<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[Graphic Omitted]
MFS(R) GLOBAL
EQUITY FUND
ANNUAL REPORT o OCTOBER 31, 2000
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MUTUAL FUND GIFT KITS (see page 35)
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<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 5
Performance Summary ....................................................... 10
Portfolio of Investments .................................................. 14
Financial Statements ...................................................... 19
Notes to Financial Statements ............................................. 27
Independent Auditors' Report .............................................. 33
Trustees and Officers ..................................................... 37
MFS ORIGINAL RESEARCH(R)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
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
[Photo of David R. Mannheim]
David R. Mannheim
For the 12 months ended October 31, 2000, Class A shares of the fund provided
a total return of 10.39%, Class B shares 9.60%, Class C shares 9.62%, Class I
shares 10.73% and Class J shares 9.55%. These returns, which assume the
reinvestment of any distributions but exclude the effects of any sales
charges, compare to a 1.39% return over the same period for the fund's
benchmark, the Morgan Stanley Capital International (MSCI) World Index. The
MSCI World Index is a broad, unmanaged index of global equities. During the
same period, the average global fund tracked by Lipper Inc., an independent
firm that reports mutual fund performance, returned 10.26%.
Q. WHAT DROVE PERFORMANCE OVER THE PAST 12 MONTHS?
A. In the fourth quarter of 1999 and into the first quarter of this year, we
witnessed a powerful market rally in Asia, Europe, and the United States
driven largely by technology and telecommunications stocks. But beginning
in March, a dramatic correction in those sectors dragged down the overall
market. The strongest sectors since last spring have been areas outside of
technology characterized by slower growth but steadier earnings, such as
financial services and health care. The fund's strategy of diversification
across market sectors served us well in this environment, as performance
early in the period was driven by our technology and telecommunications
holdings, while performance since the spring correction has been aided by
our holdings in insurance, health care, and energy companies.
What happened in the insurance, health care, and energy areas prior to March
was that valuations, or stock prices in relation to projected earnings, had
gone down -- not necessarily because these companies were having fundamental
problems, but because investors became enamored of technology firms that were
seen as having more exciting growth prospects. Our research identified this
as an opportunity to build positions in several of these less glamorous
companies at attractive prices.
In the insurance area, we believed that property and casualty insurers were
poised for a cyclical upturn due to price increases after a couple of very
difficult years and that life insurers were going to benefit from premium
increases and strong sales of annuity products. When the market rotated away
from technology, our holdings in companies such as Hartford Financial
Services and QBE Insurance appreciated sharply. We also profited from our
position in ReliaStar, an American life insurance company that was bought out
by ING Groep, a Dutch financial services firm.
In the health care area, we noticed about a year ago that companies that had
solid fundamental growth and that historically had traded at valuations 20%
to 30% higher than the market average were trading at discounts to the
market. Our research indicated that some of these companies could continue to
grow earnings steadily, not at the torrid pace expected of technology
companies, but perhaps more reliably. We used the opportunity to build
positions in companies such as Sanofi-Synthelabo, a global pharmaceutical
firm headquartered in Paris. CIGNA, a U.S. health maintenance organization
(HMO) that we believe is better managed than many other HMOs, was another
health care holding that delivered solid performance as investors fled the
technology sector in search of safer havens.
In 1999, when energy stocks were out of favor due to low oil and gas prices,
MFS analysts identified several exploration and production companies as
undervalued opportunities. We were already building our positions in these
firms when oil and gas prices started to rally about a year ago. Holdings
such as Anderson Exploration in Canada and EOG Resources in Texas have been
huge performers from March through the end of the period. Recently, however,
we have reduced our exposure to some parts of the energy sector as stocks in
those areas have reached what we consider to be full valuations.
The decline over the period of the euro, in relation to the dollar had a
negative impact on fund performance. Since our results must always be
converted back into dollars, any profits we make on European equities are
decreased if the euro declines versus the dollar. The good news, however, is
that a falling euro may be a positive factor for overseas firms competing
against dollar-based companies. In the United States, for example, a weak
euro makes European goods cheaper and more competitive, which may ultimately
benefit stock prices of European companies.
Q. WHAT DO YOU BELIEVE WILL BE STRONG AREAS FOR THE FUND GOING FORWARD?
A. We see health care as continuing to have solid long-term growth prospects,
with projected earnings growth in the mid-teens for our holdings in the
sector. Although valuations for these companies have risen as the market
has recognized their potential, we're still comfortable with our positions.
If these stocks were to rise to levels we considered overvalued, however,
we would decrease our holdings.
Insurance is another area that we think continues to offer growth potential,
for the reasons stated earlier. When we received cash for our ReliaStar
shares in the buyout by ING Groep, we reinvested the money into other
insurance companies, including St. Paul Companies and MetLife.
In financial services, although banks in general have not been good
performers, we believe one attractive area are banking firms involved in the
ongoing Asian economic recovery. We've increased our positions in HSBC
Holdings, a global banking franchise that does a large part of its business
in Hong Kong and other parts of Asia; Standard Chartered, a
U.K.-headquartered emerging market bank with most of its business in Asia;
and Overseas Chinese Bank and Overseas Union Bank, both headquartered in
Singapore.
