<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[Graphic Omitted]
MFS(R) GLOBAL TOTAL
RETURN FUND
ANNUAL REPORT o OCTOBER 31, 2000
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MUTUAL FUND GIFT KITS (see page 38)
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<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 5
Performance Summary ....................................................... 9
Portfolio of Investments .................................................. 13
Financial Statements ...................................................... 21
Notes to Financial Statements ............................................. 28
Independent Auditors' Report .............................................. 36
Trustees and Officers ..................................................... 41
MFS ORIGINAL RESEARCH(R)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
If you've been reading our fund reports for any length of time, you've probably
sensed the pride we have in our research process. More than anything else, we
think MFS Original Research(R) -- and the performance results it has yielded for
shareholders -- makes us unique among investment management companies. We think
that uniqueness stems from three factors: philosophy, process, and people.
PHILOSOPHY
In over 75 years of managing mutual funds, we've developed a number of beliefs
about the best ways to invest over a variety of market conditions. First, we
believe in bottom-up research, which means we use a company-by-company, one-
security-at-a-time approach to building a portfolio. What we look for is the
truth about the fundamentals of a company's business -- things such as the
ability of management to execute its business plan, the ability of that plan to
be scaled up as the company grows, actual demand for the company's products and
services, cash flow, profits, and earnings.
Second, we believe that, over the long term, stock prices follow earnings. In
our view, stock prices are basically a multiple of projected earnings, with the
multiple increasing as the market perceives that a company has something
customers want and will continue to want. One of the major elements of Original
Research(SM) is doing our best to project a company's future earnings and
determine how much the market will pay for those earnings.
Third, we believe there are at least three ways to potentially achieve
competitive long-term performance: be early, uncover second chances, and avoid
mistakes. All of these are based on bottom-up research. In both domestic and
international markets, early discovery has historically been a hallmark of our
investment style. Some of the stocks with which MFS has been most successful are
those in which we've taken large positions before the market discovered or
believed in them. Similarly, some of our best fixed-income investments have been
early positions in companies or governments that our research revealed were
potential candidates for credit upgrades. (A credit upgrade causes the value of
a bond to rise because it indicates the market has increased confidence that
principal and interest on the bond will be repaid.)
"Second-chance" opportunities are companies whose stock prices have stumbled but
that we believe still have the potential to be market leaders. For example, a
quarterly earnings shortfall of a few cents may cause the market to temporarily
lose confidence in a company. If we believe the business remains fundamentally
strong, we may use the price decline as a buying opportunity.
Avoiding mistakes is another way we feel Original Research may help performance.
In fixed-income investing this means, among other things, trying to be better
than our peers at avoiding bond issuers that may default. In equity investing,
avoiding mistakes means we strive to know a company and its industry well enough
to distinguish truth from hype.
PROCESS
We acquire our information firsthand, by researching thousands of companies to
determine which firms may make good investments. Our analysis of an individual
company may include
o face-to-face contact with senior management as well as frontline workers
o analysis of the company's financial statements and balance sheets
o contact with the company's current and potential customers
o contact with the company's competitors
o our own forecasts of the company's future market share, cash flow, and
earnings
Our analysts and portfolio managers disseminate this information in the form of
daily notes e-mailed worldwide to all members of our investment team. This
ensures that our best ideas are shared throughout the company, without barriers
between equity and fixed-income, international and domestic, or value and growth
investment areas. We believe this allows each of our portfolio managers -- and
thus each of our investors -- to potentially benefit from any relevant item of
Original Research.
John Ballen, our President and Chief Investment Officer, has often said that the
thought he hopes managers will have when they read the daily notes is, "I could
never perform as well at any other investment company, because nowhere else
could the quality of the research be this good."
PEOPLE
Our team of research analysts and portfolio managers traces its roots back to
1932, when we created one of the first in-house research departments in the
industry. Today, we believe we have an investment team distinguished for its
unique blend of talent, continuity, and cohesiveness.
MFS' team culture and commitment to quality research have proven to be of
tremendous value in attracting some of the best and brightest talent from
leading business schools and from other investment management companies. Our
company culture was a key factor in our recognition by Fortune magazine in its
January 10, 2000, issue as one of the "100 Best Companies to Work For" in
America. As befits a great team, our people have tended to stick around -- the
average MFS tenure of our portfolio managers is 11 years, with over 16 years in
the investment industry. Contributing to this continuity is our policy that all
equity portfolio managers are promoted from within, after distinguishing
themselves first as research analysts. And because many of us who are now
managing funds or managing the company itself have been working together for
well over a decade, we have a cohesiveness, a shared philosophy of investing,
and a unity of purpose that we believe bodes well for the future of the company.
We also have scale. Our research analyst team is over 55 members strong and
growing. Each analyst is our in-house expert on a specific industry or group of
industries in a specific region of the globe. In pursuing their research, our
analysts and portfolio managers each year will visit more than 2,000 companies
throughout the world, meet with representatives from more than 3,000 companies
at one of our four worldwide offices, attend roughly 5,000 company presentations
sponsored by major Wall Street firms, and consult with over 1,000 analysts from
hundreds of U.S. and foreign brokerage houses.
All of this culminates in our analysts making buy and sell recommendations on a
wide range of potential investments for all of our portfolios. In the end, the
goal of Original Research is to try to give our portfolio managers an advantage
over their peers -- to enable our managers to deliver competitive performance by
finding opportunities before they are generally recognized by the market, and by
avoiding mistakes whenever possible. Original Research does, we believe, make a
difference.
As always, we appreciate your confidence in MFS and welcome any questions or
comments you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
November 16, 2000
A prospectus containing more complete information on any MFS product, including
charges and expenses, can be obtained from your investment professional. Please
read it carefully before you invest or send money. Investments in mutual funds
will fluctuate and may be worth more or less upon redemption.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
For the 12 months ended October 31, 2000, Class A shares of the fund provided a
total return of 7.76%, Class B shares 7.07%, Class C shares 7.11% and Class I
shares 8.19%. These returns include the reinvestment of any distributions but
exclude the effects of any sales charges, and compare to the following returns
for the fund's benchmarks: 8.87% for the Lipper Global Flexible Fund Index,
6.09% for the Standard & Poor's 500 Composite Index (the S&P 500), and -1.04%
for a benchmark comprised 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. During the same period, the
average global flexible fund tracked by Lipper Inc., an independent firm that
reports mutual fund performance, returned 7.65%.
Q. CAN YOU TELL US ABOUT THE INVESTMENT STRATEGY FOR THE PORTFOLIO AND HOW IT
HAS AFFECTED RECENT PERFORMANCE?
A. Our investment strategy stresses value stocks, particularly value among
growth stocks. In other words, our goal is to find companies with strong
earnings and sales growth potential and to buy them at what we feel are
undervalued prices. Recently, our strategy has had a positive effect on
performance, as we've seen investors shift assets into more value-oriented
stocks, and growth-oriented stocks with proven earnings records. In
addition, unlike some flexible global portfolio managers who may maintain
larger exposure to equities, we maintain a disciplined asset allocation.
