<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[Graphic Omitted]
MFS(R) GLOBAL
GROWTH FUND
ANNUAL REPORT o OCTOBER 31, 2000
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 5
Performance Summary ....................................................... 9
Portfolio of Investments .................................................. 13
Financial Statements ...................................................... 25
Notes to Financial Statements ............................................. 32
Independent Auditors' Report .............................................. 38
Trustees and Officers ..................................................... 41
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,
If you've been reading our fund reports for any length of time, you've probably
sensed the pride we have in our research process. More than anything else, we
think MFS Original Research(R) -- and the performance results it has yielded for
shareholders -- makes us unique among investment management companies. We think
that uniqueness stems from three factors: philosophy, process, and people.
PHILOSOPHY
In over 75 years of managing mutual funds, we've developed a number of beliefs
about the best ways to invest over a variety of market conditions. First, we
believe in bottom-up research, which means we use a company-by-company,
one-security-at-a-time approach to building a portfolio. What we look for is the
truth about the fundamentals of a company's business -- things such as the
ability of management to execute its business plan, the ability of that plan to
be scaled up as the company grows, actual demand for the company's products and
services, cash flow, profits, and earnings.
Second, we believe that, over the long term, stock prices follow earnings. In
our view, stock prices are basically a multiple of projected earnings, with the
multiple increasing as the market perceives that a company has something
customers want and will continue to want. One of the major elements of Original
Research(SM) is doing our best to project a company's future earnings and
determine how much the market will pay for those earnings.
Third, we believe there are at least three ways to potentially achieve
competitive long-term performance: be early, uncover second chances, and avoid
mistakes. All of these are based on bottom-up research. In both domestic and
international markets, early discovery has historically been a hallmark of our
investment style. Some of the stocks with which MFS has been most successful are
those in which we've taken large positions before the market discovered or
believed in them. Similarly, some of our best fixed-income investments have been
early positions in companies or governments that our research revealed were
potential candidates for credit upgrades. (A credit upgrade causes the value of
a bond to rise because it indicates the market has increased confidence that
principal and interest on the bond will be repaid.)
"Second-chance" opportunities are companies whose stock prices have stumbled but
that we believe still have the potential to be market leaders. For example, a
quarterly earnings shortfall of a few cents may cause the market to temporarily
lose confidence in a company. If we believe the business remains fundamentally
strong, we may use the price decline as a buying opportunity.
Avoiding mistakes is another way we feel Original Research may help performance.
In fixed-income investing this means, among other things, trying to be better
than our peers at avoiding bond issuers that may default. In equity investing,
avoiding mistakes means we strive to know a company and its industry well enough
to distinguish truth from hype.
PROCESS
We acquire our information firsthand, by researching thousands of companies to
determine which firms may make good investments. Our analysis of an individual
company may include
o face-to-face contact with senior management as well as frontline
workers
o analysis of the company's financial statements and balance sheets
o contact with the company's current and potential customers
o contact with the company's competitors
o our own forecasts of the company's future market share, cash flow, and
earnings
Our analysts and portfolio managers disseminate this information in the form of
daily notes e-mailed worldwide to all members of our investment team. This
ensures that our best ideas are shared throughout the company, without barriers
between equity and fixed-income, international and domestic, or value and growth
investment areas. We believe this allows each of our portfolio managers -- and
thus each of our investors -- to potentially benefit from any relevant item of
Original Research.
John Ballen, our President and Chief Investment Officer, has often said that the
thought he hopes managers will have when they read the daily notes is, "I could
never perform as well at any other investment company, because nowhere else
could the quality of the research be this good."
PEOPLE
Our team of research analysts and portfolio managers traces its roots back to
1932, when we created one of the first in-house research departments in the
industry. Today, we believe we have an investment team distinguished for its
unique blend of talent, continuity, and cohesiveness.
MFS' team culture and commitment to quality research have proven to be of
tremendous value in attracting some of the best and brightest talent from
leading business schools and from other investment management companies. Our
company culture was a key factor in our recognition by Fortune magazine in its
January 10, 2000, issue as one of the "100 Best Companies to Work For" in
America. As befits a great team, our people have tended to stick around -- the
average MFS tenure of our portfolio managers is 11 years, with over 16 years in
the investment industry. Contributing to this continuity is our policy that all
equity portfolio managers are promoted from within, after distinguishing
themselves first as research analysts. And because many of us who are now
managing funds or managing the company itself have been working together for
well over a decade, we have a cohesiveness, a shared philosophy of investing,
and a unity of purpose that we believe bodes well for the future of the company.
We also have scale. Our research analyst team is over 55 members strong and
growing. Each analyst is our in-house expert on a specific industry or group of
industries in a specific region of the globe. In pursuing their research, our
analysts and portfolio managers each year will visit more than 2,000 companies
throughout the world, meet with representatives from more than 3,000 companies
at one of our four worldwide offices, attend roughly 5,000 company presentations
sponsored by major Wall Street firms, and consult with over 1,000 analysts from
hundreds of U.S. and foreign brokerage houses.
All of this culminates in our analysts making buy and sell recommendations on a
wide range of potential investments for all of our portfolios. In the end, the
goal of Original Research is to try to give our portfolio managers an advantage
over their peers -- to enable our managers to deliver competitive performance by
finding opportunities before they are generally recognized by the market, and by
avoiding mistakes whenever possible. Original Research does, we believe, make a
difference.
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)
November 16, 2000
A prospectus containing more complete information on any MFS product, including
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
For the 12 months ended October 31, 2000, Class A shares of the fund provided a
total return of 27.22%, Class B shares 26.26%, Class C shares 26.28%, and Class
I shares 27.56%. These returns, which include the reinvestment of any
distributions but exclude the effects of any sales charges, compare to a 0.85%
return over the same period for the fund's benchmark, the Morgan Stanley Capital
International All Country World Index (the MSCI Index). The MSCI Index is an
unmanaged index of developed country and emerging market equities. During the
same period, the average global fund tracked by Lipper Inc., an independent firm
that reports mutual fund performance, returned 10.27%.
Q. DESPITE THE RECENT MARKET WEAKNESS, THE FUND DELIVERED STRONG GAINS DURING
THE 12-MONTH PERIOD. WHAT FACTORS CONTRIBUTED TO ITS PERFORMANCE?
A. The fund solidly outperformed its benchmark and Lipper category average in
what turned out to be a positive, but rather turbulent period for equities
around the world. Fund performance was aided by strong security selection
within most industries as well as in the major geographical regions where
the fund was concentrated, such as the United States, Europe, and Japan. In
particular, in the first half of the period, technology, telecommunications,
and energy-related holdings staged impressive gains. In the second half of
the period, our decisions to increase our exposure to financial services and
health care, reduce our holdings in technology and telecommunications, and
diversify the portfolio's assets across a broad range of industries provided
a strong boost to our performance.
Q. WHAT SPARKED YOUR DECISIONS TO REDUCE THE FUND'S EXPOSURE TO TECHNOLOGY
AND TELECOMMUNICATIONS STOCKS AND INCREASE HOLDINGS IN THE OTHER AREAS YOU
MENTIONED?
A. It was a combination of factors. While we continued to like the fundamental
business outlooks for many of the technology and telecommunications stocks
we held, we felt that investors had factored in most of the good news these
stocks were going to offer in the near term by bidding up prices to all-time
highs. As a result, we felt that valuations were peaking in these sectors
and it was time to look for new opportunities. As we cut back the fund's
stake in technology and telecommunications stocks, we found what we believed
to be compelling growth opportunities across an eclectic group of industries
and companies. For example, we added financial services companies such as
ING and HSBC Holdings, both of which appeared attractively valued and poised
for steady earnings growth. We also saw strong potential in health care
stocks such as Jomed, a medical device manufacturer, and pharmaceutical
stocks such as Pharmacia and Novartis.
Q. WHICH TECHNOLOGY AND TELECOMMUNICATIONS COMPANIES DID YOU HOLD ON TO?
A. Electronics manufacturers such as Victor of Japan, also known as JVC, and
Pioneer Electronics produced double-digit returns amid steady sales and
earnings growth. We also saw favorable business fundamentals among Japanese
electronics manufacturers Rohm and Murata. In the computer software,
networking, and telecommunications industries, our holdings in companies
such as Siebel Systems, CIENA, and Alcatel also contributed favorably to
performance despite the sharp selloff in the technology and
telecommunications sectors during the period.
Q. BESIDES FINANCIAL SERVICES AND HEALTH CARE, WHERE ELSE DID YOU
FIND OPPORTUNITIES?
A. We added U.S. retailers such as grocery store chains Safeway and Kroger and
drug store operator CVS. Japanese apparel retailer Fast Retailing also
provided a boost to total return, and we continue to believe that
fundamental growth outlooks for these retailers remain strong. We
capitalized on the strong real estate market and robust demand for new
mortgages in select regions by investing in companies such as Sumitomo
Realty, Federal Home Loan Mortgage Corporation, and the Federal National
Mortgage Association. We also found what we believed to be attractive growth
opportunities among business services and outsourcing companies such as DST
Systems and BISYS Group, which provide software and business solutions to
the financial services industry.
