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Form N-Q MFS SERIES TRUST IX For: Jan 31

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March 21, 2019 12:59 PM EDT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF

REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-02464

MFS SERIES TRUST IX

(Exact name of registrant as specified in charter)

111 Huntington Avenue, Boston, Massachusetts 02199

(Address of principal executive offices) (Zip code)

Christopher R. Bohane

Massachusetts Financial Services Company

111 Huntington Avenue

Boston, Massachusetts 02199

(Name and address of agents for service)

Registrant’s telephone number, including area code: (617) 954-5000

Date of fiscal year end: October 31*

Date of reporting period: January 31, 2019

 

*

This Form N-Q pertains only to the following series of the Registrant: MFS Inflation-Adjusted Bond Fund. Each remaining series of the Registrant has a fiscal year end of April 30.

ITEM 1.

SCHEDULE OF INVESTMENTS.

Quarterly Report
January 31, 2019
MFS®  Inflation-Adjusted
Bond Fund

Portfolio of Investments
1/31/19 (unaudited)
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Issuer     Shares/Par Value ($)
Bonds – 98.4%
Asset-Backed & Securitized – 2.2%
A Voce CLO Ltd., 2014-1A, “A1R”, FLR, 3.947% (LIBOR - 3mo. + 1.16%), 7/15/2026 (n)   $ 4,052,837 $ 4,053,968
Commercial Mortgage Trust, 2017-COR2, “A3”, 3.51%, 9/10/2050      2,190,172 2,179,614
Dryden Senior Loan Fund, 2018-55A, “A1”, CLO, FLR, 3.807% (LIBOR - 3mo. + 1.02%), 4/15/2031 (n)     1,331,195 1,315,426
Loomis, Sayles & Co., CLO, “A2”, FLR, 4.179% (LIBOR - 3mo. + 1.4%), 4/15/2028 (n)     3,204,527 3,158,106
Madison Park Funding Ltd., 2014-13A, “BR2”, FLR, 4.261% (LIBOR - 3mo. + 1.5%), 4/19/2030 (n)     3,382,623 3,327,442
Morgan Stanley Bank of America Merrill Lynch Trust, 2017-C34, “A4”, 3.536%, 11/15/2052      467,871 467,712
Symphony CLO Ltd., 2016-17A, “BR”, FLR, 3.987% (LIBOR - 3mo. + 1.2%), 4/15/2028 (n)     2,866,629 2,813,983
TICP CLO Ltd., FLR, 3.601% (LIBOR - 3mo. + 0.8%), 4/20/2028 (n)     4,817,160 4,756,363
UBS Commercial Mortgage Trust, 2017-C1, “A4”, 3.544%, 11/15/2050      2,058,000 2,047,164
West CLO Ltd. 2013-1A, “A1AR”, FLR, 3.749% (LIBOR - 3mo. + 1.16%), 11/07/2025 (n)     1,268,999 1,268,365
        $ 25,388,143
Chemicals – 0.2%
Sherwin Williams Co., 2.75%, 6/01/2022    $ 1,858,000 $ 1,822,858
Computer Software - Systems – 0.2%
Apple, Inc., 3.2%, 5/11/2027    $ 1,826,000 $ 1,809,531
Conglomerates – 0.1%
United Technologies Corp., 3.95%, 8/16/2025    $ 1,304,000 $ 1,334,169
Consumer Products – 0.2%
Reckitt Benckiser Treasury Services PLC, 2.75%, 6/26/2024 (n)   $ 2,417,000 $ 2,335,688
Food & Beverages – 0.2%
Anheuser-Busch InBev Finance, Inc., 2.65%, 2/01/2021    $ 2,118,000 $ 2,109,302
International Market Sovereign – 2.2%
Commonwealth of Australia, Inflation Linked Bond, 3%, 9/20/2025    AUD 14,636,147 $ 12,368,951
Government of New Zealand, Inflation Linked Bond, 3%, 9/20/2030    NZD 15,682,623 12,752,851
        $ 25,121,802
Major Banks – 0.5%
Bank of America Corp., 3.124% to 1/20/2022, FLR (LIBOR - 3mo. + 1.16%) to  1/20/2023    $ 3,139,000 $ 3,128,053
UBS Group Funding (Switzerland) AG, 3.491%, 5/23/2023 (n)     2,334,000 2,315,049
        $ 5,443,102
Mortgage-Backed – 1.1%  
Freddie Mac, 3.064%, 8/25/2024   $ 3,288,093 $ 3,310,327
Freddie Mac, 3.243%, 4/25/2027     4,838,000 4,862,084
Freddie Mac, 3.117%, 6/25/2027     2,380,992 2,370,877
Freddie Mac, 3.286%, 11/25/2027     2,049,000 2,059,292
        $ 12,602,580
Municipals – 0.9%
New Jersey Economic Development Authority State Pension Funding Rev., Capital Appreciation, “B”, AGM, 0%, 2/15/2023    $ 8,796,000 $ 7,549,431
Philadelphia, PA, School District Rev., “A”, AGM, 5.995%, 9/01/2030      1,925,000 2,279,835
        $ 9,829,266
Other Banks & Diversified Financials – 0.2%
ING Groep N.V., 3.15%, 3/29/2022    $ 2,236,000 $ 2,219,495
Restaurants – 0.3%
Starbucks Corp., 3.8%, 8/15/2025    $ 3,607,000 $ 3,636,592
1