Accordingly, the portfolio's typical asset allocation has remained
consistent, ranging from 55% to 65% in equities and 35% to 45% in bonds and
short-term investments. In recent months, most sectors of the bond market
outperformed equities, which provided a boost to the fund's performance.
Q. WHAT OTHER FACTORS AFFECTED PERFORMANCE?
A. Recent weakness in technology, telecommunications, and media stocks
detracted from the portfolio's total return; however, many of our stock
picks in these sectors generally held up much better than those of the
overall group. Within these groups, our significant holdings in stocks such
as Canadian telecommunications equipment manufacturer Nortel Networks,
French television operator Television Francaise, and Japanese technology
conglomerate Rohm all provided favorable results. We believe that these
companies' product lines offer compelling competitive advantages, their
earnings outlooks appear bright, and their management teams have generally
initiated effective cost-cutting measures, greater efficiencies, and
aggressive marketing efforts to increase market share.
Q. WHERE ELSE HAVE YOU SEEN OPPORTUNITIES?
A. We've witnessed international investors becoming increasingly focused on
personal investing and retirement planning versus simply saving. We believe
this trend has been creating numerous opportunities for large financial
services firms and insurance companies, such as QBE Insurance and ING, to
gather more assets and add to their bottom-line profit growth.
Q. WHAT WAS YOUR STRATEGY WITH BOND HOLDINGS IN THE PORTFOLIO?
A. We continued to invest only in government or government-guaranteed bonds.
Our main focus was the dollar bloc, particularly the United States, where
the portfolio's returns were bolstered by our heavy concentration in U.S.
Treasury securities. These proved to be among the best-performing bonds in
the global fixed-income markets. (Principal value and interest on Treasury
securities are guaranteed by the U.S. government if held to maturity.) The
U.S. federal budget surplus encouraged the U.S. Treasury to auction fewer
bonds and to implement a program of buying back long-term debt that carried
higher interest rates. Reduced supply and strong demand helped yields fall
and prices rise, especially on long-term Treasuries.
Q. ARE YOU CONCERNED ABOUT THE WEAK EURO AFFECTING CORPORATE EARNINGS?
A. We're keeping a close eye on some of our large multinational companies that
derive revenue from business operations in Europe, as a weaker euro
generally means that their revenue from Europe translates into fewer
dollars. As a result, we've concentrated on businesses with well-
diversified revenue streams that are generally experiencing accelerating
sales growth in their local markets and core product lines. Good examples of
this strategy have included conglomerates such as General Electric and Tyco
and diversified food and consumer products companies such as Diageo and
Nestle.
Q. WHAT'S YOUR OUTLOOK FOR THE GLOBAL MARKETS?
A. We believe U.S. economic growth should continue to buoy U.S. markets and
help support stock markets around the globe. However, we think the
significant outperformance of U.S. stocks could be at a turning point given
the amount of business taking place around the world. In 1970, only 37% of
the world's market capitalization existed outside the U.S.; now, more than
half of it does, according to Morgan Stanley Capital International. In the
years to come, we believe the capital markets will continue to expand, as
more economies in Asia, Europe, and Latin America undergo privatization and
companies everywhere attempt to maximize shareholder value in response to
increased international competition. This trend doesn't necessarily mean
that the U.S. market will decline, but we believe it may slow while stocks
overseas begin to post higher gains.
/s/ Stephen C. Bryant /s/ Steven R. Gorham
Stephen C. Bryant Steven R. Gorham
Portfolio Manager Portfolio Manager
/s/ Frederick J. Simmons
Frederick J. Simmons
Portfolio Manager
Note to shareholders: Effective July 1, 2000, Steven R. Gorham and Stephen C.
Bryant joined Frederick J. Simmons as portfolio managers of the fund. Mr.
Simmons and Mr. Gorham are managers of the common stock portion of the fund's
portfolio. Mr. Bryant is a manager of the fixed income portion of the fund's
portfolio.
The opinions expressed in this report are those of the portfolio managers and
are current only through the end of the period of the report as stated on the
cover. The managers' views are subject to change at any time based on market and
other conditions, and no forecasts can be guaranteed.
<PAGE>
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PORTFOLIO MANAGERS' PROFILES
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STEPHEN C. BRYANT IS SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R) AND
PORTFOLIO MANAGER OF OUR GLOBAL FIXED-INCOME INSTITUTIONAL PRODUCTS AND THE
GLOBAL GOVERNMENTS PORTFOLIO OF OUR MUTUAL FUNDS AND VARIABLE ANNUITY PRODUCTS.
HE ALSO MANAGES MFS(R) GOVERNMENT MARKETS INCOME TRUST AND MFS(R) INTERMEDIATE
INCOME TRUST, TWO CLOSED-END FUNDS. HE JOINED MFS IN 1987 AS ASSISTANT VICE
PRESIDENT. HE WAS NAMED VICE PRESIDENT IN 1989, PORTFOLIO MANAGER IN 1992, AND
SENIOR VICE PRESIDENT IN 1993. STEVE IS A GRADUATE OF WESLEYAN UNIVERSITY.
STEVEN R. GORHAM, CFA, IS VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R) AND A
PORTFOLIO MANAGER OF THE GLOBAL BALANCED AND INTERNATIONAL GROWTH AND INCOME
PORTFOLIOS OF OUR MUTUAL FUNDS AND VARIABLE ANNUITIES. STEVE JOINED MFS IN 1989
AS A TELESERVICES REPRESENTATIVE. HE JOINED THE FINANCIAL ADVISOR DIVISION SALES
DESK IN 1991. IN 1992 HE JOINED THE EQUITY RESEARCH DEPARTMENT, AND HE BECAME A
RESEARCH ANALYST IN 1993 AND AN INVESTMENT OFFICER IN 1996. HE WAS NAMED VICE
PRESIDENT IN 1998 AND A PORTFOLIO MANAGER IN JUNE 2000. HE IS A GRADUATE OF THE
UNIVERSITY OF NEW HAMPSHIRE AND HAS AN M.B.A. FROM BOSTON COLLEGE. HE IS A
MEMBER OF THE BOSTON SECURITY ANALYSTS SOCIETY, INC. AND IS A CHARTERED
FINANCIAL ANALYST (CFA).
FREDERICK J. SIMMONS, CFA, IS SENIOR VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R). HE MANAGES THE GLOBAL BALANCED AND INTERNATIONAL GROWTH AND
INCOME PORTFOLIOS OF OUR MUTUAL FUND, VARIABLE ANNUITY, AND OFFSHORE PRODUCT
LINES. FRED JOINED MFS IN 1971 AS INVESTMENT OFFICER IN THE RESEARCH DEPARTMENT
AND WAS NAMED VICE PRESIDENT IN 1975 AND SENIOR VICE PRESIDENT IN 1983. FRED
GRADUATED WITH HONORS FROM THE AMOS TUCK SCHOOL OF BUSINESS ADMINISTRATION OF
DARTMOUTH COLLEGE. HE IS A CHARTERED FINANCIAL ANALYST (CFA), A MEMBER OF THE
BOSTON SECURITY ANALYSTS SOCIETY, INC., AND PAST PRESIDENT OF THE ELECTRONIC
ANALYSTS OF BOSTON.
