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)
James R. Bordewick, Jr.
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, 2004
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ITEM 1. SCHEDULE OF INVESTMENTS.
MFS(R) Mutual Funds
QUARTERLY PORTFOLIO HOLDINGS 8/31/04
MFS(R) CHARTER INCOME TRUST
[graphic omitted]
[logo] M F S(R)
INVESTMENT MANAGEMENT
The Trust is a closed-end investment product. Shares of the Trust are only
available for purchase/sale on the NYSE at the current market price. Shares may
trade at a discount to NAV.
Visit MFS.COM for the latest information about your investment.
o Annual and semiannual reports contain information regarding the specific
securities held in the fund and how the fund has performed over the period.
o Week in Review provides a look at key events influencing U.S. and global
financial markets for the week.
o MFS Global Perspective is a commentary and analysis of markets around the
globe.
o Chief Investment Strategist Corner is a commentary by James Swanson, MFS'
Chief Investment Strategist.
A fact sheet, annual, and semiannual report for the fund can be accessed by
clicking "Closed End Funds" on the home page. Week in Review, MFS Global
Perspective, and Chief Investment Strategist Corner are located under "Updates
and Announcements."
The portfolio is actively managed, and current holdings may be different.
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PORTFOLIO OF INVESTMENTS (UNAUDITED) 08/31/2004 MFS(R)CHARTER INCOME TRUST
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ISSUER PAR AMOUNT $ VALUE
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BONDS - 95.3%
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U.S. BONDS - 59.5%
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Advertising & Broadcasting - 1.4%
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Allbritton Communications Co., 7.75%, 2012 $1,500,000 $1,526,250
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DIRECTV Holdings LLC, 8.375%, 2013 335,000 381,062
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Lamar Media Corp., 7.25%, 2013 1,390,000 1,480,350
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Muzak LLC, 10%, 2009 440,000 391,600
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Paxson Communications Corp., 0% to 2006,12.25% to 2009 2,305,000 1,950,606
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Spanish Broadcasting System, Inc., 9.625%, 2009 1,500,000 1,584,375
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Young Broadcasting, Inc., 8.5%, 2008 600,000 639,750
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$7,953,993
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Aerospace - 0.7%
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BAE Systems Holdings, Inc., 6.4%, 2011## $1,700,000 $1,867,933
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K&F Industries, Inc., 9.25%, 2007 941,000 960,996
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TransDigm Holding Co., 8.375%, 2011 995,000 1,052,213
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$3,881,142
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Agency - Other - 1.0%
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Financing Corp., 10.35%, 2018 $3,600,000 $5,529,596
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Airlines - 0.2%
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Continental Airlines, Inc., 7.568%, 2006 $575,000 $417,504
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Continental Airlines, Inc., 7.566%, 2020 1,077,363 812,398
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$1,229,902
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Apparel Manufacturers - 0%
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WestPoint Stevens, Inc., 7.875%, 2005 - 2008** $3,550,000 $26,625
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Asset Backed & Securitized - 4.5%
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Airplane Pass-Through Trust, 10.875%, 2019** $222,233 $1,111
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Amresco Commercial Mortgage Funding I, 7%, 2029 3,000,000 3,211,758
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Asset Securitization Corp., 8.2889%, 2026 2,000,000 2,081,038
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Asset Securitization Corp., 7.525%, 2029 1,586,134 1,379,937
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Commercial Mortgage Acceptance Corp., 5.44%, 2030## 3,535,000 3,360,106
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Credit Suisse First Boston Mortgage, 6.75%, 2030## 2,000,000 1,920,163
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DLJ Commercial Mortgage Corp., 6.04%, 2031 2,000,000 2,007,192
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First Union-Lehman Brothers Bank of America, 0.74%, 2028^^ 81,462,735 1,866,034
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First Union-Lehman Brothers Commercial Mortgage Trust, 7%, 2029## 850,000 945,493
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First Union-Lehman Brothers Commercial Mortgage Trust, 7.5%, 2029 3,000,000 3,124,570
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Mortgage Capital Funding, Inc., 1.0475%, 2031^^ 23,806,484 619,380
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TIAA Retail Estate CDO Ltd., 7.17%, 2032## 4,171,517 4,453,820
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$24,970,602
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Automotive - 1.3%
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DaimlerChrysler N.A.Holdings Corp., 8.5%, 2031 $400,000 $487,938
---------------------------------------------------------------------------------------------------------------------------
Dana Corp., 9%, 2011 1,195,000 1,432,506
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Ford Motor Credit Co., 7%, 2013 2,252,000 2,364,048
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General Motors Acceptance Corp., 8%, 2031 1,363,000 1,412,233
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TRW Automotive, Inc., 9.375%, 2013 781,000 900,103
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TRW Automotive, Inc., 11%, 2013 84,000 101,640
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Tenneco Automotive, Inc., 10.25%, 2013 535,000 619,263
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$7,317,731
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Banks & Credit Companies - 0.8%
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Abbey National Capital Trust I, 8.963% to 2030,4.625% to 2049 $1,500,000 $2,009,860
---------------------------------------------------------------------------------------------------------------------------
RBS Capital Trust II, 6.425% to 2034,3.7425% to 2049 829,000 836,801
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Socgen Real Estate LLC, 7.64% to 2007,4.552% to 2049## 1,600,000 1,786,278
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$4,632,939
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Broadcast & Cable TV - 1.8%
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CSC Holdings, Inc., 8.125%, 2009 $550,000 $589,875
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Charter Communications, Inc., 8.625%, 2009 3,030,000 2,408,850
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Continental Cablevision, Inc., 9.5%, 2013 2,390,000 2,634,401
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Lenfest Communications, Inc., 10.5%, 2006 1,900,000 2,131,137
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Mediacom Broadband LLC, 11%, 2013 600,000 649,500
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TCI Communications, Inc., 9.8%, 2012 1,169,000 1,500,825
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$9,914,588
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Brokerage & Asset Managers - 1.4%
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Goldman Sachs Group, Inc., 5.7%, 2012 $2,680,000 $2,827,628
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Morgan Stanley Dean Witter, Inc., 6.6%, 2012 2,537,000 2,833,213
