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 811-5822
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MFS CHARTER INCOME 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: November 30
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Date of reporting period: August 31, 2006
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ITEM 1. SCHEDULE OF INVESTMENTS.
MFS(R) Charter Income Trust
8/31/06
Quarterly portfolio holdings
[graphic omitted]
M F S(R)
INVESTMENT MANAGEMENT
MFS Charter Income Trust
PORTFOLIO OF INVESTMENTS (Unaudited) 08/31/2006
ISSUER SHARES/PAR VALUE ($)
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BONDS - 97.7%
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AEROSPACE - 0.1%
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DRS Technologies, Inc., 7.625%, 2018 $ 440,000 $ 440,000
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AGENCY - OTHER - 1.0%
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Financing Corp., 10.35%, 2018 $ 3,600,000 $ 5,253,019
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AIRLINES - 0.2%
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Continental Airlines, Inc., 7.566%, 2020 $ 1,015,699 $ 1,004,143
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ASSET BACKED & SECURITIZED - 7.7%
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Amresco Commercial Mortgage Funding I, 7%, 2029 $ 3,000,000 $ 3,018,520
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Asset Securitization Corp., FRN, 8.2945%, 2029 2,000,000 2,084,440
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Bayview Financial Acquisition Trust, FRN, 5.483%, 2041 404,000 394,531
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Bayview Financial Revolving Mortgage Loan Trust, FRN, 6.1281%, 2040 (z) 1,160,000 1,159,993
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Bear Stearns Commercial Mortgage Securities, Inc., FRN, 5.116%, 2041 1,120,248 1,094,868
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Countrywide Asset-Backed Certificates, FRN, 5.147%, 2035 2,000,000 1,985,523
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Credit Suisse First Boston Mortgage Securities Corp., 6.75%, 2030 (a) 2,000,000 2,044,036
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Crest Ltd., 7%, 2040 (a) 2,000,000 1,838,460
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DLJ Commercial Mortgage Corp., 6.04%, 2031 2,000,000 2,032,613
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First Union-Lehman Brothers Bank of America, FRN, 0.6845%, 2035 (i) 66,845,855 1,106,292
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First Union-Lehman Brothers Commercial Mortgage Trust, 7%, 2029 (a) 850,000 916,468
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First Union-Lehman Brothers Commercial Mortgage Trust, FRN, 7.5%, 2029 3,000,000 3,376,414
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J.P. Morgan Chase Commercial Mortgage Securities Corp., FRN, 5.038%, 2046 4,000,000 3,884,148
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Morgan Stanley Capital I, Inc., 5.168%, 2042 1,532,020 1,501,289
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Mortgage Capital Funding, Inc., FRN, 0.8812%, 2031 (i) 17,002,313 170,443
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New Century Home Equity Loan Trust, FRN, 4.532%, 2035 2,500,000 2,463,181
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Residential Asset Mortgage Products, Inc., 3.878%, 2035 1,233,591 1,223,708
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Spirit Master Funding LLC, 5.05%, 2023 (z) 1,906,699 1,821,494
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Structured Asset Securities Corp., FRN, 4.67%, 2035 2,484,152 2,452,783
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TIAA Real Estate CDO Ltd., 7.17%, 2032 (a) 1,968,463 1,983,643
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Wachovia Bank Commercial Mortgage Trust, FRN, 4.847%, 2041 2,000,000 1,919,625
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Wachovia Bank Commercial Mortgage Trust, FRN, 5.083%, 2042 2,000,000 1,945,164
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$ 40,417,636
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AUTOMOTIVE - 1.7%
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American Axle & Manufacturing, Inc., 5.25%, 2014 $ 515,000 $ 427,450
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DaimlerChrysler N.A. Holdings Corp., 8.5%, 2031 400,000 480,340
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Ford Motor Credit Co., 6.625%, 2008 196,000 192,745
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Ford Motor Credit Co., 5.8%, 2009 1,100,000 1,053,750
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Ford Motor Credit Co., 7%, 2013 989,000 923,032
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General Motors Acceptance Corp., 5.85%, 2009 1,842,000 1,787,714
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General Motors Acceptance Corp., 6.875%, 2011 1,875,000 1,846,648
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General Motors Acceptance Corp., 6.75%, 2014 1,746,000 1,673,867
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General Motors Corp., 8.375%, 2033 100,000 83,750
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GMAC LLC, 6.125%, 2008 234,000 231,220
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Lear Corp., 8.11%, 2009 285,000 275,025
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Lear Corp., 5.75%, 2014 5,000 4,025
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$ 8,979,566
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BROADCASTING - 1.1%
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Allbritton Communications Co., 7.75%, 2012 $ 365,000 $ 360,894
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CBS Corp., 6.625%, 2011 860,000 889,397
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EchoStar DBS Corp., 6.375%, 2011 1,945,000 1,893,944
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Intelsat Subsidiary Holding Co. Ltd., 8.625%, 2015 340,000 343,400
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Lamar Media Corp., 7.25%, 2013 675,000 669,937
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News America Holdings, 7.7%, 2025 1,140,000 1,260,289
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News America, Inc., 6.2%, 2034 542,000 506,462
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$ 5,924,323
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BROKERAGE & ASSET MANAGERS - 1.0%
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Goldman Sachs Group, Inc., 5.7%, 2012 $ 2,680,000 $ 2,708,330
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Morgan Stanley Dean Witter, Inc., 6.6%, 2012 2,537,000 2,675,992
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$ 5,384,322
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BUSINESS SERVICES - 0.6%
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Iron Mountain, Inc., 7.75%, 2015 $ 175,000 $ 173,250
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Xerox Corp., 7.625%, 2013 920,000 951,050
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Xerox Corp., 6.4%, 2016 2,000,000 1,980,192
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$ 3,104,492
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CABLE TV - 1.1%
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CCH II Holdings LLC, 10.25%, 2010 $ 670,000 $ 678,375
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CSC Holdings, Inc., 8.125%, 2009 1,050,000 1,085,437