Q. HAVE YOU FOUND ANY OPPORTUNITIES IN EMERGING MARKETS?
A. Despite the recent volatility, we've maintained the fund's exposure to
emerging markets stocks at around 9% of the portfolio's assets because we
believe there are a number of exciting growth opportunities in this sector.
We haven't focused on any particular industry or geographical location, but
have added to holdings such as China Telecom and Telefonos de Mexico in the
wireless and telecommunications industries because we've seen strong
fundamentals. We also added companies such as Embraer, a Brazilian aircraft
manufacturer, and Check Point Software, an Internet security systems
developer headquartered in Israel. In our view, each of these companies
possesses strong franchises and compelling growth outlooks.
Q. GIVEN THE DIFFICULT MARKET ENVIRONMENT, WHAT'S YOUR STRATEGY FOR THE FUND
IN THE COMING MONTHS?
A. Our feeling is that investors tend to overreact or underreact to both
positive and negative news. In our view, the past 12 months provide a very
good example of this behavior. In the beginning of the period, investors
continued to bid up technology and telecommunications shares amid the media
hype and euphoria surrounding the information age and the technological
revolution. At the same time, investors tended to ignore or underreact to
positive news in many other sectors. In the second half of the period,
investors unloaded many of the same technology and telecommunications stocks
that were all the rage six months earlier. Did that much change? The global
economy began to show signs of slowing, the euro hit an all-time low, and
oil prices surged higher. Although many stocks may turn out to be unaffected
by a slowdown in the global economy, the majority of stocks were sold off.
We believe this environment creates opportunities for the fund because there
are many companies that possess positive business fundamentals and are
poised for growth regardless of the overall market environment. As a result,
our strategy remains to try to find these companies.
/s/ David A. Antonelli /s/ John W. Ballen
David A. Antonelli John W. Ballen
Director of International Portfolio Manager
Equity Research*
/s/ John E. Lathrop /s/ Toni Y. Shimura
John E. Lathrop Toni Y. Shimura
Portfolio Manager Portfolio Manager
*The committee of MFS international research analysts is responsible for the
day-to-day management of a portion of the fund under the general supervision
of Mr. Antonelli.
Note to shareholders: John E. Lathrop became a portfolio manager of the fund
effective August 15, 2000.
The opinions expressed in this report are those of the portfolio managers and
the Director of International Equity Research and are current only through the
end of the period of the report as stated on the cover. Their views are subject
to change at any time based on market and other conditions, and no forecasts can
be guaranteed.
<PAGE>
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PORTFOLIO MANAGERS' PROFILES
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JOHN W. BALLEN IS PRESIDENT, CHIEF INVESTMENT OFFICER, AND A MEMBER OF THE
MANAGEMENT COMMITTEE AND BOARD OF DIRECTORS OF MFS INVESTMENT MANAGEMENT(R). AS
CHIEF INVESTMENT OFFICER HE OVERSEES THE EQUITY AND FIXED INCOME DEPARTMENTS AND
GUIDES THEIR GLOBAL STRATEGIC DIRECTION. HE ALSO IS PORTFOLIO MANAGER OF MFS(R)
EMERGING GROWTH FUND AND THE EMERGING GROWTH SERIES, OFFERED THROUGH MFS(R)/SUN
LIFE ANNUITY PRODUCTS. JOHN HAS BEEN PROFILED BY NUMEROUS PUBLICATIONS,
INCLUDING MONEY, SMARTMONEY, BARRON'S, THE NEW YORK TIMES, AND WORTH, WHICH
NAMED HIM ONE OF THE "25 SMARTEST PEOPLE ON WALL STREET." HE WAS THE SUBJECT OF
A CHAPTER IN THE BOOK, INVESTMENT GURUS, BY PETER TANOUS. HE ALSO HAS BEEN
FEATURED PROMINENTLY ON NETWORK TELEVISION PROGRAMS SUCH AS ABC NIGHTLINE AND
WALL STREET WEEK WITH LOUIS RUKEYSER. JOHN JOINED MFS IN 1984 AS A RESEARCH
ANALYST. HE BECAME PORTFOLIO MANAGER OF MFS EMERGING GROWTH AT THE FUND'S
INCEPTION IN DECEMBER 1986. HE WAS NAMED DIRECTOR OF EQUITY RESEARCH IN 1988,
CHIEF EQUITY OFFICER IN 1995, AND PRESIDENT AND CHIEF INVESTMENT OFFICER IN
1998. JOHN IS A GRADUATE OF HARVARD COLLEGE AND EARNED A MASTER OF COMMERCE
DEGREE FROM THE UNIVERSITY OF NEW SOUTH WALES IN AUSTRALIA, WHICH HE ATTENDED AS
A FULBRIGHT SCHOLAR. HE HOLDS AN M.B.A. DEGREE FROM STANFORD UNIVERSITY.
JOHN E. LATHROP, CFA, IS VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R) AND A
MEMBER OF OUR LARGE CAP GROWTH PORTFOLIO MANAGEMENT TEAM. HE MANAGES THE GLOBAL
TELECOMMUNICATIONS, GLOBAL GROWTH, AND LARGE CAP GROWTH PORTFOLIOS FOR OUR
MUTUAL FUNDS, VARIABLE ANNUITIES, INSTITUTIONAL ACCOUNTS AND OFFSHORE FUNDS.
JOHN JOINED MFS IN 1994 FROM PUTNAM INVESTMENTS, WHERE HE HAD WORKED AS AN
EQUITY ANALYST, STATISTICAL ANALYST, AND INSTITUTIONAL ACCOUNT CONTROLLER SINCE
1988. HE WAS NAMED VICE PRESIDENT IN 1996 AND PORTFOLIO MANAGER IN 1999. HE IS A
GRADUATE OF NORTHWESTERN UNIVERSITY, WHERE HE WAS ELECTED TO PHI BETA KAPPA WITH
HONORS IN ECONOMICS, AND HE EARNED AN M.B.A. DEGREE FROM CORNELL UNIVERSITY'S
JOHNSON GRADUATE SCHOOL OF MANAGEMENT. JOHN IS A CHARTERED FINANCIAL ANALYST.
TONI Y. SHIMURA IS SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R) AND
PORTFOLIO MANAGER OF THE MANAGED SECTORS PORTFOLIOS OF OUR MUTUAL FUNDS AND
VARIABLE ANNUITIES. TONI JOINED MFS IN 1987 AS A RESEARCH ANALYST. SHE WAS NAMED
VICE PRESIDENT IN 1992, PORTFOLIO MANAGER IN 1993, AND SENIOR VICE PRESIDENT IN
1999. SHE IS A GRADUATE OF WELLESLEY COLLEGE AND MIT'S SLOAN SCHOOL OF
MANAGEMENT.
ALL EQUITY PORTFOLIO MANAGERS BEGAN THEIR CAREERS AT MFS INVESTMENT
MANAGEMENT(R) AS RESEARCH ANALYSTS. OUR PORTFOLIO MANAGERS ARE SUPPORTED BY AN
INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS ORIGINAL RESEARCH(R), A
COMPANY-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 charges and expenses, for any 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 CAPITAL APPRECIATION BY INVESTING IN SECURITIES
OF COMPANIES WORLDWIDE GROWING AT RATES EXPECTED TO BE
WELL ABOVE THE GROWTH RATE OF THE U.S. ECONOMY.
COMMENCEMENT OF
INVESTMENT OPERATIONS: NOVEMBER 18, 1993
CLASS INCEPTION: CLASS A NOVEMBER 18, 1993
CLASS B NOVEMBER 18, 1993
CLASS C JANUARY 3, 1994
CLASS I JANUARY 2, 1997
SIZE: $903.6 MILLION NET ASSETS AS OF OCTOBER 31, 2000
PERFORMANCE SUMMARY
The following information illustrates the historical performance of the fund's
original share class in comparison to various market indicators. Performance
results include the deduction of the maximum applicable sales charge and reflect
the percentage change in net asset value, including the reinvestment of
dividends. Benchmark comparisons are unmanaged and do not reflect any fees or
expenses. The performance of other share classes will be greater than or less
than the line shown. (See Notes to Performance Summary.) It is not possible to
invest directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from the commencement of the fund's investment operations,
November 18, 1993, through October 31, 2000. Index information is from
December 1, 1993.)
