<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
WE INVENTED THE MUTUAL FUND(R)
[Graphic Omitted]
MFS(R) GLOBAL
GOVERNMENTS FUND
SEMIANNUAL REPORT o MAY 31, 2000
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MUTUAL FUND GIFT KITS (see page 34)
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<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Performance Summary ....................................................... 9
Portfolio of Investments .................................................. 12
Financial Statements ...................................................... 18
Notes to Financial Statements ............................................. 25
Trustees and Officers ..................................................... 37
MFS ORIGINAL RESEARCH(R)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
I'm sure you've noticed that whenever financial markets suffer a large decline,
as they did very dramatically this past spring, there's a flurry of information
on "how to deal with market volatility" -- both in the popular press and from
those of us in the investment business. Our own thinking on this is that, first,
for long-term investors volatility is not necessarily something to be feared;
occasional volatility may in fact be healthy for the markets.
Second, our experience has been that when markets begin to fall, it's often too
late to act. The best response may be to do nothing -- if you're properly
prepared with a long-term plan, created with the help of your investment
professional. To help you create or update that plan and take market volatility
in stride, here are some points you may want to consider the next time you talk
with your investment professional.
1. VOLATILITY CAN BE A GOOD THING
We would argue that the markets today are much healthier than they were before
the period of volatility this past spring, in the sense that stock prices have
returned to more reasonable levels and we have a stronger base for future
growth. Perhaps the worst of the market's wrath descended on companies with very
high stock prices, relative to their earnings, or with business concepts that
looked great in the euphoria of a booming market but in the end appeared to have
no fundamental backing. It has always been our view that one of the best
protections against market volatility is to invest in stocks and bonds of
fundamentally good companies selling at reasonable prices. When discussing
potential investments with your investment professional, you may want to ask how
they fared in previous periods of volatility, as well as in the good times.
2. INVEST FOR THE LONG TERM
You've heard that before, but we think it's still probably the most important
concept in investing. Time is one of an investor's greatest allies. Over nearly
all long-term periods -- five, 10, 20 years, and more -- stock and bond returns,
as represented by most common indices, have been positive and have considerably
outpaced inflation. Investing is the best way we know of to make your money work
for you while you're doing something else.
Where investors can get into trouble is by confusing investing with trading. In
our view, traders who buy securities with the intention of selling them at a
profit in a matter of hours, days, or weeks are gambling. We believe this seldom
turns out to be a good strategy for increasing your wealth.
3. INVEST REGULARLY
Waiting for the "right time" to invest is almost always a poor strategy, because
only in retrospect do we know when that right time really was. Periods of
volatility are probably the worst times to make an investment decision. Faced
with turmoil in the markets, many investors have opted to simply stay on the
sidelines.
On the other hand, we think one of the best techniques for investing is through
automatic monthly or quarterly deductions from a checking or savings account.
This approach has at least three major benefits. First, you can formulate a
long-term plan -- how much to invest, how often, and into which portfolios -- in
a calm, rational manner, working with your investment professional. Second, with
this approach you invest regularly without agonizing over the decision each time
you buy shares. And, third, if you invest equal amounts of money at regular
intervals, you'll be taking advantage of a strategy called dollar-cost
averaging: by investing a fixed amount while the share cost fluctuates, you end
up with an average share cost to you that is lower than the average share price
over your investment period.(1) If all this sounds familiar, it's probably
because you're already taking advantage of dollar-cost averaging by investing
regularly for retirement through a 401(k) or similar account at work.
4. DIVERSIFY
One of the dangers of not having an investment plan is that you may be tempted
to simply chase performance, by moving money into whatever asset class appears
to be outperforming at the moment -- small, mid, or large cap; growth or value;
United States or international; stocks or bonds. The problem with this approach
is that by the time a particular area is generally recognized as "hot," you may
have already missed some of the best performance.
International investing offers a case in point. In the 1980s, international
investments, as represented by the Morgan Stanley Capital International (MSCI)
Europe, Australia, Far East (EAFE) Index, outperformed U.S. investments, as
represented by the Standard & Poor's 500 Composite Index (S&P 500), in seven out
of 10 years.(2) For the decade, the MSCI EAFE's average annual performance was
23%, compared to 18% for the S&P 500. Going into the 1990s, then, an investor
looking only at recent performance might have favored international investments
over U.S. investments.
But the 1990s turned out to be virtually a mirror image of the '80s. Domestic
investments outperformed international investments in seven out of 10 years,
with the S&P 500 returning an average of 18% annually for the decade and the
MSCI EAFE returning a 7% annual average. Looking ahead, however, we are
optimistic about international markets because we feel that many of the same
forces that propelled the current U.S. economic boom -- deregulation,
restructuring, and increased adoption of technology -- have taken root overseas.
The lesson to be learned is that nobody really knows what asset class will be
the next to outperform or how long that performance will be sustained. We would
suggest that one way to potentially profit from swings in the market -- to
potentially be invested in various asset classes before the market shifts in
their favor -- is with a diversified portfolio covering several asset classes.
If you haven't already done so, we encourage you to discuss these thoughts with
your investment professional and factor them into your long-range financial
planning. Hopefully, the next time the markets appear to be going wild, you'll
feel confident enough in your plan to view periods of volatility as a time of
potential opportunity -- or perhaps just a time to sit back and do nothing.
As always, we appreciate your confidence in MFS and welcome any questions or
comments you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
June 15, 2000
--------------
(1) For a more complete explanation of dollar-cost averaging and the math
involved, see "ABCs of Investing" in the Investor Education section of our
Web site (www.mfs.com).
(2) Source: Lipper Inc. Decade performance: '80s -- 12/31/79-12/31/89, '90s --
12/31/89-12/31/99. The MSCI EAFE Index is an unmanaged,
market-capitalization-weighted total return index that measures the
performance of the same developed-country global stock markets included in
the MSCI World Index but excludes the United States, Canada, and the South
African mining component. The S&P 500 is a popular, unmanaged index of
common stock total return performance. It is not possible to invest directly
in an index. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
A prospectus containing more complete information on any MFS product, including
all charges and expenses, can be obtained from your investment professional.
Please read it carefully before you invest or send money. Investments in mutual
funds will fluctuate and may be worth more or less upon redemption.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of Christopher D. Piros]
Christopher D. Piros
For the six months ended May 31, 2000, Class A shares of the fund provided a
total return of -1.19%, Class B shares -1.60%, Class C shares -1.57%, and Class
I shares -1.09%. These returns assume the reinvestment of any distributions but
exclude the effects of any sales charges and compare to a -2.25% return for the
fund's benchmark, the J.P. Morgan Global Government Bond Index (the Morgan
Index), an aggregate index of actively traded government bonds issued by 13
countries, including the United States, with remaining maturities of at least
one year. During the same period, the average global income fund tracked by
Lipper Inc., an independent firm that reports mutual fund performance, returned
-1.02%.
Q. WHAT CONTRIBUTED TO THE FUND'S PERFORMANCE DURING THE PAST SIX MONTHS?
A. The fund, the Lipper peer group, and the Morgan Index posted negative
returns mainly because of a sell off in foreign currencies, especially the
euro. Even though interest rates were generally on the rise, all of the
government markets represented in the Morgan Index posted positive local-
currency returns during the period. Our relative underweighting of the euro
and other foreign currencies during a period when the dollar was quite
strong turned out to be beneficial. In addition, our investments in emerging
market debt -- which are not included in the Morgan Index -- were
particularly helpful. The investments chosen by our emerging market debt
team performed very strongly.