ALL PORTFOLIO MANAGERS OF MFS INVESTMENT MANAGEMENT(R) 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.
<PAGE>
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.
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FUND FACTS
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OBJECTIVE: TO SEEK TOTAL RETURN BY PROVIDING ABOVE-AVERAGE INCOME
(COMPARED TO A PORTFOLIO INVESTED ENTIRELY IN EQUITY
SECURITIES) AND OPPORTUNITIES FOR 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: $343.5 MILLION NET ASSETS AS OF OCTOBER 31, 2000
PERFORMANCE SUMMARY
The following information illustrates the historical performance of the fund's
original share class in comparison to various market indicators. Performance
results include the deduction of the maximum applicable sales charge and reflect
the percentage change in net asset value, including the reinvestment of
dividends. Benchmark comparisons are unmanaged and do not reflect any fees or
expenses. The performance of other share classes will be greater than or less
than the line shown. (See Notes to Performance Summary.) It is not possible to
invest directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 10-year period ended October 31, 2000)
MFS Global Lipper S&P 60% MSCI World
Total Global 500 Index/40% J,P,
Return Fund Flexible Composite Morgan Global
- Class A Fund Index Index Government Bond Index
--------------------------------------------------------------------------------
10/90 $ 9,525 $10,000 $10,000 $10,000
10/92 12,387 11,967 14,679 11,600
10/94 15,174 14,711 17,525 14,776
10/96 19,484 18,413 27,497 18,547
10/98 25,766 21,962 44,316 23,777
10/00 29,143 28,338 59,084 26,624
TOTAL RATES OF RETURN THROUGH OCTOBER 31, 2000
<TABLE>
<CAPTION>
CLASS A
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +7.76% +29.27% +73.59% +205.96%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +7.76% + 8.94% +11.66% + 11.83%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge +2.64% + 7.18% +10.58% + 11.29%
-------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +7.07% +26.73% +68.01% +191.70%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +7.07% + 8.22% +10.94% + 11.30%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge +3.14% + 7.36% +10.67% + 11.30%
-------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS C
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +7.11% +26.73% +68.17% +192.78%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +7.11% + 8.22% +10.96% + 11.34%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge +6.13% + 8.22% +10.96% + 11.34%
-------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS I
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +8.19% +30.87% +76.14% +210.46%
-------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +8.19% + 9.38% +11.99% + 12.00%
-------------------------------------------------------------------------------------------------------
<CAPTION>
COMPARATIVE INDICES(+)
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average global flexible fund+ +7.65% +10.04% +11.90% + 11.30%
-------------------------------------------------------------------------------------------------------
Lipper Global Flexible Index Fund+ +8.87% + 9.97% +12.04% + 10.98%
-------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Composite Index# +6.09% +17.60% +21.67% + 19.44%
-------------------------------------------------------------------------------------------------------
60% MSCI World Index/40% J.P. Morgan
Global Government Bond Index# -1.04% + 8.77% +10.00% + 10.29%
-------------------------------------------------------------------------------------------------------
(+) Average annual rates of return.
+ Source: Lipper Inc.
# Source: Standard & Poor's Micropal, Inc.
</TABLE>
NOTES TO PERFORMANCE SUMMARY
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 4.75% sales charge. Class B Share Performance Including
Sales Charge takes into account the deduction of the applicable contingent
deferred sales charge (CDSC), which declines over six years from 4% to 0%. Class
C Share Performance Including Sales Charge takes into account the deduction of
the 1% CDSC applicable to Class C shares redeemed within 12 months. Class I
shares have no sales charge and are only available to certain institutional
investors.
Class B, C, and I share performance include the performance of the fund's Class
A shares for periods prior to their inception (blended performance). Class B and
C blended performance has been adjusted to take into account the CDSC applicable
to Class B and C shares rather than the initial sales charge (load) applicable
to Class A shares. Class I share blended performance has been adjusted to
account for the fact that Class I shares have no sales charge. These blended
performance figures have not been adjusted to take into account differences in
class-specific operating expenses. Because operating expenses of Class B and C
shares are higher than those of Class A, the blended Class B and C share
performance is higher than it would have been had Class B and C shares been
offered for the entire period. Conversely, because operating expenses of Class I
shares are lower than those of Class A, the blended Class I share performance is
lower than it would have been had Class I shares been offered for the entire
period.
All performance results reflect any applicable expense subsidies and waivers 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 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.
This portfolio is nondiversified and has more risk than one that is diversified.
The portfolio invests in a limited number of companies and may have more risk
because a change in one security's value may have a more significant effect on
the portfolio's net asset value. An investment in the portfolio is not a
complete investment program. See the prospectus for details.
PORTFOLIO CONCENTRATION AS OF OCTOBER 31, 2000
FIVE LARGEST STOCK SECTORS
FINANCIAL SERVICES 17.8%
TECHNOLOGY 12.3%
UTILITIES & COMMUNICATIONS 11.0%
HEALTH CARE 10.9%
CONSUMER STAPLES 10.5%
TOP 10 STOCK HOLDINGS
VODAFONE GROUP PLC 2.6% AKZO NOBEL N.V. 2.0%
British global industrial and Diversified Dutch chemical company
telecommunications company
QBE INSURANCE GROUP LTD. 1.9%
BOEING CO. 2.2% Australian commercial insurance
Aircraft manufacturer company
ROYAL DUTCH PETROLEUM CO. 2.1% NESTLE S.A. 1.8%
Oil exploration and production company International food company
GENERAL ELECTRIC CO. 2.1% HEWLETT-PACKARD CO. 1.7%
Diversified manufacturing and financial U.S. computer systems company
services conglomerate
BP AMOCO PLC 1.7%
DIAGEO PLC 2.0% British oil and petrochemical
Worldwide consumer goods company company
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS -- October 31, 2000
Stocks - 62.0%
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ISSUER SHARES VALUE
-----------------------------------------------------------------------------
Foreign Stocks - 38.3%
Australia - 2.0%
Australia & New Zealand Banking Group Ltd.
(Banks and Credit Cos.)* 217,107 $ 1,602,885
Broken Hill Proprietary Co. Ltd. (Mining) 106,600 1,032,791
OneSteel Ltd. (Steel Production)* 26,650 12,703
QBE Insurance Group Ltd. (Insurance)* 890,218 4,104,876
------------
$ 6,753,255
-----------------------------------------------------------------------------
Brazil - 0.3%
Empresa Brasileira de Aeronautica S.A., ADR
(Aerospace and Defense) 30,520 $ 883,172
-----------------------------------------------------------------------------
Canada - 2.1%
BCE, Inc. (Telecommunications) 37,300 $ 1,009,431
Canadian National Railway Co. (Railroads) 95,539 3,009,479
Manitoba Telecom Services, Inc.