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Morgan Stanley Group, Inc., 5.3%, 2013 1,800,000 1,847,034
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$7,507,875
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Building - 0.5%
---------------------------------------------------------------------------------------------------------------------------
American Standard Cos., Inc., 7.375%, 2008 $1,005,000 $1,108,012
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Atrium Cos., Inc., 10.5%, 2009 1,070,000 1,123,500
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Jacuzzi Brands, Inc., 9.625%, 2010 510,000 562,275
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Williams Scotsman, Inc., 10%, 2008 205,000 224,475
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$3,018,262
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Business Services - 0.2%
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Iron Mountain, Inc., 7.75%, 2015 $600,000 $624,000
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Xerox Corp., 7.625%, 2013 595,000 632,188
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$1,256,188
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Chemicals - 0.8%
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Equistar Chemicals LP, 10.625%, 2011 $710,000 $798,750
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Huntsman International LLC, 10.125%, 2009 590,000 607,700
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IMC Global, Inc., 10.875%, 2013 480,000 604,800
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Lyondell Chemical Co., 11.125%, 2012 1,690,000 1,922,375
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Nalco Co., 7.75%, 2011## 690,000 734,850
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$4,668,475
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Conglomerates - 0.3%
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Tyco International Group S.A., 6.75%, 2011 $1,600,000 $1,788,013
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Consumer Goods & Services - 0.1%
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KinderCare Learning Centers, Inc., 9.5%, 2009 $656,000 $665,840
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Containers - 0.2%
---------------------------------------------------------------------------------------------------------------------------
Owens-Brockway Glass Container, Inc., 8.875%, 2009 $660,000 $717,750
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Pliant Corp., 13%, 2010 190,000 174,800
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$892,550
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Energy - Independent - 1.2%
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Chesapeake Energy Corp., 7.5%, 2014 $2,165,000 $2,311,137
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Chesapeake Energy Corp., 6.875%, 2016 925,000 936,562
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Kerr-McGee Corp., 6.95%, 2024 1,800,000 1,893,463
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Pioneer Natural Resource Co., 5.875%, 2016 1,425,000 1,472,270
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$6,613,432
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Energy - Integrated - 0.3%
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Amerada Hess Corp., 7.3%, 2031 $1,700,000 $1,828,602
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Entertainment - 1.5%
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AMC Entertainment, Inc., 9.5%, 2011 $1,224,000 $1,248,480
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Loews Cineplex Entertainment Corp., 9%, 2014## 35,000 35,525
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News America Holdings, 7.7%, 2025 1,140,000 1,331,032
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News America, Inc., 6.55%, 2033 538,000 567,510
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Six Flags, Inc., 9.75%, 2013 1,500,000 1,395,000
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Turner Broadcasting System, Inc., 8.375%, 2013 1,784,000 2,151,738
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Walt Disney Co., 6.375%, 2012 1,700,000 1,870,289
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$8,599,574
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Food & Non-Alcoholic Beverages - 0.1%
---------------------------------------------------------------------------------------------------------------------------
Seminis Vegetable Seeds, Inc., 10.25%, 2013 $360,000 $399,600
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Forest & Paper Products - 0.3%
---------------------------------------------------------------------------------------------------------------------------
Buckeye Technologies, Inc., 8.5%, 2013 $580,000 $614,800
---------------------------------------------------------------------------------------------------------------------------
Georgia Pacific Corp., 9.375%, 2013 500,000 588,750
---------------------------------------------------------------------------------------------------------------------------
Graphic Packaging International, Inc., 8.5%, 2011 500,000 555,000
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$1,758,550
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Gaming & Lodging - 2.2%
---------------------------------------------------------------------------------------------------------------------------
Ameristar Casinos, Inc., 10.75%, 2009 $515,000 $580,662
---------------------------------------------------------------------------------------------------------------------------
Boyd Gaming Corp., 6.75%, 2014 610,000 611,525
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GEO Group, Inc., 8.25%, 2013 1,120,000 1,134,000
---------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.625%, 2012 1,100,000 1,256,750
---------------------------------------------------------------------------------------------------------------------------
MGM Mirage, Inc., 8.375%, 2011 1,675,000 1,817,375
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Pinnacle Entertainment, Inc., 8.75%, 2013 900,000 927,000
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Starwood Hotels & Resorts Worldwide, Inc., 7.875%, 2012 3,000,000 3,360,000
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Station Casinos, Inc., 6.5%, 2014 600,000 600,000
---------------------------------------------------------------------------------------------------------------------------
Venetian Casino Resort LLC, 11%, 2010 1,550,000 1,765,063
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$12,052,375
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Industrial - 0.2%
---------------------------------------------------------------------------------------------------------------------------
MSW Energy Holdings LLC, 7.375%, 2010 $1,045,000 $1,086,800
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Insurance - 0.3%
---------------------------------------------------------------------------------------------------------------------------
ASIF Global Financing XIX, 4.9%, 2013## $1,800,000 $1,825,189
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Insurance - Property & Casualty - 0.3%
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Fund American Cos., Inc., 5.875%, 2013 $1,351,000 $1,378,217
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Machinery & Tools - 0.9%
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AGCO Corp., 9.5%, 2008 $1,750,000 $1,898,750
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Amsted Industries, Inc., 10.25%, 2011## 565,000 610,200
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Case New Holland, Inc., 9.25%, 2011## 240,000 265,200
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Manitowoc Co., Inc., 10.5%, 2012 510,000 581,400
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Terex Corp., 9.25%, 2011 555,000 621,600
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United Rentals, Inc., 6.5%, 2012 1,230,000 1,168,500
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$5,145,650
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Medical & Health Technology & Services - 0.6%