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Grupo Televisa S.A., 8.5%, 2032 962,000 1,159,081
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Mediacom LLC, 9.5%, 2013 280,000 287,700
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Rogers Cable, Inc., 5.5%, 2014 1,025,000 949,406
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TCI Communications, Inc., 9.8%, 2012 1,169,000 1,376,881
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$ 5,536,880
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CHEMICALS - 1.0%
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BCP Crystal Holdings Corp., 9.625%, 2014 $ 204,000 $ 221,085
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Equistar Chemicals LP, 10.125%, 2008 375,000 395,625
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Hercules, Inc., 6.75%, 2029 740,000 697,450
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Huntsman International LLC, 10.125%, 2009 331,000 337,620
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Lyondell Chemical Co., 11.125%, 2012 615,000 670,350
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Nalco Co., 7.75%, 2011 650,000 661,375
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Nalco Co., 8.875%, 2013 70,000 72,100
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Yara International A.S.A., 5.25%, 2014 (a) 2,000,000 1,906,722
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$ 4,962,327
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CONGLOMERATES - 0.2%
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Kennametal, Inc., 7.2%, 2012 $ 1,140,000 $ 1,202,954
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CONSTRUCTION - 0.5%
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Beazer Homes USA, Inc., 6.875%, 2015 $ 2,300,000 $ 2,047,000
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M/I Homes, Inc., 6.875%, 2012 675,000 578,813
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$ 2,625,813
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CONSUMER GOODS & SERVICES - 0.2%
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Church & Dwight Co., Inc., 6%, 2012 $ 460,000 $ 432,400
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Service Corp. International, 8%, 2017 (a) 360,000 344,700
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$ 777,100
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CONTAINERS - 0.4%
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Ball Corp., 6.625%, 2018 $ 475,000 $ 457,188
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Crown Americas LLC., 7.75%, 2015 565,000 567,825
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Owens-Brockway Glass Container, Inc., 8.875%, 2009 378,000 388,395
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Owens-Brockway Glass Container, Inc., 8.25%, 2013 865,000 875,813
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$ 2,289,221
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DEFENSE ELECTRONICS - 0.9%
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BAE Systems Holdings, Inc., 4.75%, 2010 (a) $ 790,000 $ 766,491
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BAE Systems Holdings, Inc., 5.2%, 2015 (a) 2,000,000 1,899,720
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L-3 Communications Corp., 5.875%, 2015 750,000 708,750
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L-3 Communications Corp., 6.375%, 2015 1,500,000 1,443,750
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$ 4,818,711
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ELECTRONICS - 0.2%
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Flextronics International Ltd., 6.5%, 2013 $ 790,000 $ 770,250
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Sensata Technologies B.V., 8%, 2014 (a) 295,000 289,100
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$ 1,059,350
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EMERGING MARKET QUASI-SOVEREIGN - 1.1%
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Banco do Brasil S.A., 7.95%, 2049 (a) $ 161,000 $ 160,195
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Gazprom OAO, 9.625%, 2013 (a) 1,510,000 1,783,688
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Pemex Project Funding Master Trust, 8.625%, 2022 1,218,000 1,467,690
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Petroleum Export/Cayman, 5.265%, 2011 (a) 267,764 262,896
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Petronas Capital Ltd., 7.875%, 2022 (a) 464,000 554,935
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Petronas Capital Ltd., 7.875%, 2022 1,340,000 1,602,613
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$ 5,832,017
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EMERGING MARKET SOVEREIGN - 1.7%
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Republic of Argentina, FRN, 5.589%, 2012 $ 1,242,000 $ 1,152,734
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Republic of Bulgaria, 8.25%, 2015 600,000 700,380
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Republic of Colombia, FRN, 7.2163%, 2015 1,287,000 1,322,392
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Republic of El Salvador, 7.65%, 2035 36,000 37,710
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Republic of Indonesia, 6.875%, 2017 (a) 171,000 172,710
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Republic of Panama, 9.375%, 2029 1,121,000 1,420,868
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Republic of South Africa, 9.125%, 2009 469,000 510,624
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Russian Federation, 3%, 2008 2,690,000 2,573,792
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United Mexican States, 8.125%, 2019 976,000 1,176,080
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$ 9,067,290
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ENERGY - INDEPENDENT - 0.7%
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Chesapeake Energy Corp., 6.875%, 2016 $ 1,220,000 $ 1,183,400
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Forest Oil Corp., 7.75%, 2014 550,000 554,125
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Newfield Exploration Co., 6.625%, 2014 770,000 752,675
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Pan American Energy LLC, 7.75%, 2012 (z) 109,000 109,681
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Quicksilver Resources, Inc., 7.125%, 2016 510,000 487,050
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Vintage Petroleum, Inc., 8.25%, 2012 550,000 581,259
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$ 3,668,190
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ENERGY - INTEGRATED - 0.2%
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TNK-BP Finance S.A., 7.5%, 2016 (a) $ 1,211,000 $ 1,256,881
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ENTERTAINMENT - 0.5%
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AMC Entertainment, Inc., 9.5%, 2011 $ 224,000 $ 223,440
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AMC Entertainment, Inc., 11%, 2016 200,000 217,250
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Six Flags, Inc., 9.75%, 2013 220,000 199,100
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Turner Broadcasting System, Inc., 8.375%, 2013 1,784,000 1,989,435
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$ 2,629,225
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FINANCIAL INSTITUTIONS - 0.6%
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Countrywide Financial Corp., 6.25%, 2016 $ 1,250,000 $ 1,262,147