The fund's U.S. Treasury investments were focused on long-term maturities, a
strategy that paid off. Long-term Treasuries performed particularly well
during the six months, while intermediate- and short-term Treasury
securities suffered. (Principal value and interest on Treasury securities
are guaranteed by the U.S. government if held to maturity.) Long-term
European government bonds also outperformed their shorter-maturity
counterparts, and, again, we benefited from positioning the fund in
longer-term European government securities. Nongovernment bond investments
such as investment-grade and high-yield corporate bonds generally
underperformed government securities during the period. Finally, we were
able to avoid the major credit problems encountered by some corporate
issuers.
Q. IN WHICH SECTORS OR MARKETS HAVE YOU FOUND THE BEST INVESTMENTS?
A. Emerging market investments provided solid performance. In this realm, it's
very important to choose carefully, and our emerging market research team
did a great job of avoiding problem spots such as Venezuela, Colombia, and
Ecuador. The fund was well diversified in higher-quality, lower-volatility
countries such as Mexico -- which enjoyed a credit upgrade -- Argentina,
Brazil, Bulgaria, Turkey, Morocco, and South Korea.
One global theme we've taken advantage of is the move by banks to shore up
their capital bases by issuing subordinated bonds. Subordinated debt simply
refers to bonds that are second in line for payoff if a company defaults. In
South Korea, and to a larger extent in Europe, we focused on the
subordinated debt of high-quality banks. We felt the additional yield of
subordinated debt more than adequately compensated for taking on a slight
amount of additional risk, as compared to senior debt, which would be paid
off first in case of a bankruptcy.
Overall, we've cut back our high-yield exposure and upgraded the portfolio
into higher-quality corporate and government bonds. Examples included Cable
& Wireless in the United Kingdom and OTE in Greece. In our opinion,
high-yield bonds underperformed due to the market's diminished risk
tolerance after several crises during the past few years, and
telecommunications companies in Europe have experienced some turmoil because
governments have auctioned off wireless licenses at high prices. However, we
remained positive about select names that we felt offered diversification
and added yield. We were able to locate some compelling opportunities in
high-yield telecommunications company debt, including Maxcom in Mexico and
Jazztel in the United Kingdom. While defaults in the high-yield market
picked up in spite of robust global economies, our team managed to avoid the
big blowups that upset the market from time to time.
Finally, in our continued efforts to cut volatility and maintain
diversification, we kept a modest weighting in U.S. mortgage-backed
securities. Fortunately, we invested exclusively in Government National
Mortgage Association securities, which are backed by the full faith and
credit of the U.S. government. Federal National Mortgage Association and
Federal Home Loan Mortgage Corporation securities are not, and these two
agencies were hurt by discussions in Congress questioning their implicit
government backing.
Q. IN WHICH COUNTRIES OR REGIONS HAVE YOU FOUND GOOD OPPORTUNITIES FOR
GOVERNMENT BONDS?
A. Despite official rate hikes all of the major government bond markets
provided positive returns for the period in their own local currencies. But
for an apples-to-apples comparison we should look at the returns with the
currency exposure hedged back into dollars. In the current environment this
enhances return for most countries over and above the local return. On this
basis most foreign markets kept pace with or exceeded the return on U.S.
Treasuries.
Throughout the period we maintained a relatively low weighting in U.S.
Treasuries. Two factors drove this decision. First, our emerging market,
mortgages, and U.S. corporate bond investments are best viewed as
substitutes for Treasuries. Second, we felt that robust growth and the
threat of inflation in the U.S. might allow other government markets to
outperform Treasuries. Hence, our government holdings were somewhat skewed
toward Europe and Japan.
Recent evidence suggests that U.S. growth is slowing and that inflation may
remain benign. If this trend persists we are likely to rebuild our Treasury
positions, most likely at the expense of European markets.
Q. WHY HAVE JAPANESE BONDS APPEALED TO YOU?
A. Although Japanese bonds offered low nominal yields given their conversion
back into U.S. dollars, they offered attractive returns; we owned them in
order to diversify the portfolio and take advantage of the strength of the
yen. Despite hopes for a recovery in Japan, we believe any such
resuscitation will be shallow and that the Bank of Japan will not raise
rates in the near future from their very low levels.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. We believe the next six months could provide a positive backdrop for the
fund, barring unforeseen difficulties. If the Fed achieves a soft landing --
slowing growth enough to dampen inflationary pressures without sending the
economy into recession -- we believe Treasuries will outperform European
government bonds and emerging markets will continue to do well. If, however,
the U.S. economy does not slow and the Fed is required to become more
aggressive by raising rates sharply, we think emerging market bonds will
suffer. Beyond that, our intention is to remain cautious with our
nongovernment holdings, especially in the high-yield corporate area, while
working to maintain a diversified portfolio that tries to limit volatility.
/s/ Christopher D. Piros
Christopher D. Piros
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and are
current only through the end of the period of the report as stated on the cover.
The manager's views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index.
--------------------------------------------------------------------------------
PORTFOLIO MANAGER'S PROFILE
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CHRISTOPHER D. PIROS IS SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R)
AND PORTFOLIO MANAGER OF MFS(R) GLOBAL GOVERNMENTS FUND. HE ALSO MANAGES THE
NOMURA GLOBAL BALANCED OPEN FUND UNDER SUBADVISORY AGREEMENTS WITH NOMURA ASSET
MANAGEMENT CO. OF JAPAN.
MR. PIROS JOINED MFS IN 1989 AS VICE PRESIDENT IN THE FIXED INCOME DEPARTMENT
AND WORKED IN THE INTERNATIONAL FIXED INCOME AREA BEFORE BEING NAMED A PORTFOLIO
MANAGER IN 1992. HE WAS NAMED SENIOR VICE PRESIDENT IN 1997. PRIOR TO JOINING
MFS, HE HAD BEEN A VICE PRESIDENT AND SENIOR ECONOMIST IN THE QUANTITATIVE ASSET
MANAGEMENT AREA AT A MAJOR CHICAGO-BASED SECURITIES FIRM AND AN ASSISTANT
PROFESSOR AT THE FUQUA SCHOOL OF BUSINESS AT DUKE UNIVERSITY. HE IS A GRADUATE
OF NORTHWESTERN UNIVERSITY AND HOLDS A PH.D. FROM HARVARD UNIVERSITY.
ALL PORTFOLIO MANAGERS AT MFS INVESTMENT MANAGEMENT(R) ARE SUPPORTED BY AN
INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS ORIGINAL RESEARCH(R), A
GLOBAL, SECURITY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING SECURITIES.
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your investment professional, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
--------------------------------------------------------------------------------
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS INCOME AND CAPITAL APPRECIATION.
COMMENCEMENT OF
INVESTMENT OPERATIONS: FEBRUARY 26, 1981
CLASS INCEPTION: CLASS A FEBRUARY 26, 1981
CLASS B SEPTEMBER 7, 1993
CLASS C JANUARY 3, 1994
CLASS I JANUARY 2, 1997
SIZE: $119.2 MILLION NET ASSETS AS OF MAY 31, 2000
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PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for the
applicable time periods. Investment results reflect the percentage change in net
asset value, including reinvestment of dividends. (See Notes to Performance
Summary.)