MFS Global MSCI All
Growth Country
- Class A World Index
---------------------------------------
11/93 $ 9,425 $10,000
10/94 10,964 11,604
10/96 13,383 14,370
10/98 15,107 18,755
10/99 20,868 23,707
10/00 26,548 23,909
TOTAL RATES OF RETURN THROUGH OCTOBER 31, 2000
<TABLE>
<CAPTION>
CLASS A
1 Year 3 Years 5 Years Life*
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +27.22% +72.23% +129.57% +181.67%
---------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +27.22% +19.87% + 18.08% + 16.07%
---------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge +19.90% +17.53% + 16.69% + 15.08%
---------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B
1 Year 3 Years 5 Years Life*
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +26.26% +68.44% +120.96% +166.90%
---------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +26.26% +18.98% + 17.18% + 15.17%
---------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge +22.26% +18.27% + 16.97% + 15.17%
---------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS C
1 Year 3 Years 5 Years Life*
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +26.28% +68.47% +121.15% +167.62%
---------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +26.28% +18.99% + 17.20% + 15.21%
---------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge +25.28% +18.99% + 17.20% + 15.21%
---------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS I
1 Year 3 Years 5 Years Life*
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +27.56% +73.83% +132.15% +184.83%
---------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +27.56% +20.24% + 18.35% + 16.25%
---------------------------------------------------------------------------------------------------------
<CAPTION>
COMPARATIVE INDICES(+)
1 Year 3 Years 5 Years Life*
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average global fund+ +10.27% +13.50% + 14.81% + 13.28%
---------------------------------------------------------------------------------------------------------
MSCI All Country World Index# + 0.85% +12.86% + 13.98% + 13.43%
---------------------------------------------------------------------------------------------------------
* For the period from the commencement of the fund's investment operations, November 18, 1993, through
October 31, 2000. Index information is from December 1, 1993.
(+) Average annual rates of return.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
</TABLE>
NOTES TO PERFORMANCE SUMMARY
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 5.75% 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 C share performance includes the performance of the fund's Class B shares
for periods prior to its inception (blended performance). Class I share
performance includes the performance of the fund's Class A shares for periods
prior to its inception (blended performance). Class C blended performance has
been adjusted to take into account the lower CDSC applicable to Class C 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 returns have not
been adjusted to take into account differences in class- specific operating
expenses. Because operating expenses of Class B and C shares are approximately
the same, the blended Class C performance is approximately the same as it would
have been had Class C shares been offered for the entire period. 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 these, the results would have been less favorable. 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.
This portfolio is nondiversified and has more risk than one that is diversified.
The portfolio invests in a limited number of companies and may have more risk
because a change in one security's value may have a more significant effect on
the portfolio's net asset value. An investment in the portfolio is not a
complete investment program. See the prospectus for details.
Investing in emerging growth companies is riskier than investing in
more-established companies. See the prospectus for details.
PORTFOLIO CONCENTRATION AS OF OCTOBER 31, 2000
FIVE LARGEST STOCK SECTORS
TECHNOLOGY 21.2%
FINANCIAL SERVICES 17.3%
UTILITIES & COMMUNICATIONS 15.5%
HEALTH CARE 9.9%
ENERGY 6.1%
TOP 10 STOCK HOLDINGS
VODAFONE GROUP PLC 2.3% PHARMACIA CORP. 1.3%
British wireless communications Pharmaceutical, health care,
services provider and agricultural products
company
FAST RETAILING CO. 1.7%
Japanese retail chain HSBC HOLDINGS PLC 1.3%
British banking and financial
TYCO INTERNATIONAL LTD. 1.7% services company
Security systems, packaging, and
electronic equipment conglomerate NOVARTIS AG 1.2%
Swiss pharmaceutical company
CISCO SYSTEMS, INC. 1.6%
U.S. computer network developer CORNING, INC. 1.1%
Optical equipment and cable supplier to
ING GROEP N.V. 1.3% communications industries
Dutch financial services company
BP AMOCO PLC 1.1%
British oil and petrochemical company
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS -- October 31, 2000
Stocks - 93.6%
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ISSUER SHARES VALUE
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Foreign Stocks - 48.4%
Australia - 1.4%
Australia & New Zealand Banking Group Ltd.
(Banks and Credit Cos.)* 728,560 $ 5,378,905
Broken Hill Proprietary Co. Ltd. (Mining) 494,600 4,791,918
Cable & Wireless Optus Ltd. (Telecommunications) 1,038,540 2,198,545
Onesteel Ltd. (Steel)* 123,825 59,021
------------
$ 12,428,389
------------------------------------------------------------------------------
Bermuda - 0.7%
FLAG Telecom Holdings Ltd. (Telecommunications)* 36,480 $ 424,080
Global Crossing Ltd. (Telecommunications)* 225,310 5,322,949
Tycom Ltd. (Telecommunications)* 6,500 217,750
------------
$ 5,964,779
------------------------------------------------------------------------------
Brazil - 1.0%
Banco Itau S.A. (Banks and Credit Cos.) 10,806,500 $ 841,072
Brasil Telecom Participacoes, ADR
(Telecommunications) 4,000 216,750
Caemi Mineracao e Metalurgica S.A. (Minerals) 2,873,000 391,499
Cellular CRT Participacoes, Preferred
(Telecommunications)* 200 65,618
Cia Brasileira de Distribuicao Grupo Pao de
Acucar, ADR (Supermarkets) 22,430 799,069
Companhia De Bebidas Das Americas (Brewery)* 38,400 866,400
Companhia Vale Rio Doce, ADR (Mining) 15,200 355,300
Empresa Brasileira de Aeronautica S.A., ADR
(Aerospace and Defense) 63,070 1,825,088
Petroleo Brasileiro S.A., ADR (Oils and Gas) 98,970 2,876,316
Tele Centro Sul Participacoes S.A.
(Telecommunications) 9,231,985 72,578
Tele Norte Celular Participacoes S.A., ADR
(Cellular Telecommunications)* 10,670 369,449
Uniao de Banco Brasiliero S.A. (Banks and
Credit Cos.) 20,740 523,685
------------
$ 9,202,824
------------------------------------------------------------------------------
Canada - 1.7%
AT&T Canada, Inc. (Telecommunications)* 49,500 $ 1,531,406
BCE, Inc. (Telecommunications) 179,750 4,864,484
Manitoba Telecom Services (Telecommunications) 115,450 2,381,582
Nortel Networks Corp. (Telecommunications) 130,272 5,927,376
Telesystem International Wireless, Inc.
(Telecommunications)* 54,380 557,395
------------
15,262,243
------------------------------------------------------------------------------
Chile - 0.1%
Banco De A. Edwards, ADR (Banks and Credit
Companies)* 20,350 $ 244,200
Banco Santander Chile, ADR, "A" (Banks and
Credit Cos.) 14,900 200,219
Banco Santiago, ADR (Banks and Credit Cos.) 6,620 130,745
Bbv Banco Bhif, ADR (Banks and Credit Cos.) 5,700 80,869
Compania Cervecerias Unidas S.A., ADR (Brewery) 24,600 475,087
Laboratorio Chile S.A., ADR (Medical and Health
Technology Services) 3,500 56,656
------------
$ 1,187,776
------------------------------------------------------------------------------
China - 0.6%
China Petroleum & Chemical Corp. (Oils)* 11,742,000 $ 2,303,681
PetroChina Co. Ltd. (Oils)* 15,226,000 3,201,980
------------
$ 5,505,661
------------------------------------------------------------------------------
Croatia
Pliva d.d. Co. (Medical and Health Products) 10,000 $ 104,000
Pliva d.d. Co., GDR (Medical and Health Products) 31,360 326,144
------------
$ 430,144
------------------------------------------------------------------------------
Czechoslovakia
Cesky Telecom A.S. (Telecommunications)* 19,325 $ 254,124
------------------------------------------------------------------------------
Denmark - 0.2%
Danske Bank A/S (Banks) 14,000 $ 2,027,944
------------------------------------------------------------------------------
Egypt - 0.1%
Al Ahram Beverage Co. S.A., GDR (Beverages)* 26,060 $ 329,659
Egypt Mobile Phone (Telecommunications)* 19,580 388,656
------------
$ 718,315
------------------------------------------------------------------------------
Estonia - 0.1%
AS Eesti Telekom, GDR (Telecommunications) 31,015 $ 486,498
------------------------------------------------------------------------------
France - 3.3%
Alcatel Co. (Telecommunications) 81,910 $ 4,997,097
Axa (Insurance) 28,090 3,718,162
Banque Nationale de Paris (Banks and Credit Cos.) 18,172 1,566,565
Business Objects S.A., ADR (Computer Software -
Systems)* 9,530 750,934
Integra S.A. (Computer Software - Services) 3,040 24,634
Natexis Co. (Financial Services)* 12,430 954,491
Sanofi-Synthelabo S.A. (Medical and Health
Products) 54,980 2,892,334
Societe Television Francaise 1 (Entertainment) 52,470 2,862,688
Technip S.A. (Construction) 41,700 5,335,675
Total Fina Elf S.A., "B" (Oils) 43,590 6,235,861
Valtech (Technology)* 50,500 647,024
------------
$ 29,985,465
------------------------------------------------------------------------------
Germany - 1.5%
Fresenius AG (Medical Supplies) 12,860 $ 3,175,309
Fresenius AG, Preferred (Medical Supplies) 29,350 1,245,174
GFT Technology AG (Computer Software - Services)* 16,800 776,887
Henkel KGaA, Preferred (Chemicals) 20,853 1,261,743
Prosieben Sat.1 Media AG, Preferred (Television)* 110,520 3,479,099
SAP AG, Preferred (Computer Software - Systems) 16,660 3,357,445
------------
$ 13,295,657
------------------------------------------------------------------------------
Greece - 0.1%
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 16,328 $ 285,324
Panafon S.A. (Telecommunications) 34,800 289,268
STET Hellas Telecommunications S.A., ADR
(Telecommunications)* 22,900 332,050
------------
$ 906,642
------------------------------------------------------------------------------
Hong Kong - 1.3%
China Mobile (Hong Kong) Ltd.
