MFS Charter Income Trust
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
 
MFS CHARTER INCOME TRUST
(Exact name of registrant as specified in charter)
 
500 Boylston Street, Boston, Massachusetts 02116
(Address of principal executive offices) (Zip code)
 
Susan S. Newton
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116 
(Name and address of agents for service)
 
Registrant’s telephone number, including area code: (617) 954-5000 
Date of fiscal year end: November 30
Date of reporting period: February 28, 2006

 

ITEM 1. SCHEDULE OF INVESTMENTS.

 

MFS Charter Income Trust
PORTFOLIO OF INVESTMENTS (Unaudited) 02/28/2006

Issuer Shares/Par   Value ($)  
Bonds – 95.9%            
Advertising & Broadcasting – 1.3%    
Allbritton Communications Co., 7.75%, 2012     $ 365,000   $ 367,281  
CBS Corp., 6.625%, 2011       860,000     897,828  
DIRECTV Holdings LLC, 8.375%, 2013       884,000     948,090  
EchoStar DBS Corp., 6.375%, 2011       1,945,000     1,901,237  
Intelsat Ltd., 8.875%, 2015 (a)       340,000     352,750  
Lamar Media Corp., 7.25%, 2013       795,000     819,844  
News America Holdings, 7.7%, 2025       1,140,000     1,292,306  
News America, Inc., 6.2%, 2034       542,000     536,196  
            $ 7,115,532  
Aerospace – 0.1%    
DRS Technologies, Inc., 7.625%, 2018     $ 440,000   $ 452,100  
Agency - Other – 1.0%    
Financing Corp., 10.35%, 2018     $ 3,600,000   $ 5,358,586  
Airlines – 0.2%    
Continental Airlines, Inc., 7.566%, 2020     $ 1,045,217   $ 968,149  
Apparel Manufacturers – 0.0%    
Quiksilver, Inc., 6.875%, 2015     $ 100,000   $ 96,500  
Asset Backed & Securitized – 8.4%    
Airplane Pass-Through Trust, "D", 10.875%, 2019 (d)(r)     $ 222,233   $ 0  
Amresco Commercial Mortgage Funding I, 7%, 2029       3,000,000     3,034,215  
Asset Securitization Corp., 7.525%, 2029       1,586,134     1,731,728  
Asset Securitization Corp., FRN, 7.4387%, 2026       2,000,000     2,100,765  
Bayview Financial Acquisition Trust, FRN, 5.483%, 2041       404,000     402,990  
Bear Stearns Commercial Mortgage Securities, Inc., FRN, 5.116%, 2041       1,120,248     1,104,549  
Commercial Mortgage Acceptance Corp., FRN, 5.44%, 2013 (a)       3,165,000     3,171,795  
Countrywide Asset-Backed Certificates, FRN, 5.147%, 2035       2,000,000     1,976,185  
Credit Suisse First Boston Mortgage Securities Corp., 6.75%, 2030 (a)       2,000,000     2,067,656  
Crest Ltd., 7%, 2040 (a)       2,000,000     1,849,000  
DLJ Commercial Mortgage Corp., 6.04%, 2031       2,000,000     2,014,364  
First Union-Lehman Brothers Bank of America, FRN, 0.4301%, 2028 (i)       69,106,243     1,290,953  
First Union-Lehman Brothers Commercial Mortgage Trust, 7%, 2029 (a)       850,000     932,839  
First Union-Lehman Brothers Commercial Mortgage Trust, FRN, 7.5%, 2015       3,000,000     3,370,009  
J.P. Morgan Chase Commercial Mortgage Securities Corp., FRN, 5.038%, 2015       4,000,000     3,921,321  
Morgan Stanley Capital I, Inc., 5.168%, 2042       1,532,020     1,515,814  
Mortgage Capital Funding, Inc., FRN, 0.7852%, 2031 (i)       18,665,984     256,876  
New Century Home Equity Loan Trust, FRN, 4.532%, 2035       2,500,000     2,446,689  
Residential Asset Mortgage Products, Inc., 3.878%, 2035       1,340,523     1,322,802  
Spirit Master Funding LLC, 5.05%, 2023 (a)       1,950,481     1,888,687  
Structured Asset Securities Corp., FRN, 4.67%, 2035       2,484,152     2,454,035  
TIAA Real Estate CDO Ltd., 7.17%, 2032 (a)       2,543,542     2,593,876  
Wachovia Bank Commercial Mortgage Trust, FRN, 4.847%, 2041       2,000,000     1,934,170  
Wachovia Bank Commercial Mortgage Trust, FRN, 5.083%, 2015       2,000,000     1,966,170  
            $ 45,347,488  
Automotive – 0.9%    
DaimlerChrysler N.A. Holdings Corp., 8.5%, 2031     $ 400,000   $ 487,673  
Ford Motor Credit Co., 4.95%, 2008       200,000     184,246  
Ford Motor Credit Co., 5.8%, 2009       1,600,000     1,437,611  
Ford Motor Credit Co., 7%, 2013       254,000     223,223  
General Motors Acceptance Corp., 6.125%, 2008       315,000     297,121  
General Motors Acceptance Corp., 5.85%, 2009       600,000     550,072  
General Motors Acceptance Corp., 6.75%, 2014       874,000     772,125  