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Fisher Scientific International, Inc., 8.125%, 2012 $1,147,000 $1,273,170
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HCA, Inc., 8.75%, 2010 1,500,000 1,759,425
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Mariner Health Care, Inc., 8.25%, 2013## 255,000 270,300
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$3,302,895
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Metals & Mining - 0.2%
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Peabody Energy Corp., 6.875%, 2013 $355,000 $374,525
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U.S. Steel Corp., 9.75%, 2010 858,000 965,250
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$1,339,775
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Mortgage Backed - 10.7%
---------------------------------------------------------------------------------------------------------------------------
Fannie Mae, 6%, 2016 - 2034 $10,322,025 $10,793,398
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Fannie Mae, 5.9956%, 2020 3,539 3,539
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Fannie Mae, 6.5%, 2031 - 2033 6,694,598 7,052,868
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Fannie Mae, 5.5%, 2033 - 2034 32,600,626 33,194,454
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Fannie Mae, 5%, 2034 5,545,915 5,520,904
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Freddie Mac, 6%, 2034 3,098,000 3,208,366
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$59,773,529
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Natural Gas - Distribution - 0.5%
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AmeriGas Partners LP, 8.875%, 2011 $555,000 $604,950
---------------------------------------------------------------------------------------------------------------------------
CenterPoint Energy Resources Corp., 7.875%, 2013 1,600,000 1,887,474
---------------------------------------------------------------------------------------------------------------------------
$2,492,424
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Natural Gas - Pipeline - 0.9%
---------------------------------------------------------------------------------------------------------------------------
El Paso Energy Corp., 7.625%, 2010 $570,000 $607,050
---------------------------------------------------------------------------------------------------------------------------
Enterprise Products Partners LP, 6.375%, 2013 2,800,000 2,900,139
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Southern Natural Gas Co., Inc., 8.875%, 2010 550,000 618,750
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Williams Cos., Inc., 7.125%, 2011 830,000 904,700
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$5,030,639
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Oil Services - 0.1%
---------------------------------------------------------------------------------------------------------------------------
Pride International, Inc., 7.375%, 2014## $580,000 $617,700
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Pollution Control - 0.2%
---------------------------------------------------------------------------------------------------------------------------
Allied Waste North America, Inc., 7.875%, 2013 $1,130,000 $1,192,150
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Printing & Publishing - 0.9%
---------------------------------------------------------------------------------------------------------------------------
Dex Media East LLC, 9.875%, 2009 $1,500,000 $1,725,000
---------------------------------------------------------------------------------------------------------------------------
Dex Media West LLC, 9.875%, 2013 1,465,000 1,684,750
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MediaNews Group, Inc., 6.875%, 2013 1,700,000 1,712,750
---------------------------------------------------------------------------------------------------------------------------
$5,122,500
---------------------------------------------------------------------------------------------------------------------------
Restaurants - 0.3%
---------------------------------------------------------------------------------------------------------------------------
YUM! Brands, Inc., 8.875%, 2011 $1,500,000 $1,857,864
---------------------------------------------------------------------------------------------------------------------------
Retailers - 0.5%
---------------------------------------------------------------------------------------------------------------------------
Gap, Inc., 10.3%, 2008 $1,070,000 $1,310,750
---------------------------------------------------------------------------------------------------------------------------
J. Crew Operating Corp., 10.375%, 2007 1,100,000 1,122,000
---------------------------------------------------------------------------------------------------------------------------
Rite Aid Corp., 9.5%, 2011 530,000 583,000
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$3,015,750
---------------------------------------------------------------------------------------------------------------------------
Supermarkets - 0.3%
---------------------------------------------------------------------------------------------------------------------------
Roundy's, Inc., 8.875%, 2012 $1,650,000 $1,753,125
---------------------------------------------------------------------------------------------------------------------------
Telecommunications - Wireless - 1.9%
---------------------------------------------------------------------------------------------------------------------------
Alamosa Holdings, Inc., 11%, 2010 $1,251,000 $1,369,845
---------------------------------------------------------------------------------------------------------------------------
Centennial Communications Corp., 10.125%, 2013 1,800,000 1,849,500
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Cingular Wireless LLC, 6.5%, 2011 1,700,000 1,874,989
---------------------------------------------------------------------------------------------------------------------------
Crown Castle International Corp., 7.5%, 2013 1,745,000 1,745,000
---------------------------------------------------------------------------------------------------------------------------
Dobson Communications Corp., 8.875%, 2013 500,000 342,500
---------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 7.375%, 2015 520,000 543,400
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Rural Cellular Corp., 9.75%, 2010 98,000 87,710
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Rural Cellular Corp., 9.875%, 2010 1,175,000 1,166,188
---------------------------------------------------------------------------------------------------------------------------
Western Wireless Corp., 9.25%, 2013 1,735,000 1,782,713
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$10,761,845
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Telecommunications - Wireline - 1.1%
---------------------------------------------------------------------------------------------------------------------------
Qwest Services Corp., 14%, 2010## $1,025,000 $1,191,563
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Sprint Capital Corp., 6.875%, 2028 1,800,000 1,876,124
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Verizon New York, Inc., 6.875%, 2012 2,542,000 2,814,787
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$5,882,474
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Tobacco - 0.2%
---------------------------------------------------------------------------------------------------------------------------
R.J.Reynolds Tobacco Holdings, Inc., 7.25%, 2012 $818,000 $807,775
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U.S. Government Agencies - 6.8%
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Fannie Mae, 5%, 2007 $5,105,000 $5,363,032
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Fannie Mae, 6%, 2008 - 2011 8,677,000 9,549,489
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Freddie Mac, 7%, 2005 6,100,000 6,359,860
