<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[Graphic Omitted]
MFS(R) GLOBAL TOTAL
RETURN FUND
(formerly MFS(R) World Total Return Fund)
SEMIANNUAL REPORT o APRIL 30, 1999
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DIVERSIFYING YOUR INVESTMENT PORTFOLIO (see page 34)
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<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 8
Portfolio of Investments .................................................. 11
Financial Statements ...................................................... 18
Notes to Financial Statements ............................................. 25
MFS' Year 2000 Readiness Disclosure ....................................... 33
Trustees and Officers ..................................................... 37
MFS(R) ORIGINAL RESEARCH(SM)
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,
Over 75 years ago, MFS invented the mutual fund, giving Americans greater
access to the investment markets. Since then, we have been guided by a number
of fundamental principles, including diversification and professional
management backed by MFS(R) Original Research(SM), a process by which we seek
long-term investment opportunities.
We have found that these principles have matched those of our shareholders. In
a recent survey for MFS by Roper Starch Worldwide, Inc., a major consumer
research firm, over 60% of mutual fund shareholders said they are investing
for long-term goals such as retirement. The survey also showed that investors
realize that the extraordinary stock market gains of the past few years cannot
be sustained. These views certainly seem to have guided investors during last
year's market correction. Beginning with the collapse of Asian markets at the
end of 1997 and continuing with the volatility in U.S. markets through
October of 1998, only 7% of mutual fund investors took money out of the stock
market.
We are even more pleased that MFS investors reacted calmly to last year's
market turmoil, indicating their commitment to diversification. As a result,
throughout the late summer and fall of 1998, daily purchases of MFS stock and
bond funds were well ahead of redemptions.
Over the past year or so, however, diversified investment programs have not
financially rewarded investors. A very narrow band of about 25 stocks
representing the largest U.S. growth companies has, until recently, vastly
outperformed the rest of the market. In 1998, for example, the return on the
Standard & Poor's 500 Composite Index (a popular, unmanaged index of common
stock total return performance) increased 28.58%. However, over half of the
stocks in the index returned less than 10%, including 198 stocks that posted
negative returns.
While 1997 and 1998 were good years for large-company growth stocks, 1996 was
dominated by the mid-sized value category. Prices of value stocks do not fully
reflect the companies' underlying values or future prospects. In 1995, the
best-performing sector was small-company growth stocks. We believe this change
of market leadership shows that while diversification may not provide the best
performance in the short run, it should benefit investors over the long term.
In fact, as 1999 progresses, we are seeing signs of renewed strength from a
broader group of industries, including electric utilities and paper products
and chemical companies. We believe our diversified MFS Family of Funds(R),
supported by Original Research, is well positioned to benefit from a broader
market.
Most mutual fund investors refrain from trying to predict short-term trends.
Despite the large stock market gains of the past several years, the Roper
Starch survey shows that people do not see performance as the only
reason to invest. These investors also cite a desire to put investment
decisions in the hands of experts, a belief that mutual funds can be less
risky than other investments, and an appreciation of the convenience of mutual
fund investing.
We appreciate the fact that our fund shareholders and their advisers share our
belief that mutual fund investing is not a way to speculate in the markets but
is a way to use the investment markets to help them work toward their long-
term goals. Our goal at MFS is to offer professionally managed investment
products with the potential to sustain returns over a variety of market
cycles.
We thank you for your confidence 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)
May 17, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of Frederick J. Simmons]
Frederick J. Simmons
For the six months ended April 30, 1999, Class A shares of the Fund provided a
total return of 4.57%, Class B shares 4.16%, Class C shares 4.23%, and Class I
shares 4.67%. These returns include the reinvestment of distributions but
exclude the effects of any sales charges.
The Fund's returns compare to a 12.49% return for the average global flexible
fund portfolio tracked by Lipper Analytical Services, Inc., an independent firm
that reports mutual fund performance. During the same period, the Fund's returns
also compare to a 14.91% return for the Lipper Global Flexible Fund Index,
22.32% for the Standard & Poor's 500 Composite Index (S&P 500), and 10.00% for
the benchmark made up of 60% of the Morgan Stanley Capital International (MSCI)
World Index and 40% of the J.P. Morgan Global Government Bond Index (the Morgan
Index). The S&P 500 is a popular, unmanaged index of common stock total
return performance. The Lipper Mutual Fund Indices are unmanaged
net-asset-value-weighted indices of the largest qualifying mutual funds within
their respective investment objectives, adjusted for the reinvestment of capital
gain distributions and income dividends. The MSCI World Index is a broad,
unmanaged index of global equities; the Morgan Index is an aggregate of actively
traded government bonds issued by 13 countries, including the United States,
with remaining maturities of at least one year.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S UNDERPERFORMANCE OVER THE PAST SIX
MONTHS?
A. We believe performance should be considered in light of the Fund's
conservative strategy of investing in stocks and bonds. Our stock portfolio
emphasizes large, financially strong companies, particularly in the United
States and Europe. Using MFS(R) Original Research(SM), we look for
companies that have a history of being profitable and of being leaders in
their markets. On the fixed-income side, the holdings are virtually all
government-issued bonds from major European countries, the United States,
and Japan. Our philosophy is this: if we need bonds to help cushion
declines in the world's stock markets, we don't want any question about the
quality of those bonds.
Q. HOW HAS THE POSITIONING OF THE FUND'S STOCK HOLDINGS IMPACTED PERFORMANCE?
A. The Fund has a lot fewer technology stocks in comparison to the indices or
the portfolios of many of our competitors, and this underweighting has
detracted from performance. The technology sector has been one of the most
powerful areas of the stock market but because prices of technology stocks
tend to be quite volatile, we continue to underweight them. In addition, we
had fewer Japanese and more European holdings than our competitors. While
the underweighting in Japan has served us well for several years, it has
hurt us in the past few months because Japanese stocks have made big gains
and European stocks have underperformed.
Q. WHAT ARE YOU DOING TO IMPROVE PERFORMANCE?
A. On technology, I'm standing pat. But I'm not going to increase the Fund's
technology weighting much above what it is now because prices of these
stocks are just too volatile for this conservative fund.
In other sectors, we have eliminated some underperforming stocks and
considerably reduced our positions in others. For example, our position in
Tomkins (a British conglomerate involved in factory automation, energy,
baking, transportation, and other businesses) has been greatly reduced. At one
point, Tomkins was one of the 10-largest holdings in the portfolio, but the
company's management recently has had problems executing its strategy.
