
provides the trust with indemnification against Borrower default. The trust
bears the risk of loss with respect to the investment of cash collateral. On
loans collateralized by cash, the cash collateral is invested in a money market
fund or short-term securities. A portion of the income generated upon investment
of the collateral is remitted to the Borrowers, and the remainder is allocated
between the trust and the lending agent. On loans collateralized by U.S.
Treasury securities, a fee is received from the Borrower, and is allocated
between the trust and the lending agent. Income from securities lending is
included in interest income on the Statement of Operations. The dividend and
interest income earned on the securities loaned is accounted for in the same
manner as other dividend and interest income.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS - The trust may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties to
meet the terms of their contracts and from unanticipated movements in the value
of a foreign currency relative to the U.S. dollar. The trust may enter into
forward foreign currency exchange contracts for hedging purposes as well as for
non-hedging purposes. For hedging purposes, the trust may enter into contracts
to deliver or receive foreign currency it will receive from or require for its
normal investment activities. The trust may also use contracts in a manner
intended to protect foreign currency-denominated securities from declines in
value due to unfavorable exchange rate movements. For non-hedging purposes, the
trust may enter into contracts with the intent of changing the relative exposure
of the trust's portfolio of securities to different currencies to take advantage
of anticipated changes. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains or
losses on foreign currency transactions.
INVESTMENT TRANSACTIONS AND INCOME - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
discount is amortized or accreted for financial statement purposes in accordance
with U.S. generally accepted accounting principles. All discount is accreted for
tax reporting purposes as required by federal income tax regulations. Dividends
received in cash are recorded on the ex-dividend date. Dividend and interest
payments received in additional securities are recorded on the ex-dividend or
ex-interest date in an amount equal to the value of the security on such date.
The trust may receive proceeds from litigation settlements involving its
portfolio holdings. Any proceeds received are reflected in realized gain/loss in
the statement of operations, or in unrealized gain/loss if the security is still
held by the trust. Legal fees and other related expenses incurred to preserve
and protect the value of a security owned are added to the cost of the security;
other legal fees are expensed. Capital infusions made directly to the security
issuer, which are generally non-recurring, incurred to protect or enhance the
value of high- yield debt securities, are reported as additions to the cost
basis of the security. Costs that are incurred to negotiate the terms or
conditions of capital infusions or that are expected to result in a plan of
reorganization are reported as realized losses. Ongoing costs incurred to
protect or enhance an investment, or costs incurred to pursue other claims or
legal actions, are expensed.
FEES PAID INDIRECTLY - The trust's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
trust. During the six months ended April 30, 2005, the trust's custodian fees
were reduced by $15,741 under this arrangement. The trust has entered into a
commission recapture agreement, under which certain brokers will credit the
trust a portion of the commissions generated, to offset certain expenses of the
trust. For the six months ended April 30, 2005, the trust's miscellaneous
expenses were reduced by $91 under this agreement. These amounts are shown as a
reduction of total expenses on the Statement of Operations.
TAX MATTERS AND DISTRIBUTIONS - The trust's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
Distributions to shareholders are recorded on the ex-dividend date. The trust
pays monthly distributions based on an annual rate of 10% of the trust's average
daily net asset value. As a result distributions may exceed actual earnings
which may result in a return of capital. The trust distinguishes between
distributions on a tax basis and a financial reporting basis and only
distributions in excess of tax basis earnings and profits are reported in the
financial statements as distributions from paid-in capital. No such designation
had been made for the six months ended April 30, 2005. Differences in the
recognition or classification of income between the financial statements and tax
earnings and profits, which result in temporary over- distributions for
financial statement purposes, are classified as distributions in excess of net
investment income or net realized gains. Common types of book and tax
differences that could occur include differences in accounting for foreign
currency transactions, defaulted bonds and amortization and accretion on debt
securities.
The tax character of distributions declared for the years ended October 31, 2004
and October 31, 2003 was as follows:
10/31/04 10/31/03
Distributions declared from:
----------------------------------------------------------------------------
Ordinary income $3,870,737 $5,543,609
----------------------------------------------------------------------------
Long-term capital gain -- 66,073
----------------------------------------------------------------------------
Tax return of capital 2,877,470 --
----------------------------------------------------------------------------
Total distributions declared $6,748,207 $5,609,682
----------------------------------------------------------------------------
As of October 31, 2004, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
Capital loss carryforward $(322,473)
----------------------------------------------------------
Unrealized depreciation (4,476,050)
----------------------------------------------------------
Other temporary differences (509,128)
----------------------------------------------------------
For federal income tax purposes, the capital loss carryforward may be applied
against any net taxable realized gains of each succeeding year until the
earlier of its utilization or expiration on October 31, 2012, ($322,473).