(Telecommunications) 38,100 785,953
Nortel Networks Corp. (Telecommunications) 53,134 2,417,597
------------
$ 7,222,460
-----------------------------------------------------------------------------
Denmark - 0.5%
Danske Bank (Banks and Credit Cos.) 6,700 $ 970,516
ISS (Business Services)* 11,500 708,298
------------
$ 1,678,814
-----------------------------------------------------------------------------
France - 5.1%
Alcatel (Telecommunications)* 10,100 $ 616,172
Aventis S.A. (Pharmaceuticals) 25,200 1,817,488
Axa (Insurance) 10,000 1,323,660
Castorama Dubois Investisse (Stores) 7,700 1,565,415
Pinault-Printemps-Redoute S.A. (Retail) 8,100 1,445,361
Sanofi-Synthelabo S.A. (Medical and
Health Products) 33,920 1,784,430
Societe Television Francaise 1
(Entertainment)* 51,000 2,782,487
StMicroelectronics N.V. (Electronics) 34,400 1,735,251
Technip S.A. (Construction) 10,600 1,356,311
Total Fina S.A., ADR (Oils) 41,100 2,943,787
------------
$ 17,370,362
-----------------------------------------------------------------------------
Germany - 1.8%
Fresenius AG, Preferred (Medical Supplies) 5,600 $ 1,382,716
Henkel KGaA, Preferred (Chemicals) 44,220 2,675,600
ProSieben Sat.1 Media AG, Preferred
(Entertainment)* 71,200 2,241,330
------------
$ 6,299,646
-----------------------------------------------------------------------------
Hong Kong - 0.4%
China Mobile (Hong Kong) Ltd.
(Telecommunications) 220,000 $ 1,410,528
-----------------------------------------------------------------------------
Italy - 0.5%
San Paolo - Imi S.p.A. (Banks and Credit Cos.) 113,000 $ 1,831,318
-----------------------------------------------------------------------------
Japan - 7.6%
Canon, Inc. (Special Products and Services) 89,000 $ 3,532,264
Eisai Co. Ltd. (Medical and Health Products) 36,000 1,108,708
Fast Retailing Co. Ltd. (Retail) 7,800 1,919,615
Fuji Heavy Industries Ltd. (Automotive) 51,000 355,270
Fujitsu Ltd. (Computer Hardware - Systems) 59,000 1,051,292
Hitachi Ltd. (Electronics) 95,000 1,018,790
Mitsubishi Electric Corp. (Electronics) 82,000 589,258
Nintendo Co. (Entertainment) 1,900 314,345
Nippon Telegraph & Telephone Co. (Utilities -
Telephone) 48 436,884
Nitto Denko Corp. (Industrial Goods and Services) 20,000 676,444
NTT DoCoMo, Inc. (Telecommunications) 125 3,082,035
Rohm Co. (Electronics) 13,400 3,378,864
Secom Co. (Security Services) 31,000 2,210,632
Sony Corp. (Electronics) 20,100 1,606,526
Sumitomo Electric Industries Ltd. (Wire
and Cable Products) 23,000 424,794
Terumo Corp. (Medical and Health Services) 49,000 1,387,809
Tokyo Broadcasting System, Inc. (Entertainment) 30,000 1,174,152
Tokyo Gas Co. Ltd. (Gas) 440,000 1,149,404
Uni-Charm Corp. (Forest and Paper Products) 3,100 132,695
Ushio, Inc. (Electronics) 39,000 679,193
------------
$ 26,228,974
-----------------------------------------------------------------------------
Mexico - 0.6%
Fomento Economico Mexicano S.A. de C.V., ADR
(Food and Beverage Products) 25,900 $ 989,056
Grupo Iusacell S.A. de C.V., ADR
(Telecommunications)* 2,150 27,950
Grupo Television S.A. de C.V., GDR
(Entertainment)* 20,600 1,114,975
------------
$ 2,131,981
-----------------------------------------------------------------------------
Netherlands - 3.8%
Akzo Nobel N.V. (Chemicals) 93,680 $ 4,264,505
ING Groep N.V. (Financial Services)* 52,166 3,581,751
KPN N.V. (Telecommunications)* 36,580 740,880
Royal Dutch Petroleum Co., ADR (Oils) 76,610 4,548,719
------------
$ 13,135,855
-----------------------------------------------------------------------------
Singapore - 0.3%
Singapore Press Holdings Ltd. (Printing and
Publishing) 73,000 $ 1,043,570
-----------------------------------------------------------------------------
South Korea - 0.1%
Korea Electric Power Corp.