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Small Business Administration, 4.34%, 2024 8,168,000 7,974,533
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Small Business Administration, 4.77%, 2024 6,386,000 6,403,690
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Small Business Administration, 5.19%, 2024 2,500,000 2,556,596
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$38,207,200
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U.S. Treasury Obligations - 9.8%
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U.S. Treasury Bonds, 10.75%, 2005 $8,000,000 $8,661,560
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U.S. Treasury Bonds, 12%, 2013 7,500,000 9,965,625
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U.S. Treasury Bonds, 10.625%, 2015 3,350,000 5,205,454
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U.S. Treasury Bonds, 9.875%, 2015 5,025,000 7,497,260
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U.S. Treasury Notes, 6.875%, 2006 8,000,000 8,613,440
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U.S. Treasury Notes, 3.375%, 2007 6,788,181 7,275,552
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U.S. Treasury Notes, 3.625%, 2008 6,627,738 7,285,594
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$54,504,485
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Utilities - Electric Power - 2.0%
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CMS Energy Corp., 8.5%, 2011 $570,000 $618,450
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Calpine Corp., 8.75%, 2013## 1,185,000 924,300
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DPL, Inc., 6.875%, 2011 1,673,000 1,739,920
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Dynegy Holdings, Inc., 9.875%, 2010## 550,000 613,250
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FirstEnergy Corp., 6.45%, 2011 1,700,000 1,839,247
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PG&E Corp., 6.875%, 2008 405,000 439,425
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PSEG Energy Holdings LLC, 7.75%, 2007 1,046,000 1,111,375
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Pacific Gas & Electric Co., 6.05%, 2034 479,000 480,706
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Reliant Resources, Inc., 9.5%, 2013 430,000 475,150
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System Energy Resources, Inc., 5.129%, 2014## 2,757,000 2,790,194
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$11,032,017
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Total U.S.Bonds $332,636,457
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FOREIGN BONDS - 35.8%
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Australia - 0.7%
---------------------------------------------------------------------------------------------------------------------------
Burns,Philp & Co. Ltd., 9.75%, 2012 (Food & Non-Alcoholic Beverages) $2,000,000 $2,110,000
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Government of Australia, 6.25%, 2015 (International Market Sovereign)^ AUD 2,618,000 1,946,297
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$4,056,297
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Austria - 1.6%
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Republic of Austria, 5.5%, 2007 (International Market Sovereign) EUR 5,859,000 $7,692,348
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Republic of Austria, 5%, 2012 (International Market Sovereign) 772,000 1,012,044
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Republic of Austria, 4.65%, 2018 (International Market Sovereign) 358,000 450,792
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$9,155,184
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Belgium - 0.9%
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Kingdom of Belgium, 3.75%, 2009 (International Market Sovereign) EUR 1,810,000 $2,252,020
---------------------------------------------------------------------------------------------------------------------------
Kingdom of Belgium, 5%, 2012 (International Market Sovereign) 1,973,000 2,582,807
---------------------------------------------------------------------------------------------------------------------------
$4,834,827
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Brazil - 2.5%
---------------------------------------------------------------------------------------------------------------------------
Federal Republic of Brazil, 2.125%, 2012 (Emerging Market Sovereign) $2,609,892 $2,352,165
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Federal Republic of Brazil, 8%, 2014 (Emerging Market Sovereign) 7,786,020 7,620,567
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Federal Republic of Brazil, 2.0625%, 2024 (Emerging Market Sovereign) 749,000 632,905
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Federal Republic of Brazil, 11%, 2040 (Emerging Market Sovereign) 3,062,000 3,276,340
---------------------------------------------------------------------------------------------------------------------------
$13,881,977
---------------------------------------------------------------------------------------------------------------------------
Canada - 1.5%
---------------------------------------------------------------------------------------------------------------------------
Abitibi-Consolidated, Inc., 8.3%, 2005 (Forest & Paper Products) $2,592,000 $2,698,920
---------------------------------------------------------------------------------------------------------------------------
Acetex Corp., 10.875%, 2009 (Chemicals) 350,000 385,000
---------------------------------------------------------------------------------------------------------------------------
Government of Canada, 5.5%, 2009 - 2010 (International Market Sovereign) CAD 4,681,000 3,807,853
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Government of Canada, 5.25%, 2012 (International Market Sovereign) 369,000 295,787
---------------------------------------------------------------------------------------------------------------------------
Government of Canada, 8%, 2023 (International Market Sovereign) 224,000 231,662
---------------------------------------------------------------------------------------------------------------------------
Nova Chemicals Corp., 6.5%, 2012 (Chemicals) $830,000 830,000
---------------------------------------------------------------------------------------------------------------------------
$8,249,222
---------------------------------------------------------------------------------------------------------------------------
Chile - 0.6%
---------------------------------------------------------------------------------------------------------------------------
Empresa Nacional de Electricidad S.A., 8.35%, 2013 (Utilities - Electric Power) $1,711,000 $1,903,322
---------------------------------------------------------------------------------------------------------------------------
Enersis S.A., 7.375%, 2014 (Utilities - Electric Power)## 1,233,000 1,283,454
---------------------------------------------------------------------------------------------------------------------------
$3,186,776
---------------------------------------------------------------------------------------------------------------------------
Colombia - 0.3%
---------------------------------------------------------------------------------------------------------------------------
Republic of Colombia, 10.75%, 2013 (Emerging Market Sovereign) $744,000 $857,460
---------------------------------------------------------------------------------------------------------------------------
Republic of Colombia, 11.75%, 2020 (Emerging Market Sovereign) 485,000 591,700
---------------------------------------------------------------------------------------------------------------------------
$1,449,160
---------------------------------------------------------------------------------------------------------------------------
Denmark - 1.0%
---------------------------------------------------------------------------------------------------------------------------