Meanwhile, we bought stocks that we think will help performance. For example,
we bought Cable & Wireless in the United Kingdom, Hellenic Telecom in Greece,
Telecom Italia Mobile in Italy, and Helsinki Telecom in Finland. The growth in
telecommunications is helping almost all of the major companies in this
industry. We also bought Banco Popular, a well-run Spanish bank. However, as
European banks continue to consolidate, we think Banco Popular could be bought
out, probably at a premium to its current price.
Q. COULD YOU TALK ABOUT STOCKS THAT HELPED PERFORMANCE?
A. The Fund benefited from good performance by Mannesmann, a German
telecommunications company; Tyco International, a U.S. conglomerate; and
Takeda Chemical, a Japanese pharmaceutical company that does a lot of
export business. We've also seen strong performance from Compass, a British
food services company. We believe these are four well-run businesses, with
steadily growing profits.
Q. WHERE HAVE YOU CONCENTRATED YOUR U.S. HOLDINGS?
A. Until recently, our U.S. holdings had focused on three major sectors:
pharmaceuticals, financial services, and energy. We have reduced our
positions in the first two sectors, but have maintained our energy
positions. Although our pharmaceutical holdings performed well, we felt
their prices were high despite declining earnings growth. We also cut back
on our financial services holdings, although these companies had helped
performance until recently. Earlier this year, prices of some financial
services stocks began to decline, partly because investors felt that the
companies had gotten quite expensive. We, however, have maintained our
position in energy, including Exxon, BP Amoco, and Royal Dutch Petroleum.
This sector has done well lately in response to rising oil and gas prices.
Q. WHAT'S YOUR VIEW ON EUROPE, AND HOW IS THIS VIEW REFLECTED IN THE FUND?
A. The European economy had been relatively strong but began to show some
weakness earlier this year. However, recently it seems to be reviving. The
Fund's weighting in Europe has stayed about the same over the past six
months, but several of the holdings have been changed. For example, we bought
Castorama Dubois, a rapidly growing French company similar to Home Depot that
is benefiting from increasing consumer spending in Europe.
Q. WHAT IS THE FUND'S EMERGING MARKET EXPOSURE?
A. Minimal. Emerging markets rebounded this year, but trends can end very
suddenly. Like those in technology, stock prices in emerging markets are
too volatile for a conservatively run portfolio. So I'll stick
to my guns.
Q. WHAT CAN YOU TELL US ABOUT THE BOND POSITION?
A. We've taken steps to reduce the Fund's sensitivity to rising interest rates
by increasing our holdings of bonds with shorter maturities. Any increase
in interest rates -- which could be prompted by unexpectedly strong growth
or by another international crisis -- would mean lower prices
for longer-term bonds. We like the United Kingdom and Greece, but for
different reasons. The Bank of England has been cutting interest rates
to help spur growth, and we see that continuing. Greece is not yet
participating in the European monetary union (EMU). For now, this means
Greece's bonds are trading at higher yields than bonds from EMU countries.
However, when Greece joins EMU, we think yields on its bonds will go down,
and their prices will go up.
Q. WHAT'S YOUR OUTLOOK FOR INTERNATIONAL MARKETS?
A. I think we can expect gains in all three major areas of the world: the
United States, Europe, and perhaps Japan. Interest rates and inflation
remain low, and the U.S. economy continues to grow at a strong rate. The
United States is going to pull along all of the other major economies, with
the possible exception of Japan, which has to do more on its own to
stimulate growth.
/s/ Frederick J. Simmons
Frederick J. Simmons
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.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
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FREDERICK J. SIMMONS IS SENIOR VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R) AND PORTFOLIO MANAGER OF MFS(R) GLOBAL TOTAL RETURN FUND,
MFS(R) INTERNATIONAL GROWTH AND INCOME FUND, AND THE WORLD TOTAL RETURN
SERIES AND INTERNATIONAL GROWTH AND INCOME SERIES OFFERED THROUGH
MFS(R)/SUN LIFE ANNUITY PRODUCTS. HE ALSO MANAGES THE NOMURA GLOBAL
BALANCED OPEN FUND AND THE NOMURA GN GLOBAL TOTAL RETURN FUND UNDER
SUBADVISORY AGREEMENTS WITH NOMURA ASSET MANAGEMENT CO. OF JAPAN.
MR. SIMMONS JOINED MFS IN 1971 AS AN INVESTMENT OFFICER IN THE RESEARCH
DEPARTMENT AND WAS NAMED ASSISTANT VICE PRESIDENT IN 1974, VICE
PRESIDENT IN 1975, AND SENIOR VICE PRESIDENT IN 1983. MR. SIMMONS
GRADUATED WITH HONORS FROM THE AMOS TUCK SCHOOL OF BUSINESS
ADMINISTRATION OF DARTMOUTH COLLEGE. HE IS A CHARTERED FINANCIAL
ANALYST, A MEMBER OF THE BOSTON SECURITY ANALYSTS SOCIETY, INC., AND
PAST PRESIDENT OF THE ELECTRONIC ANALYSTS OF BOSTON.
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(R)
ORIGINAL RESEARCH(SM), A COMPANY-ORIENTED, BOTTOM-UP PROCESS OF
SELECTING SECURITIES.
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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 financial adviser, 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 TOTAL RETURN: ABOVE-AVERAGE CURRENT INCOME
(COMPARED TO AN ALL-STOCK PORTFOLIO) AND
OPPORTUNITIES FOR LONG-TERM GROWTH OF CAPITAL
AND INCOME.
COMMENCEMENT OF
INVESTMENT OPERATIONS: SEPTEMBER 4, 1990
CLASS INCEPTION: CLASS A SEPTEMBER 4, 1990
CLASS B SEPTEMBER 7, 1993
CLASS C JANUARY 3, 1994
CLASS I JANUARY 2, 1997
SIZE: $374.2 MILLION NETS AS OF APRIL 30, 1999
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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 for more information.)
<TABLE>
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH APRIL 30, 1999
CLASS A
<CAPTION>
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return +4.57% +6.51% +46.91% +83.02% +184.80%
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Average Annual Total Return -- +6.51% +13.68% +12.85% + 12.85%
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SEC Results -- +1.45% +11.85% +11.76% + 12.21%
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CLASS B
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
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Cumulative Total Return +4.16% +5.78% +43.91% +76.86% +174.06%
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Average Annual Total Return -- +5.78% +12.90% +12.08% + 12.35%
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SEC Results -- +1.90% +12.11% +11.82% + 12.35%
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*For the period from the commencement of the Fund's investment operations, September 4, 1990,
through April 30, 1999.