(Utilities - Electric) 11,600 $ 259,366
-----------------------------------------------------------------------------
Spain - 1.6%
Altadis S.A. (Tobacco) 228,354 $ 3,390,773
Repsol-YPF, S.A. (Oils) 45,900 729,072
Telefonica S.A. (Telecommunications) 76,400 1,456,627
------------
$ 5,576,472
-----------------------------------------------------------------------------
Sweden - 0.8%
Saab AB, "B" (Aerospace) 255,200 $ 1,737,567
Skandia Forsakrings AB (Insurance) 52,800 896,098
------------
$ 2,633,665
-----------------------------------------------------------------------------
Switzerland - 1.9%
Nestle S.A. (Food and Beverage Products) 1,847 $ 3,828,432
Novartis AG (Medical and Health Products) 1,245 1,889,219
Serono S.A., ADR (Biotechnology)* 33,700 762,462
------------
$ 6,480,113
-----------------------------------------------------------------------------
United Kingdom - 8.9%
AstraZeneca Group PLC (Medical and
Health Products) 37,263 $ 1,761,050
Boots Co. PLC (Retail)* 243,300 1,941,255
BP Amoco PLC, ADR (Oils) 71,546 3,644,374
British Telecommunications PLC
(Telecommunications)* 146,684 1,719,380
Carlton Communications PLC (Broadcasting)* 81,706 657,847
CGNU PLC (Insurance)* 168,576 2,254,782
Diageo PLC (Food and Beverage Products)* 454,194 4,286,142
HSBC Holdings PLC (Banks and Credit Cos.)* 195,991 2,792,065
Reckitt Benckiser PLC (Consumer Goods
and Services) 66,400 872,719
Reuters Group PLC (Business Services) 137,450 2,675,932
Royal Bank of Scotland Group PLC
(Banks and Credit Cos.)* 37,000 830,367
Standard Chartered PLC (Banks and Credit Cos.)* 106,640 1,537,745
Vodafone Group PLC (Telecommunications)* 1,339,864 5,573,680
------------
$ 30,547,338
-----------------------------------------------------------------------------
Total Foreign Stocks $131,486,889
-----------------------------------------------------------------------------
U.S. Stocks - 23.7%
Advertising - 0.6%
Omnicom Group, Inc. 22,550 $ 2,080,238
-----------------------------------------------------------------------------
Aerospace - 1.7%
Boeing Co. 67,600 $ 4,584,125
General Dynamics Corp. 5,600 400,750
United Technologies Corp. 13,700 956,431
------------
$ 5,941,306
-----------------------------------------------------------------------------
Automotive - 0.2%
Delphi Automotive Systems Corp. 22,500 $ 352,969
Visteon Corp. 25,100 443,956
------------
$ 796,925
-----------------------------------------------------------------------------
Banks and Credit Companies - 0.5%
Chase Manhattan Corp. 11,500 $ 523,250
PNC Financial Services Group 13,600 909,500
Providian Financial Corp. 4,000 416,000
------------
$ 1,848,750
-----------------------------------------------------------------------------
U.S. Stocks - continued
Biotechnology - 1.1%
Pharmacia Corp. 65,897 $ 3,624,335
-----------------------------------------------------------------------------
Business Machines - 2.2%
Hewlett-Packard Co. 80,000 $ 3,715,000
International Business Machines Corp. 30,480 3,002,280
Sun Microsystems, Inc.* 6,200 687,425
------------
$ 7,404,705
-----------------------------------------------------------------------------
Business Services - 0.6%
Automatic Data Processing, Inc. 11,700 $ 764,156
Computer Sciences Corp.* 15,700 989,100
United Parcel Service, Inc. 5,460 331,695
------------
$ 2,084,951
-----------------------------------------------------------------------------
Computer Hardware - Systems - 0.1%
Compaq Computer Corp. 12,100 $ 367,961
-----------------------------------------------------------------------------
Computer Software - Personal Computers - 0.2%
America Online, Inc.* 3,600 $ 181,548
Microsoft Corp.* 6,000 413,250
------------
$ 594,798
-----------------------------------------------------------------------------
Computer Software - Services - 0.1%
EMC Corp.* 4,800 $ 427,500
-----------------------------------------------------------------------------
Construction Services - 0.1%
Martin Marietta Materials, Inc. 11,786 $ 452,582
-----------------------------------------------------------------------------
Consumer Goods and Services - 1.8%
Philip Morris Cos., Inc. 85,150 $ 3,118,619
Tyco International Ltd. 56,644 3,211,006
------------
$ 6,329,625
-----------------------------------------------------------------------------
Electrical Equipment - 1.3%
General Electric Co. 81,270 $ 4,454,612
-----------------------------------------------------------------------------
Financial Institutions - 1.4%
AXA Financial, Inc. 11,400 $ 616,312
Freddie Mac Corp. 28,960 1,737,600
Goldman Sachs Group, Inc. 4,930 492,076
Merrill Lynch & Co., Inc. 21,000 1,470,000
Morgan Stanley Dean Witter & Co. 4,200 337,313
------------
$ 4,653,301
-----------------------------------------------------------------------------
Food and Beverage Products - 0.9%
Anheuser-Busch Cos., Inc. 68,400 $ 3,129,300
-----------------------------------------------------------------------------
Insurance - 2.8%
AFLAC, Inc. 14,200 $ 1,037,487
American International Group, Inc. 35,092 3,439,016
MetLife, Inc.* 59,420 1,641,477
Nationwide Financial Services, Inc., "A" 10,100 491,113
St. Paul Cos., Inc. 53,300 2,731,625
UnumProvident Corp. 15,500 437,875
------------
$ 9,778,593
-----------------------------------------------------------------------------
Machinery - 1.0%
Deere & Co. 59,600 $ 2,194,025
Ingersoll-Rand Co. 36,800 1,389,200
------------
$ 3,583,225
-----------------------------------------------------------------------------
Medical and Health Products - 2.3%
American Home Products Corp. 44,400 $ 2,819,400
Bristol-Myers Squibb Co. 57,060 3,477,094
Medtronic, Inc. 7,200 391,050
Pfizer, Inc. 23,900 1,032,181
------------
$ 7,719,725
-----------------------------------------------------------------------------
Metals and Minerals - 0.5%
Alcoa, Inc. 37,000 $ 1,061,438
Phelps Dodge Corp. 14,800 691,900
------------
$ 1,753,338
-----------------------------------------------------------------------------
Oils - 1.4%
Baker Hughes, Inc. 18,000 $ 618,750
Exxon Mobil Corp. 23,090 2,059,340
Halliburton Co. 47,300 1,753,056
Santa Fe International Corp. 12,400 452,600
------------
$ 4,883,746
-----------------------------------------------------------------------------
Retail - 0.5%
CVS Corp. 18,300 $ 968,756
The Gap, Inc. 29,400 758,888
------------
$ 1,727,644
-----------------------------------------------------------------------------
Supermarkets - 0.3%
Safeway, Inc.* 16,300 $ 891,406
-----------------------------------------------------------------------------
Telecommunications - 1.5%
Cabletron Systems, Inc.* 14,000 $ 379,750
CIENA Corp.* 2,380 250,198
Cisco Systems, Inc.* 6,600 355,575
Corning, Inc. 3,975 304,088
Qwest Communications International, Inc.* 8,500 413,312
Sprint Corp. (PCS Group)* 12,800 488,000
Verizon Communications 51,600 2,983,125
------------
$ 5,174,048
-----------------------------------------------------------------------------
Utilities - Electric - 0.6%
Sierra Pacific Resources 110,151 $ 1,893,220
Southern Energy, Inc.* 1,260 34,335
------------
$ 1,927,555
-----------------------------------------------------------------------------
Total U.S. Stocks $ 81,630,169
-----------------------------------------------------------------------------
Total Stocks (Identified Cost, $175,802,160) $213,117,058
-----------------------------------------------------------------------------
Bonds - 35.9%
-----------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
-----------------------------------------------------------------------------
U.S. Bonds - 21.4%
U.S. Federal Agencies - 5.3%
Federal Home Loan Mortgage Corp.,
6.625s, 2002 $ 13,876 $ 13,921,513
Federal Home Loan Mortgage Corp., 7s, 2005 1,361 1,386,519
Federal National Mortgage Assn., 6.5s, 2004 2,927 2,925,156
------------
$ 18,233,188
-----------------------------------------------------------------------------
U.S. Treasury Obligations - 16.1%
U.S. Treasury Notes, 6.75s, 2005 $ 4,587 $ 4,755,435
U.S. Treasury Notes, 6.125s, 2007 22,285 22,598,327
U.S. Treasury Notes, 3.875s, 2009 1,433 1,433,174
U.S. Treasury Notes, 5.5s, 2009 5,275 5,156,312
U.S. Treasury Notes, 5.75s, 2010 6,166 6,160,204
U.S. Treasury Bonds, 6.25s, 2023 14,766 15,232,015
------------
$ 55,335,467