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HSBC Finance Corp., 5.5%, 2016 1,481,000 1,470,286
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International Lease Finance Corp., 5%, 2010 321,000 315,706
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$ 3,048,139
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FOOD & BEVERAGES - 0.1%
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B&G Foods Holding Corp., 8%, 2011 $ 170,000 $ 172,550
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Michael Foods, Inc., 8%, 2013 315,000 321,300
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$ 493,850
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FOREST & PAPER PRODUCTS - 0.8%
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Buckeye Technologies, Inc., 8.5%, 2013 $ 460,000 $ 455,400
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Jefferson Smurfit Corp., 8.25%, 2012 185,000 175,287
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MDP Acquisitions PLC, 9.625%, 2012 310,000 323,562
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Norske Skog Canada Ltd., 7.375%, 2014 695,000 634,188
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Stone Container Corp., 7.375%, 2014 1,000,000 900,000
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Stora Enso Oyj, 6.404%, 2016 (a) 1,560,000 1,579,161
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Verso Paper Holdings LLC, 9.125%, 2014 (a) 160,000 159,200
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$ 4,226,798
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GAMING & LODGING - 2.0%
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Boyd Gaming Corp., 6.75%, 2014 $ 520,000 $ 490,100
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Caesars Entertainment, Inc., 8.125%, 2011 730,000 768,325
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GTECH Holdings Corp., 5.25%, 2014 235,000 235,136
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Harrah's Operating Co., Inc., 5.625%, 2015 2,147,000 2,009,442
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Host Marriott LP, 7.125%, 2013 465,000 469,650
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Host Marriott LP, 6.375%, 2015 250,000 240,000
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Host Marriott LP, 6.75%, 2016 1,000,000 970,000
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Mandalay Resort Group, 9.375%, 2010 450,000 475,313
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MGM Mirage, Inc., 8.375%, 2011 1,155,000 1,188,206
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MGM Mirage, Inc., 6.75%, 2013 (a) 230,000 221,950
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MGM Mirage, Inc., 6.875%, 2016 (a) 195,000 185,006
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Scientific Games Corp., 6.25%, 2012 380,000 360,050
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Starwood Hotels & Resorts Worldwide, Inc., 7.875%, 2012 1,810,000 1,959,325
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Station Casinos, Inc., 6.5%, 2014 455,000 424,288
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Wynn Las Vegas LLC, 6.625%, 2014 395,000 377,225
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$ 10,374,016
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INDUSTRIAL - 0.2%
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Amsted Industries, Inc., 10.25%, 2011 (z) $ 725,000 $ 783,000
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JohnsonDiversey Holdings, Inc., "B", 9.625%, 2012 310,000 305,350
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$ 1,088,350
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INSURANCE - 0.9%
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American International Group, Inc., 4.25%, 2013 $ 4,250,000 $ 3,945,173
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UnumProvident Corp., 7.625%, 2011 110,000 117,014
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UnumProvident Corp., 6.85%, 2015 (a) 580,000 587,369
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$ 4,649,556
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INSURANCE - PROPERTY & CASUALTY - 0.6%
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AXIS Capital Holdings Ltd., 5.75%, 2014 $ 1,689,000 $ 1,639,203
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Fund American Cos., Inc., 5.875%, 2013 1,351,000 1,326,344
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$ 2,965,547
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INTERNATIONAL MARKET QUASI-SOVEREIGN - 2.6%
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KfW Bankengruppe, FRN, 2.844%, 2007 EUR 3,321,000 $ 4,253,447
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Landesbank Baden-Wurttemberg, FRN, 3.092%, 2007 EUR 1,105,000 1,415,667
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Landesbank Baden-Wurttemberg, FRN, 3.217%, 2007 EUR 1,033,000 1,323,613
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Landesbank Baden-Wurttemberg, FRN, 3.333%, 2007 EUR 1,950,000 2,498,991
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Network Rail MTN Finance PLC, FRN, 3.255%, 2007 EUR 3,359,000 4,303,993
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$ 13,795,711
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INTERNATIONAL MARKET SOVEREIGN - 21.1%
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Commonwealth of Australia, 6.5%, 2013 AUD 516,000 $ 411,049
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Federal Republic of Germany, 3.5%, 2008 EUR 4,199,000 5,381,150
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Federal Republic of Germany, 3.75%, 2015 EUR 4,531,000 5,814,596
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Federal Republic of Germany, 6.25%, 2030 EUR 774,000 1,319,921
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Government of Canada, 4.5%, 2015 CAD 731,000 682,236
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Government of Canada, 8%, 2023 CAD 949,000 1,247,106
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Kingdom of Denmark, 4%, 2015 DKK 3,674,000 641,420
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Kingdom of Netherlands, 5.75%, 2007 EUR 4,645,000 6,011,990
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Kingdom of Netherlands, 3.75%, 2009 EUR 5,253,000 6,770,024
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Kingdom of Norway, 5%, 2015 NOK 3,590,000 605,395
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Kingdom of Spain, 6%, 2008 EUR 5,210,000 6,894,934
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Kingdom of Spain, 5.35%, 2011 EUR 3,107,000 4,295,868
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Republic of Austria, 5.5%, 2007 EUR 5,424,000 7,097,699
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Republic of Finland, 5.375%, 2013 EUR 8,835,000 12,456,021
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Republic of France, 4.75%, 2007 EUR 9,732,000 12,600,910
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Republic of France, 4.75%, 2012 EUR 1,219,000 1,655,048
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Republic of France, 6%, 2025 EUR 874,000 1,419,641
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Republic of Ireland, 4.25%, 2007 EUR 7,693,000 9,932,321
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Republic of Ireland, 4.6%, 2016 EUR 5,416,000 7,403,316
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United Kingdom Treasury, 5.75%, 2009 GBP 3,268,000 6,405,121