1  

 

MFS Charter Income Trust
PORTFOLIO OF INVESTMENTS (Unaudited) 02/28/2006 - continued

Issuer Shares/Par   Value ($)  
Bonds – continued    
Automotive – continued    
General Motors Acceptance Corp., 8%, 2031     $ 236,000   $ 215,524  
Lear Corp., 8.11%, 2009       495,000     436,837  
            $ 4,604,432  
Banks & Credit Companies – 4.2%    
Abbey National Capital Trust I, 8.963% to 2030, FRN to 2049     $ 1,500,000   $ 2,038,885  
Banco BMG S.A., 9.15%, 2016 (a)       982,000     1,008,023  
Banco do Brasil S.A., 7.95%, 2049 (a)       161,000     163,616  
Banco do Estado de Sao Paulo S.A., 8.7%, 2049 (a)       1,400,000     1,450,750  
Banco Mercantil del Norte S.A., 5.875% to 2009, FRN to 2014 (a)       808,000     808,000  
BNP Paribas, 5.186% to 2015, FRN to 2049 (a)       1,667,000     1,600,088  
Bosphorus Financial Services Ltd., FRN, 6.5488%, 2012 (a)       1,500,000     1,508,058  
Chuo Mitsui Trust & Banking Co., 5.506% to 2015, FRN to 2049 (a)       1,676,000     1,624,500  
DFS Funding Corp., FRN, 6.91%, 2010 (a)       1,750,000     1,801,625  
HBOS Capital Funding LP, 6.071% to 2014, FRN to 2049 (a)       1,330,000     1,353,318  
J.P. Morgan Chase & Co., 5.125%, 2014       2,100,000     2,053,871  
Kazkommerts International B.V., 10.125%, 2007 (a)       367,000     385,809  
Kazkommerts International B.V., 10.125%, 2007       128,000     134,560  
Mizuho Financial Group, Inc., 5.79%, 2014 (a)       1,898,000     1,938,496  
RBS Capital Trust II, 6.425% to 2034, FRN to 2049       829,000     875,489  
Resona Bank Ltd., 5.85% to 2016, FRN to 2049 (a)       655,000     650,195  
Russian Standard Finance S.A., 8.125%, 2008 (a)       682,000     688,820  
Russian Standard Finance S.A., 7.5%, 2010 (a)       176,000     174,240  
Turanalem Finance B.V., 8%, 2014 (a)       854,000     890,295  
UFJ Finance Aruba AEC, 6.75%, 2013       1,300,000     1,400,084  
            $ 22,548,722  
Broadcast & Cable TV – 1.1%    
CCH II LLC, 10.25%, 2010     $ 475,000   $ 473,812  
CSC Holdings, Inc., 8.125%, 2009       1,050,000     1,082,812  
Lenfest Communications, Inc., 10.5%, 2006       1,900,000     1,924,227  
Mediacom LLC, 9.5%, 2013       280,000     280,000  
Rogers Cable, Inc., 5.5%, 2014       1,025,000     972,469  
TCI Communications, Inc., 9.8%, 2012       1,169,000     1,394,025  
            $ 6,127,345  
Brokerage & Asset Managers – 1.0%    
Goldman Sachs Group, Inc., 5.7%, 2012     $ 2,680,000   $ 2,733,804  
Morgan Stanley Dean Witter, Inc., 6.6%, 2012       2,537,000     2,693,982  
            $ 5,427,786  
Business Services – 0.2%    
Iron Mountain, Inc., 7.75%, 2015     $ 175,000   $ 177,187  
Xerox Corp., 7.625%, 2013       920,000     976,350  
            $ 1,153,537  
Chemicals – 0.9%    
BCP Crystal Holdings Corp., 9.625%, 2014     $ 204,000   $ 228,225  
Hercules, Inc., 6.75%, 2029       860,000     842,800  
Huntsman International LLC, 10.125%, 2009       331,000     339,275  
Kronos International, Inc., 8.875%, 2009   EUR   100,000     124,433  
Lyondell Chemical Co., 11.125%, 2012     $ 615,000     679,575  
Nalco Co., 7.75%, 2011       650,000     661,375  
Nalco Co., 8.875%, 2013       70,000     73,325  
Rockwood Specialties Group, Inc., 7.5%, 2014       60,000     60,600  
Yara International A.S.A., 5.25%, 2014 (a)       2,000,000     1,940,048  
            $ 4,949,656  