Finally, we should note that despite the correction in technology, we're
still bullish on several areas of the sector. In fact, the correction offered
us bargain prices on what we feel are still fundamentally strong companies
with great long-term prospects. We added to our positions in companies we
view as industry leaders, such as optical infrastructure supplier Corning and
French telecommunications equipment supplier Alcatel. And although
performance of telecommunications stocks was poor in the second half of the
period, we're still quite confident in the long-term growth prospects of
cellular operators Vodafone and NTT DoCoMo, our two largest holdings as of
October 31, 2000.
Q. HOW DO YOU USE MFS ORIGINAL RESEARCH(R) TO UNCOVER NEW OPPORTUNITIES?
A. ProSieben, a German television broadcaster, offers a good example. The
German television market had been lagging that of other European countries
in terms of advertising growth, a major driver of TV station profits. For
that reason, the stock of ProSieben was depressed. But our European media
analysts believed that two things were about to happen. First, we expected
consolidation in German broadcasting that would give ProSieben more power
to raise advertising rates. Second, we felt advertising growth in Germany
was about to accelerate as it had in much of the rest of Europe. Our
outlook led us to accumulate a large position in ProSieben when it had one
of the lowest valuations of any European broadcaster. Subsequently,
consolidation began to happen and the stock price rose significantly in
2000. We believe ProSieben has room for further appreciation if our
expectations about advertising growth in the German market prove correct.
Q. IS THIS A GOOD TIME TO BE INVESTED GLOBALLY?
A. Yes, we believe it is, for several reasons. First, although indications have
been that earnings growth in the U.S. may be slowing from the torrid pace of
the past several years, we still expect that growth will continue at a very
good rate by historical standards. Second, the trends that have driven the
U.S. economic boom -- restructuring, consolidation, implementation of new
technology, increased productivity -- appear to be spreading around the
world. Third, we have found significant valuation opportunities in Europe and
Asia, where stocks of strong companies have sold for lower valuations than
what we felt were equally good companies in the United States. And finally,
we have seen increasing growth in other regions that may serve to
counterbalance slowing growth in the United States. Our projections of
European growth have increased over those of last year; Japan has moved from
negative to positive growth; and in the rest of Asia, recovery from the
financial crisis of 1998 appears to us to be accelerating.
/s/ David R. Mannheim
David R. Mannheim
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.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
--------------------------------------------------------------------------------
DAVID R. MANNHEIM IS SENIOR VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R) AND DIRECTOR OF INTERNATIONAL EQUITY PORTFOLIO MANAGEMENT.
HE IS PORTFOLIO MANAGER OF THE GLOBAL EQUITY AND INTERNATIONAL GROWTH
PORTFOLIOS OF OUR MUTUAL FUNDS, VARIABLE ANNUITIES, INSTITUTIONAL
ACCOUNTS, AND OFFSHORE FUNDS.
DAVID JOINED MFS IN 1988 AND WAS NAMED VICE PRESIDENT AND PORTFOLIO
MANAGER IN 1992, SENIOR VICE PRESIDENT IN 1997, AND DIRECTOR OF
INTERNATIONAL PORTFOLIO MANAGEMENT IN 1999. HE IS A GRADUATE OF AMHERST
COLLEGE AND THE MIT 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 GLOBAL, 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.
COMMENCEMENT OF
INVESTMENT OPERATIONS: DECEMBER 29, 1986
CLASS INCEPTION: CLASS A SEPTEMBER 7, 1993
CLASS B DECEMBER 29, 1986
CLASS C JANUARY 3, 1994
CLASS I JANUARY 2, 1997
CLASS J JULY 7, 1999
SIZE: $831.9 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 any applicable contingent deferred sales charges 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 10-year period ended October 31, 2000)
MFS Global MSCI
Equity Fund World
- Class B Index
-------------------------------------
10/90 $10,000 $10,000
10/92 10,399 11,117
10/94 14,126 15,361
10/96 17,834 19,748
10/98 22,796 26,768
10/00 28,706 33,988
<PAGE>
<TABLE>
PERFORMANCE SUMMARY -- continued
TOTAL RATES OF RETURN THROUGH OCTOBER 31, 2000
CLASS A
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +10.39% +37.39% +93.72% +205.20%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +10.39% +11.17% +14.14% + 11.80%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge + 4.04% + 9.00% +12.80% + 11.14%
-------------------------------------------------------------------------------------------------------
CLASS B
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge + 9.60% +34.43% +86.32% +187.06%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge + 9.60% +10.37% +13.25% + 11.12%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge + 5.60% + 9.54% +13.01% + 11.12%
-------------------------------------------------------------------------------------------------------
CLASS C
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge + 9.62% +34.29% +86.44% +187.76%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge + 9.62% +10.33% +13.27% + 11.15%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge + 8.62% +10.33% +13.27% + 11.15%
-------------------------------------------------------------------------------------------------------
CLASS I
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +10.73% +38.46% +93.76% +198.52%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +10.73% +11.46% +14.14% + 11.56%
-------------------------------------------------------------------------------------------------------
CLASS J
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge + 9.55% +34.80% +86.84% +187.86%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge + 9.55% +10.47% +13.32% + 11.15%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge + 6.27% + 9.35% +12.63% + 10.81%
-------------------------------------------------------------------------------------------------------
COMPARATIVE INDICES(+)
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average global fund* +10.27% +13.50% +14.81% + 12.49%
-------------------------------------------------------------------------------------------------------
MSCI World Index+ + 1.39% +13.68% +14.99% + 13.01%
-------------------------------------------------------------------------------------------------------
(+) Average Annual Rates of Return.
* Source: Lipper Inc.
+ Source: Standard & Poor's Micropal, Inc.