-----------------------------------------------------------------------------
Total U.S. Bonds $ 73,568,655
-----------------------------------------------------------------------------
Foreign Bonds - 14.5%
Australia - 0.2%
Commonwealth of Australia, 7.5s, 2005 AUD 1,209 $ 661,136
-----------------------------------------------------------------------------
Canada - 1.6%
Government of Canada, 5.25s, 2008 $ 3,041 $ 2,770,996
Government of Canada, 5.5s, 2009 CAD 4,390 2,807,875
------------
$ 5,578,871
-----------------------------------------------------------------------------
Denmark - 1.1%
Kingdom of Denmark, 7s, 2007 DKK 30,341 $ 3,752,106
-----------------------------------------------------------------------------
Germany - 3.6%
Federal Republic of Germany, 4.5s, 2009 EUR 15,178 $ 12,237,779
-----------------------------------------------------------------------------
Greece - 1.0%
Hellenic Republic, 8.9s, 2003 GRD 648,000 $ 1,733,801
Hellenic Republic, 8.7s, 2005 413,000 1,147,913
Hellenic Republic, 8.6s, 2008 193,000 557,283
------------
$ 3,438,997
-----------------------------------------------------------------------------
Italy - 0.9%
Republic of Italy, 5s, 2008 EUR 3,578 $ 2,938,918
-----------------------------------------------------------------------------
Japan - 2.3%
Development Bank of Japan, 1.75s, 2010
(Banks and Credit Cos.) JPY 201,000 $ 1,830,708
International Bank for Reconstruction &
Developement, 2s, 2008 (Banks and
Credit Cos.) 630,400 5,990,499
------------
$ 7,821,207
-----------------------------------------------------------------------------
Mexico - 0.1%
United Mexican States, 9.875s, 2010 $ 334 $ 346,525
-----------------------------------------------------------------------------
Sweden - 0.4%
Kingdom of Sweden, 6s, 2005 SEK 4,000 $ 416,175
Kingdom of Sweden, 9s, 2009 8,700 1,093,883
------------
$ 1,510,058
-----------------------------------------------------------------------------
United Kingdom - 3.3%
United Kingdom Treasury, 6.5s, 2003 GBP 5,000 $ 7,404,050
United Kingdom Treasury, 6.75s, 2004 2,624 3,966,480
------------
$ 11,370,530
-----------------------------------------------------------------------------
Total Foreign Bonds $ 49,656,127
-----------------------------------------------------------------------------
Total Bonds (Identified Cost, $130,406,809) $123,224,782
-----------------------------------------------------------------------------
Call Options Purchased
-----------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER/EXPIRATION MONTH/STRIKE PRICE (000 OMITTED)
-----------------------------------------------------------------------------
Japan Government Bonds/November/132.4
(Premiums Paid, $54,757) JPY 540,000 $ 54,198
-----------------------------------------------------------------------------
Short-Term Obligations - 1.3%
-----------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
-----------------------------------------------------------------------------
Associates Corp. of North America,
due 11/01/00 $ 911 $ 911,000
Chase Nassau Time Deposit, due 11/01/00 132 132,000
Ford Motor Credit Corp., due 11/01/00 1,040 1,040,000
General Electric Capital Corp., due 11/01/00 1,271 1,271,000
General Motors Acceptance Corp., due 11/01/00 1,028 1,028,000
Prudential Funding Corp., due 11/01/00 119 119,000
-----------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 4,501,000
-----------------------------------------------------------------------------
Total Investments (Identified Cost, $310,764,726) $340,897,038
-----------------------------------------------------------------------------
Put Options Written
-----------------------------------------------------------------------------
<PAGE>
PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER/EXPIRATION MONTH/STRIKE PRICE (000 OMITTED)
-----------------------------------------------------------------------------
Japan Government Bonds/November/132.4
(Premiums Received, $54,757) JPY 540,000 $ (7,672)
-----------------------------------------------------------------------------
Other Assets, Less Liabilities - 0.8% 2,649,362
-----------------------------------------------------------------------------
Net Assets - 100.0% $343,538,728
-----------------------------------------------------------------------------
*Non-income producing security.
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 GBP = British Pounds
CAD = Canadian Dollars GRD = Greek Drachma
DKK = Danish Kroner JPY = Japanese Yen
EUR = Euro SEK = Swedish Krona
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
------------------------------------------------------------------------------
OCTOBER 31, 2000
------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $310,764,726) $340,897,038
Investment of cash collateral for securities loaned, at
cost and value 6,460,724
Cash 8,320
Net receivable for forward foreign currency exchange
contracts to sell 460,483
Net receivable for forward foreign currency exchange
contracts closed or subject to master netting
agreements 270,131
Receivable for fund shares sold 822,569
Receivable for investments sold 589,361
Interest and dividends receivable 2,716,007
Other assets 3,809
------------
Total assets $352,228,442
------------
Liabilities:
Payable for fund shares reacquired $ 443,071
Payable for investments purchased 1,465,843
Net payable for forward foreign currency exchange
contracts to purchase 56,421
Collateral for securities loaned 6,460,724
Written options outstanding, at value
(premiums received, $54,757) 7,672
Payable to affiliates -
Management fee 7,197
Shareholder servicing agent fee 933
Distribution and service fee 6,140
Administrative fee 163
Accrued expenses and other liabilities 241,550
------------
Total liabilities $ 8,689,714
------------
Net assets $343,538,728
============
Net assets consist of:
Paid-in capital $285,426,836
Unrealized appreciation on investments and
translation of assets and liabilities in
foreign currencies 30,770,688
Accumulated undistributed net realized gain on
investments and foreign currency transactions 20,235,996
Accumulated undistributed net investment income 7,105,208
------------
Total $343,538,728
============
Shares of beneficial interest outstanding 25,007,130
==========
Class A shares:
Net asset value per share
(net assets of $178,773,098 / 12,989,577 shares of
beneficial interest outstanding) $13.76
======
Offering price per share (100 / 95.25 of net asset value
per share) $14.45
======
Class B shares:
Net asset value and offering price per share
(net assets of $118,676,148 / 8,649,994 shares of
beneficial interest outstanding) $13.72
======
Class C shares:
Net asset value and offering price per share
(net assets of $44,468,309 / 3,250,103 shares of
beneficial interest outstanding) $13.68
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $1,621,173 / 117,456 shares of
beneficial interest outstanding) $13.80
======
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
------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000
------------------------------------------------------------------------------
Net investment income:
Income -
Interest $ 8,196,189
Dividends 7,216,107
Foreign taxes withheld (431,563)
-------------
Total investment income $ 14,980,733
-------------
Expenses -
Management fee $ 3,098,763
Trustees' compensation 43,859
Shareholder servicing agent fee 361,617
Distribution and service fee (Class A) 647,098
Distribution and service fee (Class B) 1,263,509
Distribution and service fee (Class C) 487,859
Administrative fee 51,534
Custodian fee 280,661
Postage 42,837
Printing 29,753
Auditing fees 43,100
Legal fees 4,748
Miscellaneous 266,267
-------------
Total expenses $ 6,621,605
Fees paid indirectly (35,163)
-------------
Net expenses $ 6,586,442
-------------
Net investment income $ 8,394,291
-------------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $ 18,687,668
Written option transactions 287,073
Foreign currency transactions 4,533,857
-------------
Net realized gain on investments and foreign currency
transactions $ 23,508,598
-------------
Change in unrealized appreciation (depreciation) -
Investments $ (5,343,416)
Written options (54,784)
Translation of assets and liabilities in foreign currencies 543,921
-------------