2  

 

MFS Charter Income Trust
PORTFOLIO OF INVESTMENTS (Unaudited) 02/28/2006 - continued

Issuer Shares/Par   Value ($)  
Bonds – continued    
Conglomerates – 0.2%    
Kennametal, Inc., 7.2%, 2012     $ 1,140,000   $ 1,229,298  
Construction – 0.8%    
Beazer Homes USA, Inc., 6.875%, 2015     $ 2,700,000   $ 2,598,750  
D.R. Horton, Inc., 8%, 2009       935,000     991,841  
M/I Homes, Inc., 6.875%, 2012       675,000     624,375  
            $ 4,214,966  
Consumer Goods & Services – 0.1%    
Church & Dwight Co., Inc., 6%, 2012     $ 460,000   $ 457,700  
Service Corp. International, 7.5%, 2017 (a)       260,000     265,525  
            $ 723,225  
Containers – 0.2%    
Crown Americas, 7.75%, 2015 (a)     $ 245,000   $ 255,412  
Owens-Brockway Glass Container, Inc., 8.875%, 2009       660,000     687,225  
Owens-Brockway Glass Container, Inc., 8.25%, 2013       85,000     88,613  
            $ 1,031,250  
Defense Electronics – 0.9%    
BAE Systems Holdings, Inc., 4.75%, 2010 (a)     $ 790,000   $ 768,992  
BAE Systems Holdings, Inc., 5.2%, 2015 (a)       2,000,000     1,943,274  
L-3 Communications Corp., 5.875%, 2015       750,000     720,000  
L-3 Communications Corp., 6.375%, 2015       1,500,000     1,496,250  
            $ 4,928,516  
Electronics – 0.2%    
Flextronics International Ltd., 6.5%, 2013     $ 895,000   $ 901,713  
Emerging Market Quasi-Sovereign – 1.2%    
Gazprom OAO, 9.625%, 2013 (a)     $ 1,510,000   $ 1,827,100  
Pemex Project Funding Master Trust, 7.375%, 2014       774,000     861,075  
Pemex Project Funding Master Trust, 8.625%, 2022       1,218,000     1,510,320  
Petronas Capital Ltd., 7.875%, 2022 (a)       464,000     576,999  
Petronas Capital Ltd., 7.875%, 2022       1,340,000     1,666,333  
            $ 6,441,827  
Emerging Market Sovereign – 2.8%    
Federal Republic of Brazil, FRN, 5.25%, 2012     $ 1,907,212   $ 1,907,212  
Republic of Argentina, FRN, 4.889%, 2012       1,656,000     1,349,173  
Republic of Bulgaria, 8.25%, 2015       1,000,000     1,200,900  
Republic of Colombia, FRN, 6.55%, 2015       1,054,000     1,106,700  
Republic of Panama, 9.375%, 2029       1,121,000     1,468,510  
Republic of South Africa, 9.125%, 2009       469,000     521,763  
Russian Federation, 3%, 2008       6,252,000     5,941,901  
United Mexican States, 8.125%, 2019       976,000     1,207,800  
United Mexican States, 6.75%, 2034       229,000     255,908  
            $ 14,959,867  
Energy - Independent – 0.6%    
Chesapeake Energy Corp., 7.5%, 2014     $ 335,000   $ 356,775  
Chesapeake Energy Corp., 7%, 2014       240,000     249,000  
Chesapeake Energy Corp., 6.875%, 2016       680,000     697,000  
Forest Oil Corp., 7.75%, 2014       550,000     574,750  
Newfield Exploration Co., 6.625%, 2014       290,000     299,425  
Plains Exploration & Production Co., 7.125%, 2014       625,000     651,563  
Vintage Petroleum, Inc., 8.25%, 2012       550,000     586,988  
            $ 3,415,501  

3  

 

MFS Charter Income Trust
PORTFOLIO OF INVESTMENTS (Unaudited) 02/28/2006 - continued