CLASS C
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
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Cumulative Total Return +4.23% +5.81% +44.06% +77.10% +175.11%
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Average Annual Total Return -- +5.81% +12.94% +12.11% + 12.40%
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SEC Results -- +4.84% +12.94% +12.11% + 12.40%
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CLASS I
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
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Cumulative Total Return +4.67% +6.80% +48.00% +84.41% +186.77%
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Average Annual Total Return -- +6.80% +13.96% +13.02% + 12.94%
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*For the period from the commencement of the Fund's investment operations, September 4, 1990,
through April 30, 1999.
</TABLE>
<PAGE>
NOTES TO PERFORMANCE SUMMARY
Class A share ("A") SEC results include the maximum 4.75% sales charge. Class
B share ("B") SEC results reflect the applicable contingent deferred sales
charge (CDSC), which declines over six years from 4% to 0%. Class C shares
("C") have no initial sales charge but, like B, have higher annual fees and
expenses than A. C SEC results reflect the 1% CDSC applicable to shares
redeemed within 12 months. Class I shares ("I") have no sales charge or Rule
12b-1 fees and are only available to certain institutional investors.
B and C results include the performance and the operating expenses
(e.g., Rule 12b-1 fees) of A for periods prior to the inception of B and C.
Because operating expenses of B and C are higher than those of A, B and C
performance generally would have been lower than A performance. The A
performance included in the B and C SEC performance has been adjusted to
reflect the CDSC generally applicable to B and C rather than the initial sales
charge generally applicable to A.
I results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of A for periods prior to the inception of I. Because operating expenses
of A are greater than those of I, I performance generally would have been
higher than A performance. The A performance included in the I performance has
been adjusted to reflect the fact that I have no initial sales charge.
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 dividends and
capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS.
Investments in foreign securities may provide superior returns but also
involve greater risk than U.S. investments. Investments in foreign 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 APRIL 30, 1999
FIVE LARGEST STOCK SECTORS
FINANCIAL SERVICES 22.2%
CONSUMER STAPLES 12.8%
UTILITIES & COMMUNICATIONS 10.9%
HEALTH CARE 7.9%
TECHNOLOGY 7.4%
TOP 10 STOCK HOLDINGS
BP AMOCO PLC 2.9% TAKEDA CHEMICAL INDUSTRIES 2.2%
British oil and petrochemical company Japanese pharmaceutical company
MANNESMANN AG 2.5% SEITA 2.2%
German industrial and French tobacco company
telecommunications company
PINAULT-PRINTEMPS-REDOUTE S.A. 2.1%
TYCO INTERNATIONAL LTD. 2.5% French department store chain
U.S. security systems, packaging, and
electronic equipment conglomerate BRISTOL-MYERS SQUIBB CO. 2.0%
U.S. pharmaceutical products
company
CANADIAN NATIONAL RAILWAY CO. 2.3%
Railway/transporation company COMPASS GROUP PLC 1.9%
British commercial food catering
company
QBE INSURANCE GROUP LTD. 2.3%
Australian commercial insurance company
The portfolio is actively managed, and holdings are subject to change.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) - April 30, 1999
Stocks - 55.8%
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ISSUER SHARES VALUE
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<S> <C> <C>
U.S. Stocks - 19.2%
Auto Parts - 0.2%
Delphi Automotive Systems Corp.* 29,500 $ 573,406
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Banks and Credit Companies - 1.0%
Wells Fargo Co. 83,300 $ 3,597,519
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Beverages - 0.8%
Anheuser-Busch Cos., Inc. 40,200 $ 2,939,625
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Business Machines - 1.4%
International Business Machines Corp. 9,790 $ 2,047,946
Xerox Corp. 53,900 3,166,625
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$ 5,214,571
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Construction Services - 0.5%
Martin Marietta Materials, Inc. 30,886 $ 1,909,141
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Consumer Goods and Services - 2.4%
Newell Rubbermaid, Inc.* 31,200 $ 1,480,050
Philip Morris Cos., Inc. 66,550 2,333,409
Tyco International Ltd. 65,322 5,307,413
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$ 9,120,872
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Defense Electronics - 0.6%
Raytheon Co., "A" 33,600 $ 2,324,700
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Electrical Equipment - 0.8%
Cooper Industries, Inc. 30,200 $ 1,460,925
General Electric Co. 15,390 1,623,645
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$ 3,084,570
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Financial Institutions - 1.9%
American Express Co. 26,770 $ 3,498,504
Federal Home Loan Mortgage Corp. 58,960 3,699,740
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$ 7,198,244
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Financial Services - 0.8%
Associates First Capital Corp., "A" 68,500 $ 3,035,406
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Food and Beverage Products - 0.2%
McCormick & Co., Inc. 21,890 $ 663,541
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Insurance - 2.0%
Allstate Corp. 58,150 $ 2,115,206
American International Group, Inc. 27,400 3,217,788
ReliaStar Financial Corp. 59,740 2,195,445
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$ 7,528,439
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Oils - 0.4%
Exxon Corp. 16,690 $ 1,386,313
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Paper - 0.5%
Jefferson Smurfit Corp. 647,900 $ 1,729,642
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Pharmaceuticals - 1.4%
Bristol-Myers Squibb Co. 67,260 $ 4,275,214
Pharmacia & Upjohn, Inc. 23,000 1,288,000
------------
$ 5,563,214
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Printing and Publishing - 0.3%
Gannett Co., Inc. 16,830 $ 1,191,774
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Restaurants and Lodging - 1.0%
McDonald's Corp. 88,480 $ 3,749,340
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Stores - 0.3%
Rite Aid Corp. 42,980 $ 1,001,971
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Supermarkets - 0.7%
Albertsons, Inc. 51,650 $ 2,659,975
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Telecommunications - 1.3%
Bell Atlantic Corp. 44,500 $ 2,564,312
Sprint Corp. 20,490 2,101,506
------------
$ 4,665,818
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Utilities - Electric - 0.7%
Sierra Pacific Resources 78,180 $ 2,785,162
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Total U.S. Stocks $ 71,923,243
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Foreign Stocks - 36.6%
Australia - 1.7%
Australia & New Zealand Banking Group Ltd.