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United Kingdom Treasury, 5%, 2012 GBP 3,873,000 7,503,835
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United Kingdom Treasury, 8%, 2015 GBP 1,664,000 3,995,617
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$110,545,218
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MACHINERY & TOOLS - 0.5%
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Case New Holland, Inc., 6%, 2009 $ 1,415,000 $ 1,386,700
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Case New Holland, Inc., 9.25%, 2011 160,000 169,600
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Case New Holland, Inc., 7.125%, 2014 380,000 375,250
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Manitowoc Co., Inc., 10.5%, 2012 331,000 355,825
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Terex Corp., 9.25%, 2011 265,000 279,244
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$ 2,566,619
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MAJOR BANKS - 0.3%
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BNP Paribas, 5.186% to 2015, FRN to 2049 (a) $ 1,667,000 $ 1,565,663
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MEDICAL & HEALTH TECHNOLOGY & SERVICES - 1.1%
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DaVita, Inc., 6.625%, 2013 $ 170,000 $ 165,750
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DaVita, Inc., 7.25%, 2015 555,000 543,900
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Fisher Scientific International, Inc., 6.125%, 2015 1,500,000 1,483,125
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HCA, Inc., 8.75%, 2010 660,000 664,950
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HCA, Inc., 6.375%, 2015 930,000 739,350
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Omnicare, Inc., 6.875%, 2015 760,000 726,750
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Owens & Minor, Inc., 6.35%, 2016 970,000 971,290
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Triad Hospitals, Inc., 7%, 2013 565,000 539,575
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$ 5,834,690
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METALS & MINING - 0.8%
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Arch Western Finance LLC, 6.75%, 2013 $ 410,000 $ 395,650
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Foundation PA Coal Co., 7.25%, 2014 740,000 719,650
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Ispat Inland ULC, 9.75%, 2014 1,200,000 1,348,800
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Massey Energy Co., 6.875%, 2013 785,000 728,087
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Peabody Energy Corp., 5.875%, 2016 425,000 387,813
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Peabody Energy Corp., "B", 6.875%, 2013 355,000 351,450
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U.S. Steel Corp., 9.75%, 2010 413,000 438,813
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$ 4,370,263
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MORTGAGE BACKED - 13.4%
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Fannie Mae, 3.81%, 2013 $ 580,798 $ 537,901
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Fannie Mae, 4.1%, 2013 936,794 881,104
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Fannie Mae, 4.19%, 2013 793,590 748,868
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Fannie Mae, 4.845%, 2013 250,884 244,688
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Fannie Mae, 4.519%, 2014 902,479 862,017
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Fannie Mae, 4.6%, 2014 757,226 728,202
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Fannie Mae, 4.667%, 2014 1,338,066 1,289,374
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Fannie Mae, 4.77%, 2014 590,938 571,822
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Fannie Mae, 4.56%, 2015 317,372 303,125
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Fannie Mae, 4.665%, 2015 257,036 247,144
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Fannie Mae, 4.7%, 2015 245,252 236,321
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Fannie Mae, 4.74%, 2015 600,000 578,096
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Fannie Mae, 4.815%, 2015 600,000 580,506
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Fannie Mae, 4.87%, 2015 517,874 504,213
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Fannie Mae, 4.89%, 2015 172,785 168,509
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Fannie Mae, 4.925%, 2015 1,928,982 1,882,332
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Fannie Mae, 6%, 2016 - 2034 6,196,978 6,248,003
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Fannie Mae, 5.5%, 2019 - 2035 40,199,826 39,632,205
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Fannie Mae, 4.88%, 2020 566,090 556,241
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Fannie Mae, 6.5%, 2032 - 2033 3,229,718 3,288,910
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Freddie Mac, 5%, 2024 394,000 391,646
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Freddie Mac, 5.5%, 2034 7,840,909 7,725,754
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Freddie Mac, 6%, 2034 2,108,364 2,117,046
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$ 70,324,027
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NATURAL GAS - DISTRIBUTION - 0.1%
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AmeriGas Partners LP, 7.25%, 2015 $ 470,000 $ 461,775
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AmeriGas Partners LP, 7.125%, 2016 175,000 170,187
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$ 631,962
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NATURAL GAS - PIPELINE - 1.2%
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Atlas Pipeline Partners LP, 8.125%, 2015 $ 375,000 $ 382,500
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CenterPoint Energy Resources Corp., 7.875%, 2013 1,600,000 1,764,362
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Colorado Interstate Gas Co., 5.95%, 2015 170,000 159,915
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El Paso Performance-Linked, 7.75%, 2011 (a) 745,000 758,969
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Kinder Morgan Energy Partners, 7.125%, 2012 2,000,000 2,109,238
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Magellan Midstream Partners LP, 5.65%, 2016 311,000 303,276
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Williams Cos., Inc., 8.75%, 2032 800,000 862,000
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$ 6,340,260
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NETWORK & TELECOM - 1.5%
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Citizens Communications Co., 9.25%, 2011 $ 815,000 $ 891,406
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Citizens Communications Co., 9%, 2031 405,000 427,275
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Nordic Telephone Co. Holdings, 8.875%, 2016 (a) 180,000 187,200
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Qwest Corp., 7.875%, 2011 860,000 896,550
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Qwest Corp., 8.875%, 2012 450,000 487,125
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Telecom Italia Capital, 6%, 2034 1,000,000 902,835
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Telefonica Europe B.V., 7.75%, 2010 1,000,000 1,077,135
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Verizon New York, Inc., 6.875%, 2012 2,542,000 2,639,397