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The trust has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities.
The management fee is computed daily and paid monthly at an annual rate of 0.68%
of the trust's average daily net assets and 3.40% of gross investment income.
Management fees from net assets and gross investment income incurred for the six
months ended April 30, 2005 were at an effective rate of 0.93% of average daily
net assets on an annualized basis.
The trust pays compensation to its Independent Trustees in the form of a
retainer, attendance fees, and additional compensation to Board and Committee
chairpersons, and pays no compensation directly to its Trustees who are officers
of the investment adviser, or to officers of the trust, all of whom receive
remuneration for their services to the trust from MFS. Certain officers and
Trustees of the trust are officers or directors of MFS and MFS Service Center,
Inc. (MFSC). The trust has an unfunded, defined benefit plan for retired
Independent Trustees and an unfunded retirement benefit deferral plan for
current Independent Trustees. Included in Trustees' compensation is a net
decrease of $2,159 as a result of the change in the trust's unfunded retirement
benefit deferral plan for certain current Independent Trustees and a pension
expense of $3,281 for retired Independent Trustees for the six months ended
April 30, 2005.
This trust and certain other MFS funds (the "funds") have entered into a
services agreement (the "Agreement") which provides for payment of fees by the
funds to Tarantino LLC in return for the provision of services of an Independent
Chief Compliance Officer (ICCO) for the funds. The ICCO is an officer of the
funds and the sole member of Tarantino LLC. MFS has agreed to reimburse each of
the funds for a proportional share of substantially all of the payments made by
the funds to Tarantino LLC and also to provide office space and other
administrative support and supplies to the ICCO. The funds can terminate the
Agreement with Tarantino LLC at any time under the terms of the Agreement.
The trust's investment adviser, MFS, has been the subject of an administrative
proceeding regarding disclosure of brokerage allocation practices in connection
with fund sales, as described in the Legal Proceedings Footnote. On July 28,
2004, the trust accrued an estimate of the amount to be received pursuant to
this matter in the amount of $441, which did not have a material impact on the
net asset value per share based on the shares outstanding on the day the
proceeds were recorded. The proceeds were paid to the trust on February 16,
2005.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to certain funds
for which MFS acts as investment adviser. Under an administrative services
agreement between the funds and MFS, MFS is entitled to partial reimbursement of
the costs MFS incurs to provide these services, subject to review and approval
by the Board of Trustees. Each fund is allocated a portion of these
administrative costs based on its size and relative average net assets. The
trust paid MFS an administrative fee up to the following annual percentage rates
of the trust's average daily net assets:
BEGINNING OF
PERIOD THROUGH
EFFECTIVE DATE 2/28/05 3/01/05
First $2 billion 0.01120% 0.01626%
---------------------------------------------------------------------------
Next $2.5 billion 0.00832% 0.01206%
---------------------------------------------------------------------------
Next $2.5 billion 0.00032% 0.00056%
---------------------------------------------------------------------------
In excess of $7 billion 0.00000% 0.00000%
---------------------------------------------------------------------------
For the six months ended April 30, 2005, the trust paid MFS $3,122 equivalent to
0.0091% of average daily net assets, to partially reimburse MFS for the costs of
providing administrative services.
TRANSFER AGENT - Included in transfer agent and dividend disbursing costs is a
fee paid to MFSC, a wholly owned subsidiary of MFS, for its services as
registrar and dividend disbursing agent for the trust. The agreement provides
that the trust will pay MFSC an account maintenance fee of no more than $9.00
and a dividend services fee of $0.75 per reinvestment. These fees amounted to
$7,412 for the six months ended April 30, 2005. Also included in transfer agent
and dividend disbursing costs are out-of-pocket expenses, paid to MFSC, which
amounted to $9,274 for the six months ended April 30, 2005, as well as other
expenses paid to unaffiliated vendors.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$18,943,333 and $19,982,434, respectively.