(Banks and Credit Cos.)* 167,200 $ 1,323,915
QBE Insurance Group Ltd. (Insurance)* 1,075,895 4,811,122
Seven Network Ltd. (Entertainment) 94,250 316,969
------------
$ 6,452,006
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Austria - 0.4%
Austria Tabak AG (Tobacco) 23,630 $ 1,447,154
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Bermuda - 0.4%
Dairy Farm International Holdings Ltd. (Supermarkets) 1,018,000 $ 1,506,640
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Canada - 1.3%
Canadian National Railway Co. (Railroads) 76,680 $ 4,840,425
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Finland - 0.3%
Helsingin Puhelin Oyj (Telecommunications) 26,020 $ 1,096,234
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France - 5.7%
Castorama Dubois Investisse (Stores - Building
Products) 10,100 $ 2,415,531
Pernod-Ricard (Beverages) 19,300 1,301,191
Pinault-Printemps-Redoute S.A. (Retail) 27,500 4,558,850
Sanofi S.A. (Medical and Health Products) 13,330 2,087,345
SEITA (Tobacco) 75,900 4,568,142
Total S.A., ADR (Oils) 20,800 1,414,400
TV Francaise (Entertainment) 16,810 3,283,692
Union des Assurances Federales S.A. (Insurance) 16,750 1,864,140
------------
$ 21,493,291
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Germany - 2.1%
Bayerische HypoVereinsbank (Banks and Credit Cos.) 36,600 $ 2,384,456
Mannesmann AG (Telecommunications) 40,880 5,378,385
------------
$ 7,762,841
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Greece - 0.4%
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 63,724 $ 1,479,067
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Ireland - 0.4%
Allied Irish Bank PLC (Banks and Credit Cos.) 84,792 $ 1,364,989
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Italy - 1.1%
ENI S.p.A, ADR (Oils) 20,450 $ 1,336,919
San Paolo Imi S.p.A (Banks and Credit Cos.)* 84,844 1,272,133
Telecom Italia Mobile S.p.A. (Telecommunications) 344,700 1,153,781
Unione Immobiliare S.p.A. (Real Estate)* 711,350 407,104
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$ 4,169,937
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Japan - 5.0%
Canon, Inc. (Special Products and Services) 136,000 $ 3,326,799
Fujitsu Ltd. (Computer Hardware - Systems) 98,000 1,678,897
NTT Mobile Communication Network, Inc.
(Telecommunications) 23 1,348,748
Olympus Optical Co. (Optical Goods) 148,000 1,820,089
Rohm Co. (Electronics) 19,000 2,292,033
Secom Co., Ltd. (Security Services) 17,000 1,660,551
Takeda Chemical Industries (Pharmaceuticals) 108,000 4,695,652
Terumo Corp. (Health Goods) 64,000 1,393,985
Ushio, Inc. (Electronics) 53,000 604,725
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$ 18,821,479
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Mexico - 0.1%
Panamerican Beverages, Inc. "A" 10,500 $ 232,969
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Netherlands - 5.3%
Akzo Nobel N.V. (Chemicals) 62,880 $ 2,838,387
Benckiser N.V., "B" (Consumer Goods and Services) 52,310 2,883,223
Hunter Douglas N.V., ADR (Consumer Goods and
Services)* 60,100 2,316,276
IHC Caland N.V. (Marine Equipment)* 36,568 1,656,462
ING Groep N.V. (Financial Services)* 20,949 1,289,599
Koninklijke Ahold N.V., ADR (Food/Retail) 65,193 2,452,886
Royal Dutch Petroleum Co., ADR (Oils) 26,110 1,532,331
Unilever N.V. (Food) 16,300 1,058,481
Wolters Kluwer (Publishing)* 84,852 3,691,325
------------
$ 19,718,970
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Portugal - 0.9%
Banco Pinto & Sotto Mayor S.A. (Banks and Credit Cos.) 111,790 $ 2,083,390
Electricidade de Portugal S.A. (Utilities - Electric) 59,900 1,125,822
------------
$ 3,209,212
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Singapore - 0.3%
Allgreen Properties Ltd. (Real Estate Development)* 84,000 $ 51,020
Asia Pulp & Paper Co. Ltd., ADR (Paper Products)* 111,300 1,168,650
------------
$ 1,219,670
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South Korea - 0.1%
Korea Electric Power Corp. (Utilities - Electric) 17,350 $ 499,470
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Spain - 1.2%
Banco Popular Espanol S.A. (Banks and Credit Cos.) 16,700 $ 1,181,447
Telefonica de Espana (Utilities - Telephone)* 75,030 3,513,594
------------
$ 4,695,041
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Sweden - 1.4%
Ericsson LM, "B" (Telecommunication Equipment) 48,100 $ 1,263,538
Saab AB, "B" (Aerospace) 270,500 2,197,492
Skandia Forsakrings AB (Insurance) 87,100 1,683,740
------------
$ 5,144,770
- --------------------------------------------------------------------------------------------------------
Switzerland - 1.7%
Clariant AG (Chemicals) 2,330 $ 1,191,581
Nestle S.A. (Food and Beverage Products) 1,390 2,572,758
UBS AG (Banks and Credit Cos.) 8,200 2,784,946
------------
$ 6,549,285
- --------------------------------------------------------------------------------------------------------
United Kingdom - 6.8%
Allied Zurich PLC (Insurance)* 70,885 $ 939,338
AstraZeneca Group PLC (Medical and Health Products) 28,463 1,110,570
Avis Europe PLC (Auto Rental)## 265,020 1,120,920
BP Amoco PLC, ADR (Oils) 54,777 6,200,072
British Aerospace PLC (Aerospace and Defense)* 330,839 2,474,058
Cable & Wireless Communications PLC
(Telecommunications) 107,300 1,223,450
Compass Group PLC (Food-Catering) 382,300 3,934,816
Lloyds TSB Group PLC (Banks and Credit Cos.) 144,865 2,334,379
Rentokil Initial PLC (Environmental Services) 160,100 939,132
Reuters Group PLC (Business Services) 140,250 1,900,260
Tomkins PLC (Conglomerate) 39,248 166,633
Williams PLC (Conglomerate) 428,064 2,960,175
------------
$ 25,303,803
- --------------------------------------------------------------------------------------------------------
Total Foreign Stocks $137,007,253
- --------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $165,062,334) $208,930,496
- --------------------------------------------------------------------------------------------------------
Bonds 35.7%
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ------------------------------------------------------------------------------------------------------
U.S. Bonds - 17.5%
U.S. Treasury Obligations - 17.5%
U.S. Treasury Notes, 4.75s, 2004 $ 6,800 $ 6,666,108
U.S. Treasury Notes, 5.375s, 2003 28,320 28,448,290
U.S. Treasury Notes, 5.625s, 2008 29,750 30,196,250
- ------------------------------------------------------------------------------------------------------
Total U.S. Bonds $ 65,310,648
- ------------------------------------------------------------------------------------------------------
Foreign Bonds - 18.2%
Australia - 2.0%
Commonwealth of Australia, 7.5s, 2005 AUD 9,950 $ 7,312,518
- ------------------------------------------------------------------------------------------------------
Canada - 0.7%
Government of Canada, 5.25s, 2008 $ 2,900 $ 2,770,225
- ------------------------------------------------------------------------------------------------------
Denmark - 1.7%
Kingdom of Denmark, 7s, 2007 DKK 37,932 $ 6,483,416
- ------------------------------------------------------------------------------------------------------
Germany - 3.9%
Germany Federal Republic, 6s, 2007 EUR 4,818 $ 5,840,163
Germany Federal Republic, 3.75s, 2009 8,478 8,866,880
------------
$ 14,707,043
- ------------------------------------------------------------------------------------------------------
Greece - 0.4%
Hellenic Republic, 8.6s, 2008 GRD 193,000 $ 738,042
Hellenic Republic, 8.9s, 2003 210,000 736,040
------------
$ 1,474,082
- ------------------------------------------------------------------------------------------------------