Issuer Shares/Par   Value ($)  
Bonds – continued    
Energy - Integrated – 0.3%    
Amerada Hess Corp., 7.3%, 2031     $ 1,463,000   $ 1,718,070  
Entertainment – 0.5%    
AMC Entertainment, Inc., 9.5%, 2011     $ 224,000   $ 211,960  
AMC Entertainment, Inc., 11%, 2016 (a)       125,000     125,781  
Six Flags, Inc., 9.75%, 2013       220,000     224,950  
Turner Broadcasting System, Inc., 8.375%, 2013       1,784,000     2,036,900  
            $ 2,599,591  
Financial Institutions – 0.3%    
HSBC Finance Corp., 5.5%, 2016     $ 1,481,000   $ 1,479,284  
International Lease Finance Corp., 5%, 2010       321,000     317,122  
            $ 1,796,406  
Food & Non-Alcoholic Beverages – 0.2%    
B&G Foods Holding Corp., 8%, 2011     $ 150,000   $ 153,750  
Dean Foods Co., 6.625%, 2009       225,000     228,937  
Smithfield Foods, Inc., 7%, 2011       465,000     470,813  
            $ 853,500  
Forest & Paper Products – 0.6%    
Abitibi-Consolidated, Inc., 7.75%, 2011     $ 720,000   $ 679,500  
Buckeye Technologies, Inc., 8.5%, 2013       460,000     468,050  
MDP Acquisitions PLC, 9.625%, 2012       310,000     324,725  
Norske Skog Canada Ltd., 7.375%, 2014       695,000     639,400  
Stone Container Corp., 7.375%, 2014       1,000,000     927,500  
            $ 3,039,175  
Gaming & Lodging – 1.8%    
Boyd Gaming Corp., 6.75%, 2014     $ 520,000   $ 518,700  
Caesars Entertainment, Inc., 8.125%, 2011       730,000     801,175  
GTECH Holdings Corp., 5.25%, 2014       235,000     236,618  
Harrah's Operating Co., Inc., 5.625%, 2015       2,147,000     2,097,709  
Host Marriott LP, 7.125%, 2013       465,000     480,112  
Host Marriott LP, 6.375%, 2015       250,000     249,375  
Majestic Star Casino LLC, 9.5%, 2010       80,000     85,600  
Mandalay Resort Group, 9.375%, 2010       450,000     493,875  
MGM Mirage, Inc., 8.375%, 2011       1,155,000     1,238,737  
Pinnacle Entertainment, Inc., 8.75%, 2013       295,000     315,650  
Royal Caribbean Cruises Ltd., 8%, 2010       990,000     1,070,755  
Scientific Games Corp., 6.25%, 2012       380,000     377,625  
Starwood Hotels & Resorts Worldwide, Inc., 7.875%, 2012       895,000     982,263  
Station Casinos, Inc., 6.5%, 2014       440,000     440,000  
Wynn Las Vegas LLC, 6.625%, 2014       225,000     221,625  
            $ 9,609,819  
Industrial – 0.1%    
Amsted Industries, Inc., 10.25%, 2011 (a)     $ 335,000   $ 363,475  
Insurance – 0.8%    
American International Group, Inc., 4.25%, 2013     $ 4,250,000   $ 3,988,408  
UnumProvident Corp., 7.625%, 2011       215,000     230,354  
UnumProvident Corp., 6.85%, 2015 (a)       220,000     228,704  
            $ 4,447,466  
Insurance - Property & Casualty – 0.9%    
ACE INA Holdings, Inc., 5.875%, 2014     $ 1,700,000   $ 1,740,601  
AXIS Capital Holdings Ltd., 5.75%, 2014       1,879,000     1,866,465  

4  

 

MFS Charter Income Trust
PORTFOLIO OF INVESTMENTS (Unaudited) 02/28/2006 - continued