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the trust, as computed on a federal income tax basis, are
as follows:
Aggregate cost $75,528,908
---------------------------------------------------------
Gross unrealized appreciation $5,052,043
---------------------------------------------------------
Gross unrealized depreciation (7,312,085)
---------------------------------------------------------
Net unrealized appreciation (depreciation) $(2,260,042)
---------------------------------------------------------
(5) SHARES OF BENEFICIAL INTEREST
The trust'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 repurchases by the trust of up to 10% annually of its own
shares of beneficial interest. During the six months ended April 30, 2005, the
trust did not repurchase any shares. Transactions in trust shares were
as follows:
Six months ended 4/30/05 Year ended 10/31/04
SHARES AMOUNT SHARES AMOUNT
Shares issued to shareholders in
reinvestment of distributions 29,351 $323,080 61,069 $645,801
--------------------------------------------------------------------------------
(6) LINE OF CREDIT
The trust and other affiliated funds participate in a $1 billion unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made for temporary financing needs. Interest is
charged to each fund, based on its borrowings, at a rate equal to the Federal
Reserve funds rate plus 0.35%. In addition, a commitment fee, based on the
average daily, unused portion of the line of credit, is allocated among the
participating funds at the end of each calendar quarter. The commitment fee
allocated to the trust for the six months ended April 30, 2005 was $224, and
is included in miscellaneous expense. The trust had no significant borrowings
during the six months ended April 30, 2005.
(7) FINANCIAL INSTRUMENTS
The trust trades financial instruments with off-balance-sheet risk in the
normal course of its investing activities in order to manage exposure to
market risks such as interest rates and foreign currency exchange rates. These
financial instruments include forward foreign currency exchange contracts. The
notional or contractual amounts of these instruments represent the investment
the trust has in particular classes of financial instruments and does not
necessarily represent the amounts potentially subject to risk. The measurement
of the risks associated with these instruments is meaningful only when all
related and offsetting transactions are considered.
Forward Foreign Currency Exchange Contracts
----------
SALES
----------
NET
IN UNREALIZED
CONTRACTS TO EXCHANGE CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE FOR AT VALUE (DEPRECIATION)
6/08/05 - 6/27/05 EUR 2,478,887 $3,194,032 $3,193,102 $930
========== ========== ====
----------
PURCHASES
----------
6/22/05 - 6/27/05 EUR 251,617 $329,425 $324,277 $(5,148)
5/06/05 SEK 181,626 26,846 25,430 (1,416)
-------- -------- -------
$356,271 $349,707 $(6,564)
======== ======== =======
At April 30, 2005, the trust had sufficient cash and/or securities to cover any
commitments under these contracts.
(8) LEGAL PROCEEDINGS
On March 31, 2004, MFS settled an administrative proceeding with the Securities
and Exchange Commission ("SEC") regarding disclosure of brokerage allocation
practices in connection with MFS fund sales (the term "MFS funds" means the
open-end registered management investment companies sponsored by MFS). Under the
terms of the settlement, in which MFS neither admitted nor denied any
wrongdoing, MFS agreed to pay (one dollar) $1.00 in disgorgement and $50 million
in penalty to certain MFS funds, pursuant to a plan developed by an independent
distribution consultant. The brokerage allocation practices which were the
subject of this proceeding were discontinued by MFS in November 2003. The
agreement with the SEC is reflected in an order of the SEC. The SEC settlement
order states that MFS failed to adequately disclose to the Boards of Trustees
and to shareholders of the MFS funds the specifics of its preferred arrangements
with certain brokerage firms selling MFS fund shares. The SEC settlement order
states that MFS had in place policies designed to obtain best execution of all
MFS fund trades. As part of the settlement, MFS retained an independent
compliance consultant to review the completeness of its current policies and
practices regarding disclosure to MFS fund trustees and to MFS fund shareholders
of strategic alliances between MFS or its affiliates and broker-dealers and
other financial intermediaries who support the sale of MFS fund shares. Pursuant
to the SEC order, on July 28, 2004, MFS transferred these settlement amounts to
the SEC, and those MFS funds entitled to these settlement amounts accrued an
estimate of their pro rata portion of these amounts. The final distribution plan
was approved by the SEC on January 21, 2005, and the affected MFS funds received
the payment on February 16, 2005.
In addition, in February 2004, MFS reached agreement with the SEC, the New York
Attorney General ("NYAG") and the Bureau of Securities Regulation of the State
of New Hampshire ("NH") to settle administrative proceedings alleging false and
misleading information in certain MFS open-end retail fund ("MFS retail funds")
prospectuses regarding market timing and related matters (the "February
Settlements"). These regulators alleged that prospectus language for certain MFS
retail funds was false and misleading because, although the prospectuses for
those funds in the regulators' view indicated that they prohibited market
timing, MFS did not limit trading activity in 11 domestic large cap stock, high
grade bond and money market retail funds. MFS' former Chief Executive Officer
and former President also reached agreement with the SEC in which they agreed
to, among other terms, monetary fines and temporary suspensions from association
with any investment adviser or registered investment company. These individuals
have resigned their positions with, and will not be returning to, MFS and the
MFS funds. Under the terms of the February Settlements, MFS and the executives
neither admit nor deny wrongdoing.