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Windstream Corp., 8.625%, 2016 (a) 280,000 296,100
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$ 7,805,023
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OIL SERVICES - 0.1%
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Basic Energy Services, Inc., 7.125%, 2016 (a) $ 210,000 $ 201,075
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GulfMark Offshore, Inc., 7.75%, 2014 435,000 432,825
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$ 633,900
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OILS - 0.7%
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Premcor Refining Group, Inc., 7.5%, 2015 $ 3,550,000 $ 3,707,833
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OTHER BANKS & DIVERSIFIED FINANCIALS - 5.0%
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Banco BMG S.A., 9.15%, 2016 (a) $ 982,000 $ 979,545
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Banco do Estado de Sao Paulo S.A., 8.7%, 2049 (a) 1,400,000 1,450,750
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Banco Mercantil del Norte S.A., 5.875% to 2009, FRN to 2014 (a) 808,000 808,000
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Bosphorus Financial Services Ltd., FRN, 7.205%, 2012 (z) 1,500,000 1,488,746
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Chuo Mitsui Trust & Banking Co., 5.506% to 2015, FRN to 2049 (a) 1,676,000 1,595,917
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DFS Funding Corp., FRN, 7.3294%, 2010 (z) 1,750,000 1,767,500
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HBOS Capital Funding LP, 6.071% to 2014, FRN to 2049 (a) 1,330,000 1,339,725
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HSBK Europe B.V., 7.75%, 2013 (a) 637,000 649,740
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ICICI Bank Ltd., 7.25% to 2016, FRN to 2049 (z) 200,000 201,272
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J.P. Morgan Chase & Co., 5.125%, 2014 2,100,000 2,045,442
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Kazkommerts International B.V., 10.125%, 2007 (a) 367,000 375,441
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Kazkommerts International B.V., 10.125%, 2007 128,000 130,944
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Mizuho Capital Investment 1 Ltd., 6.686% to 2016, FRN to 2049 (a) 3,800,000 3,806,285
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Mizuho Financial Group, Inc., 5.79%, 2014 (a) 1,898,000 1,906,127
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MUFG Capital Finance 1 Ltd., 6.346% to 2016, FRN to 2049 1,408,000 1,409,418
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RBS Capital Trust II, 6.425% to 2034, FRN to 2049 829,000 812,908
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Resona Bank Ltd., 5.85% to 2016, FRN to 2049 (a) 655,000 635,752
---------------------------------------------------------------------------------------------------------------------------------
Russian Standard Finance S.A., 8.125%, 2008 (a) 682,000 685,410
---------------------------------------------------------------------------------------------------------------------------------
Russian Standard Finance S.A., 7.5%, 2010 (a) 176,000 169,840
---------------------------------------------------------------------------------------------------------------------------------
Russian Standard Finance S.A., 8.625%, 2011 (a) 498,000 490,530
---------------------------------------------------------------------------------------------------------------------------------
Turanalem Finance B.V., 7.75%, 2013 (a) 590,000 591,475
---------------------------------------------------------------------------------------------------------------------------------
UFJ Finance Aruba AEC, 6.75%, 2013 1,300,000 1,383,487
---------------------------------------------------------------------------------------------------------------------------------
Woori Bank, 6.125% to 2011, FRN to 2016 (a) 1,490,000 1,506,295
---------------------------------------------------------------------------------------------------------------------------------
$ 26,230,549
---------------------------------------------------------------------------------------------------------------------------------
PRECIOUS METALS & MINERALS - 0.6%
---------------------------------------------------------------------------------------------------------------------------------
Alrosa Finance S.A., 8.875%, 2014 $ 2,880,000 $ 3,275,712
---------------------------------------------------------------------------------------------------------------------------------
PRINTING & PUBLISHING - 0.5%
---------------------------------------------------------------------------------------------------------------------------------
Dex Media East LLC, 9.875%, 2009 $ 565,000 $ 596,075
---------------------------------------------------------------------------------------------------------------------------------
Dex Media West LLC, 9.875%, 2013 1,527,000 1,639,616
---------------------------------------------------------------------------------------------------------------------------------
MediaNews Group, Inc., 6.875%, 2013 515,000 471,225
---------------------------------------------------------------------------------------------------------------------------------
$ 2,706,916
---------------------------------------------------------------------------------------------------------------------------------
RAILROAD & SHIPPING - 0.6%
---------------------------------------------------------------------------------------------------------------------------------
TFM S.A. de C.V., 9.375%, 2012 $ 2,809,000 $ 2,974,029
---------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE - 0.5%
---------------------------------------------------------------------------------------------------------------------------------
EOP Operating LP, REIT, 4.75%, 2014 $ 1,500,000 $ 1,402,810
---------------------------------------------------------------------------------------------------------------------------------
HRPT Properties Trust, REIT, 6.25%, 2016 1,324,000 1,350,819
---------------------------------------------------------------------------------------------------------------------------------
$ 2,753,629
---------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS - 0.3%
---------------------------------------------------------------------------------------------------------------------------------
YUM! Brands, Inc., 8.875%, 2011 $ 1,500,000 $ 1,690,490
---------------------------------------------------------------------------------------------------------------------------------
RETAILERS - 0.6%
---------------------------------------------------------------------------------------------------------------------------------
Couche-Tard, Inc., 7.5%, 2013 $ 420,000 $ 424,200
---------------------------------------------------------------------------------------------------------------------------------
Dollar General Corp., 8.625%, 2010 315,000 333,900
---------------------------------------------------------------------------------------------------------------------------------
Gap, Inc., 9.55%, 2008 940,000 1,015,105
---------------------------------------------------------------------------------------------------------------------------------
Limited Brands, Inc., 5.25%, 2014 1,100,000 1,028,468
---------------------------------------------------------------------------------------------------------------------------------