</TABLE>
<PAGE>
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 J Share Performance Including Sales Charge
takes into account the deduction of the maximum 3.00% sales charge. Class J
shares are only available to certain
Japanese investors.
Class A, C, I, and J share performance includes the performance of the fund's
Class B shares for periods prior to their inception (blended performance).
Class A and J blended performance has been adjusted to take into account the
initial sales charge applicable to Class A and J shares rather than the CDSC
applicable to Class B shares. Class C blended performance has been adjusted to
take into account the lower CDSC applicable to Class C shares. Class I blended
performance has been adjusted to account for the fact that Class I shares have
no sales charge. These blended performance figures have not been adjusted to
take into account differences in class-specific operating expenses. Because
operating expenses for Class A, I, and J shares are lower than those of Class
B shares, the blended Class A, I, and J share performance is lower than it
would have been had Class A, I, and J shares been offered for the entire
period. 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.
All performance results reflect any applicable expense subsidies and waivers
in effect during the periods shown; 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.
<PAGE>
PORTFOLIO CONCENTRATION AS OF OCTOBER 31, 2000
FIVE LARGEST STOCK SECTORS
UTILITIES & COMMUNICATIONS 15.7%
FINANCIAL SERVICES 15.1%
TECHNOLOGY 13.5%
HEALTH CARE 12.8%
LEISURE 9.8%
<TABLE>
TOP 10 STOCK HOLDINGS
<S> <C>
VODAFONE AIRTOUCH PLC 2.8%
U.K. telecommunications company CHUGAI PHARMACEUTICAL CO. LTD 1.8%
Japanese pharmaceutical manufacturer
NTT DOCOMO, INC. 2.4%
Japanese telecommunications company NOVARTIS AG 1.8%
Swiss pharmaceutical firm
AKZO NOBEL N.V. 2.2%
Diversified Dutch pharmaceutical and chemical BOEING CO. 1.7%
company U.S. aerospace firm
PROSIEBEN SAT.1, MEDIA AG 2.2% FAST RETAILING CO. 1.7%
German broadcasting and multimedia company Japanese clothing retailer
CANON, INC. 1.8% METLIFE, INC. 1.7%
Japanese office equipment and imaging company U.S. insurance and financial services firm
The portfolio is actively managed, and current holdings may be different.
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS -- October 31, 2000
Stocks - 94.5%
------------------------------------------------------------------------------------------------------
<CAPTION>
ISSUER SHARES VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Stocks - 57.0%
Australia - 1.5%
QBE Insurance Group Ltd. (Insurance)* 2,717,995 $ 12,532,922
------------------------------------------------------------------------------------------------------
Bermuda - 0.2%
FLAG Telecom Holdings Ltd. (Telecommunications)* 158,630 $ 1,844,074
------------------------------------------------------------------------------------------------------
Brazil - 0.6%
Empresa Brasileira de Aeronautica S.A., ADR
(Aerospace and Defense) 161,190 $ 4,664,436
------------------------------------------------------------------------------------------------------
Canada - 2.9%
Anderson Exploration Ltd. (Oils)* 150,600 $ 2,761,493
AT&T Canada, Inc. (Telecommunications)* 100,970 3,123,759
BCE, Inc. (Telecommunications) 312,399 8,387,923
Canadian National Railway Co. (Railroads) 223,104 7,027,776
Nortel Networks Corp. (Telecommunications) 64,462 2,917,043
------------
$ 24,217,994
------------------------------------------------------------------------------------------------------
Finland - 1.0%
Elisa Communications Oyj (Telecommunications) 290,133 $ 8,050,018
------------------------------------------------------------------------------------------------------
France - 7.8%
Alcatel Co. (Telecommunications)* 137,660 $ 8,398,247
Aventis S.A. (Pharmaceuticals) 76,350 5,506,555
Banque Nationale de Paris (Banks and Credit Cos.) 85,740 7,391,442
Bouygues (Construction)* 159,550 8,122,693
Sanofi-Synthelabo S.A. (Medical and Health Products) 242,560 12,760,358
Technip S.A. (Construction) 58,940 7,541,599
Total Fina Elf S.A., "B" (Oils) 62,480 8,938,211
Vivendi S.A. (Business Services) 89,350 6,421,403
------------
$ 65,080,508
------------------------------------------------------------------------------------------------------
Germany - 2.1%
ProSieben Sat.1 Media AG, Preferred (Media)* 557,420 $ 17,547,225
------------------------------------------------------------------------------------------------------
Greece - 0.3%
Antenna TV S.A., ADR (Broadcasting)* 108,000 $ 2,133,000
------------------------------------------------------------------------------------------------------
Israel - 0.1%
Partner Communications Co. Ltd., ADR
(Cellular Telephones)* 178,200 $ 1,069,200
------------------------------------------------------------------------------------------------------
Japan - 13.6%
Canon, Inc. (Special Products and Services) 352,000 $ 13,970,303
Chugai Pharmaceutical Co. Ltd. (Pharmaceuticals) 844,000 14,327,113
Fast Retailing Co. (Retail) 55,200 13,584,968
Fuji Heavy Industries Ltd. (Automotive) 655,000 4,562,786
Fujitsu Ltd. (Computer Hardware - Systems) 170,000 3,029,148
Hitachi Ltd. (Electronics) 528,000 5,662,328
Mikuni Coca-Cola Bottling Co. Ltd. (Food and
Beverage Products) 148,000 1,626,508
Murata Manufacturing Co. Ltd. (Electronics) 44,000 5,267,094
NTT DoCoMo (Telecommunications) 754 18,590,834
Shionogi & Co., Ltd. (Pharmaceuticals) 355,000 6,930,798
Sky Perfect Communications (Broadcasting)* 286 526,911
Sony Corp. (Electronics) 95,600 7,640,990
Sumitomo Electric Industries (Wire & Cable Products) 345,000 6,371,907
Tokyo Broadcasting System, Inc. (Entertainment) 286,000 11,193,584
------------
$113,285,272