Under the terms of the February Settlements, a $225 million pool has been
established for distribution to shareholders in certain MFS retail funds, which
has been funded by MFS and of which $50 million is characterized as a penalty.
This pool will be distributed in accordance with a methodology developed by an
independent distribution consultant in consultation with MFS and the Board of
Trustees of the MFS retail funds, and acceptable to the SEC. MFS has further
agreed with NYAG to reduce its management fees in the aggregate amount of
approximately $25 million annually over the next five years, and not to increase
certain management fees during this period. MFS has also paid an administrative
fine to NH in the amount of $1 million, which will be used for investor
education purposes (NH retained $250,000 and $750,000 was contributed to the
North American Securities Administrators Association's Investor Protection
Trust). In addition, under the terms of the February Settlements, MFS is in the
process of adopting certain governance changes and reviewing its policies and
procedures.
Since December 2003, MFS, MFS Fund Distributors, Inc., MFS Service Center, Inc.,
MFS Corporation Retirement Committee, Sun Life Financial Inc., various MFS
funds, certain current and/or former Trustees of these MFS funds, and certain
officers of MFS have been named as defendants in multiple lawsuits filed in
federal and state courts. The lawsuits variously have been commenced as class
actions or individual actions on behalf of investors who purchased, held or
redeemed shares of the MFS funds during specified periods, as ERISA actions by
participants in certain retirement plan accounts on behalf of those accounts, or
as derivative actions on behalf of the MFS funds. The lawsuits relating to
market timing and related matters have been transferred to, and consolidated
before, the United States District Court for the District of Maryland, as part
of a multi-district litigation of market timing and related claims involving
several other fund complexes (In re Mutual Funds Investment Litigation (Alger,
Columbia, Janus, MFS, One Group, Putnam, Allianz Dresdner), No. 1:04-md-15863
(transfer began March 19, 2004)). The market timing cases related to the MFS
complex are Riggs v. MFS et al., Case No. 04-cv-01162-JFM (direct), Hammerslough
v. MFS et al., Case No. 04-md-01620 (derivative) and Anita Walker v. MFS et al.,
Case No. 1:04-CV-01758 (ERISA). The plaintiffs in these consolidated lawsuits
generally seek injunctive relief including removal of the named Trustees,
adviser and distributor, rescission of contracts and 12b-1 Plans, disgorgement
of fees and profits, monetary damages, punitive damages, attorney's fees and
costs and other equitable and declaratory relief. Two lawsuits alleging improper
brokerage allocation practices and excessive compensation are pending in the
United States District Court for the District of Massachusetts (Forsythe v. Sun
Life Financial Inc., et al., No. 04cv10584 (GAO) (a consolidated action) and
Marcus Dumond, et al. v. Massachusetts Financial Servs. Co., et al., No.
04cv11458 (GAO)). The plaintiffs in these lawsuits generally seek compensatory
damages, punitive damages, recovery of fees, rescission of contracts, an
accounting, restitution, declaratory relief, equitable and/or injunctive relief
and attorney's fees and costs. The various lawsuits generally allege that some
or all of the defendants (i) permitted or acquiesced in market timing and/or
late trading in some of the MFS funds, inadequately disclosed MFS' internal
policies concerning market timing and such matters (ii) received excessive
compensation as fiduciaries to the MFS funds, or (iii) permitted or acquiesced
in the improper use of fund assets by MFS to support the distribution of MFS
fund shares and inadequately disclosed MFS' use of fund assets in this manner.
The actions assert that some or all of the defendants violated the federal
securities laws, including the Securities Act of 1933 and the Securities
Exchange Act of 1934, the Investment Company Act of 1940 and the Investment
Advisers Act of 1940, the Employee Retirement Income Security Act of 1974, as
well as fiduciary duties and other violations of common law. Insofar as any of
the actions is appropriately brought derivatively on behalf of any of the MFS
funds, any recovery will inure to the benefit of the MFS funds. In February,
March, and April 2005, the defendants filed separate motions to dismiss all
claims of the various lawsuits. The parties continue to brief the issues for the
courts and various hearing dates have been scheduled. Additional lawsuits based
on similar allegations may be filed in the future.