TOTAL RATES OF RETURN THROUGH MAY 31, 2000
CLASS A
6 Months 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
Cumulative Total Return
Excluding Sales Charge -1.19% -2.62% +2.49% +8.55% +76.88%
--------------------------------------------------------------------------------
Average Annual Total Return
Excluding Sales Charge -- -2.62% +0.82% +1.65% + 5.87%
--------------------------------------------------------------------------------
Average Annual Total Return
Including Sales Charge -- -7.25% -0.80% +0.67% + 5.36%
--------------------------------------------------------------------------------
CLASS B
6 Months 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
Cumulative Total Return
Excluding Sales Charge -1.60% -3.44% +0.01% +4.25% +67.56%
--------------------------------------------------------------------------------
Average Annual Total Return
Excluding Sales Charge -- -3.44% +0.00% +0.84% + 5.30%
--------------------------------------------------------------------------------
Average Annual Total Return
Including Sales Charge -- -7.05% -0.85% +0.54% + 5.30%
--------------------------------------------------------------------------------
CLASS C
6 Months 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
Cumulative Total Return
Excluding Sales Charge -1.57% -3.40% +0.09% +4.48% +68.48%
--------------------------------------------------------------------------------
Average Annual Total Return
Excluding Sales Charge -- -3.40% +0.03% +0.88% + 5.36%
--------------------------------------------------------------------------------
Average Annual Total Return
Including Sales Charge -- -4.30% +0.03% +0.88% + 5.36%
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CLASS I
6 Months 1 Year 3 Years 5 Years 10 Years
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Cumulative Total Return
Excluding Sales Charge -1.09% -2.43% +3.18% +9.39% +78.25%
--------------------------------------------------------------------------------
Average Annual Total Return
Excluding Sales Charge -- -2.43% +1.05% +1.81% + 5.95%
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NOTES TO PERFORMANCE SUMMARY
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 4.75% sales charge. Class B Share Performance Including
Sales Charge takes into account the deduction of the applicable contingent
deferred sales charge (CDSC), which declines over six years from 4% to 0%. Class
C Share Performance Including Sales Charge takes into account the deduction of
the 1% CDSC applicable to Class C shares redeemed within 12 months. Class I
shares have no sales charge and are only available to certain institutional
investors.
Class B, C, and I share performance include the performance of the fund's Class
A shares for periods prior to their inception (blended performance). Class B and
C blended performance has been adjusted to take into account the CDSC applicable
to Class B and C shares rather than the initial sales charge (load) applicable
to Class A shares. Class I share blended performance has been adjusted to
account for the fact that Class I shares have no sales charge. These blended
performance figures have not been adjusted to take into account differences in
class-specific operating expenses. Because operating expenses of Class B and C
shares are higher than those of Class A, the blended Class B and C share
performance is higher than it would have been had Class B and C shares been
offered for the entire period. Conversely, because operating expenses of Class I
shares are lower than those of Class A, the blended Class I share performance is
lower than it would have been had Class I shares been offered for the entire
period.
All performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and waivers
may be rescinded at any time. See the prospectus for details. All results are
historical and assume the reinvestment of capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MORE RECENT
RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
Investments in foreign and emerging market securities may provide superior
returns but also involve greater risk than U.S. investments. Investments in
foreign and emerging market securities may be favorably or unfavorably affected
by changes in interest rates and currency exchange rates, market conditions, and
the economic and political conditions of the countries where investments are
made. These risks may increase share price volatility. See the prospectus for
details.
PORTFOLIO CONCENTRATION AS OF MAY 31, 2000
PORTFOLIO STRUCTURE
International 30.6%
High Grade Corporates 15.9%
Cash 15.8%
U.S. Treasuries 9.3%
Mortgage Backed 7.0%
Emerging Markets 6.8%
Yankee 6.6%
Government Agency 5.2%
High Yield Corporates 2.8%
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- May 31, 2000
<TABLE>
<CAPTION>
Bonds - 75.3%
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PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Bonds - 44.5%
Argentina - 1.7%
Republic of Argentina, 0s, 2001 $ 1,625 $ 1,499,875
Republic of Argentina, 6s, 2023 850 566,107
------------
$ 2,065,982
--------------------------------------------------------------------------------------------------
Brazil - 1.7%
Banco Naciona de Desenvolvi, 12.693s, 2008 (Banks and
Credit Cos.)+ $ 125 $ 113,125
Federal Republic of Brazil, 5s, 2014 555 388,756
Federal Republic of Brazil, 7.375s, 2024 550 411,813
Federal Republic of Brazil, 12.25s, 2030 140 123,900
Federal Republic of Brazil, 14.5s, 2009 900 927,900
------------
$ 1,965,494
--------------------------------------------------------------------------------------------------
Bulgaria - 0.5%
National Republic of Bulgaria, 7.063s, 2024 $ 730 $ 551,541
--------------------------------------------------------------------------------------------------
Canada - 0.5%
Gulf Canada Resources Ltd., 9.25s, 2004 (Oils) $ 625 $ 621,812
--------------------------------------------------------------------------------------------------
Denmark - 2.0%
Nykredit, 5s, 2019 (Banks and Credit Cos.) DKK 7,433 $ 826,003
Nykredit, 6s, 2029 (Banks and Credit Cos.) 13,276 1,522,610
------------
$ 2,348,613
--------------------------------------------------------------------------------------------------
France - 0.6%
Republic of France, 3.5s, 2004 EUR 872 $ 766,476
--------------------------------------------------------------------------------------------------
Germany - 6.2%
Federal Republic of Germany, 4.5s, 2009 EUR 2,434 $ 2,159,559
Federal Republic of Germany, 4.75s, 2028 1,350 1,139,573
Federal Republic of Germany, 5.375s, 2010 1,828 1,725,205
Federal Republic of Germany, 6.25s, 2030 1,870 1,963,912
Republic of Deutschland, 6.5s, 2027 377 402,975
------------
$ 7,391,224
--------------------------------------------------------------------------------------------------
Grand Cayman Islands - 0.3%
Pemex Finance Ltd., 9.69s, 2009 (Industrial) $ 350 $ 357,980
--------------------------------------------------------------------------------------------------
Greece - 4.0%
Hellenic Republic, 5.75s, 2008 EUR 1,331 $ 1,238,941
OTE PLC, 6.125s, 2007 (Telecom)## 590 542,094
Republic of Greece, 6s, 2006 GRD 523,800 1,439,880
Republic of Greece, 6.3s, 2009 523,400 1,465,613
------------
$ 4,686,528
--------------------------------------------------------------------------------------------------
Ireland - 0.5%
Bank of Ireland, 6.45s, 2010 (Banks and Credit Cos.) EUR 635 $ 585,453
--------------------------------------------------------------------------------------------------
Italy - 4.6%
Olivetti International N.V., 5.875s, 2003
(Telecommunications) EUR 810 $ 741,284
Republic of Italy, 3.25s, 2004 696 602,541
Republic of Italy, 5.5s, 2010 1,276 1,193,339
Republic of Italy, 6s, 2031 3,127 3,007,549
------------
$ 5,544,713
--------------------------------------------------------------------------------------------------
Japan - 2.3%
Toyota Motor Credit Corporation, 1s, 2004 JPY 294,000 $ 2,720,756
--------------------------------------------------------------------------------------------------
Luxembourg - 0.1%
PTC International Finance II S.A., 11.25s, 2009
(Telecommunications)## $ 160 $ 159,200
--------------------------------------------------------------------------------------------------
Mexico - 0.7%
Maxcom Telecomunicaciones Cv, 13.75s, 2007
(Telecommunications)## $ 185 $ 159,563
Nuevo Grupo Iusacell SA, 14.25s, 2006
(Telecommunications)## 385 381,150
United Mexican States, 11.375s, 2016 100 107,375
United Mexican States, 11.5s, 2026 135 150,356
------------
$ 798,444
--------------------------------------------------------------------------------------------------
Morocco - 0.4%
Kingdom of Morocco, 7.75s, 2009+ $ 470 $ 414,776
--------------------------------------------------------------------------------------------------
Norway - 1.1%
Union Bank of Norway, 7.35s, 2049 (Banks and
Credit Cos.)## $ 1,400 $ 1,348,046
--------------------------------------------------------------------------------------------------