Portfolio of Investments (unaudited) – continued
Issuer     Shares/Par Value ($)
Bonds – continued
Tobacco – 0.1%
B.A.T Capital Corp., 2.764%, 8/15/2022    $ 1,600,000 $ 1,555,269
U.S. Treasury Inflation Protected Securities – 89.5%
U.S. Treasury Bonds, 2.375%, 1/15/2025    $ 26,233,706 $ 28,776,411
U.S. Treasury Bonds, 2%, 1/15/2026      28,707,725 31,142,969
U.S. Treasury Bonds, 2.375%, 1/15/2027      22,812,417 25,628,446
U.S. Treasury Bonds, 1.75%, 1/15/2028      12,274,923 13,280,412
U.S. Treasury Bonds, 3.625%, 4/15/2028      26,383,408 32,934,944
U.S. Treasury Bonds, 2.5%, 1/15/2029      26,788,626 31,114,222
U.S. Treasury Bonds, 3.875%, 4/15/2029      20,789,378 26,950,939
U.S. Treasury Bonds, 3.375%, 4/15/2032      7,673,302 10,083,997
U.S. Treasury Bonds, 2.125%, 2/15/2040      12,163,485 14,651,139
U.S. Treasury Bonds, 2.125%, 2/15/2041      13,051,319 15,802,123
U.S. Treasury Bonds, 0.75%, 2/15/2042      29,404,438 27,454,480
U.S. Treasury Bonds, 0.625%, 2/15/2043      22,178,031 20,009,609
U.S. Treasury Bonds, 1.375%, 2/15/2044      25,168,120 26,737,195
U.S. Treasury Bonds, 0.75%, 2/15/2045      28,956,167 26,701,507
U.S. Treasury Bonds, 1%, 2/15/2046      20,419,849 19,961,998
U.S. Treasury Bonds, 0.875%, 2/15/2047      25,753,771 24,395,326
U.S. Treasury Bonds, 1%, 2/15/2048      4,763,868 4,656,743
U.S. Treasury Notes, 1.25%, 7/15/2020      16,511,721 16,641,678
U.S. Treasury Notes, 1.125%, 1/15/2021      54,158,433 54,449,421
U.S. Treasury Notes, 0.125%, 4/15/2021      12,152,764 11,949,585
U.S. Treasury Notes, 0.625%, 7/15/2021      43,443,283 43,453,482
U.S. Treasury Notes, 0.125%, 1/15/2022      55,553,281 54,532,353
U.S. Treasury Notes, 0.125%, 7/15/2022      48,941,433 48,129,353
U.S. Treasury Notes, 0.125%, 1/15/2023      31,438,273 30,722,187
U.S. Treasury Notes, 0.375%, 7/15/2023      46,935,921 46,466,118
U.S. Treasury Notes, 0.625%, 1/15/2024      38,662,883 38,552,515
U.S. Treasury Notes, 0.125%, 7/15/2024      15,162,813 14,751,829
U.S. Treasury Notes, 0.25%, 1/15/2025      42,163,230 41,018,845
U.S. Treasury Notes, 0.375%, 7/15/2025      67,708,437 66,460,944
U.S. Treasury Notes, 0.625%, 1/15/2026      37,070,043 36,768,848
U.S. Treasury Notes, 0.125%, 7/15/2026      44,561,299 42,681,949
U.S. Treasury Notes, 0.375%, 1/15/2027      26,215,966 25,418,222
U.S. Treasury Notes, 0.375%, 7/15/2027      21,591,595 20,957,061
U.S. Treasury Notes, 0.5%, 1/15/2028      38,364,774 37,395,164
        $ 1,010,632,014
Utilities - Electric Power – 0.5%
Enel Finance International N.V., 2.875%, 5/25/2022 (n)   $ 3,038,000 $ 2,921,271
Virginia Electric & Power Co., 3.5%, 3/15/2027      2,891,000 2,875,690
        $ 5,796,961
Total Bonds   $ 1,111,636,772
Investment Companies (h) – 2.5%
Money Market Funds – 2.5%  
MFS Institutional Money Market Portfolio, 2.47% (v)     28,684,326 $ 28,681,457
 
Other Assets, Less Liabilities – (0.9)%   (10,682,770)
Net Assets – 100.0% $ 1,129,635,459
(h) An affiliated issuer, which may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $28,681,457 and $1,111,636,772, respectively.      
(n) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $28,265,661, representing 2.5% of net assets.      
2