Any potential resolution of these matters may include, but not be limited to,
judgments or settlements for damages against MFS, the MFS funds, or any other
named defendant. As noted above, as part of the regulatory settlements, MFS has
established a restitution pool in the amount of $225 million to compensate
certain shareholders of certain MFS retail funds for damages that they allegedly
sustained as a result of market timing or late trading in certain of the MFS
retail funds, and distributed $50 million to affected MFS funds to compensate
those funds based upon the amount of brokerage commissions allocated in
recognition of MFS fund sales. It is not clear whether these amounts will be
sufficient to compensate shareholders for all of the damage they allegedly
sustained, whether certain shareholders or putative class members may have
additional claims to compensation, or whether the damages that may be awarded in
any of the actions will exceed these amounts. In the event the MFS funds incur
any losses, costs or expenses in connection with such lawsuits, the Boards of
Trustees of the affected MFS funds may pursue claims on behalf of such funds
against any party that may have liability to the funds in respect thereof.
Review of these matters by the independent Trustees of the MFS funds and their
counsel is continuing. There can be no assurance that these regulatory actions
and lawsuits, or the adverse publicity associated with these developments, will
not result in increased fund redemptions, reduced sales of fund shares, or other
adverse consequences to the MFS funds.
While these developments relate to MFS and the MFS' open-end funds, there can be
no assurance that these developments, or the adverse publicity associated with
these developments, will not result in an increase to the market discount of the
MFS closed-end fund shares or other adverse consequences.
-------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------------------------------
To the Trustees and Shareholders of the MFS Special Value Trust:
We have reviewed the accompanying statement of assets and liabilities of MFS
Special Value Trust (the Fund), including the portfolio of investments, as of
April 30, 2005, and the related statements of operations, changes in net assets,
and financial highlights for the six-month period ended April 30, 2005. These
interim financial statements are the responsibility of the Fund's management.
We conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying interim financial statements for them to be in
conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the statement of changes in
net assets for the year ended October 31, 2004, and financial highlights for
each of the five years in the period ended October 31, 2004, and in our report
dated December 10, 2004, we expressed an unqualified opinion on such statement
of changes in net assets and financial highlights.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts June 8, 2005
------------------------------------------------------------------------------
RESULTS OF SHAREHOLDER MEETING (unaudited) - 4/30/05
------------------------------------------------------------------------------
At the annual meeting of shareholders of MFS Special Value Trust, which was
held on March 23, 2005, the following action was taken:
ITEM 1. The election of the following as Trustees of the trust.
NUMBER OF SHARES
-----------------------------------
NOMINEE AFFIRMATIVE WITHHOLD AUTHORITY
Lawrence H. Cohn, M.D. 6,154,196.607 85,647.856
------------------------------------------------------------------------------
David H. Gunning 6,166,610.649 73,233.814
------------------------------------------------------------------------------
William R. Gutow 6,164,311.649 75,532.814
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Michael Hegarty 6,164,333.649 75,510.814
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J. Atwood Ives 6,152,389.649 87,454.814
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Amy B. Lane 6,165,282.649 74,561.814
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Robert J. Manning 6,165,574.649 74,269.814
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Lawrence T. Perera 6,152,639.649 87,204.814
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Robert C. Pozen 6,164,156.471 75,687.992
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J. Dale Sherratt 6,157,114.649 82,729.814
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Laurie J. Thomsen 6,163,782.649 76,061.814
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PROXY VOTING POLICIES AND INFORMATION
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A general description of the MFS funds' proxy voting policies and procedures is
available without charge, upon request, by calling 1-800-225-2606, by visiting
the Proxy Voting section of mfs.com or by visiting the SEC's Web site at
http://www.sec. gov.
Information regarding how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is
available without charge by visiting the Proxy Voting section of mfs.com or by
visiting the SEC's Web site at http://www.sec.gov.
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QUARTERLY PORTFOLIO DISCLOSURE
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The fund will file a complete schedule of portfolio holdings with the Securities
and Exchange Commission (the Commission) for the first and third quarters of
each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed and copied at
the:
Public Reference Room
Securities and Exchange Commission
Washington, D.C. 20549-0102
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-800-SEC-0330. The fund's Form N-Q is available on
the EDGAR database on the Commission's Internet website at http://www.sec.gov,
and copies of this information may be obtained, upon payment of a duplicating
fee, by electronic request at the following e-mail address: publicinfo@sec.gov
or by writing the Public Reference Section at the above address.