Issuer Shares/Par   Value ($)  
Bonds – continued    
Insurance - Property & Casualty – continued    
Fund American Cos., Inc., 5.875%, 2013     $ 1,351,000   $ 1,346,686  
            $ 4,953,752  
International Market Quasi-Sovereign – 2.2%    
KfW Bankengruppe, FRN, 2.563%, 2007   EUR   3,321,000   $ 3,960,634  
Landesbank Baden-Wurttemberg, FRN, 2.508%, 2007   EUR   1,105,000     1,318,666  
Landesbank Baden-Wurttemberg, FRN, 2.594%, 2007   EUR   1,033,000     1,232,819  
Landesbank Baden-Wurttemberg, FRN, 2.704%, 2007   EUR   1,950,000     2,327,624  
Network Rail MTN Finance PLC, FRN, 2.628%, 2007   EUR   2,304,000     2,750,587  
            $ 11,590,330  
International Market Sovereign – 21.2%    
Federal Republic of Germany, 3.5%, 2008   EUR   6,350,000   $ 7,650,284  
Federal Republic of Germany, 3.75%, 2015   EUR   4,204,000     5,125,190  
Federal Republic of Germany, 6.25%, 2030   EUR   740,000     1,232,373  
Government of Canada, 4.5%, 2015   CAD   1,435,000     1,296,434  
Government of New Zealand, 6.5%, 2013   NZD   12,651,000     8,738,352  
Government of New Zealand, 6%, 2015   NZD   768,000     517,855  
Government of New Zealand, 6%, 2017   NZD   1,975,000     1,336,167  
Kingdom of Netherlands, 5.75%, 2007   EUR   4,442,000     5,444,268  
Kingdom of Netherlands, 3.75%, 2009   EUR   5,253,000     6,385,540  
Kingdom of Spain, 6%, 2008   EUR   4,910,000     6,179,025  
Kingdom of Spain, 5.35%, 2011   EUR   2,929,000     3,852,514  
Republic of Austria, 5.5%, 2007   EUR   5,174,000     6,415,207  
Republic of Finland, 5.375%, 2013   EUR   8,453,000     11,366,715  
Republic of France, 4.75%, 2007   EUR   9,352,000     11,428,222  
Republic of France, 4.75%, 2012   EUR   950,000     1,225,570  
Republic of France, 6%, 2025   EUR   1,211,000     1,902,789  
Republic of Ireland, 4.25%, 2007   EUR   9,050,000     11,014,768  
Republic of Ireland, 4.6%, 2016   EUR   963,000     1,256,065  
United Kingdom Treasury, 5.75%, 2009   GBP   4,870,000     8,971,359  
United Kingdom Treasury, 8%, 2015   GBP   5,559,000     12,756,430  
            $ 114,095,127  
Machinery & Tools – 0.5%    
Case New Holland, Inc., 6%, 2009     $ 1,415,000   $ 1,386,700  
Case New Holland, Inc., 9.25%, 2011       160,000     171,600  
Case New Holland, Inc., 7.125%, 2014 (a)       380,000     380,950  
Manitowoc Co., Inc., 10.5%, 2012       331,000     366,582  
Terex Corp., 9.25%, 2011       265,000     282,556  
            $ 2,588,388  
Medical & Health Technology & Services – 1.3%    
AmerisourceBergen Corp., 5.875%, 2015 (a)     $ 2,465,000   $ 2,480,653  
DaVita, Inc., 6.625%, 2013       170,000     172,550  
Fisher Scientific International, Inc., 6.125%, 2015       1,800,000     1,802,250  
HCA, Inc., 8.75%, 2010       960,000     1,055,892  
HCA, Inc., 6.375%, 2015       955,000     953,502  
Omnicare, Inc., 6.875%, 2015       360,000     367,200  
Triad Hospitals, Inc., 7%, 2013       315,000     317,756  
            $ 7,149,803  
Metals & Mining – 0.8%    
Codelco, Inc., 5.625%, 2035 (a)     $ 1,104,000   $ 1,102,636  
Foundation PA Coal Co., 7.25%, 2014       520,000     533,000  
Ispat Inland ULC, 9.75%, 2014       1,200,000     1,365,000  
Massey Energy Co., 6.875%, 2013 (a)       290,000     289,275  

5  

 

MFS Charter Income Trust
PORTFOLIO OF INVESTMENTS (Unaudited) 02/28/2006 - continued

Issuer Shares/Par   Value ($)  
Bonds – continued    
Metals & Mining – continued    
Peabody Energy Corp., 5.875%, 2016     $ 425,000   $ 412,250  
Peabody Energy Corp., "B", 6.875%, 2013       355,000     364,763  
U.S. Steel Corp., 9.75%, 2010       413,000     448,105  
            $ 4,515,029  
Mortgage Backed – 13.9%    
Fannie Mae, 4.845%, 2013     $ 252,937   $ 247,248  
Fannie Mae, 4.1%, 2013       947,987     889,597  
Fannie Mae, 4.19%, 2013       867,827     817,380  
Fannie Mae, 3.81%, 2013       588,675     543,477  
Fannie Mae, 4.6%, 2014       763,053     734,475  
Fannie Mae, 4.667%, 2014       1,348,473     1,304,183  
Fannie Mae, 4.518%, 2014       910,286     872,329  
Fannie Mae, 4.77%, 2014       595,529     578,368  
Fannie Mae, 4.56%, 2015       319,741     306,068  
Fannie Mae, 4.665%, 2015       258,917     249,590  
Fannie Mae, 4.7%, 2015       247,035     238,675  
Fannie Mae, 4.89%, 2015       173,997     170,247  
Fannie Mae, 4.74%, 2015       600,000     580,811  
Fannie Mae, 4.87%, 2015       521,550     509,641  
Fannie Mae, 4.925%, 2015       1,943,640     1,908,265  
Fannie Mae, 4.815%, 2015       600,000     583,544  
Fannie Mae, 6%, 2016 - 2034       6,917,243     7,025,254  
Fannie Mae, 5.5%, 2019 - 2035       42,891,481     42,647,748  
Fannie Mae, 4.88%, 2020       580,157     574,448  
Fannie Mae, 6.5%, 2032 - 2033       3,635,845     3,730,050  
Freddie Mac, 6%, 2034       2,399,337     2,425,487  
Freddie Mac, 5.5%, 2034       8,125,066     8,073,525  
            $ 75,010,410  
Municipals – 0.5%    
Massachusetts State Water Resources Authority, "A", MBIA, 5.25%, 2015     $ 2,450,000   $ 2,724,694  
Natural Gas - Distribution – 0.1%    
AmeriGas Partners LP, 7.25%, 2015     $ 470,000   $ 477,050  
AmeriGas Partners LP, 7.125%, 2016       175,000     175,875  
            $ 652,925  
Natural Gas - Pipeline – 0.8%    
Atlas Pipeline Partners LP, 8.125%, 2015 (a)     $ 215,000   $ 223,600  
CenterPoint Energy Resources Corp., 7.875%, 2013       1,600,000     1,816,496  
Colorado Interstate Gas Co., 5.95%, 2015       170,000     167,700  
Magellan Midstream Partners LP, 5.65%, 2016       311,000     309,752  
Southern Natural Gas Co., Inc., 8.875%, 2010       550,000     588,292  
Williams Cos., Inc., 8.75%, 2032       800,000     968,000  
            $ 4,073,840  
Network & Telecom – 2.0%    
Citizens Communications Co., 9.25%, 2011     $ 815,000   $ 902,612  
Citizens Communications Co., 6.25%, 2013       645,000     632,906  
Citizens Communications Co., 9%, 2031       650,000     690,625  
Deutsche Telekom International Finance B.V., 8.25%, 2030       1,500,000     1,886,034  
Eircom Funding PLC, 8.25%, 2013       515,000     550,406  
Espirit Telecom Group PLC, 10.875%, 2008 (d)       165,000     0  
Qwest Corp., 7.875%, 2011       860,000     920,200  
Qwest Corp., 8.875%, 2012       450,000     504,000  
Telecom Italia Capital, 6%, 2034       1,000,000     945,645  