Kingdom of Denmark, 7%, 2007 (International Market Sovereign) DKK 11,863,000 $2,178,183
---------------------------------------------------------------------------------------------------------------------------
Kingdom of Denmark, 6%, 2009 (International Market Sovereign) 16,161,000 2,951,822
---------------------------------------------------------------------------------------------------------------------------
Kingdom of Denmark, 5%, 2013 (International Market Sovereign) 3,511,000 609,462
---------------------------------------------------------------------------------------------------------------------------
$5,739,467
---------------------------------------------------------------------------------------------------------------------------
Finland - 2.0%
---------------------------------------------------------------------------------------------------------------------------
Republic of Finland, 2.75%, 2006 (International Market Sovereign) EUR 4,222,000 $5,171,415
---------------------------------------------------------------------------------------------------------------------------
Republic of Finland, 3%, 2008 (International Market Sovereign) 4,962,000 6,035,256
---------------------------------------------------------------------------------------------------------------------------
$11,206,671
---------------------------------------------------------------------------------------------------------------------------
France - 1.8%
---------------------------------------------------------------------------------------------------------------------------
Crown European Holdings S.A., 9.5%, 2011 (Containers) $530,000 $588,300
---------------------------------------------------------------------------------------------------------------------------
Republic of France, 4.75%, 2007 (International Market Sovereign) EUR 5,241,000 6,734,341
---------------------------------------------------------------------------------------------------------------------------
Republic of France, 4%, 2009 (International Market Sovereign) 1,681,000 2,108,558
---------------------------------------------------------------------------------------------------------------------------
Rhodia S.A., 8.875%, 2011 (Chemicals) $1,045,000 883,025
---------------------------------------------------------------------------------------------------------------------------
$10,314,224
---------------------------------------------------------------------------------------------------------------------------
Germany - 4.0%
---------------------------------------------------------------------------------------------------------------------------
Deutsche Telekom International Finance B.V., 8.75%, 2030
(Telecommunications - Wireline) $1,500,000 $1,922,803
---------------------------------------------------------------------------------------------------------------------------
Federal Republic of Germany, 4%, 2007 (International Market Sovereign) EUR 2,998,000 3,771,050
---------------------------------------------------------------------------------------------------------------------------
Federal Republic of Germany, 3.5%, 2008 (International Market Sovereign) 9,552,000 11,819,463
---------------------------------------------------------------------------------------------------------------------------
Federal Republic of Germany, 5.25%, 2010 (International Market Sovereign) 1,673,000 2,222,444
---------------------------------------------------------------------------------------------------------------------------
Kreditanstalt fur Wiederaufbau, 3.25%, 2008 (International Market Agencies) 2,244,000 2,756,979
---------------------------------------------------------------------------------------------------------------------------
Kronos International, Inc., 8.875%, 2009 (Chemicals) 100,000 131,582
---------------------------------------------------------------------------------------------------------------------------
$22,624,321
---------------------------------------------------------------------------------------------------------------------------
Ireland - 2.3%
---------------------------------------------------------------------------------------------------------------------------
Eircom Funding PLC, 8.25%, 2013 (Telecommunications - Wireline) $810,000 $874,800
---------------------------------------------------------------------------------------------------------------------------
MDP Acquisitions PLC, 9.625%, 2012 (Forest & Paper Products) 970,000 1,091,250
---------------------------------------------------------------------------------------------------------------------------
Republic of Ireland, 4.25%, 2007 (International Market Sovereign) EUR 8,456,000 10,733,936
---------------------------------------------------------------------------------------------------------------------------
$12,699,986
---------------------------------------------------------------------------------------------------------------------------
Italy - 0.3%
---------------------------------------------------------------------------------------------------------------------------
Telecom Italia S.p.A., 5.25%, 2013 (Telecommunications - Wireline)## $1,418,000 $1,440,014
---------------------------------------------------------------------------------------------------------------------------
Japan - 0.6%
---------------------------------------------------------------------------------------------------------------------------
Mizuho Financial Group, Inc., 5.79%, 2014 (Banks & Credit Companies)## $1,898,000 $1,954,196
---------------------------------------------------------------------------------------------------------------------------
UFJ Finance Aruba AEC, 6.75%, 2013 (Banks & Credit Companies) 1,300,000 1,437,693
---------------------------------------------------------------------------------------------------------------------------
$3,391,889
---------------------------------------------------------------------------------------------------------------------------
Kazakhstan - 0.9%
---------------------------------------------------------------------------------------------------------------------------
Hurricane Finance B.V., 9.625%, 2010 (Oils) $735,000 $801,150
---------------------------------------------------------------------------------------------------------------------------
Kazkommerts International B.V., 10.125%, 2007 (Banks & Credit Companies)## 123,000 136,223
---------------------------------------------------------------------------------------------------------------------------
Kazkommerts International B.V., 10.125%, 2007 (Banks & Credit Companies)+ 128,000 141,760
---------------------------------------------------------------------------------------------------------------------------
Kazkommerts International B.V., 8.5%, 2013 (Banks & Credit Companies) 190,000 197,097
---------------------------------------------------------------------------------------------------------------------------
Kazkommerts International B.V., 8.5%, 2013 (Banks & Credit Companies)## 949,000 984,450
---------------------------------------------------------------------------------------------------------------------------
Turanalem Finance B.V., 8%, 2014 (Banks & Credit Companies)## 2,590,000 2,515,538
---------------------------------------------------------------------------------------------------------------------------
$4,776,218
---------------------------------------------------------------------------------------------------------------------------
Malaysia - 0.6%
---------------------------------------------------------------------------------------------------------------------------
Petroliam Nasional Berhad, 7.75%, 2015 (Emerging Market Agencies) $1,363,000 $1,614,046
---------------------------------------------------------------------------------------------------------------------------
Petronas Capital Ltd., 7.875%, 2022 (Emerging Market Agencies)## 1,357,000 1,606,263
---------------------------------------------------------------------------------------------------------------------------
$3,220,309