(Telecommunications)* 1,062,500 $ 6,812,208
China Mobile (Hong Kong) Ltd., ADR
(Telecommunications)* 40,000 1,225,000
Cosco Pacific Ltd. (Containers) 558,000 411,425
Dah Sing Financial Group (Banks and Credit Cos.) 133,200 572,187
Li & Fung Ltd. (Consumer Goods and Services)* 1,338,000 2,487,786
------------
$ 11,508,606
------------------------------------------------------------------------------
Hungary - 0.1%
Magyar Tavkozlesi Rt., ADR (Telecommunications)* 28,835 $ 677,622
------------------------------------------------------------------------------
India - 0.1%
Reliance Industries Ltd. (Conglomerate)## 36,470 $ 474,110
Videsh Sanchar Nigam Ltd., ADR
(Telecommunications)* 2,100 15,488
Videsh Sanchar Nigam Ltd., GDR
(Telecommunications)## 44,650 328,177
------------
$ 817,775
------------------------------------------------------------------------------
Ireland
Trintech Group PLC, ADR (Computer Software -
Products)* 42,420 $ 450,713
------------------------------------------------------------------------------
Israel - 0.9%
Bank Hapoalim (Banks and Credit Cos.) 73,000 $ 184,884
Bank Leumi Le-Israel (Banks) 92,800 182,502
Check Point Software Technologies Ltd. (Computer
Software - Services)* 45,730 7,242,489
Partner Communications Co. Ltd., ADR (Cellular
Telephones)* 46,440 278,640
------------
$ 7,888,515
------------------------------------------------------------------------------
Italy - 0.8%
Banca Intesa S.p.A. (Financial Services) 1,066,820 $ 4,426,413
Banca Monte Dei Paschi Siena S.p.A. (Banks) 617,800 2,516,177
------------
$ 6,942,590
------------------------------------------------------------------------------
Japan - 9.5%
Canon, Inc. (Special Products and Services) 133,000 $ 5,278,552
Chugai Pharmaceutical Co. Ltd. (Pharmaceuticals) 510,000 8,657,379
Daikin Industries Ltd. (Consumer Goods
and Services) 222,000 4,293,492
Eisai Co. Ltd. (Medical and Health Products) 53,000 1,632,264
Fast Retailing Co. (Retail) 59,100 14,544,776
Hitachi Ltd. (Electronics) 80,000 857,929
Honda Motor Co Ltd. (Automotive) 90,000 3,109,991
Keyence Corp. (Electronics) 12,530 3,893,373
Mimasu Semiconductor Industry Co. Ltd.
(Electronics) 119,100 1,486,840
Mitsubishi Electric Corp. (Electronics) 190,800 1,371,102
Murata Manufacturing Co. Ltd. (Electronics) 38,000 4,548,854
Nintendo Co. (Entertainment) 11,600 1,919,157
Nitto Denko Corp. (Industrial Goods and Services) 52,000 1,758,754
NTT Mobile Communications Network, Inc.
(Telecommunications) 245 6,040,788
Pioneer Electronic Corp. (Electronics) 39,000 1,208,249
Rohm Co. (Electronics) 13,500 3,404,079
Secom Co. (Consumer Goods and Services) 49,000 3,494,226
Shionogi & Co., Ltd. (Pharmaceuticals) 111,000 2,167,094
Sky Perfect Communications (Telecommunication
and Cable)* 254 467,956
Sony Corp. (Electronics) 59,300 4,739,652
Sumitomo Electric Industries (Telecommunication) 116,000 2,142,438
Sumitomo Realty & Development (Real Estate) 502,000 2,880,403
Tokyo Broadcasting System, Inc. (Entertainment) 89,000 3,483,318
Tokyo Gas Co. Ltd. (Gas) 780,000 2,037,580
Victor Company of Japan (Telecommunications) 82,600 695,778
------------
$ 86,114,024
------------------------------------------------------------------------------
Malaysia
Petronas Gas Berhad (Oil and Gas)* 225,000 $ 408,574
------------------------------------------------------------------------------
Mexico - 2.0%
Cemex S.A. (Construction) 11,700 $ 247,163
Cifra S.A. de C.V. (Retail) 202,395 486,934
Fomento Economico Mexicano S.A. (Food and
Beverage Products) 8,460 323,066
Grupo Aeroportuario del Sureste S.A. de C.V.,
ADR (Transportation)* 270,100 4,017,737
Grupo Continential S.A. (Food and Beverage
Products) 161,240 190,587
Grupo Financiero Banamex (Finance)* 369,480 574,317
Grupo Financiero Banorte S.A. de C.V. (Finance)* 238,140 355,715
Grupo Iusacell S.A. de C.V., ADR
(Telecommunications)* 59,640 775,320
Grupo Modelo S.A. de C.V. (Brewery) 567,900 1,514,796
Grupo Television S.A. de C.V., GDR
(Entertainment)* 24,120 1,305,495
Kimberly-Clark de Mexico S.A. de C.V. (Forest
and Paper Products) 237,280 606,851
Nuevo Grupo Mexico S.A., "B" (Metals and Mining)* 76,600 254,799
Organiz Soriana S.A., "B" (Retail)* 169,470 531,810
Telefonos de Mexico S.A., ADR
(Telecommunications) 116,415 6,279,134
Tubos de Acero de Mexico S.A. (Steel) 32,670 496,911
------------
$ 17,960,635
------------------------------------------------------------------------------
Netherlands - 5.0%
ABN Amro Holdings N.V. (Finance)* 45,600 $ 1,056,281
Akzo Nobel N.V. (Chemicals) 89,690 4,082,872
Fugro N.V. (Engineering)* 24,972 1,471,559
Hunter Douglas N.V., ADR (Consumer Goods and
Services)* 91,370 2,620,428
ING Groep N.V. (Financial Services)* 164,591 11,300,924
Jomed N.V. (Medical and Health Products)* 36,750 2,249,457
KPN N.V. (Telecommunications)* 192,487 3,898,574
Libertel N.V. (Cellular Telecommunications)* 128,480 1,673,385
Philips Electronics N.V. (Electronics) 106,247 4,174,875
Royal Dutch Petroleum Co. (Oils) 130,510 7,739,463
Royal Dutch Petroleum Co., ADR (Oils) 35,670 2,117,906
Verenigde Nederlandse Uitgeversbedrijven
Verenigd Bezit (Publishing)* 38,400 1,808,324
Versatel Telecommunications N.V.
(Telecommunications) 49,960 985,592
------------
$ 45,179,640
------------------------------------------------------------------------------
Panama
Banco Latinoamericano de Exportaciones, S.A.
(Banks) 10,400 $ 260,650
------------------------------------------------------------------------------
Poland - 0.1%
Polski Koncern Naftowy Orlen S.A., GDR (Oils)*## 44,350 $ 341,495
Telekomunikacja Polska S.A., GDR
(Telecommunications)* 137,800 682,110
------------
$ 1,023,605
------------------------------------------------------------------------------
Russia - 0.3%
AO Tatneft, ADR (Oils) 47,370 $ 491,464
Lukoil Oil Co., ADR (Oils) 21,640 1,155,576
Mobile Telesystems, ADR (Telecommunications) 17,420 481,227
Surgutneftegaz, ADR (Oils and Gas) 59,120 759,692
------------
$ 2,887,959
------------------------------------------------------------------------------
Singapore - 1.2%
Datacraft Asia Ltd. (Telecommunications) 629,309 $ 4,310,767
DBS Group Holdings Ltd. (Financial Services) 196,264 2,313,854
Overseas Union Bank Ltd. (Banks and Credit Cos.) 477,000 2,309,204
Singapore Press Holdings Ltd. (Printing and
Publishing) 137,000 1,958,480
------------
$ 10,892,305
------------------------------------------------------------------------------
South Africa - 0.5%
De Beers Centenary AG (Diamonds - Precious Stones) 32,737 $ 901,094
De Beers Consolidated Mines Ltd. (Mining) 9,470 263,976
Imperial Holdings Ltd. (Conglomerate)* 2 14
Investec Group Ltd. (Banks and Credit Cos.) 12,900 385,803
Johnnic Communications (Media) 11,200 192,677
Johnnic Holdings Ltd. (Telecommunications) 20,120 228,978
Liberty Life Association of Africa Ltd.