Poland - 0.3%
Netia Holdings B V, 10.25s, 2007 (Telecommunications) $ 400 $ 334,000
--------------------------------------------------------------------------------------------------
South Korea - 0.5%
Chohung Bank, 11.5s to 2005, 14.04s to 2010 (Banks
and Credit Cos.)## $ 300 $ 270,000
Hanvit Bank, 12.75s, 2010 (Banks and Credit Cos.)## 450 411,750
------------
$ 681,750
--------------------------------------------------------------------------------------------------
Spain - 2.6%
Government of Spain, 6s, 2008 EUR 3,197 $ 3,064,396
--------------------------------------------------------------------------------------------------
Sweden - 2.4%
AB Spintab, 6.8s, 2049 (Banks and Credit Cos.)## $ 1,700 $ 1,621,423
Kingdom of Sweden, 6s, 2005 SEK 5,300 607,322
Kingdom of Sweden, 9s, 2009 4,400 619,983
------------
$ 2,848,728
--------------------------------------------------------------------------------------------------
Turkey
Republic of Turkey, 11.875s, 2030 $ 51 $ 52,976
--------------------------------------------------------------------------------------------------
United Kingdom - 11.5%
Cable & Wireless Communications, 6.75s, 2008
(Telecommunications) $ 2,612 $ 2,622,910
Halifax Building Society PLC, 6.409s, 2012 (Banks and
Credit Cos.) GBP 1,700 2,495,155
Halifax Group, 7.627 to 2011, 6.32 to 2049
(Industrial) EUR 610 565,135
Jazztel PLC, 13.25s, 2009 (Telecommunications)## 470 409,437
Lloyds TSB Bank PLC, 7.375s, 2004 (Banks and Credit
Cos.) GBP 1,500 2,282,678
Polestar Corp. PLC, 10.5s, 2008 (Printing) 575 828,707
United Kingdom Treasury, 7s, 2002 1,341 2,037,806
Woolwich Building Society PLC, 6.609s, 2012 (Banks
and Credit Cos.) 1,700 2,500,797
------------
$ 13,742,625
--------------------------------------------------------------------------------------------------
Total Foreign Bonds $ 53,051,513
--------------------------------------------------------------------------------------------------
U.S. Bonds - 30.8%
Automotive - 2.3%
General Motors Corporation, 1.25s, 2004 JPY 294,000 $ 2,722,121
--------------------------------------------------------------------------------------------------
Banks and Credit Companies - 0.5%
Socgen Real Estate Co., 7.64s, 2049## $ 625 $ 561,419
--------------------------------------------------------------------------------------------------
Building - 1.0%
Building Materials Corp., 8.625s, 2006 $ 1,250 $ 1,168,750
--------------------------------------------------------------------------------------------------
Business Services - 1.1%
Unisystem Corp., 7.875s, 2008 $ 1,400 $ 1,312,500
--------------------------------------------------------------------------------------------------
Conglomerates - 0.5%
News America Holdings, Inc., 6.625s, 2008 $ 649 $ 573,761
--------------------------------------------------------------------------------------------------
Entertainment - 0.5%
Time Warner Entertainment Co. LP, 8.375s, 2033 $ 605 $ 576,753
--------------------------------------------------------------------------------------------------
Financial Institutions - 0.8%
Natexis AMBS Co. LLC, 8.44s, 2049## $ 1,066 $ 967,389
--------------------------------------------------------------------------------------------------
Medical and Health Technology and Services - 1.1%
Tenet Healthcare Corp., 8.625s, 2003 $ 1,370 $ 1,328,900
--------------------------------------------------------------------------------------------------
Metal Fabrication - 0.4%
Ryerson Tull, Inc., 9.125s, 2006 $ 500 $ 517,534
--------------------------------------------------------------------------------------------------
Oils - 0.5%
Phillips Petroleum Company, 8.5s, 2005 $ 327 $ 329,979
Phillips Petroleum Company, 8.75s, 2010 327 332,153
------------
$ 662,132
--------------------------------------------------------------------------------------------------
Supermarkets - 0.7%
Marsh Supermarkets, Inc., 8.875s, 2007 $ 900 $ 834,750
--------------------------------------------------------------------------------------------------
U.S. Federal Agencies - 12.2%
FNMA, 1.75s, 2008 JPY 200,000 $ 1,913,369
FHLMC, 6.875s, 2005 $ 4,300 4,207,937
GNMA, 8s, 2030 8,387 8,407,225
------------
$ 14,528,531
--------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 9.2%
U.S. Treasury Bonds, 3.875s, 2029 $ 1,119 $ 1,099,091
U.S. Treasury Bonds, 6.125s, 2029 276 274,705
U.S. Treasury Bonds, 6.25s, 2030 3,182 3,282,933
U.S. Treasury Notes, 3.875s, 2009 3,944 3,853,649
U.S. Treasury Notes, 6s, 2009 1,297 1,263,965
U.S. Treasury Notes, 6.5s, 2010 1,174 1,191,246
------------
$ 10,965,589
--------------------------------------------------------------------------------------------------
Total U.S. Bonds $ 36,720,129
--------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $93,677,108) $ 89,771,642
--------------------------------------------------------------------------------------------------
Call Options Purchased - 0.8%
--------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER/EXPIRATION MONTH/STRIKE PRICE (000 OMITTED)
--------------------------------------------------------------------------------------------------
Japanese Government Bonds/August/132.49 JPY 700,000 $ 65,008
Japanese Yen/July/105 582,457 62,905
Swiss Franc/June/1.7 CHF 13,546 62,611
Australian Dollar/August/0.66 AUD 4,746 247
Euro/July/0.905 EUR 5,549 40,099
Euro/August/1.07 3,834 234
Euro/August/1.04 4,472 1,959
Euro/November/0.95 18,877 670,616
--------------------------------------------------------------------------------------------------
Total Call Options Purchased (Premiums Paid, $999,501) $ 903,679
--------------------------------------------------------------------------------------------------
Put Options Purchased - 0.8%
--------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER/EXPIRATION MONTH/STRIKE PRICE (000 OMITTED) VALUE
--------------------------------------------------------------------------------------------------
Euro/June/0.95 EUR 19,305 $ 370,695
British Pound/Euro/August/0.605 GBP 2,148 17,162
British Pound/Euro/August/0.62 4,399 49,311
British Pound/Euro/August/0.615 4,326 43,137
British Pound/Euro/August/0.595 2,093 183,140
Japanese Yen/June/110 JPY 673,585 11,451
Japanese Yen/June/106 635,539 55,292
Japanese Yen/Euro/June/102 690,713 69,762
Japanese Yen/Euro/August/102 624,893 104,982
Japanese Yen/Euro/January/130 34,156 11,510
--------------------------------------------------------------------------------------------------
Total Put Options Purchased (Premiums Paid, $903,624) $ 916,442
--------------------------------------------------------------------------------------------------
Short-Term Obligations - 22.6%
--------------------------------------------------------------------------------------------------
American Express Credit Corporation, due 6/01/00 $ 1,852 $ 1,852,000
General Motors Acceptance Corp., due 6/01/00 1,675 1,675,000
Federal National Mortgage Association Discount Notes,
due 6/01/00 23,465 23,465,000
--------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 26,992,000
--------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $122,572,233) $118,583,763
Call Options Written - (0.6)%
--------------------------------------------------------------------------------------------------
Australian Dollar/August/0.61 AUD (4,386) $ (283,873)
Australian Dollar/May/0.555 (1,976) (55,338)
Canadian Dollar/September/1.4 CAD (10,339) (2,078)
Euro/June/0.9 EUR (19,548) (3,929)
Euro/November/0.9 (17,883) (321,896)
Japanese Yen/Euro/September/93.25 JPY (631,461) (88,404)
Euro/June/1 EUR (25,740) (26)
Euro/August/1.12 (4,816) (19)
--------------------------------------------------------------------------------------------------
Total Call Options Written (Premiums Received,
$1,061,942) $ (755,563)
--------------------------------------------------------------------------------------------------
Put Options Written - (0.7)%
--------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER/EXPIRATION MONTH/STRIKE PRICE (000 OMITTED) VALUE
--------------------------------------------------------------------------------------------------
Japanese Government Bonds/August/132.49 JPY (700,000) $ (65,007)
British Pound/Euro/September/0.615 GBP (4,326) (221,420)
Canadian Dollar/June/1.51 CAD (62) (12,536)
Canadian Dollar/July/1.5 (61) (18,547)
Canadian Dollar/August/1.49 (61) (21,945)
Euro/November/1.015 EUR (26,891) (357,662)
Japanese Yen/July/108 JPY (646,635) (84,063)
--------------------------------------------------------------------------------------------------
Total Put Options Written (Premiums Received, $614,218) $ (781,180)
--------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.8% 2,118,993
--------------------------------------------------------------------------------------------------
Net Assets - 100.0% $119,166,013
--------------------------------------------------------------------------------------------------