---------------------------------------------------------------------------------------------------------------------------
Mexico - 2.4%
---------------------------------------------------------------------------------------------------------------------------
BBVA Bancomer Capital Trust I, 10.5%, 2011 (Banks & Credit Companies)## $1,000,000 $1,097,500
---------------------------------------------------------------------------------------------------------------------------
Innova S.de R.L., 9.375%, 2013 (Telecommunications - Wireless) 654,000 712,860
---------------------------------------------------------------------------------------------------------------------------
Pemex Finance Ltd., 9.69%, 2009 (Emerging Market Agencies) 915,000 1,048,590
---------------------------------------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 8.625%, 2022 (Emerging Market Agencies) 5,105,000 5,819,700
---------------------------------------------------------------------------------------------------------------------------
Petroleos Mexicanos, 9.5%, 2027 (Emerging Market Agencies) 1,416,000 1,727,520
---------------------------------------------------------------------------------------------------------------------------
United Mexican States, 8%, 2022 (Emerging Market Sovereign) 889,000 1,002,348
---------------------------------------------------------------------------------------------------------------------------
United Mexican States, 7.5%, 2033 (Emerging Market Sovereign) 1,804,000 1,905,926
---------------------------------------------------------------------------------------------------------------------------
$13,314,444
---------------------------------------------------------------------------------------------------------------------------
Netherlands - 2.1%
---------------------------------------------------------------------------------------------------------------------------
Kingdom of Netherlands, 5.75%, 2007 (International Market Sovereign) EUR 4,022,000 $5,256,161
---------------------------------------------------------------------------------------------------------------------------
Kingdom of Netherlands, 3.75%, 2009 (International Market Sovereign) 5,359,000 6,662,699
---------------------------------------------------------------------------------------------------------------------------
$11,918,860
---------------------------------------------------------------------------------------------------------------------------
New Zealand - 1.3%
---------------------------------------------------------------------------------------------------------------------------
Government of New Zealand, 7%, 2009 (International Market Sovereign) NZD 2,425,000 $1,644,586
---------------------------------------------------------------------------------------------------------------------------
Government of New Zealand, 6.5%, 2013 (International Market Sovereign)^ 8,596,000 5,748,434
---------------------------------------------------------------------------------------------------------------------------
$7,393,020
---------------------------------------------------------------------------------------------------------------------------
Panama - 0.4%
---------------------------------------------------------------------------------------------------------------------------
Republic of Panama, 9.375%, 2023 - 2029 (Emerging Market Sovereign) $1,745,000 $1,928,490
---------------------------------------------------------------------------------------------------------------------------
Republic of Panama, 8.875%, 2027 (Emerging Market Sovereign) 556,000 575,460
---------------------------------------------------------------------------------------------------------------------------
$2,503,950
---------------------------------------------------------------------------------------------------------------------------
Peru - 0.2%
---------------------------------------------------------------------------------------------------------------------------
Republic of Peru, 4.5%, 2017 (Emerging Market Sovereign) $1,315,000 $1,137,475
---------------------------------------------------------------------------------------------------------------------------
Poland - 0.3%
---------------------------------------------------------------------------------------------------------------------------
PTC International Finance II S.A., 11.25%, 2009 (Telecommunications - Wireless) $1,316,000 $1,408,120
---------------------------------------------------------------------------------------------------------------------------
Portugal - 0.4%
---------------------------------------------------------------------------------------------------------------------------
Republic of Portugal, 5.45%, 2013 (International Market Sovereign) EUR 1,777,000 $2,396,363
---------------------------------------------------------------------------------------------------------------------------
Qatar - 0.6%
---------------------------------------------------------------------------------------------------------------------------
State of Qatar, 9.75%, 2030 (Emerging Market Sovereign) $2,292,000 $3,260,370
---------------------------------------------------------------------------------------------------------------------------
Russia - 2.5%
---------------------------------------------------------------------------------------------------------------------------
Gaz Capital S.A., 8.625%, 2034 (Oils)## $1,410,000 $1,454,944
---------------------------------------------------------------------------------------------------------------------------
Gazprom OAO, 9.625%, 2013 (Oils)## 1,020,000 1,106,700
---------------------------------------------------------------------------------------------------------------------------
Mobile TeleSystems OJSC, 9.75%, 2008 (Telecommunications - Wireless)## 1,552,000 1,649,000
---------------------------------------------------------------------------------------------------------------------------
Russian Federation, 3%, 2008 - 2011 (Emerging Market Sovereign) 1,684,000 1,342,710
---------------------------------------------------------------------------------------------------------------------------
Russian Federation, 11%, 2018 (Emerging Market Sovereign) 2,674,000 3,499,464
---------------------------------------------------------------------------------------------------------------------------
Siberian Oil Co., 10.75%, 2009 (Energy - Integrated) 750,000 787,500
---------------------------------------------------------------------------------------------------------------------------
Tyumen Oil Co., 11%, 2007 (Energy - Integrated) 2,164,000 2,412,860
---------------------------------------------------------------------------------------------------------------------------
Vimpel-Communications, 10%, 2009 (Telecommunications - Wireless)## 1,621,000 1,681,788
---------------------------------------------------------------------------------------------------------------------------
$13,934,966
---------------------------------------------------------------------------------------------------------------------------
Singapore - 0.5%
---------------------------------------------------------------------------------------------------------------------------
DBS Capital Funding Corp., 7.657% to 2011,5% to 2049 (Banks & Credit Companies)## $1,600,000 $1,854,272
---------------------------------------------------------------------------------------------------------------------------
Flextronics International Ltd., 6.5%, 2013 (Electronics) 1,145,000 1,145,000
---------------------------------------------------------------------------------------------------------------------------
$2,999,272
---------------------------------------------------------------------------------------------------------------------------
South Africa - 0.7%
---------------------------------------------------------------------------------------------------------------------------
Republic of South Africa, 8.5%, 2017 (Emerging Market Sovereign) $3,308,000 $3,944,790
---------------------------------------------------------------------------------------------------------------------------