(Insurance) 58,851 449,363
Nedcor Ltd. (Banks and Credit Cos.)* 29 545
Sasol Ltd. (Oils) 100,250 768,123
South African Breweries Ltd. (Brewery) 105,836 634,453
South African Breweries Ltd., ADR (Brewery) 90,520 544,968
Standard Bank Investment (Banks) 86,500 303,340
------------
$ 4,673,334
------------------------------------------------------------------------------
South Korea - 0.5%
Housing & Commercial Bank of Korea (Banks and
Credit Cos.) 23,670 $ 569,872
Korea Telecom Corp. (Telecommunications) 92,760 3,420,525
Samsung Securities Co. Ltd. (Finance) 22,000 398,944
------------
$ 4,389,341
------------------------------------------------------------------------------
Spain - 0.7%
Altadis S.A. (Tobacco) 198,360 $ 2,945,399
Cortefiel S.A. (Retail) 125,490 2,252,016
Grupo Auxiliar Metalurgico, S.A. (Energy)* 2,530 46,648
Repsol S.A., ADR (Oils) 50,150 799,266
------------
$ 6,043,329
------------------------------------------------------------------------------
Sweden - 0.8%
Saab AB, "B" (Aerospace) 595,847 $ 4,056,912
Scandinavia Online Co. (Internet)* 29,906 209,608
Skandia Forsakrings AB (Insurance) 116,060 1,969,718
Tele1 Europe Holdings AB (Telecommunications)* 101,290 780,925
------------
$ 7,017,163
------------------------------------------------------------------------------
Switzerland - 2.6%
Actelion Ltd. (Medical and Health Products)* 1,777 $ 786,108
Julius Baer Holdings (Banks and Credit Cos.) 217 1,074,676
Leica Geosystems AG (Technology)* 8,290 2,352,624
Nestle S.A. (Food and Beverage Products) 1,839 3,811,850
Novartis AG (Medical and Health Products) 6,798 10,315,589
Synthes-Stratec, Inc. (Medical and Health
Products)* 8,200 5,239,800
------------
$ 23,580,647
------------------------------------------------------------------------------
Taiwan - 0.4%
Acer, Inc., GDR (Computer Software - Systems)* 152,055 $ 623,425
Advanced Semiconductor Engineering Inc., ADR
(Technology)* 98,027 594,289
Far Eastern Textile Ltd., GDR (Textiles) 2,409 19,031
Ritek Corp. (Computer - Software Systems)*## 51,446 187,778
Taipei Fund (Finance)* 227 1,352,012
Taiwan Semiconductor Manufacturing Co. Ltd., ADR
(Electronics) 37,709 855,523
------------
$ 3,632,058
------------------------------------------------------------------------------
Thailand - 0.1%
BEC World Public Company Ltd. (Television) 120,800 $ 566,078
BEC World Public Company Ltd. - Foreign
(Television) 9,600 45,860
PTT Exploration & Production Public Co. (Oils) 145,000 346,338
------------
$ 958,276
------------------------------------------------------------------------------
Turkey - 0.1%
Turkiye Garanti Bankasi (Banks and Credit Cos.)* 33,252,200 $ 341,243
Akbank T.A.S. (Banks and Credit Cos.) 44,820,300 289,117
------------
$ 630,360
------------------------------------------------------------------------------
United Kingdom - 10.6%
Anglo American PLC (Metals) 17,033 $ 926,405
Anglo American PLC, ADR (Metals) 3,866 211,664
Antofagasta Holdings PLC (Minerals) 27,910 165,195
AstraZeneca Group PLC (Medical and Health
Products) 109,780 5,140,846
Boots Co. PLC (Retail)* 266,040 2,122,694
BP Amoco PLC, ADR (Oils) 180,294 9,183,726
British Telecommunications PLC
(Telecommunications)* 258,165 3,026,123
Capital Radio PLC (Broadcasting) 44,950 971,614
CGU PLC (Insurance)* 352,303 4,712,215
COLT Telecom Group PLC (Telecommunications) 14,800 472,348
Diageo PLC (Food and Beverage Products)* 518,043 4,888,673
HSBC Holdings PLC (Banks and Credit Cos.) 782,737 10,890,167
HSBC Holdings PLC, ADR (Banks and Credit Cos.)* 740,501 10,549,090
Next PLC (Retail) 244,863 2,435,053
Old Mutual PLC (Insurance) 282,930 620,801
Regus PLC (Real Estate)* 338,470 1,537,871
Reuters Group PLC (Business Services) 272,800 5,310,981
Royal Bank of Scotland PLC (Banks and Credit
Cos.)* 220,579 4,950,309
Standard Chartered PLC (Banks and Credit Cos.)* 514,970 7,425,850
Vodafone Group PLC (Telecommunications)* 4,635,208 19,281,931
Vodafone Group PLC, ADR (Telecommunications) 31,718 1,349,997
------------
$ 96,173,553
------------------------------------------------------------------------------
Total Foreign Stocks 437,767,735
------------------------------------------------------------------------------
U.S. Stocks - 45.2%
Aerospace - 0.7%
United Technologies Corp. 95,740 $ 6,683,849
------------------------------------------------------------------------------
Automotive - 0.3%
Harley-Davidson, Inc. 63,220 $ 3,046,414
------------------------------------------------------------------------------
Banks and Credit Companies - 0.6%
Chase Manhattan Corp. 34,960 $ 1,590,680
Providian Financial Corp. 34,410 3,578,640
------------
$ 5,169,320
------------------------------------------------------------------------------
Biotechnology - 1.7%
Abbott Laboratories, Inc. 86,300 $ 4,557,719
Pharmacia Corp. 201,042 11,057,310
------------
$ 15,615,029
------------------------------------------------------------------------------
Business Machines - 1.4%
Affiliated Computer Services, Inc., "A"* 85,080 $ 4,737,892
International Business Machines Corp. 40,000 3,940,000
Sun Microsystems, Inc.* 36,920 4,093,505
------------
$ 12,771,397
------------------------------------------------------------------------------
Business Services - 3.2%
Automatic Data Processing, Inc. 22,400 $ 1,463,000
BEA Systems, Inc.* 41,720 2,993,410
BISYS Group, Inc.* 89,480 4,216,745
Computer Sciences Corp.* 69,970 4,408,110
DST Systems, Inc.* 39,340 2,424,328
First Data Corp. 94,390 4,731,299
Fiserv, Inc.* 50,280 2,636,557
Nextel Partners, Inc. 69,570 1,704,465
S1 Corp.* 23,310 281,177
VeriSign, Inc.* 30,110 3,974,520
------------
$ 28,833,611
------------------------------------------------------------------------------
Cellular Telephones - 1.4%
Powertel, Inc.* 27,900 $ 2,434,275
Sprint Corp. (PCS Group)* 134,510 5,128,194
Voicestream Wireless Corp.* 35,800 4,707,700
------------
$ 12,270,169
------------------------------------------------------------------------------
Computer Hardware - Systems - 0.8%
Compaq Computer Corp. 186,440 $ 5,669,640
Dell Computer Corp.* 36,600 1,079,700
------------
$ 6,749,340
------------------------------------------------------------------------------
Computer Software - Personal Computers - 1.1%
Mercury Interactive Corp.* 12,600 $ 1,398,600
Microsoft Corp.* 127,540 8,784,317
------------
$ 10,182,917
------------------------------------------------------------------------------
Computer Software - Services - 1.4%
Art Technology Group, Inc.* 30,400 $ 1,907,600
EMC Corp.* 91,340 8,134,969
Internet Security Systems, Inc.* 32,200 2,841,650
------------
$ 12,884,219
------------------------------------------------------------------------------
Computer Software - Systems - 3.1%
Ariba, Inc.* 10,200 $ 1,289,025
Cadence Design Systems, Inc.* 102,890 2,642,987
Comverse Technology, Inc.* 44,200 4,939,350
Digex, Inc.* 24,200 949,850
E Piphany, Inc.* 27,400 2,469,425
Extreme Networks, Inc.* 12,100 1,003,544
I2 Technologies, Inc.* 11,000 1,870,000
Oracle Corp.* 106,140 3,502,620
Rational Software Corp.* 66,660 3,978,768
Siebel Systems, Inc.* 25,060 2,629,734
VERITAS Software Corp.* 16,210 2,285,863
------------
$ 27,561,166
------------------------------------------------------------------------------
Conglomerates - 1.6%
Tyco International Ltd. 252,850 $ 14,333,434
------------------------------------------------------------------------------
Electrical Equipment - 0.6%
General Electric Co. 103,480 $ 5,671,997
------------------------------------------------------------------------------
Electronics - 0.9%
Applied Materials, Inc.* 31,610 $ 1,679,281
Flextronics International Ltd.* 54,920 2,086,960
Gemstar Tv Guide International Inc.* 16,300 1,117,569
Intel Corp. 73,470 3,306,150
------------
$ 8,189,960
------------------------------------------------------------------------------
Energy - 0.2%
Dynegy, Inc. 44,800 $ 2,074,800
------------------------------------------------------------------------------
Entertainment - 0.5%
Tivo, Inc.* 25 $ 327
USA Networks, Inc.* 145,500 2,946,375
Viacom, Inc., "B"* 19,400 1,103,375
------------
$ 4,050,077
------------------------------------------------------------------------------
Financial Institutions - 2.5%
Associates First Capital Corp., "A" 82,280 $ 3,054,645
Citigroup, Inc. 60,573 3,187,654
Federal National Mortgage Assn. 33,610 2,587,970
Freddie Mac Corp. 82,800 4,968,000
Merrill Lynch & Co., Inc. 42,800 2,996,000
Schwab (Charles) Corp. 25,120 882,340
State Street Corp. 42,190 5,262,781
------------
$ 22,939,390
------------------------------------------------------------------------------
Financial Services - 0.2%
AXA Financial, Inc. 33,650 $ 1,819,203
------------------------------------------------------------------------------