Italy - 1.2%
Republic of Italy, 6.75s, 2007 EUR 3,579 $ 4,504,699
- ------------------------------------------------------------------------------------------------------
New Zealand - 1.9%
Government of New Zealand, 7s, 2009 NZD 1,800 $ 1,099,446
Government of New Zealand, 8s, 2004 9,160 5,814,766
------------
$ 6,914,212
- ------------------------------------------------------------------------------------------------------
Sweden - 2.2%
Kingdom of Sweden, 6s, 2005 SEK 26,100 $ 3,467,412
Kingdom of Sweden, 9s, 2009 28,400 4,673,269
------------
$ 8,140,681
- ------------------------------------------------------------------------------------------------------
United Kingdom - 4.2%
United Kingdom Treasury, 6.5s, 2003 GBP 5,000 $ 8,595,832
United Kingdom Treasury, 6.75s, 2004 4,100 7,220,016
------------
$ 15,815,848
- ------------------------------------------------------------------------------------------------------
Total Foreign Bonds $ 68,122,724
- ------------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $137,102,646) $133,433,372
Preferred Stock 0.9%
- ------------------------------------------------------------------------------------------------------
SHARES
- ------------------------------------------------------------------------------------------------------
Foreign Preferred - 0.9%
Henkel KGaA (Germany - Chemicals)
(Identified Cost $2,452,209) 40,520 $ 3,204,603
Rights
- ------------------------------------------------------------------------------------------------------
Telefonica de Espana (Spain - Utilities - Telephone)*
(Identified Cost, $62,131) 75,030 $ 70,510
Short-Term Obligations - 6.6%
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ------------------------------------------------------------------------------------------------------
General Electric Capital Corp., due 5/03/99 $ $ 5,000 $ 4,998,628
Federal Farm Credit Bank Discount Notes, due 5/10/99 8,000 7,990,600
Student Loan Marketing Discount Note, due 5/03/99 11,830 11,826,845
- ------------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 24,816,073
- ------------------------------------------------------------------------------------------------------
Call Options Purchased - 0.1%
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER/EXPIRATION MONTH/STRIKE PRICE (000 OMITTED)
- ------------------------------------------------------------------------------------------------------
Japanese Government Bonds/
May/133.08 (Premiums Paid, $95,678) JPY 910,000 $ 175,337
- ------------------------------------------------------------------------------------------------------
Put Options Purchased
- ------------------------------------------------------------------------------------------------------
Deutsche Marks
November/0.997 (Premiums Paid, $48,124) DEM 437 $ 135,217
- ------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $329,639,195) $370,765,608
- ------------------------------------------------------------------------------------------------------
Put OptionsWritten
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER/EXPIRATION MONTH/STRIKE PRICE (000 OMITTED) VALUE
- ------------------------------------------------------------------------------------------------------
Japanese Government Bonds/
May/133.08 (Premiums Received, $(95,678)) JPY (910,000) $ (11,435)
- ------------------------------------------------------------------------------------------------------
Call Options Written
- ------------------------------------------------------------------------------------------------------
Australian Dollars
May/0.6245 (Premiums Received, $(15,908)) AUD (1,967) $ 0
- ------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 0.9% 3,464,924
- ------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $374,219,097
- ------------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
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
DEM = Deutsche Marks JPY = Japanese Yen
DKK = Danish Kroner NZD = New Zealand Dollars
EUR = Euro SEK = Swedish Krone
GBP = British Pounds
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- --------------------------------------------------------------------------------
APRIL 30, 1999
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $329,639,195) $370,765,608
Cash 43,775
Net receivable for forward foreign currency exchange
contracts closed or subject to master netting
agreements 444,182
Receivable for Fund shares sold 961,915
Receivable for investments sold 11,339,278
Interest and dividends receivable 3,200,105
Other assets 3,809
------------
Total assets $386,758,672
------------
Liabilities:
Payable for Fund shares reacquired $ 1,611,881
Payable for investments purchased 10,209,838
Net payable for forward foreign currency exchange
contracts to sell 417,216
Written options outstanding, at value
(premiums received, $111,586) 11,435
Payable to affiliates -
Management fee 8,018
Shareholder servicing agent fee 1,031
Distribution and service fee 115,105
Administrative fee 155
Accrued expenses and other liabilities 164,896
------------
Total liabilities $ 12,539,575
------------
Net assets $374,219,097
============
Net assets consist of:
Paid-in capital $308,787,229
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 41,247,212
Accumulated undistributed net realized gain on
investments and foreign currency transactions 27,045,207
Accumulated distributions in excess of net investment income (2,860,551)
------------
Total $374,219,097
============
Shares of beneficial interest outstanding 26,642,444
============
Class A shares:
Net asset value per share
(net assets of $187,736,766 / 13,350,269 shares of
beneficial interest outstanding) $14.06
======
Offering price per share (100 / 95.25 of net asset value
per share) $14.76
======
Class B shares:
Net asset value and offering price per share
(net assets of $132,283,553 / 9,426,837 shares of
beneficial interest outstanding) $14.03
======
Class C shares:
Net asset value and offering price per share
(net assets of $52,414,635 / 3,738,569 shares of
beneficial interest outstanding) $14.02
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $1,784,143 / 126,769 shares of
beneficial interest outstanding) $14.07
======
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 APRIL 30, 1999
- --------------------------------------------------------------------------------
Net investment income:
Income -
Interest $ 4,012,560
Dividends 1,334,400
Foreign taxes withheld (77,450)
------------
Total investment income $ 5,269,510
------------
Expenses -
Management fee $ 1,408,105
Trustees' compensation 19,812
Shareholder servicing agent fee 194,741
Distribution and service fee (Class A) 322,095
Distribution and service fee (Class B) 617,636
Distribution and service fee (Class C) 217,993
Administrative fee 18,173
Custodian fee 123,591
Postage 27,723
Printing 21,159
Auditing fees 19,000
Legal fees 1,401
Miscellaneous 142,142
------------
Total expenses $ 3,133,571
Fees paid indirectly (14,118)
------------
Net expenses $ 3,119,453
------------
Net investment income $ 2,150,057
------------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $ 23,520,789
Written option transactions 527,015
Foreign currency transactions 2,926,452
------------
Net realized gain on investments and foreign
currency transactions $ 26,974,256
------------
Change in unrealized appreciation (depreciation) -
Investments $(11,751,072)
Written options 39,850
Translation of assets and liabilities in foreign currencies (2,588,833)
------------