------------------------------------------------------------------------------------------------------
Mexico - 0.9%
Grupo Television S.A. de C.V., GDR (Entertainment)* 134,760 $ 7,293,885
------------------------------------------------------------------------------------------------------
Netherlands - 6.1%
Akzo Nobel N.V. (Chemicals) 376,000 $ 17,116,287
ING Groep N.V. (Financial Services)* 105,492 7,243,149
KPN N.V. (Telecommunications)* 228,155 4,620,983
Libertel N.V. (Cellular Telecommunications)* 295,277 3,845,829
Philips Electronics N.V. (Electronics)* 223,194 8,770,196
Royal Dutch Petroleum Co. (Oils) 156,420 9,275,969
------------
$ 50,872,413
------------------------------------------------------------------------------------------------------
Norway - 0.3%
Schibsted ASA (Publishing) 181,530 $ 2,759,945
------------------------------------------------------------------------------------------------------
Portugal - 0.4%
Telecel - Comunicacoes Pessoais, S.A
(Cellular Phones)* 306,380 $ 3,358,729
------------------------------------------------------------------------------------------------------
Singapore - 2.4%
Overseas Union Bank Ltd. (Banks and Credit Cos.) 2,259,332 $ 10,937,648
Overseas-Chinese Banking Corp. Ltd. (Banks and
Credit Cos.) 809,000 5,160,497
Singapore Press Holdings Ltd. (Printing and
Publishing) 256,000 3,659,642
------------
$ 19,757,787
------------------------------------------------------------------------------------------------------
Spain - 0.5%
Repsol S.A. (Oils) 278,780 $ 4,428,121
------------------------------------------------------------------------------------------------------
Sweden - 1.4%
NetCom AB (Telecommunications)* 12,230 $ 574,316
Saab AB, "B" (Aerospace) 1,643,859 11,192,456
------------
$ 11,766,772
------------------------------------------------------------------------------------------------------
Switzerland - 2.0%
Novartis AG (Medical and Health Products) 9,100 $ 13,808,747
Synthes-Stratec, Inc. (Medical and Health Products)* 4,258 2,720,862
------------
$ 16,529,609
------------------------------------------------------------------------------------------------------
United Kingdom - 12.9%
AstraZeneca Group PLC (Medical and Health Products) 203,384 $ 9,611,932
BP Amoco PLC (Oils)* 909,590 7,712,729
BP Amoco PLC, ADR (Oils) 11,020 561,331
Capital Radio PLC (Broadcasting) 147,480 3,187,845
Carlton Communications PLC (Broadcasting)* 619,390 4,986,950
CGNU PLC (Insurance)* 430,973 5,764,463
Diageo PLC (Food and Beverage Products)* 1,220,964 11,522,004
HSBC Holdings PLC (Banks and Credit Cos.)* 621,297 8,850,924
NDS Group PLC, ADR (Internet)* 9,840 738,000
Next PLC (Retail) 644,640 6,410,658
Reckitt Benckiser PLC (Consumer Goods and Services) 529,430 6,958,484
Royal Bank of Scotland PLC (Banks and Credit Cos.)* 467,484 10,491,436
Standard Chartered PLC (Banks and Credit Cos.)* 597,318 8,613,305
Vodafone Airtouch PLC (Telecommunications)* 5,237,535 21,787,541
------------
$107,197,602
------------------------------------------------------------------------------------------------------
Total Foreign Stocks $474,389,512
------------------------------------------------------------------------------------------------------
U.S. Stocks - 37.5%
Business Machines - 2.0%
Hewlett-Packard Co. 122,680 $ 5,696,952
International Business Machines Corp. 112,230 11,054,655
------------
$ 16,751,607
------------------------------------------------------------------------------------------------------
Business Services - 0.9%
Fedex Corp.* 130,400 6,110,544
United Parcel Service, Inc. 17,640 1,071,630
------------
$ 7,182,174
------------------------------------------------------------------------------------------------------
Computer Services - 1.2%
Computer Sciences Corp.* 162,590 $ 10,243,170
------------------------------------------------------------------------------------------------------
Computer Software - Personal Computers - 1.6%
Compaq Computer Corp. 444,750 $ 13,524,848
------------------------------------------------------------------------------------------------------
Computer Software - Systems - 1.0%
Computer Associates International, Inc. 251,040 $ 8,001,900
------------------------------------------------------------------------------------------------------
Consumer Products - 2.8%
BJ's Wholesale Club, Inc.* 313,900 $ 10,339,081
CVS Corp. 241,900 12,805,581
------------
$ 23,144,662
------------------------------------------------------------------------------------------------------
Entertainment - 2.0%
Disney (Walt) Co. 275,370 $ 9,861,688
Time Warner, Inc. 90,880 6,898,701
------------
$ 16,760,389
------------------------------------------------------------------------------------------------------
Food and Beverage Products - 1.0%
Keebler Foods Co. 203,300 $ 8,233,650
------------------------------------------------------------------------------------------------------
Insurance - 6.2%
CIGNA Corp. 80,010 $ 9,757,220
Hartford Financial Services Group, Inc. 118,650 8,832,009
Marsh & McLennan Cos., Inc. 57,050 7,459,288
MetLife, Inc.* 492,290 13,599,511
St. Paul Cos., Inc. 232,800 11,931,000
------------
$ 51,579,028
------------------------------------------------------------------------------------------------------
Machinery - 1.8%
Deere & Co., Inc. 232,930 $ 8,574,736
Ingersoll Rand Co. 163,890 6,186,847
------------
$ 14,761,583
------------------------------------------------------------------------------------------------------
Oils - 4.4%
Apache Corp. 66,800 $ 3,694,875
Coastal Corp. 52,700 3,975,556
Conoco, Inc., "A" 428,830 11,069,175
EOG Resources, Inc. 200,600 7,898,625
Halliburton Co. 131,490 4,873,348
Santa Fe International Corp. 140,940 5,144,310
------------
$ 36,655,889