Insurance - 2.8%
AFLAC, Inc. 82,200 $ 6,005,737
American International Group, Inc. 61,070 5,984,860
Hartford Financial Services Group, Inc. 31,750 2,363,391
Marsh & McLennan Cos., Inc. 23,510 3,073,933
St. Paul Cos., Inc. 67,400 3,454,250
UnumProvident Corp. 151,600 4,282,700
------------
$ 25,164,871
------------------------------------------------------------------------------
Internet - 0.6%
CNET Networks, Inc.* 45,200 $ 1,423,800
VIA Net.Works, Inc.* 103,490 766,473
XO Communications, Inc. 101,810 3,434,497
------------
$ 5,624,770
------------------------------------------------------------------------------
Machinery - 0.2%
W.W. Grainger, Inc. 48,320 $ 1,543,220
------------------------------------------------------------------------------
Medical and Health Products - 2.2%
Alza Corp.* 21,800 $ 1,764,437
American Home Products Corp. 102,250 6,492,875
Bristol-Myers Squibb Co. 103,910 6,332,016
Pfizer, Inc. 126,910 5,480,926
------------
$ 20,070,254
------------------------------------------------------------------------------
Medical and Health Technology and Services - 0.3%
Discovery Partners International* 120 $ 1,800
PE Corp.-PE Biosystems Group 22,500 2,632,500
------------
$ 2,634,300
------------------------------------------------------------------------------
Oil Services - 1.5%
Baker Hughes, Inc. 94,690 $ 3,254,969
Global Marine, Inc.* 93,750 2,484,375
Halliburton Co. 55,870 2,070,682
Noble Drilling Corp.* 57,140 2,374,881
Weatherford International, Inc.* 96,690 3,529,185
------------
$ 13,714,092
------------------------------------------------------------------------------
Oils - 1.7%
Conoco, Inc. 134,720 $ 3,662,700
Grant Pride Co., Inc.* 106,640 1,979,505
Santa Fe International Corp. 183,000 6,679,500
Transocean Sedco Forex, Inc. 55,450 2,938,850
------------
$ 15,260,555
------------------------------------------------------------------------------
Pharmaceuticals - 0.1%
ICN Pharmaceuticals, Inc. 29,640 $ 1,128,173
------------------------------------------------------------------------------
Printing and Publishing - 0.1%
Tribune Co. 33,640 $ 1,246,782
------------------------------------------------------------------------------
Retail - 2.1%
BJ's Wholesale Club, Inc.* 79,050 $ 2,603,709
CVS Corp. 160,300 8,485,881
RadioShack Corp. 76,990 4,590,529
Wal-Mart Stores, Inc. 63,640 2,887,665
------------
$ 18,567,784
------------------------------------------------------------------------------
Supermarkets - 1.5%
Kroger Co.* 221,330 $ 4,993,758
Safeway, Inc.* 152,590 8,344,766
------------
$ 13,338,524
------------------------------------------------------------------------------
Telecommunications - 8.9%
ADC Telecommunications, Inc.* 121,988 $ 2,607,494
Allegiance Telecom, Inc.* 94,230 2,962,356
Alltel Corp. 46,550 2,999,566
American Tower Corp., "A"* 119,560 4,894,487
AT&T Corp., "A"* 240,500 4,329,000
BroadWing, Inc.* 93,630 2,645,047
Cabletron Systems, Inc.* 83,290 2,259,241
California Amplifier, Inc.* 28,510 712,750
CIENA Corp.* 31,680 3,330,360
Cisco Systems, Inc.* 248,950 13,412,181
Corning, Inc. 130,140 9,955,710
EchoStar Communications Corp.* 147,300 6,665,325
Emulex Corp.* 3,600 528,750
Metromedia Fiber Network, Inc., "A"* 95,880 1,821,720
NEXTEL Communications, Inc.* 8,900 342,094
NTL, Inc.* 88,831 3,903,012
Powerwave Technologies, Inc.* 68,420 3,292,712
Qwest Communications International, Inc.* 50,900 2,475,013
Tekelec Co.* 58,680 2,160,158
Tellabs, Inc.* 65,620 3,276,899
UnitedGlobalCom, Inc.* 96,520 3,070,542
UTStarcom, Inc.* 1,470 29,400
Verizon Communications 50,480 2,918,375
------------
$ 80,592,192
------------------------------------------------------------------------------
Telecommunications and Cable - 0.3%
Comcast Corp., "A"* 59,450 $ 2,422,587
------------------------------------------------------------------------------
Utilities - Electric - 0.7%
AES Corp.* 105,700 $ 5,972,050
------------------------------------------------------------------------------
Total U.S. Stocks $408,126,446
------------------------------------------------------------------------------
Total Stocks (Identified Cost, $782,424,114) $845,894,181
------------------------------------------------------------------------------
Warrants
------------------------------------------------------------------------------
U.S. Stocks
Acclaim Entertainment, Inc.* (Identified Cost, $0) $ 65
2,185 5
------------------------------------------------------------------------------
Short-Term Obligations - 5.2%
------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
------------------------------------------------------------------------------
American Express Credit Corp., due 11/01/00 $ 293 $ 293,000
Associates Corp. of North America, due 11/01/00 5,893 5,893,000
Chase Nassau Time Deposit, due 11/01/00 424 424,000
Ford Motor Credit Corp., due 11/01/00 6,694 6,694,000
Ford Motor Credit Corp., due 11/07/00 906 905,020
General Electric Capital Corp., due 11/01/00 8,153 8,153,000
General Motors Acceptance Corp., due 11/01/00 6,591 6,591,000
Prudential Funding Corp., due 11/01/00 754 754,000
Salomon Smith Barney Holdings, Inc., due 11/01/00 166 166,000
Ubs Finance Inc., due 11/01/00 17,280 17,280,000
------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 47,153,020
------------------------------------------------------------------------------
Total Investments (Identified Cost, $829,577,134) $893,047,856
Other Assets, Less Liabilities - 1.2% 10,508,244
------------------------------------------------------------------------------
Net Assets - 100.0% $903,556,100
------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
-------------------------------------------------------------------------------
OCTOBER 31, 2000
-------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $829,577,134) $ 893,047,856
Investments of cash collateral for securities loaned, at
identified cost and value 79,694,277
Foreign currency, at value (identified cost, $3,048,474) 3,010,521
Receivable for investments sold 9,840,861
Receivable for fund shares sold 3,272,098
Dividends and interest receivable 836,042
Other assets 3,575
-------------
Total assets $ 989,705,230
-------------
Liabilities:
Payable to custodian $ 124,091
Payable for investments purchased 4,316,531
Payable for fund shares reacquired 1,558,385
Collateral for securities loaned, at value 79,694,277
Payable to affiliates -
Management fee 21,779
Shareholder servicing agent fee 2,420
Distribution and service fee 16,147
Administrative fee 423
Accrued expenses and other liabilities 415,077
-------------
Total liabilities $ 86,149,130
-------------
Net assets $ 903,556,100
=============
Net assets consist of:
Paid-in capital $ 656,450,922
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 63,387,555
Accumulated undistributed net realized gain on
investments and foreign currency transactions 183,842,293
Accumulated net investment loss (124,670)
-------------
Total $ 903,556,100
=============
Shares of beneficial interest outstanding 33,288,997
==========
Class A shares:
Net asset value per share
(net assets of $389,664,213 / 14,165,257 shares of
beneficial interest outstanding) $27.51
======
Offering price per share (100 / 94.25 of net asset
value per share) $29.19
======
Class B shares:
Net asset value and offering price per share
(net assets $442,368,355 / 16,460,374 shares of
beneficial interest outstanding) $26.87
======
Class C shares:
Net asset value and offering price per share
(net assets of $62,520,091 / 2,338,422 shares of
beneficial interest outstanding) $26.74
======
Class I shares:
Net asset value, offering price, and redemption price
per share (net assets of $9,003,441 / 324,944
shares of beneficial interest outstanding) $27.71
======
On sales of $50,000 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
------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000
------------------------------------------------------------------------------
Net investment income (loss):
Income -
Dividends $ 12,356,152
Interest 3,271,121
Foreign taxes withheld (700,202)
------------
Total investment income $ 14,927,071
------------
Expenses -
Management fee $ 7,880,965
Trustees' compensation 44,537
Shareholder servicing agent fee 875,663
Distribution and service fee (Class A) 1,254,338
Distribution and service fee (Class B) 4,518,184
Distribution and service fee (Class C) 561,430
Administrative fee 129,818
Custodian fee 851,634
Printing 75,940
Postage 116,646
Auditing fees 44,410
Legal fees 6,608
Miscellaneous 580,135
------------
Total expenses $ 16,940,308
Fees paid indirectly (257,998)
Reduction of expenses by distributor (359,157)
------------
Net expenses $ 16,323,153