Portfolio of Investments (unaudited) – continued
(v) Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end.      
The following abbreviations are used in this report and are defined:
AGM Assured Guaranty Municipal
CLO Collateralized Loan Obligation
FLR Floating Rate. Interest rate resets periodically based on the parenthetically disclosed reference rate plus a spread (if any). The period-end rate reported may not be the current rate. All reference rates are USD unless otherwise noted.
LIBOR London Interbank Offered Rate
PLC Public Limited Company
Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below:
AUD Australian Dollar
EUR Euro
NZD New Zealand Dollar
Derivative Contracts at 1/31/19
Forward Foreign Currency Exchange Contracts
Currency
Purchased 		Currency
Sold 		Counterparty Settlement
Date 		Unrealized
Appreciation
(Depreciation)
Asset Derivatives
USD 413,697 EUR 357,570 Goldman Sachs International 4/12/2019 $ 2,039
Liability Derivatives
USD 12,045,038 AUD 16,835,963 Deutsche Bank AG 4/12/2019 $(204,599)
USD 12,513,433 NZD 18,483,763 Goldman Sachs International 4/12/2019 (280,151)
            $(484,750)
See attached supplemental information. For more information see notes to financial statements as disclosed in the most recent semiannual or annual report.
3

Supplemental Information
1/31/19 (unaudited)
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(1) Investment Valuations
Debt instruments and floating rate loans, including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service.  Short-term instruments with a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value. Forward foreign currency exchange contracts are generally valued at the mean of bid and asked prices for the time period interpolated from rates provided by a third-party pricing service for proximate time periods. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. In determining values, third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.
The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser's own assumptions in determining the fair value of investments. Other financial instruments are derivative instruments, such as forward foreign currency exchange contracts. The following is a summary of the levels used as of January 31, 2019 in valuing the fund's assets or liabilities:
Financial Instruments Level 1 Level 2 Level 3 Total
U.S. Treasury Bonds & U.S. Government Agency & Equivalents $— $1,010,632,014 $— $1,010,632,014
Non-U.S. Sovereign Debt — 25,121,802 — 25,121,802
Municipal Bonds — 9,829,266 — 9,829,266
U.S. Corporate Bonds — 16,716,195 — 16,716,195
Residential Mortgage-Backed Securities — 12,602,580 — 12,602,580
Commercial Mortgage-Backed Securities — 4,694,489 — 4,694,489
Asset-Backed Securities (including CDOs) — 20,693,654 — 20,693,654
Foreign Bonds — 11,346,772 — 11,346,772
Mutual Funds 28,681,457 — — 28,681,457
Total $28,681,457 $1,111,636,772 $— $1,140,318,229
Other Financial Instruments        
Forward Foreign Currency Exchange Contracts - Assets $— $2,039 $— $2,039
Forward Foreign Currency Exchange Contracts - Liabilities — (484,750) — (484,750)
For further information regarding security characteristics, see the Portfolio of Investments.
4

Supplemental Information (unaudited) – continued
(2) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:
Affiliated Issuers Beginning
Shares/Par
Amount 		Acquisitions
Shares/Par
Amount 		Dispositions
Shares/Par
Amount 		Ending
Shares/Par
Amount
MFS Institutional Money Market Portfolio 11,159 75,564,030 (46,890,863) 28,684,326
Affiliated Issuers Realized
Gain (Loss) 		Change in
Unrealized
Appreciation/
Depreciation 		Capital Gain
Distributions 		Dividend
Income 		Ending
Value
MFS Institutional Money Market Portfolio $701 $— $— $57,114 $28,681,457
    
5

ITEM 2.

CONTROLS AND PROCEDURES.

 

(a)

Based upon their evaluation of the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as conducted within 90 days of the filing date of this Form N-Q, 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 registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

ITEM 3.

EXHIBITS.

File as exhibits as part of this Form a separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2): Attached hereto as EX-99.CERT.

Notice

A copy of the Amended and Restated Declaration of Trust, as amended, of the Registrant is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually, but are binding only upon the assets and property of the respective constituent series of the Registrant.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Registrant: MFS SERIES TRUST IX

 

By (Signature and Title)*    /S/ DAVID L. DILORENZO
  David L. DiLorenzo, President

Date: March 19, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)*    /S/ DAVID L. DILORENZO
  David L. DiLorenzo, President (Principal Executive Officer)

Date: March 19, 2019

 

By (Signature and Title)*    /S/ JAMES O. YOST
  James O. Yost, Treasurer (Principal Financial Officer and Accounting Officer)

Date: March 19, 2019

 

*

Print name and title of each signing officer under his or her signature.

EX-99.CERT

MFS SERIES TRUST IX

CERTIFICATION

I, James O. Yost, certify that:

 

1.

I have reviewed this report on Form N-Q of MFS Series Trust IX;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

  a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and

 

  d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

  b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: March 19, 2019     /S/ JAMES O. YOST
    James O. Yost
   

Treasurer (Principal Financial Officer and

Accounting Officer)

EX-99.CERT

MFS SERIES TRUST IX

CERTIFICATION

I, David L. DiLorenzo, certify that:

 

1.

I have reviewed this report on Form N-Q of MFS Series Trust IX;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

  a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and

 

  d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

  b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: March 19, 2019     /S/ DAVID L. DILORENZO
    David L. DiLorenzo
    President (Principal Executive Officer)

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