## SEC Rule 144A restriction.
+ Restricted security.
</TABLE>
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 Dollars GRD = Greek Drachma
CAD = Canadian Dollars JPY = Japanese Yen
CHF = Swiss Francs NZD = New Zealand Dollars
DKK = Danish Kroner SEK = Swedish Kronor
EUR = Euro VEB = Venezuelan Bolivar
GBP = British Pounds
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
---------------------------------------------------------------------------
MAY 31, 2000
---------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $122,572,233) $118,583,763
Cash 45,442
Foreign currency, at value (identified cost, $74,773) 72,207
Net receivable for forward foreign currency exchange
contracts to sell 834,457
Receivable for investments sold 1,509,266
Receivable for Fund shares sold 37,831
Receivable for Swap Agreement 13,079
Interest receivable 1,628,228
Other assets 2,560
------------
Total assets $122,726,833
------------
Liabilities:
Payable for investments purchased $ 1,086,085
Payable for Fund shares reacquired 192,709
Net payable for forward foreign currency exchange
contracts to purchase 533,187
Net payable for forward foreign currency exchange subject
to master netting agreements 25,178
Written options outstanding, at value (premiums received,
$1,676,160) 1,536,743
Payable to affiliates -
Management fee 3,010
Administrative fee 57
Distribution and service fee 19,903
Shareholder servicing agent fee 401
Accrued expenses and other liabilities 163,547
------------
Total liabilities $ 3,560,820
------------
Net assets $119,166,013
============
Net assets consist of:
Paid-in capital $148,037,109
Unrealized depreciation on investments and translation of
assets and liabilities in foreign currencies (3,754,503)
Accumulated undistributed net realized loss on
investments and foreign currency transactions (28,070,376)
Accumulated undistributed net investment income 2,953,783
------------
Total $119,166,013
============
Shares of beneficial interest outstanding 12,890,660
==========
Class A shares:
Net asset value per share
(net assets of $80,497,580 / 8,672,039 shares of
beneficial interest outstanding) $9.28
=====
Offering price per share (100 / 95.25 of net asset value
per share) $9.74
=====
Class B shares:
Net asset value and offering price per share
(net assets of $35,021,919 / 3,824,171 shares of
beneficial interest outstanding) $9.16
=====
Class C shares:
Net asset value and offering price per share
(net assets of $2,202,928 / 238,752 shares of
beneficial interest outstanding) $9.23
=====
Class I shares:
Net asset value and offering price per share
(net assets of $1,443,586 / 155,698 shares of
beneficial interest outstanding) $9.27
=====
On sales of $100,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B, and Class C shares.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2000
------------------------------------------------------------------------------
Net investment income:
Interest income $ 4,241,312
------------
Expenses -
Management fee $ 486,027
Trustees' compensation 11,490
Shareholder servicing agent fee 64,804
Distribution and service fee (Class A) 99,926
Distribution and service fee (Class B) 192,879
Distribution and service fee (Class C) 13,303
Administration 8,466
Custodian fee 41,342
Printing 19,422
Postage 15,791
Auditing 12,600
Legal 268
Miscellaneous 64,550
------------
Total expenses $ 1,030,868
Fees paid indirectly (20,883)
------------
Net expenses $ 1,009,985
------------
Net investment income $ 3,231,327
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ (8,979,685)
Written option transactions 797,338
Foreign currency transactions 689,174
------------
Net realized loss on investments and foreign
currency transactions $ (7,493,173)
------------
Change in unrealized appreciation (depreciation) -
Investments $ 2,657,348
Written options 95,365
Translation of assets and liabilities in
foreign currencies (171,068)
Swap agreements 47,654
------------
Net unrealized gain on investments and foreign
currency transactions $ 2,629,299
------------
Net realized and unrealized loss on investments
and foreign currency $ (4,863,874)
------------
Decrease in net assets from operations $ (1,632,547)
============
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
--------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
(UNAUDITED)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Decrease in net assets:
From operations -
Net investment income $ 3,231,327 $ 8,789,837
Net realized loss on investments and foreign currency
transactions (7,493,173) (8,296,330)
Net unrealized gain (loss) on investments and foreign
currency translation 2,629,299 (6,357,258)
------------- -------------
Decrease in net assets from operations $ (1,632,547) $ (5,863,751)
------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (7,237,849) $ (8,915,136)
From net investment income (Class B) (2,748,179) (3,474,564)
From net investment income (Class C) (193,691) (333,062)
From net investment income (Class I) (123,685) (132,660)
------------- -------------
Total distributions declared to shareholders $ (10,303,404) $ (12,855,422)
------------- -------------
Net decrease in net assets from Fund share transactions $ (11,266,016) $ (45,170,204)
------------- -------------
Total decrease in net assets $ (23,201,967) $ (63,889,377)
Net assets:
At beginning of period 142,367,980 206,257,357
------------- -------------
At end of period (including accumulated undistributed net
investment income of $2,953,783 and $10,025,860,
respectively) $ 119,166,013 $ 142,367,980
============= =============
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED -------------------------------------------------------------------------
MAY 31, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
----------------------------------------------------------------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of
period $10.17 $11.20 $11.34 $11.70 $12.46 $11.39
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.25 $ 0.54 $ 0.70 $ 0.64 $ 0.65 $ 0.76
Net realized and unrealized
gain (loss) on investments
and foreign currency (0.36) (0.84) (0.34) (0.68) 0.17 0.76
------ ------ ------ ------ ------ ------
Total from investment
operations $(0.11) $(0.30) $ 0.36 $(0.04) $ 0.82 $ 1.52
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.78) $(0.73) $(0.44) $(0.25) $(1.58) $ --
From net realized gain on
investments and foreign
currency transactions -- -- (0.06) (0.06) -- (0.45)
In excess of net realized gain
on investments and foreign
currency transactions -- -- -- (0.01) -- --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.78) $(0.73) $(0.50) $(0.32) $(1.58) $(0.45)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 9.28 $10.17 $11.20 $11.34 $11.70 $12.46
====== ====== ====== ====== ====== ======
Total return(+) (1.19)%++ (3.01)% 3.27% (0.29)% 7.36% 13.93%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.33%+ 1.34% 1.35% 1.35% 1.42% 1.51%
Net investment income 5.18%+ 5.19% 6.28% 5.75% 5.70% 6.42%
Portfolio turnover 97% 217% 334% 335% 370% 277%
Net assets at end of period
(000 omitted) $80,498 $95,888 $139,648 $187,152 $283,770 $343,188
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charges had been included, the results