------------
Net investment loss $ (1,396,082)
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $229,938,202
Foreign currency transactions (600,098)
------------
Net realized gain on investments and foreign
currency transactions $229,338,104
------------
Change in unrealized depreciation -
Investments $(76,967,247)
Translation of assets and liabilities in foreign
currencies (92,211)
------------
Net unrealized loss on investments and foreign
currency translation $(77,059,458)
------------
Net realized and unrealized gain on investments
and foreign currency $152,278,646
------------
Increase in net assets from operations $150,882,564
============
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (1,396,082) $ (3,583,816)
Net realized gain on investments and foreign currency
transactions 229,338,104 65,098,721
Net unrealized gain (loss) on investments and foreign
currency translation (77,059,458) 110,860,673
------------- -------------
Increase in net assets from operations $ 150,882,564 $ 172,375,578
------------- -------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $ (20,046,665) $ (16,259,953)
From net realized gain on investments and foreign
currency transactions (Class B) (25,906,105) (22,605,139)
From net realized gain on investments and foreign
currency transactions (Class C) (2,240,760) (1,663,777)
From net realized gain on investments and foreign
currency transactions (Class I) (625,939) (471,404)
------------- -------------
Total distributions declared to shareholders $ (48,819,469) $ (41,000,273)
------------- -------------
Net increase (decrease) in net assets from fund share
transactions $ 192,781,936 $ (1,797,176)
------------- -------------
Total increase in net assets $ 294,845,031 $ 129,578,129
Net assets:
At beginning of period 608,711,069 479,132,940
------------- -------------
At end of period (including accumulated net investment
loss of $124,670 and $801,337, respectively) $ 903,556,100 $ 608,711,069
============= =============
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
-----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------------
CLASS A
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $23.20 $18.27 $20.79 $19.09 $18.16
------ ------ ------ ------ ------
Income (loss) from investment operations# -
Net investment income (loss)(S) $ 0.07 $(0.05) $(0.01) $(0.02) $(0.07)
Net realized and unrealized gain (loss)
on investments and foreign currency 6.14 6.59 (0.41) 2.77 2.73
------ ------ ------ ------ ------
Total from investment operations $ 6.21 $ 6.54 $(0.42) $ 2.75 $ 2.66
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ -- $ -- $(0.01)
From net realized gain on investments
and foreign currency transactions (1.90) (1.61) (2.10) (1.05) (1.72)
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.90) $(1.61) $(2.10) $(1.05) $(1.73)
------ ------ ------ ------ ------
Net asset value - end of period $27.51 $23.20 $18.27 $20.79 $19.09
====== ====== ====== ====== ======
Total return(+) 27.22% 38.13% (1.99)% 15.17% 15.73%
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.45% 1.48% 1.49% 1.52% 1.58%
Net investment income (loss) 0.26% (0.23)% (0.06)% (0.10)% (0.35)%
Portfolio turnover 182% 146% 104% 133% 95%
Net assets at end of period (000 Omitted) $389,664 $244,777 $195,194 $204,918 $172,106
(S) The distributor voluntarily waived a portion of its fee for the periods indicated. If the fee had been incurred by the fund,
the net investment income (loss) per share and the ratios would have been:
Net investment income (loss) $ 0.04 $(0.07) $(0.03) $(0.04) $(0.09)
Ratios (to average net assets):
Expenses## 1.55% 1.58% 1.59% 1.62% 1.68%
Net investment income (loss) 0.16% (0.33)% (0.16)% (0.20)% (0.45)%
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
-----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------------
CLASS B
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $22.73 $18.06 $20.56 $18.87 $17.97
------ ------ ------ ------ ------
Income (loss) from investment operations# -
Net investment loss $(0.14) $(0.20) $(0.16) $(0.17) $(0.21)
Net realized and unrealized gain (loss)
on investments and foreign currency 6.04 6.48 (0.40) 2.76 2.70
------ ------ ------ ------ ------
Total from investment operations $ 5.90 $ 6.28 $(0.56) $ 2.59 $ 2.49
------ ------ ------ ------ ------
Less distributions declared to
shareholders from net realized gain on
investments and foreign currency
transactions $(1.76) $(1.61) $(1.94) $(0.90) $(1.59)
------ ------ ------ ------ ------
Net asset value - end of period $26.87 $22.73 $18.06 $20.56 $18.87
====== ====== ====== ====== ======
Total return 26.26% 37.12% (2.70)% 14.30% 14.77%
Ratios (to average net assets)/Supplemental data:
Expenses## 2.20% 2.23% 2.24% 2.28% 2.39%
Net investment loss (0.47)% (0.99)% (0.81)% (0.87)% (1.16)%
Portfolio turnover 182% 146% 104% 133% 95%
Net assets at end of period (000 Omitted) $442,368 $330,542 $259,345 $308,692 $282,668
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
-----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------------
CLASS C
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $22.64 $17.99 $20.49 $18.85 $17.96
------ ------ ------ ------ ------
Income (loss) from investment operations# -
Net investment loss $(0.11) $(0.20) $(0.16) $(0.17) $(0.20)
Net realized and unrealized gain (loss) on
investments and foreign currency 5.99 6.46 (0.40) 2.75 2.70
------ ------ ------ ------ ------
Total from investment operations $ 5.88 $ 6.26 $(0.56) $ 2.58 $ 2.50
------ ------ ------ ------ ------
Less distributions declared to shareholders
from net realized gain on investments and
foreign currency transactions $(1.78) $(1.61) $(1.94) $(0.94) $(1.61)
------ ------ ------ ------ ------
Net asset value - end of period $26.74 $22.64 $17.99 $20.49 $18.85
====== ====== ====== ====== ======
Total return 26.28% 37.15% (2.73)% 14.27% 14.88%
Ratios (to average net assets)/Supplemental data:
Expenses## 2.20% 2.23% 2.24% 2.25% 2.32%
Net investment loss (0.39)% (0.99)% (0.83)% (0.85)% (1.10)%
Portfolio turnover 182% 146% 104% 133% 95%
Net assets at end of period (000 Omitted) $62,520 $26,120 $19,149 $24,662 $19,994
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, PERIOD ENDED
----------------------------------------------- OCTOBER 31,
2000 1999 1998 1997*
----------------------------------------------------------------------------------------------------------------------------
CLASS I
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $23.33 $18.32 $20.84 $18.34
------ ------ ------ ------
Income (loss) from investment operations# -
Net investment income $ 0.15 $ -- $ 0.04 $ 0.04
Net realized and unrealized gain (loss) on
investments and foreign currency 6.19 6.62 (0.40) 2.46
------ ------ ------ ------
Total from investment operations $ 6.34 $ 6.62 $(0.36) $ 2.50
------ ------ ------ ------
Less distributions declared to shareholders from
net realized gain on investments and foreign
currency transactions $(1.96) $(1.61) $(2.16) $ --
------ ------ ------ ------
Net asset value - end of period $27.71 $23.33 $18.32 $20.84
====== ====== ====== ======
Total return 27.56% 38.55% (1.64)% 13.58%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.20% 1.23% 1.24% 1.21%+
Net investment income 0.50% 0.01% 0.19% 0.20%+
Portfolio turnover 182% 146% 104% 133%
Net assets at end of period (000 Omitted) $9,003 $7,272 $5,445 $6,550
*For the period from the inception of Class I shares, January 2, 1997, through October 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Global Growth Fund (the fund) is a non-diversified series of MFS Series
Trust VIII (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 - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last sale
prices. Unlisted equity securities or listed equity securities for which last
sale prices are not available are reported at market value using last quoted bid
prices. Short-term obligations, which mature in 60 days or less, are valued at
amortized cost, which approximates market value. Securities for which there are
no such quotations or valuations are valued in good faith, at fair value, by the
Trustees.
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.
Security Loans - State Street Bank and Trust Company ("State Street"), as
lending agent, may loan the securities of the fund to certain qualified
institutions (the "Borrowers") approved by the fund. The loans are
collateralized at all times by cash and/or U.S. Treasury securities in an amount
at least equal to the market value of the securities loaned. State Street
provides the fund with indemnification against Borrower default. The fund bears
the risk of loss with respect to the investment of cash collateral.