Steinway Musical Instruments, Inc., 7%, 2014 (a) 305,000 294,325
---------------------------------------------------------------------------------------------------------------------------------
$ 3,095,998
---------------------------------------------------------------------------------------------------------------------------------
SPECIALTY STORES - 0.1%
---------------------------------------------------------------------------------------------------------------------------------
GSC Holdings Corp., 8%, 2012 $ 310,000 $ 316,587
---------------------------------------------------------------------------------------------------------------------------------
STEEL - 0.2%
---------------------------------------------------------------------------------------------------------------------------------
Chaparral Steel Co., 10%, 2013 $ 515,000 $ 569,075
---------------------------------------------------------------------------------------------------------------------------------
FMG Finance Ltd., 10.625%, 2016 (z) 240,000 238,800
---------------------------------------------------------------------------------------------------------------------------------
$ 807,875
---------------------------------------------------------------------------------------------------------------------------------
SUPRANATIONAL - 0.3%
---------------------------------------------------------------------------------------------------------------------------------
Central American Bank, 4.875%, 2012 (a) $ 1,426,000 $ 1,365,066
---------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - WIRELESS - 1.6%
---------------------------------------------------------------------------------------------------------------------------------
AT&T Wireless Services, Inc., 8.75%, 2031 $ 1,500,000 $ 1,895,901
---------------------------------------------------------------------------------------------------------------------------------
Centennial Communications Corp., 10.125%, 2013 240,000 253,200
---------------------------------------------------------------------------------------------------------------------------------
Cingular Wireless LLC, 6.5%, 2011 1,700,000 1,774,139
---------------------------------------------------------------------------------------------------------------------------------
Excelcomindo Finance Co., 7.125%, 2013 (a) 100,000 99,000
---------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 5.95%, 2014 1,315,000 1,278,463
---------------------------------------------------------------------------------------------------------------------------------
Rogers Wireless, Inc., 6.375%, 2014 550,000 539,000
---------------------------------------------------------------------------------------------------------------------------------
Rogers Wireless, Inc., 7.5%, 2015 450,000 470,250
---------------------------------------------------------------------------------------------------------------------------------
UBS Luxembourg S.A., 8.25%, 2016 2,036,000 2,061,450
---------------------------------------------------------------------------------------------------------------------------------
$ 8,371,403
---------------------------------------------------------------------------------------------------------------------------------
TOBACCO - 0.4%
---------------------------------------------------------------------------------------------------------------------------------
Reynolds American, Inc., 7.25%, 2012 (a) $ 818,000 $ 840,541
---------------------------------------------------------------------------------------------------------------------------------
Reynolds American, Inc., 7.3%, 2015 (a) 1,300,000 1,333,791
---------------------------------------------------------------------------------------------------------------------------------
$ 2,174,332
---------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - SERVICES - 0.2%
---------------------------------------------------------------------------------------------------------------------------------
Hertz Corp., 8.875%, 2014 (a) $ 315,000 $ 326,813
---------------------------------------------------------------------------------------------------------------------------------
Stena AB, 7%, 2016 375,000 352,500
---------------------------------------------------------------------------------------------------------------------------------
Westinghouse Air Brake Technologies Corp., 6.875%, 2013 370,000 359,825
---------------------------------------------------------------------------------------------------------------------------------
$ 1,039,138
---------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES - 2.8%
---------------------------------------------------------------------------------------------------------------------------------
Small Business Administration, 4.34%, 2024 $ 7,277,666 $ 6,886,841
---------------------------------------------------------------------------------------------------------------------------------
Small Business Administration, 4.77%, 2024 5,582,028 5,416,955
---------------------------------------------------------------------------------------------------------------------------------
Small Business Administration, 5.11%, 2025 2,526,531 2,492,119
---------------------------------------------------------------------------------------------------------------------------------
$ 14,795,915
---------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 9.3%
---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 12%, 2013 $ 4,500,000 $ 5,103,635
---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 10.625%, 2015 3,350,000 4,772,571
---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 6.25%, 2023 (f) 8,000,000 9,173,128
---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 5.375%, 2031 635,000 675,580
---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes, 4.25%, 2014 2,500,000 2,418,165
---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes, 4.125%, 2015 1,285,000 1,229,334
---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes, 9.875%, 2015 5,025,000 6,923,902
---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes, 4.5%, 2016 4,128,000 4,051,083
---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes, TIPS, 2%, 2014 11,153,789 10,952,931
---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes, TIPS, 1.625%, 2015 3,831,519 3,648,775
---------------------------------------------------------------------------------------------------------------------------------
$ 48,949,104
---------------------------------------------------------------------------------------------------------------------------------
UTILITIES - ELECTRIC POWER - 4.0%
---------------------------------------------------------------------------------------------------------------------------------
Allegheny Energy Supply Co. LLC, 8.25%, 2012 (a) $ 370,000 $ 399,600
---------------------------------------------------------------------------------------------------------------------------------
DPL, Inc., 6.875%, 2011 634,000 664,450
---------------------------------------------------------------------------------------------------------------------------------
Duke Capital Corp., 8%, 2019 1,350,000 1,541,821
---------------------------------------------------------------------------------------------------------------------------------
Edison Mission Energy, 7.75%, 2016 (a) 385,000 385,000
---------------------------------------------------------------------------------------------------------------------------------