South Korea - 0.2%
---------------------------------------------------------------------------------------------------------------------------
Woori Bank, 5.75%, 2014 (Banks & Credit Companies)## $1,344,000 $1,377,600
---------------------------------------------------------------------------------------------------------------------------
Spain - 1.1%
---------------------------------------------------------------------------------------------------------------------------
Kingdom of Spain, 6%, 2008 (International Market Sovereign) EUR 1,600,000 $2,141,215
---------------------------------------------------------------------------------------------------------------------------
Kingdom of Spain, 5.35%, 2011 (International Market Sovereign) 3,014,000 4,029,037
---------------------------------------------------------------------------------------------------------------------------
$6,170,252
---------------------------------------------------------------------------------------------------------------------------
Ukraine - 0.3%
---------------------------------------------------------------------------------------------------------------------------
Ukraine Cabinet of Ministers, 6.875%, 2011 (Emerging Market Sovereign)## $1,000,000 $990,000
---------------------------------------------------------------------------------------------------------------------------
Ukraine Cabinet of Ministers, 7.65%, 2013 (Emerging Market Sovereign)## 554,000 559,540
---------------------------------------------------------------------------------------------------------------------------
$1,549,540
---------------------------------------------------------------------------------------------------------------------------
United Kingdom - 1.2%
---------------------------------------------------------------------------------------------------------------------------
HBOS Capital Funding LP, 6.071%, 2049 (Banks & Credit Companies)## $1,330,000 $1,403,879
---------------------------------------------------------------------------------------------------------------------------
United Kingdom Treasury, 7.25%, 2007 (International Market Sovereign) GBP 826,000 1,597,507
---------------------------------------------------------------------------------------------------------------------------
United Kingdom Treasury, 5%, 2012 (International Market Sovereign) 2,107,000 3,821,046
---------------------------------------------------------------------------------------------------------------------------
$6,822,432
---------------------------------------------------------------------------------------------------------------------------
Total Foreign Bonds $200,357,996
---------------------------------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost,$516,358,633) $532,994,453
---------------------------------------------------------------------------------------------------------------------------
ISSUER SHARES $ VALUE
---------------------------------------------------------------------------------------------------------------------------
STOCKS - 0.1%
---------------------------------------------------------------------------------------------------------------------------
Apparel Manufacturers - 0.1%
---------------------------------------------------------------------------------------------------------------------------
Sind Holdings, Inc.+* 5,720 $446,160
---------------------------------------------------------------------------------------------------------------------------
Machinery & Tools - 0%
---------------------------------------------------------------------------------------------------------------------------
Thermadyne Holdings Corp.* 109 $1,319
---------------------------------------------------------------------------------------------------------------------------
Specialty Chemicals - 0%
---------------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.* 6 $138
---------------------------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost,$2,156,110) $447,617
---------------------------------------------------------------------------------------------------------------------------
WARRANTS - 0%
---------------------------------------------------------------------------------------------------------------------------
U.S. WARRANTS - 0%
---------------------------------------------------------------------------------------------------------------------------
Basic Industry - 0%
---------------------------------------------------------------------------------------------------------------------------
Thermadyne Holdings Corp.* 760 $95
---------------------------------------------------------------------------------------------------------------------------
Business Services - 0%
---------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd.* 1,625 $0
---------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd.* 750 0
---------------------------------------------------------------------------------------------------------------------------
$0
---------------------------------------------------------------------------------------------------------------------------
Specialty Chemicals - 0%
---------------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.* 11 $11
---------------------------------------------------------------------------------------------------------------------------
Total U.S.Warrants $106
---------------------------------------------------------------------------------------------------------------------------
Total Warrants (Identified Cost,$39,014) $106
---------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
---------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS - 0.3%
---------------------------------------------------------------------------------------------------------------------------
U.S. BONDS - 0.3%
---------------------------------------------------------------------------------------------------------------------------
Telecommunications - Wireless - 0.3%
---------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 5.25%, 2010 $1,500,000 $1,494,375
---------------------------------------------------------------------------------------------------------------------------
Total U.S. Bonds $1,494,375
---------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost,$1,438,455) $1,494,375
---------------------------------------------------------------------------------------------------------------------------
SHORT-TERM OBLIGATION - 0.7%
---------------------------------------------------------------------------------------------------------------------------
General Electric Capital Corp., 1.57%, due 9/01/04,at Amortized Cost $4,036,000 $4,036,000
---------------------------------------------------------------------------------------------------------------------------
ISSUER SHARES $ VALUE
---------------------------------------------------------------------------------------------------------------------------
COLLATERAL FOR SECURITIES LOANED - 0.8%
---------------------------------------------------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio,at Cost and Net Asset Value 4,634,155 $4,634,155
---------------------------------------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
---------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 1.7%
---------------------------------------------------------------------------------------------------------------------------
Goldman Sachs, 1.58%, dated 08/31/2004,due 09/01/2004, total to be received
$9,276,407 (secured by various U.S.Treasury
and Federal Agency obligations in a jointly traded account),at Cost $9,276,000 $9,276,000
---------------------------------------------------------------------------------------------------------------------------
Total Investments ~ (Identified Cost,$537,938,367) $552,882,706
---------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES - 1.1% 6,328,613
---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $559,211,319
---------------------------------------------------------------------------------------------------------------------------