would have been lower.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED -------------------------------------------------------------------------
MAY 31, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
----------------------------------------------------------------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of
period $ 9.97 $10.99 $11.13 $11.50 $12.28 $11.32
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.21 $ 0.46 $ 0.60 $ 0.55 $ 0.54 $ 0.65
Net realized and unrealized
gain (loss) on investments
and foreign currency (0.35) (0.84) (0.33) (0.68) 0.17 0.76
------ ------ ------ ------ ------ ------
Total from investment
operations $(0.14) $(0.38) $ 0.27 $(0.13) $ 0.71 $ 1.41
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.67) $(0.64) $(0.35) $(0.17) $(1.49) $ --
From net realized gain on
investments and foreign
currency transactions -- -- (0.06) (0.06) -- (0.45)
In excess of net realized gain
on investments and foreign
currency transactions -- -- -- (0.01) -- --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.67) $(0.64) $(0.41) $(0.24) $(1.49) $(0.45)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 9.16 $ 9.97 $10.99 $11.13 $11.50 $12.28
====== ====== ====== ====== ====== ======
Total return (1.60)%++ (3.74)% 2.46% (1.08)% 6.39% 13.01%
Ratios (to average net assets)/Supplemental data:
Expenses## 2.10%+ 2.12% 2.12% 2.10% 2.27% 2.33%
Net investment income 4.41%+ 4.41% 5.53% 5.03% 4.89% 5.59%
Portfolio turnover 97% 217% 334% 335% 370% 277%
Net assets at end of period
(000 omitted) $35,022 $41,865 $58,646 $77,962 $102,717 $90,978
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED -------------------------------------------------------------------------
MAY 31, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------
CLASS C
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of
period $10.02 $11.03 $11.13 $11.51 $12.29 $11.31
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.21 $ 0.45 $ 0.60 $ 0.55 $ 0.55 $ 0.66
Net realized and unrealized
gain (loss) on investments
and foreign currency (0.35) (0.83) (0.33) (0.68) 0.17 0.77
------ ------ ------ ------ ------ ------
Total from investment
operations $(0.14) $(0.38) $ 0.27 $(0.13) $ 0.72 $ 1.43
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.65) $(0.63) $(0.31) $(0.18) $(1.50) $ --
From net realized gain on
investments and foreign
currency transactions -- -- (0.06) (0.06) -- (0.45)
In excess of net realized gain
on investments and foreign
currency transactions -- -- -- (0.01) -- --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.65) $(0.63) $(0.37) $(0.25) $(1.50) $(0.45)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 9.23 $10.02 $11.03 $11.13 $11.51 $12.29
====== ====== ====== ====== ====== ======
Total return (1.57)%++ (3.70)% 2.46% (1.10)% 6.56% 13.11%
Ratios (to average net assets)/Supplemental data:
Expenses## 2.10%+ 2.12% 2.12% 2.10% 2.20% 2.26%
Net investment income 4.43%+ 4.41% 5.52% 5.02% 4.97% 5.67%
Portfolio turnover 97% 217% 334% 335% 370% 277%
Net assets at end of period
(000 omitted) $2,203 $3,059 $5,953 $9,534 $14,487 $11,813
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
-------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED ------------------------------------------------
MAY 31, 2000 1999 1998 1997*
(UNAUDITED)
-------------------------------------------------------------------------------------------------------------------------
CLASS I
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $10.18 $11.22 $11.37 $11.24
------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.26 $ 0.57 $ 0.73 $ 0.61
Net realized and unrealized loss on investments
and foreign currency (0.36) (0.85) (0.35) (0.48)
------ ------ ------ ------
Total from investment operations $(0.10) $(0.28) $ 0.38 $ 0.13
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.81) $(0.76) $(0.47) $ --
From net realized gain on investments and
foreign currency transactions -- -- (0.06) --
------ ------ ------ ------
Total distributions declared to
shareholders $(0.81) $(0.76) $(0.53) $ --
------ ------ ------ ------
Net asset value - end of period $ 9.27 $10.18 $11.22 $11.37
====== ====== ====== ======
Total return (1.09)%++ (2.74)% 3.49% 1.16%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.11%+ 1.11% 1.12% 0.99%+
Net investment income 5.42%+ 5.42% 6.58% 5.54%+
Portfolio turnover 97% 217% 334% 335%
Net assets at end of period (000 omitted) $1,444 $1,556 $2,010 $2,023
* For the period from inception of Class I, January 2, 1997, to November 30, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Global Governments Fund (the Fund) is a non-diversified series of MFS Series
Trust VII (the Trust). The Trust is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The Fund can invest in foreign securities. Investments in foreign securities are
vulnerable to the effects of changes in the relative values of the local
currency and the U.S. dollar and to the effects of changes in each country's
legal, political, and economic environment.
Investment Valuations - Debt securities (other than short-term obligations which
mature in 60 days or less), including listed issues, forward contracts, and swap
agreements, are valued on the basis of valuations furnished by dealers or by a
pricing service with consideration to factors such as institutional-size trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data, without exclusive
reliance upon exchange or over-the-counter prices. Short-term obligations, which
mature in 60 days or less, are valued at amortized cost, which approximates
market value. Futures contracts, options, and options on futures contracts
listed on commodities exchanges are reported at market value using closing
settlement prices. Over-the-counter options on securities are valued by brokers.
Over-the-counter currency options are valued through the use of a pricing model
which takes into account foreign currency exchange spot and forward rates,
implied volatility, and short-term repurchase rates. Securities for which there
are no such quotations or valuations are valued in good faith, at fair value, by
the Trustees.
Repurchase Agreements - The Fund may enter into repurchase agreements with
institutions that the Fund's investment adviser has determined are creditworthy.
Each repurchase agreement is recorded at cost. The Fund requires that the
securities collateral in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the Fund to obtain those securities
in the event of a default under the repurchase agreement. The Fund monitors, on
a daily basis, the value of the collateral to ensure that its value, including
accrued interest, is greater than amounts owed to the Fund under each such
repurchase agreement. The Fund, along with other affiliated entities of
Massachusetts Financial Services Company (MFS), may utilize a joint trading
account for the purpose of entering into one or more repurchase agreements.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Written Options - The Fund may write call or put options in exchange for a
premium. The premium is initially recorded as a liability which is subsequently
adjusted to the current value of the option contract. When a written option
expires, the Fund realizes a gain equal to the amount of the premium received.