------------------------------------------------------------------------------------------------------
Pharmaceuticals - 3.1%
American Home Products Corp. 171,460 $ 10,887,710
Pfizer, Inc. 198,970 8,593,017
Pharmacia Corp. 107,490 5,911,950
------------
$ 25,392,677
------------------------------------------------------------------------------------------------------
Supermarkets - 1.3%
Safeway, Inc.* 189,330 $ 10,353,984
------------------------------------------------------------------------------------------------------
Telecommunications - 4.3%
Corning, Inc. 73,740 $ 5,641,110
NTL, Inc.* 199,922 8,784,073
Tellabs, Inc.* 126,700 6,327,081
Time Warner Telecom, Inc.* 62,740 3,740,873
Verizon Communications 199,172 11,514,631
------------
$ 36,007,768
------------------------------------------------------------------------------------------------------
Telecom - Wire Less - 2.3%
BroadWing, Inc.* 132,220 $ 3,735,215
Sprint Corp. (PCS Group)* 341,030 13,001,769
Voicestream Wireless Corp.* 18,500 2,432,750
------------
$ 19,169,734
------------------------------------------------------------------------------------------------------
Transportation - 1.6%
Boeing Co. 202,360 $ 13,722,537
------------------------------------------------------------------------------------------------------
Total U.S. Stocks $311,485,600
------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $701,875,477) $785,875,112
------------------------------------------------------------------------------------------------------
Short-Term Obligations - 6.3%
------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
------------------------------------------------------------------------------------------------------
American Express Credit Corp., due 11/01/00 $ 227 $ 227,000
Associates Corp. of North America, due 11/01/00 4,560 4,560,000
Chase Nassau Time Deposit, due 11/01/00 327 327,000
Ford Motor Credit Corp., due 11/01/00 - 11/07/00 19,447 19,441,571
General Electric Capital Corp., due 11/01/00 6,312 6,312,000
General Motors Acceptance Corp., due 11/01/00 5,103 5,103,000
Prudential Funding Corp., due 11/01/00 584 584,000
Salomon Smith Barney Holdings, Inc., due 11/01/00 128 128,000
UBS Finance Inc., due 11/01/00 16,009 16,009,000
------------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 52,691,571
------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $754,567,048) $838,566,683
Other Assets, Less Liabilities - (0.8)% (6,663,037)
------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $831,903,646
------------------------------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
--------------------------------------------------------------------------------
OCTOBER 31, 2000
--------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $754,567,048) $838,566,683
Investments of cash collateral for securities loaned, at
identified cost and value 45,587,643
Cash 4,457
Foreign currency, at value (identified cost, $8,761) 9,165
Receivable for fund shares sold 3,586,376
Receivable for investments sold 2,330,421
Dividends and interest receivable 1,113,528
Other assets 6,539
------------
Total assets $891,204,812
------------
Liabilities:
Payable for fund shares reacquired $ 1,333,486
Payable for investments purchased 11,941,185
Collateral for securities loaned, at value 45,587,643
Payable to affiliates -
Management fee 21,439
Shareholder servicing agent fee 2,236
Distribution and service fee 13,683
Administrative fee 399
Accrued expenses and other liabilities 401,095
------------
Total liabilities $ 59,301,166
------------
Net assets $831,903,646
============
Net assets consist of:
Paid-in capital $699,138,369
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 83,929,514
Accumulated undistributed net realized gain on
investments and foreign currency transactions 48,918,885
Accumulated net investment loss (83,122)
------------
Total $831,903,646
============
Shares of beneficial interest outstanding 36,668,074
============
Class A shares:
Net asset value per share
(net assets of $450,480,958 / 19,689,216 shares of
beneficial interest outstanding) $22.88
======
Offering price per share (100 / 94.25 of net asset value
per share) $24.28
======
Class B shares:
Net asset value and offering price per share
(net assets of $301,815,636 / 13,399,510 shares of
beneficial interest outstanding) $22.52
======
Class C shares:
Net asset value and offering price per share
(net assets of $56,754,789 / 2,560,564 shares of
beneficial interest outstanding) $22.16
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $2,312,344 / 100,380 shares of
beneficial interest outstanding) $23.04
======
Class J shares:
Net asset value and redemption price per share
(net assets of $20,539,919 / 918,404 shares of
beneficial interest outstanding) $22.36
======
Offering price per share (100 / 97 of net asset
value per share) $23.05
======
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>
<TABLE>
FINANCIAL STATEMENTS -- continued
Statement of Operations
------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000
------------------------------------------------------------------------------------------
<S> <C>
Net investment income (loss):
Income -
Dividends $14,014,883
Interest 2,488,336
Foreign taxes withheld (1,070,056)
-----------
Total investment income $15,433,163
-----------
Expenses -
Management fee $ 8,409,257
Trustees' compensation 44,105
Shareholder servicing agent fee 841,018
Distribution and service fee (Class A) 1,121,265
Distribution and service fee (Class B) 3,247,247
Distribution and service fee (Class C) 551,123
Distribution and service fee (Class J) 107,077
Administrative fee 122,670
Custodian fee 630,953
Printing 87,326
Postage 135,322
Auditing fees 34,448
Legal fees 30,460