6  

 

MFS Charter Income Trust
PORTFOLIO OF INVESTMENTS (Unaudited) 02/28/2006 - continued

Issuer Shares/Par   Value ($)  
Bonds – continued    
Network & Telecom – continued    
Telefonica Europe B.V., 7.75%, 2010     $ 1,000,000   $ 1,086,210  
Verizon New York, Inc., 6.875%, 2012       2,542,000     2,660,694  
            $ 10,779,332  
Oil Services – 0.1%    
GulfMark Offshore, Inc., 7.75%, 2014     $ 435,000   $ 452,400  
Petroleum Export Peloil, 5.265%, 2011 (a)       280,000     272,524  
            $ 724,924  
Oils – 0.7%    
Premcor Refining Group, Inc., 7.5%, 2015     $ 3,550,000   $ 3,785,947  
Printing & Publishing – 0.5%    
Dex Media East LLC, 9.875%, 2009     $ 565,000   $ 605,962  
Dex Media West LLC, 9.875%, 2013       1,527,000     1,691,152  
MediaNews Group, Inc., 6.875%, 2013       515,000     480,238  
            $ 2,777,352  
Railroad & Shipping – 0.6%    
TFM S.A. de C.V., 9.375%, 2012     $ 2,809,000   $ 3,093,411  
Real Estate – 0.5%    
EOP Operating LP, 4.75%, 2014     $ 1,500,000   $ 1,413,106  
HRPT Properties Trust, 6.25%, 2016       1,324,000     1,361,553  
            $ 2,774,659  
Restaurants – 0.3%    
YUM! Brands, Inc., 8.875%, 2011     $ 1,500,000   $ 1,712,747  
Retailers – 0.6%    
Couche-Tard, Inc., 7.5%, 2013     $ 210,000   $ 218,925  
Gap, Inc., 9.55%, 2008       940,000     1,031,615  
GSC Holdings Corp., 8%, 2012 (a)       130,000     129,675  
Limited Brands, Inc., 5.25%, 2014       1,100,000     1,039,128  
Rite Aid Corp., 8.125%, 2010       365,000     372,300  
Steinway Musical Instruments, Inc., 7%, 2014 (a)       155,000     156,163  
            $ 2,947,806  
Steel – 0.1%    
Chaparral Steel Co., 10%, 2013     $ 205,000   $ 226,525  
Supranational – 0.3%    
Central American Bank, 4.875%, 2012 (a)     $ 1,426,000   $ 1,369,237  
Telecommunications - Wireless – 1.2%    
AT&T Wireless Services, Inc., 8.75%, 2031     $ 1,500,000   $ 1,990,585  
Centennial Communications Corp., 10.125%, 2013       240,000     262,800  
Cingular Wireless LLC, 6.5%, 2011       1,700,000     1,802,819  
Dolphin Telecom PLC, 11.5%, 2008 (d)       1,600,000     0  
Dolphin Telecom PLC, "B", 14%, 2009 (d)       750,000     0  
Excelcomindo Finance Co., 7.125%, 2013 (a)       100,000     100,500  
Nextel Communications, Inc., 5.95%, 2014       1,315,000     1,321,768  
Rogers Wireless, Inc., 6.375%, 2014       550,000     555,500  
Rogers Wireless, Inc., 7.5%, 2015       450,000     488,250  
            $ 6,522,222  
Tobacco – 0.4%    
R.J. Reynolds Tobacco Holdings, Inc, 7.3%, 2015     $ 1,300,000   $ 1,347,125  
R.J. Reynolds Tobacco Holdings, Inc., 7.25%, 2012       818,000     846,630  
            $ 2,193,755  