When a written call option is exercised or closed, the premium received is
offset against the proceeds to determine the realized gain or loss. When a
written put option is exercised, the premium reduces the cost basis of the
security purchased by the Fund. The Fund, as writer of an option, may have no
control over whether the underlying securities may be sold (call) or purchased
(put) and, as a result, bears the market risk of an unfavorable change in the
price of the securities underlying the written option. In general, written call
options may serve as a partial hedge against decreases in value in the
underlying securities to the extent of the premium received. Written options may
also be used as part of an income producing strategy reflecting the view of the
Fund's management on the direction of interest rates.
Forward Foreign Currency Exchange Contracts - The Fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties to
meet the terms of their contracts and from unanticipated movements in the value
of a foreign currency relative to the U.S. dollar. The Fund may enter into
forward contracts for hedging purposes as well as for non-hedging purposes. For
hedging purposes, the Fund may enter into contracts to deliver or receive
foreign currency it will receive from or require for its normal investment
activities. The Fund may also use contracts in a manner intended to protect
foreign currency-denominated securities from declines in value due to
unfavorable exchange rate movements. For non-hedging purposes, the Fund may
enter into contracts with the intent of changing the relative exposure of the
Fund's portfolio of securities to different currencies to take advantage of
anticipated changes. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains or
losses on foreign currency transactions.
Swap Agreements - The Fund may enter into swap agreements. A swap is an exchange
of cash payments between the Fund and another party which is based on a specific
financial index. Cash payments are exchanged at specified intervals and the
expected income or expense is recorded on the accrual basis. The value of the
swap is adjusted daily and the change in value is recorded as unrealized
appreciation or depreciation. Risks may arise upon entering into these
agreements from the potential inability of counterparties to meet the terms of
their contract and from unanticipated changes in the value of the financial
index on which the swap agreement is based. The Fund uses swaps for both hedging
and non-hedging purposes. For hedging purposes, the Fund may use swaps to reduce
its exposure to interest and foreign exchange rate fluctuations. For non-hedging
purposes, the Fund may use swaps to take a position on anticipated changes in
the underlying financial index.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All discount is
accreted for financial statement and tax reporting purposes as required by
federal income tax regulations. Interest payments received in additional
securities are recorded on the ex-interest date in an amount equal to the value
of the security on such date. The Fund uses the effective interest method for
reporting interest income on payment-in-kind (PIK) bonds. Some securities may be
purchased on a "when-issued" or "forward delivery" basis, which means that the
securities will be delivered to the Fund at a future date, usually beyond
customary settlement time.
Fees Paid Indirectly - The Fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits be reported in the financial statements as distributions from paid-in
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains.
At November 30, 1999, the Fund, for federal income tax purposes, had a capital
loss carryforward of $20,266,813 which may be applied against any net taxable
realized gains of each succeeding year until the earlier of its utilization or
expiration on November 30, 2006, ($8,420,466) and November 30, 2007,
($11,846,347).
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. Differences in per share dividend rates are
generally due to differences in separate class expenses. Class B shares will
convert to Class A shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at the following annual rates:
First $500 million of average net assets 0.75%
Average net assets in excess of $500 million 0.70%
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain officers and Trustees of the
Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD), and
MFS Service Center, Inc. (MFSC). The Fund has an unfunded defined benefit plan
for all of its independent Trustees. Included in Trustees' compensation is a net
periodic pension expense of $5,170 for the period May 31, 2000.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund incurs an administrative fee at
the following annual percentages of the Fund's average daily net assets:
First $2 billion 0.0175%
Next $2.5 billion 0.0130%
Next $2.5 billion 0.0005%
In excess of $7 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$4,097 for the period ended May 31, 2000, as its portion of the sales charge on
sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A, Class B, and Class C
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
The Fund's distribution plan provides that the Fund will pay MFD up to 0.35% per
annum of its average daily net assets attributable to Class A shares in order
that MFD may pay expenses on behalf of the Fund related to the distribution and
servicing of its shares. These expenses include a service fee paid to each
securities dealer that enters into a sales agreement with MFD of up to 0.25% per
annum (reduced to 0.15% per annum for assets sold prior to October 1, 1989) of
the Fund's average daily net assets attributable to Class A shares which are
attributable to that securities dealer and a distribution fee to MFD of up to
0.10% per annum of the Fund's average daily net assets attributable to Class A
shares. MFD retains the service fee for accounts not attributable to a
securities dealer, which amounted to $26,754 for the period ended May 31, 2000.
Fees incurred under the distribution plan during the period ended May 31, 2000,
were 0.25% of average daily net assets attributable to Class A shares on an
annualized basis.
The Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B and Class C shares. MFD
will pay to securities dealers that enter into a sales agreement with MFD all or
a portion of the service fee attributable to Class B and Class C shares, and
will pay to such securities dealers all of the distribution fee attributable to
Class C shares. The service fee is intended to be consideration for services
rendered by the dealer with respect to Class B and Class C shares. MFD retains
the service fee for accounts not attributable to a securities dealer, which
amounted to $4,114 and $1,303 for Class B and Class C shares, respectively, for
the period ended May 31, 2000. Fees incurred under the distribution plan during
the period ended May 31, 2000, were 1.00% of average daily net assets
attributable to Class B and Class C shares, on an annualized basis
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months following
purchase. A contingent deferred sales charge is imposed on shareholder
redemptions of Class B shares in the event of a shareholder redemption within
six years of purchase. MFD receives all contingent deferred sales charges.
Contingent deferred sales charges imposed during the period ended May 31, 2000,
were $827, $36,030, and $372 for Class A, Class B, and Class C shares,
respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the Fund's average daily net assets at an annual rate of 0.10%.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, were as follows:
PURCHASES SALES
-----------------------------------------------------------------------------
U.S. government securities $ 59,304,965 $ 70,388,657
------------ ------------
Investments (non-U.S. government securities) $ 47,359,807 $ 75,681,446
------------ ------------
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 $122,789,049
------------
Gross unrealized depreciation $ (5,734,021)
Gross unrealized appreciation 1,528,735
------------
Net unrealized (depreciation) $ (4,205,286)
============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
Fund shares were
as follows:
<TABLE>
<CAPTION>
Class A Shares
SIX MONTHS ENDED MAY 31, 2000 YEAR ENDED NOVEMBER 30, 1999
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,509,091 $ 14,108,822 938,320 $ 9,861,513
Shares issued to shareholders in
reinvestment of distributions 649,728 6,113,933 719,917 7,573,533
Shares reacquired (2,915,798) (27,370,561) (4,693,959) (48,876,378)
------------ ------------ ------------ ------------
Net decrease (756,979) $ (7,147,806) (3,035,722) $(31,441,332)
============ ============ ============ ============
<CAPTION>
Class B Shares
SIX MONTHS ENDED MAY 31, 2000 YEAR ENDED NOVEMBER 30, 1999
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 661,817 $ 6,157,957 1,467,521 $ 15,288,826
Shares issued to shareholders in
reinvestment of distributions 238,401 2,221,896 271,877 2,824,800
Shares reacquired (1,274,345) (11,908,749) (2,876,790) (29,178,969)
------------ ------------ ------------ ------------
Net decrease (374,127) $ (3,528,896) (1,137,392) $(11,065,343)
============ ============ ============ ============
<CAPTION>
Class C Shares
SIX MONTHS ENDED MAY 31, 2000 YEAR ENDED NOVEMBER 30, 1999
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 313,239 $ 2,931,474 156,777 $ 1,604,155
Shares issued to shareholders in
reinvestment of distributions 14,509 136,096 20,707 216,178
Shares reacquired (394,281) (3,684,867) (411,801) (4,211,857)
------------ ------------ ------------ ------------
Net decrease (66,533) $ (617,297) (234,317) $ (2,391,524)
============ ============ ============ ============
<CAPTION>
Class I Shares
SIX MONTHS ENDED MAY 31, 2000 YEAR ENDED NOVEMBER 30, 1999
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 161,996 $ 1,522,476 9,059 $ 94,041
Shares issued to shareholders in
reinvestment of distributions 13,172 123,681 12,634 132,656
Shares reacquired (172,324) (1,618,174) (48,089) (498,702)
------------ ------------ ------------ ------------
Net increase (decrease) 2,844 $ 27,983 (26,396) $ (272,005)
============ ============ ============ ============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $1.1 billion unsecured line
of credit provided by a syndication of banks under a line of credit agreement.