Net unrealized loss on investments and foreign
currency translation $(14,300,055)
------------
Net realized and unrealized gain on investments and
foreign currency $ 12,674,201
------------
Increase in net assets from operations $ 14,824,258
============
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
<CAPTION>
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets:
From operations -
Net investment income $ 2,150,057 $ 5,060,276
Net realized gain on investments and foreign currency
transactions 26,974,256 23,364,047
Net unrealized gain (loss) on investments and foreign
currency translation (14,300,055) 9,640,634
------------ ------------
Increase in net assets from operations $ 14,824,258 $ 38,064,957
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (1,261,155) $ (2,035,201)
From net investment income (Class B) (656,952) (655,779)
From net investment income (Class C) (217,832) (177,479)
From net investment income (Class I) (14,310) (28,271)
From net realized gain on investments and foreign
currency transactions (Class A) (11,777,309) (10,168,017)
From net realized gain on investments and foreign
currency transactions (Class B) (7,731,843) (6,502,653)
From net realized gain on investments and foreign
currency transactions (Class C) (2,441,077) (1,566,438)
From net realized gain on investments and foreign
currency transactions (Class I) (120,214) (113,097)
In excess of net investment income (Class A) (1,512,443) --
In excess of net investment income (Class B) (787,852) --
In excess of net investment income (Class C) (261,236) --
In excess of net investment income (Class I) (17,162) --
------------ ------------
Total distributions declared to shareholders $(26,799,385) $(21,246,935)
------------ ------------
Net increase in net assets from Fund share transactions $ 65,235,868 $ 30,717,782
------------ ------------
Total increase in net assets $ 53,260,741 $ 47,535,804
Net assets:
At beginning of period 320,958,356 273,422,552
------------ ------------
At end of period (including distributions in excess of net
investment income ($2,860,551) and ($281,666),
respectively) $374,219,097 $320,958,356
============ ============
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
<CAPTION>
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED ------------------------------------------------------------
APRIL 30, 1999 1998 1997 1996 1995
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $14.59 $13.84 $12.73 $11.57 $10.58
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.11 $ 0.28 $ 0.31 $ 0.34 $ 0.33
Net realized and unrealized gain on
investments and foreign currency
transactions 0.55 1.57 1.61 1.46 0.79
------ ------ ------ ------ ------
Total from investment operations $ 0.66 $ 1.85 $ 1.92 $ 1.80 $ 1.12
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.10) $(0.18) $(0.21) $(0.63) $(0.08)
From net realized gain on investments and
foreign currency transactions (0.96) (0.92) (0.60) (0.01) (0.05)
In excess of net investment income (0.13) -- -- -- --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.19) $(1.10) $(0.81) $(0.64) $(0.13)
------ ------ ------ ------ ------
Net asset value - end of period $14.06 $14.59 $13.84 $12.73 $11.57
====== ====== ====== ====== ======
Total return(+) 4.57%++ 14.29% 15.71% 16.06% 10.63%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.47%+ 1.51% 1.59% 1.63% 1.77%
Net investment income 1.52%+ 1.99% 2.35% 2.79% 3.06%
Portfolio turnover 53% 183% 143% 167% 160%
Net assets at end of period (000 omitted) $187,737 $174,576 $152,919 $129,843 $110,294
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without
reduction for this expense offset arrangement.
(+) 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.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED ---------------------------------------------------------------
APRIL 30, 1999 1998 1997 1996 1995
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $14.56 $13.82 $12.71 $11.52 $10.54
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.06 $ 0.19 $ 0.22 $ 0.25 $ 0.25
Net realized and unrealized gain on
investments and foreign currency
transactions 0.55 1.56 1.62 1.46 0.77
------ ------ ------ ------ ------
Total from investment operations $ 0.61 $ 1.75 $ 1.84 $ 1.71 $ 1.02
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.08) $(0.09) $(0.13) $(0.47) $(0.03)
From net realized gain on investments and
foreign currency transactions (0.96) (0.92) (0.60) (0.01) (0.01)
In excess of net investment income (0.10) -- -- (0.04) --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.14) $(1.01) $(0.73) $(0.52) $(0.04)
------ ------ ------ ------ ------
Net asset value - end of period $14.03 $14.56 $13.82 $12.71 $11.52
====== ====== ====== ====== ======
Total return 4.16%++ 13.57% 15.00% 15.29% 9.75%
Ratios (to average net assets)/Supplemental data:
Expenses## 2.13%+ 2.16% 2.25% 2.34% 2.49%
Net investment income 0.88%+ 1.33% 1.70% 2.07% 2.34%
Portfolio turnover 53% 183% 143% 167% 160%
Net assets at end of period (000 omitted) $132,284 $113,966 $96,931 $71,788 $57,214
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained
by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without reduction for
this expense offset arrangement.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED --------------------------------------------------------------
APRIL 30, 1999 1998 1997 1996 1995
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $14.56 $13.82 $12.72 $11.52 $10.53
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.06 $ 0.19 $ 0.23 $ 0.26 $ 0.27
Net realized and unrealized gain on
investments and foreign currency
transactions 0.55 1.56 1.61 1.46 0.76
------ ------ ------ ------ ------
Total from investment operations $ 0.61 $ 1.75 $ 1.84 $ 1.72 $ 1.03
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.09) $(0.09) $(0.14) $(0.51) $(0.03)
From net realized gain on investments and
foreign currency transactions (0.96) (0.92) (0.60) (0.01) (0.01)
In excess of net investment income (0.10) -- -- -- --
------ ------ ------ ------ ------
Total distributions declared to shareholders $(1.15) $(1.01) $(0.74) $(0.52) $(0.04)
------ ------ ------ ------ ------
Net asset value - end of period $14.02 $14.56 $13.82 $12.72 $11.52
====== ====== ====== ====== ======
Total return 4.23%++ 13.52% 14.97% 15.41% 9.84%
Ratios (to average net assets)/Supplemental data:
Expenses## 2.13%+ 2.16% 2.24% 2.27% 2.42%
Net investment income 0.91%+ 1.33% 1.71% 2.14% 2.41%
Portfolio turnover 53% 183% 143% 167% 160%
Net assets at end of period (000 omitted) $52,415 $30,580 $21,725 $14,248 $10,894
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained
by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without reduction for
this expense offset arrangement.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
<CAPTION>
Financial Highlights - continued
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED ----------------------------------
APRIL 30, 1999 1998 1997*
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------
CLASS I
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $14.60 $13.86 $12.51
------ ------ ------
Income from investment operations# -
Net investment income $ 0.13 $ 0.33 $ 0.30
Net realized and unrealized gain on investments and
foreign currency transactions 0.55 1.56 1.21
------ ------ ------
Total from investment operations $ 0.68 $ 1.89 $ 1.51
------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.11) $(0.23) $(0.16)
From net realized gain on investments and foreign
currency transactions (0.96) (0.92) --