Miscellaneous 677,053
-----------
Total expenses $16,039,324
Fees paid indirectly (73,619)
-----------
Net expenses $15,965,705
-----------
Net investment loss $ (532,542)
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $75,116,536
Foreign currency transactions (174,077)
-----------
Net realized gain on investments and foreign currency transactions $74,942,459
-----------
Change in unrealized depreciation -
Investments $(3,337,784)
Translation of assets and liabilities in foreign currencies (63,567)
-----------
Net unrealized loss on investments and foreign currency translation $(3,401,351)
-----------
Net realized and unrealized gain on investments and foreign
currency $71,541,108
-----------
Increase in net assets from operations $71,008,566
===========
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Statement of Changes in Net Assets
----------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31, 2000 1999
----------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (532,542) $ (2,511,114)
Net realized gain on investments and foreign currency
transactions 74,942,459 90,716,444
Net unrealized gain (loss) on investments and foreign
currency translation (3,401,351) 5,150,895
------------ ------------
Increase in net assets from operations $ 71,008,566 $ 93,356,225
------------ ------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) (32,586,148) (13,250,121)
From net realized gain on investments and foreign
currency transactions (Class B) (22,543,774) (12,904,747)
From net realized gain on investments and foreign
currency transactions (Class C) (3,859,326) (1,483,607)
From net realized gain on investments and foreign
currency transactions (Class I) (68,983) (30,531)
From net realized gain on investments and foreign
currency transactions (Class J) (122,290) --
------------ ------------
Total distributions declared to shareholders $(59,180,521) $(27,669,006)
------------ ------------
Net increase in net assets from fund share transactions $ 99,063,564 $ 77,262,844
------------ ------------
Total increase in net assets $110,891,609 $142,950,063
Net assets:
At beginning of period 721,012,037 578,061,974
------------ ------------
At end of period (including accumulated distributions in
excess of net investment income of $83,122 and $73,181,
respectively) $831,903,646 $721,012,037
============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
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 $22.50 $20.35 $20.09 $18.45 $16.68
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $
$ 0.07 -- $ 0.06 $ 0.08 $ 0.07
Net realized and unrealized gain on
investments and foreign currency 2.24 3.14 1.35 3.49 2.60
------ ------ ------ ------ ------
Total from investment operations $ 2.31 $ 3.14 $ 1.41 $ 3.57 $ 2.67
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.11) $ -- $ --
From net realized gain on investments
and foreign currency transactions (1.93) (0.99) (1.04) (1.93) (0.90)
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.93) $(0.99) $(1.15) $(1.93) $(0.90)
------ ------ ------ ------ ------
Net asset value - end of period $22.88 $22.50 $20.35 $20.09 $18.45
====== ====== ====== ====== ======
Total return(+) 10.39% 15.82% 7.46% 20.81% 16.72%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.55% 1.59% 1.60% 1.63% 1.65%
Net investment income 0.28% 0.00% 0.28% 0.42% 0.38%
Portfolio turnover 84% 92% 64% 65% 83%
Net assets at end of period (000 Omitted) $450,481 $384,436 $280,454 $167,390 $94,909
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would
have been lower.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
-------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
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 $22.17 $20.21 $19.97 $18.36 $16.55
------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.11) $(0.09) $(0.11) $(0.07) $(0.08)
Net realized and unrealized gain on
investments and foreign currency 2.21 3.04 1.39 3.46 2.60
------ ------ ------ ------ ------
Total from investment operations $ 2.10 $ 2.95 $ 1.28 $ 3.39 $ 2.52
------ ------ ------ ------ ------
Less distributions declared to
shareholders from net realized gain on
investments and foreign currency
transactions $(1.75) $(0.99) $(1.04) $(1.78) $(0.71)
------ ------ ------ ------ ------
Net asset value - end of period $22.52 $22.17 $20.21 $19.97 $18.36
====== ====== ====== ====== ======
Total return 9.60% 14.90% 6.75% 19.74% 15.75%
Ratios (to average net assets)/Supplemental data:
Expenses## 2.30% 2.34% 2.35% 2.39% 2.45%
Net investment loss (0.46)% (0.76)% (0.51)% (0.36)% (0.44)%
Portfolio turnover 84% 92% 64% 65% 83%
Net assets at end of period (000 Omitted) $301,816 $287,700 $267,886 $253,354 $182,139
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
-------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
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 $21.89 $19.97 $19.78 $18.24 $16.53
------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.11) $(0.16) $(0.10) $(0.06) $(0.06)
Net realized and unrealized gain on
investments and foreign currency 2.18 3.07 1.34 3.44 2.57
------ ------ ------ ------ ------
Total from investment operations $ 2.07 $ 2.91 $ 1.24 $ 3.38 $ 2.51
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.01) $ -- $ --
From net realized gain on investments and
foreign currency transactions (1.80) (0.99) (1.04) (1.84) (0.80)
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.80) $(0.99) $(1.05) $(1.84) $(0.80)
------ ------ ------ ------ ------
Net asset value - end of period $22.16 $21.89 $19.97 $19.78 $18.24
====== ====== ====== ====== ======
Total return 9.62% 14.88% 6.64% 19.86% 15.82%
Ratios (to average net assets)/Supplemental data:
Expenses## 2.30% 2.34% 2.35% 2.36% 2.39%