Borrowings may be made for temporary financing needs. Interest is charged to
each fund, based on its borrowings, at a rate equal to the bank's base rate. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating funds at the end of each
quarter. The commitment fee allocated to the Fund for the six months ended May
31, 2000, was $301. The Fund had no borrowings during the period.
(7) 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 written options, forward foreign currency exchange
contracts, swap agreements, 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.
Written Option Transactions
NUMBER OF
CONTRACTS PREMIUMS
-------------------------------------------------------------------------------
Outstanding, beginning of period 8 $ 567,581
Options written 26 2,822,224
Options terminated in closing transactions (10) (1,318,696)
Options exercised (4) (294,620)
Options expired (5) (100,329)
-- -----------
Outstanding, end of period 15 $ 1,676,160
== ===========
At May 31, 2000, the Fund had sufficient cash and/or securities at least equal
to the value of the written options.
<TABLE>
<CAPTION>
Forward Foreign Currency Exchange Contracts
NET
UNREALIZED
CONTRACTS TO CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN EXCHANGE FOR AT VALUE (DEPRECIATION)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales 06/05/00 CHF 2,076,420 $ 1,593,687 $ 1,604,204 $(10,517)
06/16/00 DKK 30,900,109 4,035,358 3,865,835 169,523
06/16/00 EUR 3,654,450 3,571,129 3,411,610 159,519
06/16/00 - 06/19/00 JPY 1,746,883,779 16,648,285 16,265,097 383,188
06/16/00 NZD 766,666 378,733 350,607 28,126
06/16/00 SEK 42,542,224 4,895,538 4,742,979 152,559
10/05/00 VEB 2,647,672,847 3,640,247 3,688,188 (47,941)
----------- ------------- ---------
$34,762,977 $ 33,928,520 $ 834,457
=========== ============= =========
Purchases 06/16/00 AUD 2,435,921 $ 1,500,966 $ 1,390,001 $(110,965)
06/16/00 EUR 11,739,942 11,138,487 10,959,812 (178,675)
06/16/00 JPY 852,633,769 8,182,108 7,938,561 (243,547)
----------- ------------- ---------
$20,821,561 $ 20,288,374 $(533,187)
=========== ============= =========
</TABLE>
At May 31, 2000, forward foreign currency purchases and sales under master
netting agreements excluded above amounted to a net payable of $332,705 with
Merrill Lynch and a net receivable of $248,226 with Deutsche Bank and $59,301
with CS First Boston.
At May 31, 2000, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
<TABLE>
<CAPTION>
Swap Agreements
Interest Rate Swaps
CASH FLOWS CASH FLOWS
NOTIONAL PRINCIPAL PAID BY RECEIVED BY UNREALIZED
EXPIRATION AMOUNT OF CONTRACT THE FUND THE FUND DEPRECIATION
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3/22/03 SEK 30,300,000 Floating - 3.247% Fixed - 4.38% $(100,531)
3/22/03 EUR 3,290,000 Fixed - 3.76% Floating - 3.01% 113,610
---------
$ 13,079
=========
</TABLE>
At May 31, 2000, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
(8) Restricted Securities
The Fund may invest not more than 15% of its net assets in securities which are
subject to legal or contractual restrictions on resale. At May 31, 2000, the
Fund owned the following restricted securities, excluding securities issued
under Rule 144A, constituting 0.44% 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 fair value, by the Trustees.
<TABLE>
<CAPTION>
DATE OF SHARE/PAR
DESCRIPTION ACQUISITION AMOUNT COST VALUE
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kingdom of Morocco, 7.75s, 2009 05/18/2000 470,000 $420,650 $414,776
Banco Naciona de Desenvolvi,
12.693s, 2008 05/04/2000 125,000 112,500 113,125
-------- --------
$533,150 $527,901
======== ========
</TABLE>
<PAGE>
MFS(R) GLOBAL GOVERNMENTS FUND
<TABLE>
<S> <C>
TRUSTEES SECRETARY
J. Atwood Ives+ - Chairman and Chief Stephen E. Cavan*
Executive Officer, Eastern Enterprises
(diversified services company) ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Lawrence T. Perera+ - Partner, Hemenway
& Barnes (attorneys) CUSTODIAN
State Street Bank and Trust Company
William J. Poorvu+ - Adjunct Professor,
Harvard University Graduate School of INVESTOR INFORMATION
Business Administration For information on MFS mutual funds, call
your investment professional or, for an
Charles W. Schmidt+ - Private Investor information kit, call toll free: 1-800-637-2929
any business day from 9 a.m. to 5 p.m.
Arnold D. Scott* - Senior Executive Eastern time (or leave a message anytime).
Vice President, Director, and Secretary,
MFS Investment Management INVESTOR SERVICE
MFS Service Center, Inc.
Jeffrey L. Shames* - Chairman and Chief P.O. Box 2281
Executive Officer, MFS Investment Boston, MA 02107-9906
Management
For general information, call toll free:
Elaine R. Smith+ - Independent Consultant 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
David B. Stone+ - Chairman, North American
Management Corp. (investment adviser) For service to speech- or hearing-impaired,
call toll free: 1-800-637-6576 any business day
INVESTMENT ADVISER from 9 a.m. to 5 p.m. Eastern time. (To use
Massachusetts Financial Services Company this service, your phone must be equipped with
500 Boylston Street a Telecommunications Device for the Deaf.)
Boston, MA 02116-3741
For share prices, account balances, exchanges,
DISTRIBUTOR or stock and bond outlooks, call toll free:
MFS Fund Distributors, Inc. 1-800-MFS-TALK (1-800-637-8255) anytime
500 Boylston Street from a touch-tone telephone.
Boston, MA 02116-3741
WORLD WIDE WEB
CHAIRMAN AND PRESIDENT www.mfs.com
Jeffrey L. Shames*
PORTFOLIO MANAGER
Christopher D. Piros*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
</TABLE>
+ Independent Trustee
* MFS Investment Management
<PAGE>
MFS(R) GLOBAL GOVERNMENTS FUND ------------
BULK RATE
U.S. POSTAGE
[Logo] M F S(R) PAID
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) ------------
500 Boylston Street
Boston, MA 02116-3741
(c)2000 MFS Investment Management(R).
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116. MWG-3 7/00 24M 20/220/320/820