A shareholder can also obtain the quarterly portfolio holdings report at
mfs.com.
CONTACT INFORMATION AND NUMBER OF SHAREHOLDERS
INVESTOR INFORMATION
Transfer Agent, Registrar and Dividend Disbursing Agent
Call 1-800-637-2304 any business day from 8 a.m. to 8 p.m. Eastern time
Write to: State Street Bank and Trust Company
c/o MFS Service Center, Inc.
P.O. Box 55024
Boston, MA 02205-5024
NUMBER OF SHAREHOLDERS
As of April 30, 2005, our records indicate that there are 600 registered
shareholders and approximately 5,326 shareholders owning trust shares in
"street" name, such as through brokers, banks, and other financial
intermediaries.
If you are a "street" name shareholder and wish to directly receive our
reports, which contain important information about the trust, please write or
call:
State Street Bank and Trust Company
c/o MFS Service Center, Inc.
P.O. Box 55024
Boston, MA 02205-5024
1-800-637-2304
M F S(SM)
INVESTMENT MANAGEMENT(R)
(C) 2005 MFS Investment Management(R)
500 Boylston Street, Boston, MA 02116.
MFV-SEM-06/05 10M
ITEM 2. CODE OF ETHICS.
The Registrant has amended its Code of Ethics to reflect that the Registrant's
Principal Financial Officer has changed.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable for semi-annual reports.
ITEM 6. SCHEDULE OF INVESTMENTS
A schedule of investments of the Registrant is included as part of the report to
shareholders of the Registrant under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable for semi-annual reports.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable at this time.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
=============================================================================================================
MFS SPECIAL VALUE TRUST
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(C) TOTAL
NUMBER OF (D) MAXIMUM NUMBER
SHARES (OR APPROXIMATE
PURCHASED AS DOLLAR VALUE)
PART OF OF SHARES THAT
(A) TOTAL PUBLICLY MAY YET BE
NUMBER OF (B) AVERAGE ANNOUNCED PURCHASED UNDER
SHARES PRICE PAID PLANS OR THE PLANS
PERIOD PURCHASED PER SHARE PROGRAMS OR PROGRAMS
=============================================================================================================
11/1/04-11/30/04 0 n/a 0 667,581
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12/1/04-12/31/04 0 n/a 0 667,581
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1/1/05-1/31/05 0 n/a 0 667,581
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2/1/05-2/28/05 0 n/a 0 667,581
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3/1/05-3/31/05 0 n/a 0 673,558
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4/1/05-4/30/05 0 n/a 0 673,558
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TOTAL 0 N/A 0
=============================================================================================================
Note: The Board of Trustees approves procedures to repurchase shares annually.
The notification to shareholders of the program is part of the semi-annual and
annual reports sent to shareholders. These annual programs begin on March 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 (March 1 through the following February
28) to 10% of the Registrant's outstanding shares as of the first day of the
plan year (March 1). The aggregate number of shares available for purchase for
the March 1, 2005 plan year are 673,558.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no material changes to the procedures by which shareholders may send
recommendations to the Board for nominees to the Registrant's Board since the
Registrant last provided disclosure as to such procedures in response to the
requirements of Item 7(d)(2)(ii)(G) of Schedule 14A.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Act) as conducted within
90 days of the filing date of this Form N-CSR, the registrant's principal
financial officer and principal executive officer have concluded that those
disclosure controls and procedures provide reasonable assurance that the
material information required to be disclosed by the registrant on this
report is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and
forms.
(b) There were no changes in the registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the second fiscal quarter covered by the report that has materially
affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Code of
Ethics attached hereto.
(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Act (17 CFR 270.30a-2): Attached hereto.
(3)Any written solicitation to purchase securities under Rule 23c-1 under
the Act sent or given during the period covered by the report by or on
behalf of the Registrant to 10 or more persons. 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.
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)* ROBERT J. MANNING
----------------------------------------------------
Robert J. Manning, President
Date: June 23, 2005
-------------
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)* ROBERT J. MANNING
-----------------------------------------------------
Robert J. Manning, President
(Principal Executive Officer)
Date: June 23, 2005
-------------
By (Signature and Title)* MARIA F. DWYER
----------------------------------------------------
Maria F. Dwyer, Treasurer (Principal
Financial Officer and Accounting Officer)
Date: June 23, 2005
-------------
* Print name and title of each signing officer under his or her signature.