Net unrealized loss on investments and foreign currency
translation $ (4,854,279)
-------------
Net realized and unrealized gain on investments
and foreign currency $ 18,654,319
-------------
Increase in net assets from operations $ 27,048,610
=============
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
--------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000 1999
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets:
From operations -
Net investment income $ 8,394,291 $ 5,260,519
Net realized gain on investments and foreign currency
transactions 23,508,598 30,457,922
Net unrealized loss on investments and foreign currency
translation (4,854,279) (19,922,300)
------------- -------------
Increase in net assets from operations $ 27,048,610 $ 15,796,141
------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (2,966,433) $ (3,114,718)
From net investment income (Class B) (1,297,376) (1,553,313)
From net investment income (Class C) (592,734) (558,400)
From net investment income (Class I) (30,408) (34,089)
From net realized gain on investments and foreign
currency transactions (Class A) (13,850,883) (11,788,156)
From net realized gain on investments and foreign
currency transactions (Class B) (9,623,474) (7,739,436)
From net realized gain on investments and foreign
currency transactions (Class C) (3,895,074) (2,444,103)
From net realized gain on investments and foreign
currency transactions (Class I) (113,766) (120,309)
In excess of net investment income (Class A) -- (1,421,757)
In excess of net investment income (Class B) -- (709,031)
In excess of net investment income (Class C) -- (254,890)
In excess of net investment income (Class I) -- (15,560)
------------- -------------
Total distributions declared to shareholders $ (32,370,148) $ (29,753,762)
------------- -------------
Net increase (decrease) in net assets from fund share
transactions $ (22,720,438) $ 64,579,969
------------- -------------
Total increase (decrease) in net assets $ (28,041,976) $ 50,622,348
Net assets:
At beginning of year 371,580,704 320,958,356
------------- -------------
At end of year (including accumulated undistributed net
investment income of $7,105,208 and $654,061, respectively) $ 343,538,728 $ 371,580,704
============= =============
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
-----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------------
CLASS A
-----------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each year):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of year $13.98 $14.59 $13.84 $12.73 $11.57
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.36 $ 0.25 $ 0.28 $ 0.31 $ 0.34
Net realized and unrealized gain on
investments and foreign currency 0.70 0.45 1.57 1.61 1.46
------ ------ ------ ------ ------
Total from investment operations $ 1.06 $ 0.70 $ 1.85 $ 1.92 $ 1.80
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ (0.23) $ (0.24) $ (0.18) $ (0.21) $ (0.63)
From net realized gain on investments
and foreign currency transactions (1.05) (0.96) (0.92) (0.60) (0.01)
In excess of net investment income -- (0.11) -- -- --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.28) $(1.31) $(1.10) $(0.81) $(0.64)
------ ------ ------ ------ ------
Net asset value - end of year $13.76 $13.98 $14.59 $13.84 $12.73
====== ====== ====== ====== ======
Total return(+) 7.76% 4.96% 14.29% 15.71% 16.06%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.51% 1.48% 1.51% 1.59% 1.63%
Net investment income 2.62% 1.74% 1.99% 2.35% 2.79%
Portfolio turnover 91% 109% 183% 143% 167%
Net assets at end of year (000 Omitted) $178,773 $187,780 $174,576 $152,919 $129,843
# 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.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
-----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------------
CLASS B
-----------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each year):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of year $13.95 $14.56 $13.82 $12.71 $11.52
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.27 $ 0.16 $ 0.19 $ 0.22 $ 0.25
Net realized and unrealized gain on
investments and foreign currency 0.69 0.45 1.56 1.62 1.46
------ ------ ------ ------ ------
Total from investment operations $ 0.96 $ 0.61 $ 1.75 $ 1.84 $ 1.71
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.14) $(0.18) $(0.09) $(0.13) $(0.47)
From net realized gain on investments and
foreign currency transactions (1.05) (0.96) (0.92) (0.60) (0.01)
In excess of net investment income -- (0.08) -- -- (0.04)
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.19) $(1.22) $(1.01) $(0.73) $(0.52)
------ ------ ------ ------ ------
Net asset value - end of year $13.72 $13.95 $14.56 $13.82 $12.71
====== ====== ====== ====== ======
Total return 7.07% 4.22% 13.57% 15.00% 15.29%
Ratios (to average net assets)/Supplemental data:
Expenses## 2.16% 2.14% 2.16% 2.25% 2.34%
Net investment income 1.98% 1.13% 1.33% 1.70% 2.07%
Portfolio turnover 91% 109% 183% 143% 167%
Net assets at end of year (000 Omitted) $118,676 $130,413 $113,966 $96,931 $71,788
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
-----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------------
CLASS C
-----------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each year):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of year $13.94 $14.56 $13.82 $12.72 $11.52
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.27 $ 0.16 $ 0.19 $ 0.23 $ 0.26
Net realized and unrealized gain on
investments and foreign currency 0.69 0.45 1.56 1.61 1.46
------ ------ ------ ------ ------
Total from investment operations $ 0.96 $ 0.61 $ 1.75 $ 1.84 $ 1.72
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.17) $(0.19) $(0.09) $(0.14) $(0.51)
From net realized gain on investments and
foreign currency transactions (1.05) (0.96) (0.92) (0.60) (0.01)
In excess of net investment income -- (0.08) -- -- --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.22) $(1.23) $(1.01) $(0.74) $(0.52)
------ ------ ------ ------ ------
Net asset value - end of year $13.68 $13.94 $14.56 $13.82 $12.72
====== ====== ====== ====== ======
Total return 7.11% 4.23% 13.52% 14.97% 15.41%
Ratios (to average net assets)/Supplemental data:
Expenses## 2.16% 2.14% 2.16% 2.24% 2.27%
Net investment income 1.97% 1.13% 1.33% 1.71% 2.14%
Portfolio turnover 91% 109% 183% 143% 167%
Net assets at end of year (000 Omitted) $44,468 $51,800 $30,580 $21,725 $14,248
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
--------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2000 1999 1998 1997*
--------------------------------------------------------------------------------------------------------------------------
CLASS I
---------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each year):
<S> <C> <C> <C> <C>
Net asset value - beginning of year $14.02 $14.60 $13.86 $12.51
------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.41 $ 0.29 $ 0.33 $ 0.30
Net realized and unrealized gain on investments
and foreign currency 0.69 0.49 1.56 1.21
------ ------ ------ ------
Total from investment operations $ 1.10 $ 0.78 $ 1.89 $ 1.51
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.27) $(0.28) $(0.23) $(0.16)
From net realized gain on investments and foreign
currency transactions (1.05) (0.96) (0.92) --
In excess of net investment income -- (0.12) -- --
------ ------ ------ ------
Total distributions declared to shareholders $(1.32) $(1.36) $(1.15) $(0.16)
------ ------ ------ ------
Net asset value - end of year $13.80 $14.02 $14.60 $13.86
====== ====== ====== ======
Total return 8.19% 5.40% 14.78% 12.08%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.16% 1.13% 1.16% 1.24%+
Net investment income 2.98% 2.08% 2.33% 2.72%+
Portfolio turnover 91% 109% 183% 143%
Net assets at end of year (000 Omitted) $1,621 $1,587 $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.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(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. 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. Debt securities (other than short-term obligations which mature in 60
days or less), including listed issues, 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 in good faith, at fair value, by the Trustees.