7  

 

MFS Charter Income Trust
PORTFOLIO OF INVESTMENTS (Unaudited) 02/28/2006 - continued

Issuer Shares/Par   Value ($)  
Bonds – continued    
Transportation - Services – 0.1%    
Stena AB, 7%, 2016     $ 375,000   $ 348,750  
Westinghouse Air Brake Technologies Corp., 6.875%, 2013       210,000     214,725  
            $ 563,475  
U.S. Government Agencies – 2.9%    
Small Business Administration, 4.34%, 2024     $ 7,615,823   $ 7,223,493  
Small Business Administration, 4.77%, 2024       5,889,975     5,737,329  
Small Business Administration, 5.11%, 2025       2,652,266     2,631,025  
            $ 15,591,847  
U.S. Treasury Obligations – 9.1%    
U.S. Treasury Bonds, 12%, 2013     $ 7,500,000   $ 8,767,380  
U.S. Treasury Bonds, 10.625%, 2015       3,350,000     4,877,258  
U.S. Treasury Bonds, 6.25%, 2023       8,000,000     9,459,376  
U.S. Treasury Bonds, 5.375%, 2031       635,000     706,859  
U.S. Treasury Notes, 4.25%, 2014       2,500,000     2,435,743  
U.S. Treasury Notes, 4.125%, 2015       1,285,000     1,240,477  
U.S. Treasury Notes, 9.875%, 2015       5,025,000     7,069,939  
U.S. Treasury Notes, TIPS, 2%, 2014       10,820,708     10,827,471  
U.S. Treasury Notes, TIPS, 1.625%, 2015       3,717,101     3,606,603  
            $ 48,991,106  
Utilities - Electric Power – 3.4%    
Allegheny Energy Supply Co. LLC, 8.25%, 2012 (a)     $ 545,000   $ 598,819  
CMS Energy Corp., 8.5%, 2011       285,000     310,650  
DPL, Inc., 6.875%, 2011       707,000     742,153  
Duke Capital Corp., 8%, 2019       1,350,000     1,595,385  
Enersis S.A., 7.375%, 2014       1,273,000     1,361,042  
FirstEnergy Corp., 6.45%, 2011       4,759,000     4,976,929  
Mirant North America LLC, 7.375%, 2013 (a)       370,000     379,713  
MSW Energy Holdings LLC, 7.375%, 2010       545,000     564,075  
Nevada Power Co., 5.875%, 2015       900,000     901,650  
NorthWestern Corp., 5.875%, 2014       1,010,000     1,015,213  
NRG Energy, Inc., 7.375%, 2016       1,110,000     1,143,300  
Reliant Resources, Inc., 9.5%, 2013       235,000     239,700  
System Energy Resources, Inc., 5.129%, 2014 (a)       2,255,683     2,156,433  
TECO Energy, Inc., 7.5%, 2010       450,000     479,250  
TXU Corp., 5.55%, 2014       605,000     576,183  
TXU Energy Co., 7%, 2013       1,220,000     1,296,526  
            $ 18,337,021  
      Total Bonds           $ 516,169,162  
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   $ 10  
      Total Common Stocks           $ 10  
Convertible Preferred Stocks – 0.1%    
Automotive – 0.1%    
General Motors Corp., 5.25%       25,500   $ 387,855  

8  

 

MFS Charter Income Trust
PORTFOLIO OF INVESTMENTS (Unaudited) 02/28/2006 - continued

Issuer Strike
Price		 First
Exercise		 Shares/Par   Value ($)  
Warrants – 0%    
Loral Space & Communications Ltd. (Business Services) (n) $   0.14    1/28/97      1,625   $ 0  
Loral Space & Communications Ltd. (Business Services) (n) 0.14    1/28/97      750   $ 0  
Sterling Chemicals, Inc. (Specialty Chemicals) (n) 52.00    12/31/02      1     0  
      Total Warrants           $ 0  
Short-Term Obligation – 1.8%    
General Electric Capital Corp., 4.56%, due 3/01/06 (y)     $ 9,638,000   $ 9,638,000  
      Total Investments (k)           $ 526,195,027  
Other Assets, Less Liabilities – 2.2%             11,850,117  
      Net Assets – 100.0%           $ 538,045,144  
  (n) Non-income producing security.
  (d) Non-income producing security - in default.
  (i) Interest only security for which the fund receives interest on notional principal (Par amount). Par amount shown is the notional principal and does not reflect the cost of the security.
  (y) The rate shown represents an annualized yield at time of purchase.
  (k) As of February 28, 2006, the fund had five securities that were fair valued, aggregating $0, in accordance with the policies adopted by the Board of Trustees.
  (a) SEC Rule 144A restriction.
  (r) Restricted securities (excluding 144A issues) are not registered under the Securities Act of 1933 and are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are 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 security:

Restricted Security Acquisition Date Acquisition Cost Current Market Value Total % of Net Assets
 
 
  Airplane Pass-Through Trust, "D", 10.875%, 2019   3/13/96   $222,233   $0   0.0%  
  Total Restricted Securities           $0   0.0%  

The following abbreviations are used in the Portfolio of Investments and are defined:
FRN Floating Rate Note. The interest rate is the rate in effect as of period end.
TIPS Treasury Inflation Protected Security
Insurer  
MBIA MBIA Insurance Corp.  

Abbreviations have been used throughout this report to 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
  EUR Euro
  GBP British Pound
  JPY Japanese Yen
  NOK Norwegian Krone
  NZD New Zealand Dollar
  SEK Swedish Krona

See attached schedules. For more information see notes to financial statements as disclosed in the most recent semiannual or annual report.

9  

 

MFS Charter Income Trust
Supplemental Schedules (Unaudited) 02/28/2006

(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 follows:

Aggregate Cost     $ 538,095,567  
Gross unrealized appreciation     $ 5,367,315  
Gross unrealized depreciation       (17,267,855 )
Net unrealized appreciation (depreciation)     $ (11,900,540 )

Aggregate cost 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.

Contracts to
Deliver/Receive		   Settlement Date In Exchange For   Contracts
at Value		   Net Unrealized Appreciation (Depreciation)  
Sales                  
AUD   4,490,980   3/20/06-4/07/06   $ 3,287,149   $ 3,277,570   $ 9,579  
EUR   79,805,059   3/27/06-4/18/06     95,261,044     95,519,934     (258,890 )
GBP   12,267,420   3/30/06     21,826,040     21,543,777     282,263  
JPY   2,215,193,960   3/15/06-3/27/06     19,192,247     19,167,267     24,980  
NOK   378,445   3/13/06     57,229     56,197     1,032  
NZD   20,470,137   3/20/06-4/07/06     14,033,363     13,544,642     488,721  
            $ 153,657,072   $ 153,109,387   $ 547,685  
 
Purchases
AUD   4,490,980   3/20/06-4/07/06   $ 3,286,699   $ 3,277,570   $ (9,129 )
CAD   1,595,230   3/20/06     1,376,444     1,403,574     27,130  
CNY   42,072,400   4/06/06     5,266,621     5,266,950     329  
EUR   4,196,551   3/20/06-3/27/06     5,145,433     5,015,962     (129,471 )
JPY   2,215,193,960   3/15/06-3/27/06     18,800,000     19,167,267     367,267  
NZD   2,096,899   4/07/06     1,424,759     1,387,124     (37,635 )
SEK   1,151,519   3/13/06     148,608     145,769     (2,839 )
            $ 35,448,564   $ 35,664,216   $ 215,652  

At February 26, 2006, forward foreign currency purchases and sales under master netting agreements excluded above amounted to a net receivable of $40,967 with Merrill Lynch International.

10  

 

MFS Charter Income Trust
Supplemental Schedules (Unaudited) 02/28/2006 - continued

Credit Default Swaps

Expiration   Notional Principal Amount of Contract   Description   Unrealized Appreciation (Depreciation)  
 
3/20/2011   $  2,700,000   Agreement between the trust and Merrill Lynch Capital Services to exchange the credit risk of Kohls Corp. As a buyer of protection, the trust agrees to pay Merrill Lynch quarterly at a fixed annual rate of 0.42% of the notional amount of $2,700,000 until maturity on March 20, 2011. If Kohls Corp. experiences one of the following credit events: bankruptcy, failure to pay, or a restructuring, the trust would then purchase $2,700,000 par of Kohls bonds at the post credit event market price, and then deliver those bonds to Merrill Lynch, who in turn would deliver $2,700,000 in cash to the trust.   $    (1,481)  

At February 28, 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 February 28, 2006, are as follows:

United States 64.4%
Great Britain 5.4%
Germany 4.8%
France 3.1%
Ireland 2.5%
Netherlands 2.2%
Finland 2.2%
Spain 2.1%
New Zealand 2.0%
Other 11.3%

The country weighting percentages include both accrued interest amounts and the equivalent exposure from any derivative holdings, if applicable.

11  

 

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: April 24, 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: April 24, 2006


By (Signature and Title)* TRACY ATKINSON  
  Tracy Atkinson, Treasurer (Principal Financial Officer and Accounting Officer)  

Date: April 24, 2006


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