Empresa Nacional de Electricidad S.A., 8.35%, 2013 1,269,000 1,409,623
---------------------------------------------------------------------------------------------------------------------------------
Enersis S.A., 7.375%, 2014 1,273,000 1,340,904
---------------------------------------------------------------------------------------------------------------------------------
FirstEnergy Corp., 6.45%, 2011 4,199,000 4,354,959
---------------------------------------------------------------------------------------------------------------------------------
HQI Transelec Chile S.A., 7.875%, 2011 1,500,000 1,578,234
---------------------------------------------------------------------------------------------------------------------------------
Midwest Generation LLC, 8.75%, 2034 315,000 335,475
---------------------------------------------------------------------------------------------------------------------------------
Mirant North American LLC, 7.375%, 2013 555,000 549,450
---------------------------------------------------------------------------------------------------------------------------------
MSW Energy Holdings LLC, 7.375%, 2010 545,000 547,725
---------------------------------------------------------------------------------------------------------------------------------
Nevada Power Co., 5.875%, 2015 900,000 889,647
---------------------------------------------------------------------------------------------------------------------------------
NorthWestern Corp., 5.875%, 2014 1,435,000 1,425,166
---------------------------------------------------------------------------------------------------------------------------------
NRG Energy, Inc., 7.375%, 2016 1,110,000 1,093,350
---------------------------------------------------------------------------------------------------------------------------------
Reliant Resources, Inc., 9.5%, 2013 235,000 244,400
---------------------------------------------------------------------------------------------------------------------------------
System Energy Resources, Inc., 5.129%, 2014 (a) 2,255,683 2,199,223
---------------------------------------------------------------------------------------------------------------------------------
TXU Corp., 5.55%, 2014 570,000 531,472
---------------------------------------------------------------------------------------------------------------------------------
TXU Energy Co., 7%, 2013 1,220,000 1,272,959
---------------------------------------------------------------------------------------------------------------------------------
$ 20,763,458
---------------------------------------------------------------------------------------------------------------------------------
TOTAL BONDS $512,511,086
---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 0.0%
---------------------------------------------------------------------------------------------------------------------------------
PRINTING & PUBLISHING - 0.0%
---------------------------------------------------------------------------------------------------------------------------------
Golden Books Family Entertainment, Inc. (n) 3,683 $ 0
---------------------------------------------------------------------------------------------------------------------------------
SPECIALTY CHEMICALS - 0.0%
---------------------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc. (n) 1 $ 13
---------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS $ 13
---------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS - 0.1%
---------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE - 0.1%
---------------------------------------------------------------------------------------------------------------------------------
General Motors Corp., "B", 5.25% 17,225 $ 325,552
---------------------------------------------------------------------------------------------------------------------------------
WARRANTS - 0.0%
---------------------------------------------------------------------------------------------------------------------------------
STRIKE PRICE FIRST EXERCISE
---------------------------------------------------------------------------------------------------------------------------------
BUSINESS SERVICES - 0.0%
---------------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. (n) $0.14 1/28/1997 1,625 $ 0
---------------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. (n) $0.14 1/28/1997 750 0
---------------------------------------------------------------------------------------------------------------------------------
$ 0
---------------------------------------------------------------------------------------------------------------------------------
SPECIALTY CHEMICALS - 0.0%
---------------------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc. (n) $52.00 12/31/2002 1 $ 0
---------------------------------------------------------------------------------------------------------------------------------
TOTAL WARRANTS $ 0
---------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 0.7%
---------------------------------------------------------------------------------------------------------------------------------
General Electric Co., 5.27%, due 9/01/06 (y) $ 3,909,000 $ 3,909,000
---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (k) $516,745,651
---------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES - 1.5% 7,918,147
---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $524,663,798
---------------------------------------------------------------------------------------------------------------------------------
(a) 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 $46,156,529, representing 8.8% of net assets.
(f) All or a portion of the security has been segregated as collateral for an open futures contract.
(i) 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.
(k) As of August 31, 2006, the trust held securities fair valued in accordance with the policies adopted by the Board of Trustees,
aggregating $501,115,937 and 96.98% of market value. An independent pricing service provided an evaluated bid for 96.18% of
the market value.
(n) Non-income producing security.
(y) The rate shown represents an annualized yield at time of purchase.
(z) Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale.
These securities generally may be resold in transactions exempt from registration or to the public if the securities are
subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable
price may be difficult. The trust holds the following restricted securities:
ACQUISITION ACQUISITION CURRENT TOTAL % OF
RESTRICTED SECURITIES DATE COST MARKET VALUE NET ASSETS
Amsted Industries, Inc., 10.25%, 2011 8/08/2003 $ 725,000 $ 783,000
Bayview Financial Revolving Mortgage Loan Trust,
FRN, 6.1281%, 2040 3/01/2006 1,160,000 1,159,993
Bosphorus Financial Services Ltd., FRN, 7.205%, 2012 3/08/2005 1,500,000 1,488,746
DFS Funding Corp., FRN, 7.3294%, 2010 6/24/2005 1,750,000 1,767,500
FMG Finance Ltd., 10.625%, 2016 8/11/2006 240,000 238,800
ICICI Bank Ltd., 7.25% to 2016, FRN to 2049 8/17/2006 198,648 201,272
Pan American Energy LLC, 7.75%, 2012 8/02/2006 109,000 109,681
Spirit Master Funding LLC, 5.05%, 2023 7/15/2005 1,906,137 1,821,494
--------------------------------------------------------------------------------------------------------------------------
Total Restricted Securities $7,570,486 1.4%
========== =======
The following abbreviations are used in this report and are defined:
FRN Floating Rate Note. The interest rate is the rate in effect as of period end.