* Non-income producing security
** Non-income producing security -- in default.
^ All or a portion of this security is on loan.
^^ Interest only security.
## SEC Rule 144A restriction. + Restricted security.
~ As of August 31,2004,the fund had one security representing $446,160 and 0.1% of net assets that was fair valued in
accordance with the policies adopted by the Board of Trustees.
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
AUD = Australian Dollar
CAD = Canadian Dollar
DKK = Danish Krone
EUR = Euro
GBP = British Pound
NZD = New Zealand Dollar
SEK = Swedish Krona
SEE ATTACHED SCHEDULES.
FOR MORE INFORMATION SEE NOTES TO FINANCIAL STATEMENTS AS DISCLOSED IN THE MOST RECENT SEMI-ANNUAL OR ANNUAL REPORT.
-------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULES (UNAUDITED)
-------------------------------------------------------------------------------
(1) PORTFOLIO SECURITIES
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the fund,as computed on a federal income tax basis, are as
follows:
Aggregate cost $544,524,828
------------
Gross unrealized appreciation $ 17,978,357
------------
Gross unrealized depreciation (9,620,479)
------------
Net unrealized appreciation $ 8,357,878
------------
(2) FINANCIAL INSTRUMENTS
The fund 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 and futures
contracts.The notional or contractual amounts of these instruments represent
the investment the fund 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
NET UNREALIZED
CONTRACTS TO CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN EXCHANGE FOR AT VALUE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------
SALES
10/12/04 AUD 2,664,556 $1,891,578 $1,874,360 $17,218
11/16/04 DKK 36,019,642 5,916,693 5,894,430 22,263
10/6/04-11/15/04 EUR 74,347,332 90,321,068 90,526,209 (205,141)
10/12/04-11/16/04 GBP 2,988,485 5,420,710 5,358,803 61,907
10/12/04 NZD 11,426,305 7,309,864 7,459,468 (149,604)
------------ ------------ ---------
$110,859,913 $111,113,270 ($253,357)
============ ============ =========
PURCHASES
9/13/04 CAD 744,699 $569,123 $566,685 ($2,438)
10/6/04-11/15/04 EUR 2,692,051 3,293,894 3,277,726 (16,168)
11/16/04 SEK 5,364,550 712,206 715,107 2,901
------------ ------------ ---------
$4,575,223 $4,559,518 ($15,705)
============ ============ =========
At August 31,2004,forward foreign currency purchases and sales under master netting agreements excluded above amounted to a net
payable of $135,995 with Merrill Lynch International.
At August 31,2004,the fund had sufficient cash and/or securities to cover any commitments under these contracts.
FUTURES CONTRACTS
Unrealized
Description Expiration Contracts Position Depreciation
U.S. Treasury 10 Year December 2004 200 Short ($85,199)
At August 31,2004,the fund had sufficient cash and/or securities to cover any margin requirements under these contracts.
(3) RESTRICTED SECURITIES
The fund may invest not more than 20% of its total assets in securities that are subject to legal or contractual
restrictions on resale.At August 31,2004,the fund owned the following restricted securities,excluding securities issued
under Rule 144A,constituting 0.10% of net assets which may not be publicly sold without registration under the
Securities Act of 1933.The fund does not have the right to demand that such securities be registered.The value of these
securities is determined by valuations furnished by dealers or by a pricing service,or if not available,in good faith at
the direction of the Trustees.
Date of Share/Principal
Description Acquisition Amount Cost Value
Kazkommerts International B.V. 4/14/03 128,000 $139,853 $141,760
Sind Holdings, Inc. 12/15/99 5,720 2,127,667 446,160
$587,920
ITEM 2. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures 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 Investment Company Act of
1940 (the "Act")) that occurred during the registrant's last fiscal quarter
that has materially affected, or is 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.
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)* ROBERT J. MANNING
-----------------------------------------------
Robert J. Manning, President
Date: October 25, 2004
----------------
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: October 25, 2004
----------------
By (Signature and Title)* RICHARD M. HISEY
--------------------------------------------
Richard M. Hisey, Treasurer (Principal Financial
Officer and Accounting Officer)
Date: October 25, 2004
----------------
* Print name and title of each signing officer under his or her signature.