In excess of net investment income (0.14) -- --
------ ------ ------
Total distributions declared to shareholders $(1.21) $(1.15) $(0.16)
------ ------ ------
Net asset value - end of period $14.07 $14.60 $13.86
====== ====== ======
Total return 4.67%++ 14.78% 12.08%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.12%+ 1.16% 1.24%+
Net investment income 1.86%+ 2.33% 2.72%+
Portfolio turnover 53% 183% 143%
Net assets at end of period (000 omitted) $1,784 $1,837 $1,848
* 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.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained
by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without reduction for
this expense offset arrangement.
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Global Total Return Fund (the Fund) is a non-diversified series of MFS
Series Trust VI (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. 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. 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. Non-U.S. dollar denominated short-term obligations
are valued at amortized cost as calculated in the foreign currency and
translated into U.S. dollars at the closing daily exchange rate. 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 at fair value as determined in good faith by or at the direction of 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.
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 options 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.
Security Loans - The Fund may lend its securities to member banks of the Federal
Reserve System and to member firms of the New York Stock Exchange or
subsidiaries thereof. State Street Bank and Trust Company ("State Street"), as
agent, loans the securities to certain brokers (the "Borrowers") approved by the
Fund. The loans are collateralized at all times by 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.
At April 30, 1999, the value of securities loaned was $1,995,344. These loans
were collateralized by U.S. Treasury securities of $2,050,385. On loans
collateralized by U.S. Treasury securities, a fee is received from the
Borrower, and is allocated between the Fund and State Street. Income from
securities lending is included in interest income on the Statement of
Operations. The dividend and interest income earned on the securities loaned
is accounted for in the same manner as other dividend and interest income.
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.
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. 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 calculated as a percentage of
the Fund's month end net assets. The 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 taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
The Fund files a tax return annually using tax accounting methods required
under provisions of the Code, which may differ from generally accepted
accounting principles, the basis on which these financial statements are
prepared. Accordingly, the amount of net investment income and net realized
gain reported on these financial statements may differ from that reported on
the Fund's tax return and, consequently, the character of distributions to
shareholders reported in the financial highlights may differ from that
reported to shareholders on Form 1099-DIV.
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 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.
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 average
daily net assets of each class, without distinction between share classes.
Dividends are declared separately for each class. No class has preferential
dividend rights; 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 0.65%
of the Fund's average daily net assets and 5.00% of investment income.
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 and Mr. Bailey.
Included in Trustees' compensation is a net periodic pension expense of $5,716
for the six months ended April 30, 1999.
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 pays MFS an administrative fee
at the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$49,075 for the six months ended April 30, 1999, 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 $25,509
for the six months ended April 30, 1999. Fees incurred under the distribution
plan during the six months ended April 30, 1999, were 0.35% 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 $13,871 and $10,672 for
Class B and Class C shares, respectively, for the six months ended April 30,
1999. Fees incurred under the distribution plan during the six months ended
April 30, 1999, were 1.00 % of each class' 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 six months ended April 30,
1999, were $2,127, $85,556, and $8,174 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 effective annual
rate of 0.10%. Prior to April 1, 1999, the fee was calculated as a percentage
of the Fund's average daily net assets at an effective annual rate of 0.1125%.
(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 $ 26,490,376 $ 20,956,892
------------ ------------
Investments (non-U.S. government
securities) $177,515,266 $154,162,583
------------ ------------
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 $329,681,422
------------
Gross unrealized appreciation $ 48,921,350
Gross unrealized depreciation (7,837,164)
------------
Net unrealized appreciation $ 41,084,186
============
(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 APRIL 30, 1999 YEAR ENDED OCTOBER 31, 1998
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 6,447,254 $ 91,135,764 4,562,531 $ 64,549,008
Shares issued to shareholders in
reinvestment of distributions 969,274 13,443,849 851,079 11,252,564
Shares reacquired (6,030,613) (85,063,358) (4,495,909) (63,669,790)
---------- ------------ ---------- ------------
Net increase 1,385,915 $ 19,516,255 917,701 $ 12,131,782
========== ============ ========== ============
Class B Shares
SIX MONTHS ENDED APRIL 30, 1999 YEAR ENDED OCTOBER 31, 1998
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
Shares sold 1,947,438 $ 27,491,647 2,053,125 $ 29,003,679
Shares issued to shareholders in
reinvestment of distributions 556,569 7,725,166 473,256 6,245,341
Shares reacquired (902,360) (12,707,973) (1,715,969) (23,999,209)
---------- ------------ ---------- ------------
Net increase 1,601,647 $ 22,508,840 810,412 $ 11,249,811
========== ============ ========== ============
Class C Shares
SIX MONTHS ENDED APRIL 30, 1999 YEAR ENDED OCTOBER 31, 1998
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
Shares sold 1,880,810 $ 26,625,511 822,996 $ 11,685,593
Shares issued to shareholders in
reinvestment of distributions 147,842 2,049,089 106,700 1,409,153
Shares reacquired (390,236) (5,476,254) (401,733) (5,642,659)
---------- ------------ ---------- ------------
Net increase 1,638,416 $ 23,198,346 527,963 $ 7,452,087
========== ============ ========== ============
Class I Shares
SIX MONTHS ENDED APRIL 30, 1999 YEAR ENDED OCTOBER 31, 1998
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
Shares sold 6,337 $ 88,173 6,889 $ 96,595
Shares issued to shareholders in
reinvestment of distributions 10,936 151,681 10,688 141,367
Shares reacquired (16,267) (227,427) (25,193) (353,860)
---------- ------------ ---------- ------------
Net increase (decrease) 1,006 $ 12,427 (7,616) $ (115,898)
========== ============ ========== ============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $720 million unsecured line
of credit provided by a syndication of banks under a line of credit agreement.