REIT Real Estate Investment Trust
TIPS Treasury Inflation Protected Security
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
CAD Canadian Dollar
CNY Chinese Yuan Renminbi
DKK Danish Krone
EUR Euro
GBP British Pound
MYR Malaysian Ringgit
NOK Norwegian Krone
NZD New Zealand Dollar
SGD Singapore Dollar
See attached schedules. For more information see notes to financial statements as disclosed in the most recent semiannual or
annual report.
MFS CHARTER INCOME TRUST
SUPPLEMENTAL SCHEDULES (UNAUDITED) 08/31/2006
(1) PORTFOLIO SECURITIES
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 follow
Aggregate Cost $526,025,481
============
Gross unrealized appreciation 6,162,316
Gross unrealized depreciation (15,442,146)
------------
Net unrealized appreciation (depreciation) $ (9,279,830)
============
The aggregate cost above includes prior fiscal year end tax adjustments.
(2) FINANCIAL INSTRUMENTS
DERIVATIVES
-----------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Sales and Purchases in the table below are reported by currency.
NET UNREALIZED
CONTRACTS TO CONTRACTS APPRECIATION
DELIVER/RECEIVE SETTLEMENT DATE IN EXCHANGE FOR AT VALUE (DEPRECIATION)
-----------------------------------------------------------------------------------------------
SALES
-----
AUD 543,317 10/10/06 $ 413,084 414,634 $ (1,550)
DKK 3,734,465 10/25/06 642,417 643,594 (1,177)
EUR 82,392,282 10/04/06-10/20/06 106,183,656 105,891,107 292,549
GBP 9,529,224 10/02/2006 17,801,455 18,160,407 (358,952)
NOK 3,896,847 9/11/06 620,523 616,938 3,585
NZD 1,365,423 10/10/06 842,616 893,035 (50,419)
------------ ------------ ---------
$126,503,751 $126,619,715 $(115,964)
============ ============ =========
PURCHASES
---------
CNY 42,072,400 9/07/06 $ 5,298,457 5,291,660 $ (6,797)
EUR 1,029,340 10/04/06 1,313,294 1,321,747 8,453
MYR 4,696,964 9/25/06 1,283,324 1,277,665 (5,659)
NZD 1,017,650 10/10/06 647,958 665,579 17,621
SGD 2,049,719 9/05/06 1,297,291 1,302,919 5,628
------------ ------------ ---------
$ 9,840,324 $ 9,859,570 $ 19,246
============ ============ =========
At August 31, 2006, forward foreign currency purchases and sales under master netting
agreements excluded above amounted to a net payable of $18,782 with Merrill Lynch
International.
FUTURES CONTRACTS
UNREALIZED
EXPIRATION APPRECIATION
CONTRACTS VALUE DATE (DEPRECIATION)
---------------------------------------------------------------------------------------------------
U.S. Treasury Bond (Long) 50 $ 5,553,125 Dec-06 $ 12,325
U.S. Treasury Note 10 year (Short) 88 9,449,000 Dec-06 (18,870)
---------------------------------------------------------------------------------------------------
$ (6,545)
========
SWAP AGREEMENTS
UNREALIZED
NOTIONAL CASH FLOWS CASH FLOWS APPRECIATION
EXPIRATION AMOUNT COUNTERPARTY TO RECEIVE TO PAY (DEPRECIATION)
----------------------------------------------------------------------------------------------------------
CREDIT DEFAULT
3/20/11 USD 1,270,000 Citibank, N.A. (1) 0.65% (fixed rate) $ (9,324)
3/20/11 USD 2,500,000 Merrill Lynch (2) 0.43% (fixed rate) (7,220)
International
--------
$(16,544)
========
(1) Fund to receive notional amount upon a defined credit default event by Autozone, Inc., 5.875%, 10/15/12.
(2) Fund to receive notional amount upon a defined credit default event by New York Times Co., 4.61%, 9/26/12.
At August 31, 2006, the trust had sufficient cash and/or securities to cover any commitments under these derivative
contracts.
(3) COUNTRY WEIGHTINGS
Country weighting percentages of portfolio holdings based on total net assets as of August 31, 2006, are as follows:
-----------------------------------------
United States 63.1%
-----------------------------------------
United Kingdom 4.7%
-----------------------------------------
Germany 4.4%
-----------------------------------------
Ireland 3.5%
-----------------------------------------
France 3.3%
-----------------------------------------
Finland 2.7%
-----------------------------------------
Netherlands 2.5%
-----------------------------------------
Spain 2.4%
-----------------------------------------
Russia 2.4%
-----------------------------------------
Others 11.0%
-----------------------------------------
The country weighting percentages include both accrued interest amounts and the equivalent exposure from any
derivative holdings, if applicable.
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.
NOTICE
A copy of the Amended and Restated Declaration of Trust of the Registrant is on
file with the Secretary of State of the Commonwealth of Massachusetts and
notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not individually
and the obligations of or arising out of this instrument are not binding upon
any of the Trustees or shareholders individually, but are binding only upon the
assets and property of the respective constituent series of the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: MFS CHARTER INCOME TRUST
-------------------------------------------------------------------
By (Signature and Title)* MARIA F. DWYER
-----------------------------------------------------
Maria F. Dwyer, President
Date: October 19, 2006
----------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* MARIA F. DWYER
-----------------------------------------------------
Maria F. Dwyer, President (Principal Executive
Officer)
Date: October 19, 2006
----------------
By (Signature and Title)* TRACY ATKINSON
-----------------------------------------------------
Tracy Atkinson, Treasurer (Principal Financial Officer
and Accounting Officer)
Date: October 19, 2006
----------------
* Print name and title of each signing officer under his or her signature.