Net investment loss (0.47)% (0.76)% (0.50)% (0.33)% (0.34)%
Portfolio turnover 84% 92% 64% 65% 83%
Net assets at end of period (000 Omitted) $56,755 $47,335 $29,123 $16,658 $7,503
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
---------------------------------------------------------------------------------------------------------------
<CAPTION>
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 $22.63 $20.42 $20.14 $17.57
------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.10 $ 0.06 $ 0.11 $ 0.13
Net realized and unrealized gain on investments
and foreign currency 2.28 3.14 1.37 2.44
------ ------ ------ ------
Total from investment operations $ 2.38 $ 3.20 $ 1.48 $ 2.57
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.16) $ --
From net realized gain on investments and
foreign currency transactions (1.97) (0.99) (1.04) --
------ ------ ------ ------
Total distributions declared to $
shareholders
$(1.97) $(0.99) $(1.20) --
------ ------ ------ ------
Net asset value - end of period $23.04 $22.63 $20.42 $20.14
====== ====== ====== ======
Total return 10.73% 16.02% 7.78% 14.63%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.30% 1.34% 1.35% 1.38%+
Net investment income 0.41% 0.26% 0.51% 0.77%+
Portfolio turnover 84% 92% 64% 65%
Net assets at end of period (000 Omitted) $2,312 $817 $599 $472
* 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 certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
---------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999*
---------------------------------------------------------------------------------------------------
CLASS J
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $22.21 $22.58
------ ------
Income from investment operations# -
Net investment loss $(0.06) $(0.10)
Net realized and unrealized gain (loss) on investments and
foreign currency 2.19 (0.27)
------ ------
Total from investment operations $ 2.13 $(0.37)
------ ------
Less distributions declared to shareholders from net realized
gain on investments and foreign currency transactions $(1.98) $ --
------ ------
Net asset value - end of period $22.36 $22.21
====== ======
Total return(+) 9.55% (1.55)%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.25% 2.37%+
Net investment loss (0.27)% (1.34)%+
Portfolio turnover 84% 92%
Net assets at end of period (000 Omitted) $20,540 $724
* For the period from the inception of Class J shares, July 7, 1999, through October 31, 1999.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
(+) Total returns for Class J 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>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Global Equity Fund (the fund) is a 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. 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.
At October 31, 2000, the value of securities loaned was $45,164,687. These
loans were collateralized by U.S. Treasury securities of $1,195,757 and cash
of $45,587,643, which was invested in the following short-term obligations:
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED COST
AMOUNT AND VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deutsche Bank AG, 6.48%, due 1/12/01 $ 1,499,859 $ 1,499,859
Salomon Smith Barney, Inc., 6.63%, due 11/01/00 25,000,249 25,000,249
Salomon Smith Barney, Inc., 6.64%, due 11/01/00 19,087,535 19,087,535
-----------
Total investments of cash collateral for securities loaned $45,587,643
===========
</TABLE>
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 date in an amount equal to the
value of the security on such date.
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 net tax-
exempt and 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, accumulated net investment loss decreased by
$522,601, accumulated undistributed net realized gain on investments and
foreign currency transactions decreased by $25,207,090, and paid-in capital
increased by $24,684,489 due to differences between book and tax accounting
for foreign currency transactions and equalization. This change had no effect
on the net assets or net asset value per share.
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 the following annual
rates:
First $1 billion of average net assets 1.00%
Average net assets in excess of $1 billion 0.85%
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 $12,530 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 0.0175%
Next $2.5 billion 0.0130%
Next $2.5 billion 0.0005%
In excess of $7 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$158,296 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, Class C, and
Class J 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 $51,074
for the year ended October 31, 2000. Fees incurred under the distribution plan
during the year ended October 31, 2000, were 0.10% 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 $32,293 and $747 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, on an annualized basis.
The fund's distribution plan provides that the fund will pay MFD a
distribution fee of 0.70% per annum, and a service fee of up to 0.25% per
annum, of the fund's average daily net assets attributable to Class J shares.
Class J shares are available for distribution through The Fuji Bank, Ltd.
("Fuji Bank") and its network of financial intermediaries. Fuji Bank also
serves as the fund's agent securities company in Japan, and in that capacity
represents the fund before Japanese regulatory authorities. MFD will pay to
Fuji Bank all of the service fee and all of the distribution fee attributable
to Class J shares. A portion of the distribution fee equal to 0.05% per annum
of the funds average daily net assets attributable to Class J shares is paid
to Fuji Bank to cover its services as the fund's agent securities company.