Cash collateral is invested in short-term securities. A portion of the income
generated upon investment of the collateral is remitted to the Borrowers, and
the remainder is allocated between the fund and the lending agent. On loans
collateralized by U.S. Treasury securities, a fee is received from the Borrower,
and is allocated between the fund and the lending agent. The dividend and
interest income earned on the securities loaned is accounted for in the same
manner as other dividend and interest income.
At October 31, 2000, the value of securities loaned was $76,556,669. These loans
were collateralized by cash of $79,694,277 which was invested in the following
short-term obligation:
IDENTIFIED COST
SHARES AND VALUE
---------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio 79,694,277 $79,694,277
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. Dividends received in cash are recorded on the
ex-dividend date. Dividend and interest payments received in additional
securities are recorded on the ex-dividend or ex-interest date in an amount
equal to the value of the security on such date.
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. During the period, the fund's custodian fees were reduced by $228,411
under this arrangement. The fund has entered into a directed brokerage
agreement, under which the broker will credit the fund a portion of the
commissions generated, to offset certain expenses of the fund. For the period,
the fund's custodian fees were reduced by $29,587 under this agreement. These
amounts are 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 only distributions in excess of tax basis earnings and profits are
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. During
the year ended October 31, 2000, $2,072,749 and $39,256,070, were reclassified
to accumulated undistributed net investment loss and paid-in-capital,
respectively, from accumulated undistributed net realized gain on investments
and foreign currency transactions due to differences between book and tax
accounting for foreign currency transactions, dividends, and the offset of net
investment loss against short-term capital gains. This change had no effect on
the net assets or net asset value per share.
Foreign Capital Gains Tax - Realized gain is reported net of any foreign capital
gains tax in the Statement of Operations.
Multiple Classes of Shares of Beneficial Interest - The fund offers multiple
classes of shares that 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 an annual rate of 0.90% of
the fund's average daily net assets.
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 $12,956 for the year ended October 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 0.0150%
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
$271,383 for the year ended October 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 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 $53,862 for the year ended October 31,
2000. The Class A distribution fee is currently being waived on a voluntary
basis and may be imposed at the discretion of MFD. Fees incurred under the
distribution plan during the year ended October 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 $29,584 and $1,271 for Class B and Class C shares, respectively, for
the year ended October 31, 2000. Fees incurred under the distribution plan
during the year ended October 31, 2000, were 1.00% of average daily net assets
attributable to Class B and Class C shares, respectively, 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 year ended October 31,
2000, were $14,166, $241,275, and $10,331 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 U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$1,631,614,653 and $1,496,885,655, respectively.
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 $839,266,201
------------
Gross unrealized appreciation $110,902,187
Gross unrealized depreciation (57,120,532)
------------
Net unrealized appreciation $ 53,781,655
============
(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
YEAR ENDED OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 1999
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 16,817,540 $ 494,924,574 47,525,247 $ 966,767,986
Shares issued to shareholders
in reinvestment of
distributions 678,907 17,997,219 836,303 15,402,364
Shares reacquired (13,883,520) (408,656,559) (48,494,561) (989,104,678)
------------- ------------- ------------- -------------
Net increase (decrease) 3,612,927 $ 104,265,234 (133,011) $ (6,934,328)
============= ============= ============= =============
<CAPTION>
Class B shares
YEAR ENDED OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 1999
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 4,826,712 $ 138,761,655 2,782,026 $ 57,830,751
Shares issued to shareholders
in reinvestment of
distributions 820,818 21,376,027 987,616 17,849,062
Shares reacquired (3,726,458) (105,459,568) (3,591,842) (72,391,978)
------------- ------------- ------------- -------------
Net increase 1,921,072 $ 54,678,114 177,800 $ 3,287,835
============= ============= ============= =============
<CAPTION>
Class C shares
YEAR ENDED OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 1999
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 2,775,914 $ 79,119,436 3,132,092 $ 63,131,555
Shares issued to shareholders
in reinvestment of
distributions 64,902 1,680,932 65,363 1,176,528
Shares reacquired (1,656,235) (47,258,454) (3,107,998) (62,729,730)
------------- ------------- ------------- -------------
Net increase 1,184,581 $ 33,541,914 89,457 $ 1,578,353
============= ============= ============= =============
<CAPTION>
Class I shares
YEAR ENDED OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 1999
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 406,996 $ 12,785,334 46,819 $ 980,650
Shares issued to shareholders
in reinvestment of
distributions 23,522 625,933 25,647 471,399
Shares reacquired (417,260) (13,114,593) (57,985) (1,181,085)
------------- ------------- ------------- -------------
Net increase 13,258 $ 296,674 14,481 $ 270,964
============= ============= ============= =============
</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 year ended October 31,
2000, was $10,142. The fund had no significant borrowings during the year.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of the MFS Series Trust VIII and Shareholders of MFS Global
Growth Fund:
We have audited the accompanying statement of assets and liabilities of MFS
Global Growth Fund (one of the series comprising MFS Series Trust VIII),
including the portfolio of investments, as of October 31, 2000, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2000, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of MFS
Global Growth Fund as of October 31, 2000, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 5, 2000
<PAGE>
-------------------------------------------------------------------------------
FEDERAL TAX INFORMATION
-------------------------------------------------------------------------------
IN JANUARY 2001, SHAREHOLDERS WILL BE MAILED A FORM 1099-DIV REPORTING THE
FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE CALENDAR YEAR 2000.
THE FUND HAS DESIGNATED $79,249,027 AS A CAPITAL GAIN DIVIDEND FOR THE YEAR
ENDED OCTOBER 31, 2000.
FOR THE YEAR ENDED OCTOBER 31, 2000, THE AMOUNT OF DISTRIBUTIONS FROM INCOME
ELIGIBLE FOR THE 70% DIVIDENDS RECEIVED DEDUCTION FOR CORPORATIONS IS 3.02%.
FOR THE YEAR ENDED OCTOBER 31, 2000, INCOME FROM FOREIGN SOURCES WAS
$10,824,196, AND THE FUND DESIGNATED A FOREIGN TAX CREDIT OF $913,875.
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MFS(R) GLOBAL GROWTH FUND
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TRUSTEES ASSISTANT TREASURERS
Marshall N. Cohan + - Private Investor Mark E. Bradley*
Robert R. Flaherty*
Lawrence H. Cohn, M.D. + - Chief of Cardiac Laura F. Healy*
Surgery, Brigham and Women's Hospital; Ellen Moynihan*
Professor of Surgery, Harvard Medical School
SECRETARY
The Hon. Sir J. David Gibbons, KBE + - Chief Stephen E. Cavan*
Executive Officer, Edmund Gibbons Ltd.;
Chairman, Colonial Insurance Company, Ltd. ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Abby M. O'Neill + - Private Investor
CUSTODIAN
Walter E. Robb, III + - President and Treasurer, State Street Bank and Trust Company
Benchmark Advisors, Inc. (corporate financial
consultants); President, Benchmark Consulting AUDITORS
Group, Inc. (office services) Deloitte & Touche LLP
Arnold D. Scott* - Senior Executive INVESTOR INFORMATION
Vice President, Director, and Secretary, For information on MFS mutual funds, call
MFS Investment Management your investment professional or, for an
information kit, call toll free: 1-800-637-2929
Jeffrey L. Shames* - Chairman and Chief any business day from 9 a.m. to 5 p.m.
Executive Officer, MFS Investment Eastern time (or leave a message anytime).
Management
INVESTOR SERVICE
J. Dale Sherratt + - President, Insight Resources, MFS Service Center, Inc.
Inc. (acquisition planning specialists) P.O. Box 2281
Boston, MA 02107-9906
Ward Smith + - Former Chairman (until 1994),
NACCO Industries (holding company) For general information, call toll free:
1-800-225-2606 any business day from
INVESTMENT ADVISER 8 a.m. to 8 p.m. Eastern time.
Massachusetts Financial Services Company
500 Boylston Street For service to speech- or hearing-impaired,
Boston, MA 02116-3741 call toll free: 1-800-637-6576 any business day
from 9 a.m. to 5 p.m. Eastern time. (To use
DISTRIBUTOR this service, your phone must be equipped with
MFS Fund Distributors, Inc. a Telecommunications Device for the Deaf.)
500 Boylston Street
Boston, MA 02116-3741 For share prices, account balances, exchanges,
or stock and bond outlooks, call toll free:
CHAIRMAN AND PRESIDENT 1-800-MFS-TALK (1-800-637-8255) anytime
Jeffrey L. Shames* from a touch-tone telephone.
PORTFOLIO MANAGERS WORLD WIDE WEB
John W. Ballen* www.mfs.com
John E. Lathrop*
Toni Y. Shimura*
DIRECTOR OF INTERNATIONAL EQUITY
RESEARCH
David A. Antonelli*
TREASURER
James O. Yost*
+ Independent Trustee
* MFS Investment Management
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MFS(R) GLOBAL GROWTH FUND ------------
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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.
MWF-2 12/00 103M 09/209/309/809