Borrowings may be made to temporarily finance the repurchase of Fund shares.
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 April 30, 1999, was $1,335. The Fund had no significant 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 and forward foreign currency
exchange 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.
<PAGE>
<TABLE>
Written Option Transactions
<CAPTION>
1999 CALLS 1999 PUTS
------------------------------- -------------------------------
PRINCIPAL AMOUNTS PRINCIPAL AMOUNTS
OF CONTRACTS OF CONTRACTS
(000 OMITTED) PREMIUMS (000 OMITTED) PREMIUMS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OUTSTANDING, BEGINNING OF PERIOD -
Australian Dollars 5,211 $ 98,024 -- $ --
Canadian Dollars 5,264 44,753 -- --
Deutsche Marks/British
Pounds 10,946 52,539 11,647 52,538
Japanese Yen 236,735 44,974 -- --
Options written -
Australian Dollars 3,876 22,366 4,158 34,177
Deutsche Marks/British
Pounds -- -- 26 9,901
Japanese Government Bonds -- -- 1,590,000 163,456
Japanese Yen 782,210 42,185 872,300 67,210
Swedish Krona/British
Pounds 58,094 84,223 -- --
Options terminated in closing transactions -
Australian Dollars (5,211) (98,024) (4,158) (34,177)
Deutsche Marks/British
Pounds (10,946) (52,539) -- --
Japanese Government Bonds -- -- (680,000) (67,778)
Japanese Yen (236,735) (44,974) -- --
Options exercised -
Deutsche Marks/British
Pounds -- -- (26) (9,901)
Options expired -
Australian Dollars (1,909) (6,458) -- --
Canadian Dollars (5,264) (44,753) -- --
Deutsche Marks/British
Pounds -- -- (11,647) (52,538)
Japanese Yen (782,210) (42,185) (872,300) (67,210)
Swedish Krona/British
Pounds (58,094) (84,223) -- --
--------- ---------
OUTSTANDING, END OF PERIOD $ 15,908 $ 95,678
========= =========
OPTIONS OUTSTANDING AT END
OF PERIOD CONSIST OF:
Australian Dollars 1,967 $ 15,908 -- $ --
Japanese Government Bonds -- -- 910,000 95,678
--------- ---------
OUTSTANDING, END OF PERIOD $ 15,908 $ 95,678
========= =========
</TABLE>
<TABLE>
Forward Foreign Currency Exchange Contracts
<CAPTION>
NET UNREALIZED
CONTRACTS TO IN EXCHANGE CONTRACTS AT APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE FOR VALUE (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 06/16/99 AUD 11,665,790 $ 7,413,563 $ 7,717,479 $(303,916)
06/16/99 DKK 46,483,827 6,832,742 6,622,933 209,809
06/16/99 NZD 13,012,183 6,961,518 7,284,627 (323,109)
----------- ----------- ---------
$21,207,823 $21,625,039 $(417,216)
=========== =========== =========
</TABLE>
Forward foreign currency purchases and sales under master netting agreements
excluded above amounted to a net payable of $115,140 with Deutsche Bank and a
net receivable of $301,921 with C.S. First Boston and $257,401 with Merrill
Lynch at April 30, 1999.
At April 30, 1999, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
<PAGE>
<TABLE>
MFS(R) GLOBAL TOTAL RETURN FUND
<S> <C>
TRUSTEES SECRETARY
Richard B. Bailey* - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991),
MFS Investment Management ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Marshall N. Cohan - Private Investor
CUSTODIAN
Lawrence H. Cohn, M.D. - Chief of Cardiac State Street Bank and Trust Company
Surgery, Brigham and Women's Hospital;
Professor of Surgery, Harvard Medical School Investor Information For MFS stock and bond
market outlooks, call toll free: 1-800-637-4458
The Hon. Sir J. David Gibbons, KBE - Chief anytime from a touch-tone telephone.
Executive Officer, Edmund Gibbons Ltd.;
Chairman, Colonial Insurance Company, Ltd. For information on MFS mutual funds, call your
financial adviser or, for an information kit,
Abby M. O'Neill - Private Investor call toll free: 1-800-637-2929 any business day
from 9 a.m. to 5 p.m. Eastern time (or leave a
Walter E. Robb, III - President and Treasurer, message anytime).
Benchmark Advisors, Inc. (corporate financial
consultants); President, Benchmark Consulting INVESTOR SERVICE
Group, Inc. (office services) MFS Service Center, Inc.
P.O. Box 2281
Arnold D. Scott* - Senior Executive Boston, MA 02107-9906
Vice President, Director, and Secretary,
MFS Investment Management For general information, call toll free:
1-800-225-2606 any business day from 8 a.m. to
Jeffrey L. Shames* - Chairman, Chief 8 p.m. Eastern time.
Executive Officer, and Director,
MFS Investment Management For service to speech- or hearing-impaired,
call toll free: 1-800-637-6576 any business day
J. Dale Sherratt - President, Insight from 9 a.m. to 5 p.m. Eastern time. (To use
Resources, Inc. (acquisition planning this service, your phone must be equipped with
specialists) a Telecommunications Device for the Deaf.) For
share prices, account balances, and exchanges,
Ward Smith - Former Chairman (until 1994), call toll free: 1-800-MFS-TALK (1-800-637-8255)
NACCO Industries (holding company) anytime from a touch-tone telephone.
INVESTMENT ADVISER WORLD WIDE WEB
Massachusetts Financial Services Company www.mfs.com
500 Boylston Street
Boston, MA 02116-3741
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGER
Frederick J. Simmons*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
MFS(R) GLOBAL TOTAL RETURN 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)1999 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MWT-3 6/99 39M 24/224/324/824