Fees incurred under the distribution plan during the year ended October 31,
2000, were 0.95% of average daily net assets attributable to Class J 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 year ended October 31,
2000, were $18,100, $353,012, and $8,310 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
$712,357,538 and $673,707,617, 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 $755,921,553
------------
Gross unrealized appreciation $133,491,823
Gross unrealized depreciation (50,846,693)
------------
Net unrealized appreciation $ 82,645,130
============
(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>
Class A shares
<CAPTION>
YEAR ENDED OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 1999
----------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 20,233,003 $ 479,520,188 63,109,043 $ 1,369,325,357
Shares issued to
shareholders in
reinvestment of
distributions 1,381,062 31,331,723 642,440 13,367,581
Shares reacquired (19,007,594) (452,337,143) (60,450,001) (1,314,372,776)
----------- ------------- ----------- ---------------
Net increase 2,606,471 $ 58,514,768 3,301,482 $ 68,320,162
=========== ============= =========== ===============
<CAPTION>
Class B shares
YEAR ENDED OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 1999
----------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
Shares sold 3,655,493 $ 85,008,218 4,761,616 $ 102,673,871
Shares issued to
shareholders in
reinvestment of
distributions 921,996 20,707,480 584,724 12,010,215
Shares reacquired (4,153,265) (96,525,404) (5,627,951) (121,304,803)
----------- ------------- ----------- ---------------
Net increase (decrease) 424,224 $ 9,190,294 (281,611) $ (6,620,717)
=========== ============= =========== ===============
<CAPTION>
Class C shares
YEAR ENDED OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 1999
----------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
Shares sold 1,879,893 $ 43,109,511 3,608,010 $ 76,600,971
Shares issued to
shareholders in
reinvestment of
distributions 155,064 3,426,910 63,158 1,280,840
Shares reacquired (1,637,241) (37,729,975) (2,966,772) (63,177,836)
----------- ------------- ----------- ---------------
Net increase 397,716 $ 8,806,446 704,396 $ 14,703,975
=========== ============= =========== ===============
<CAPTION>
Class I shares
YEAR ENDED OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 1999
----------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
Shares sold 185,057 $ 4,417,607 12,469 $ 272,774
Shares issued to
shareholders in
reinvestment of
distributions 3,029 68,976 1,469 30,528
Shares reacquired (123,810) (2,969,159) (7,198) (161,537)
----------- ------------- ----------- ---------------
Net increase 64,276 $ 1,517,424 6,740 $ 141,765
=========== ============= =========== ===============
<CAPTION>
Class J shares
YEAR ENDED OCTOBER 31, 2000 PERIOD ENDED OCTOBER 31, 1999*
----------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
Shares sold 966,052 $ 22,910,731 32,609 $ 717,659
Shares reacquired (80,257) (1,876,099) -- --
----------- ------------- ----------- ---------------
Net increase 885,795 $ 21,034,632 32,609 $ 717,659
=========== ============= =========== ===============
* For the period from the inception of Class J shares, July 7, 1999, through October 31, 1999.
</TABLE>
(6) Line of Credit
The fund and other affiliated funds participate in 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 $7,008. The fund had no borrowings during the year.
<PAGE>
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
To the Trustees of MFS Series Trust VI and Shareholders of MFS Global Equity
Fund:
We have audited the accompanying statement of assets and liabilities of MFS
Global Equity Fund (the fund), including the schedule of portfolio
investments, as of October 31, 2000, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of
the two years in the period then ended and the financial highlights for each
of the three years in the period then ended. These financial statements and
financial highlights are the responsibility of the fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the two
years in the period then ended October 31, 1997, were audited by other
auditors whose report dated December 5, 1997 expressed an unqualified opinion
on those financial highlights.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 and financial highlights. Our
procedures included confirmation of securities owned as of October 31, 2000,
by correspondence with the custodian and brokers or by other appropriate
auditing procedures where replies from brokers were not received. 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 the
MFS Global Equity Fund at October 31, 2000, the results of its operations for
the year then ended, the changes in its net assets and the financial
highlights for each of the two years in the period then ended, in conformity
with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 8, 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 $60,624,908 AS A CAPITAL GAIN DIVIDEND FOR THE
YEAR ENDED OCTOBER 31, 2000.
FOR THE YEAR ENDED OCTOBER 31, 2000, INCOME FROM FOREIGN SOURCES WAS
$1,070,056, AND THE FUND DESIGNATED A FOREIGN TAX CREDIT OF $1,028,703.
--------------------------------------------------------------------------------
<PAGE>
<TABLE>
MFS(R) Global Equity Fund
<S> <C>
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) Ernst & Young LLP
Arnold D. Scott* - Senior Executive INVESTOR INFORMATION
Vice President, Director, and Secretary, For information on MFS mutual funds, call your
MFS Investment Management investment professional or, for an information
kit, call toll free: 1-800-637-2929 any
Jeffrey L. Shames* - Chairman and Chief business day from 9 a.m. to 5 p.m. Eastern time
Executive Officer, MFS Investment Management (or leave a message anytime).
J. Dale Sherratt - President, Insight INVESTOR SERVICE
Resources, Inc. (acquisition planning MFS Service Center, Inc.
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 from a
Jeffrey L. Shames* touch-tone telephone.
PORTFOLIO MANAGER WORLD WIDE WEB
David R. Mannheim* www.mfs.com
TREASURER
James O. Yost*
+ Independent Trustee
* MFS Investment Management
</TABLE>
<PAGE>
MFS(R) GLOBAL EQUITY FUND ------------
PRSRT STD
U.S. POSTAGE
[Logo] M F S(R) PAID
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) ------------
500 Boylston Street
Boston, MA 02116-3741
(c)2000 MFS Investment Management.(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116.
MWE-2 12/00 115M 04/204/304/804