Repurchase Agreements - The fund may enter into repurchase agreements with
institutions that the fund's investment adviser has determined are creditworthy.
Each repurchase agreement is recorded at cost. The fund requires that the
securities collateral in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the fund to obtain those securities
in the event of a default under the repurchase agreement. The fund monitors, on
a daily basis, the value of the collateral to ensure that its value, including
accrued interest, is greater than amounts owed to the fund under each such
repurchase agreement. The fund, along with other affiliated entities of
Massachusetts Financial Services Company (MFS), may utilize a joint trading
account for the purpose of entering into one or more repurchase agreements.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Written Options - The fund may write call or put options in exchange for a
premium. The premium is initially recorded as a liability which is subsequently
adjusted to the current value of the option contract. When a written option
expires, the fund realizes a gain equal to the amount of the premium received.
When a written call option is exercised or closed, the premium received is
offset against the proceeds to determine the realized gain or loss. When a
written put option is exercised, the premium reduces the cost basis of the
security purchased by the fund. The fund, as writer of an option, may have no
control over whether the underlying securities may be sold (call) or purchased
(put) and, as a result, bears the market risk of an unfavorable change in the
price of the securities underlying the written option. In general, written call
options may serve as a partial hedge against decreases in value in the
underlying securities to the extent of the premium received. Written options may
also be used as part of an income producing strategy reflecting the view of the
fund's management on the direction of interest rates.
Security Loans - State Street Bank and Trust Company ("State Street") and Chase
Manhattan Bank ("Chase"), as lending agents, 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 U.S. Treasury securities in an
amount at least equal to the market value of the securities loaned. State Street
and Chase provide the fund with indemnification against Borrower default. The
fund bears the risk of loss with respect to the investment of cash collateral.
Cash collateral is invested in short-term securities. A portion of the income
generated upon investment of the collateral is remitted to the Borrowers, and
the remainder is allocated between the fund and the lending agents. On loans
collateralized by U.S. Treasury securities, a fee is received from the Borrower,
and is allocated between the fund and the lending agents. 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.
At October 31, 2000, the value of securities loaned was $6,187,937. These loans
were collateralized by cash of $6,460,724 which was invested in the following
short-term obligations:
PRINCIPAL AMORTIZED COST
AMOUNT AND VALUE
------------------------------------------------------------------------------
Salomon Smith Barney, Inc. (GNMA Repurchase
Agreement) $6,460,724 $6,460,724
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. The fund uses the effective
interest method for reporting interest income on payment-in-kind (PIK) bonds.
Some securities may be purchased on a "when-issued" or "forward delivery" basis,
which means that the securities will be delivered to the fund at a future date,
usually beyond customary settlement time.
Legal fees and other related expenses incurred to preserve and protect the value
of a security owned are added to the cost of the security; other legal fees are
expensed. Capital infusions made directly to the security issuer, which are
generally non-recurring, incurred to protect or enhance the value of high-yield
debt securities, are reported as additions to the cost basis of the security.
Costs that are incurred to negotiate the terms or conditions of capital
infusions or that are expected to result in a plan of reorganization are
reported as realized losses. Ongoing costs incurred to protect or enhance an
investment, or costs incurred to pursue other claims or legal actions, are
expensed.
Fees Paid Indirectly - The fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
fund. This amount is shown as a reduction of total expenses on the Statement of
Operations. During the period, the fund's custodian fees were reduced by $35,163
under this arrangement.
Tax Matters and Distributions - The fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
Distributions to shareholders are recorded on the ex-dividend date. The fund
distinguishes between distributions on a tax basis and a financial reporting
basis and only distributions in excess of tax basis earnings and profits are
reported in the financial statements as distributions from paid-in capital.
Differences in the recognition or classification of income between the financial
statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains. During
the year ended October 31, 2000, $2,943,807 was reclassified from accumulated
undistributed net realized gain on investments and foreign currency transactions
to accumulated undistributed net investment income due to differences between
book and tax accounting for foreign currency transactions. This change had no
effect on the net assets or net asset value per share. At October 31, 2000,
accumulated undistributed net investment income (realized gain on investments
and foreign currency transactions) under book accounting were different from tax
accounting due to temporary differences.
Multiple Classes of Shares of Beneficial Interest - The fund offers multiple
classes of shares that differ in their respective distribution and service fees.
All shareholders bear the common expenses of the fund based on daily net assets
of each class, without distinction between share classes. Dividends are declared
separately for each class. Differences in per share dividend rates are generally
due to differences in separate class expenses. Class B shares will convert to
Class A shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities.
The management fee is computed daily and paid monthly at an annual rate of 0.65%
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. Included in Trustees' compensation is a net
periodic pension expense of $12,258 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
$35,203 for the year ended October 31, 2000, as its portion of the sales charge
on sales of Class A shares of the fund.
The Trustees have adopted a distribution plan for Class A, Class B, and Class C
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
The fund's distribution plan provides that the fund will pay MFD up to 0.35% per
annum of its average daily net assets attributable to Class A shares in order
that MFD may pay expenses on behalf of the fund related to the distribution and
servicing of its shares. These expenses include a service fee paid to each
securities dealer that enters into a sales agreement with MFD of up to 0.25% per
annum of the fund's average daily net assets attributable to Class A shares
which are attributable to that securities dealer and a distribution fee to MFD
of up to 0.10% per annum of the fund's average daily net assets attributable to
Class A shares. MFD retains the service fee for accounts not attributable to a
securities dealer, which amounted to $54,195 for the year ended October 31,
2000. Fees incurred under the distribution plan during the year ended October
31, 2000, were 0.35% of average daily net assets attributable to Class A shares
on an annualized basis.
The Trustees have adopted a distribution plan relating to 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 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 $41,742 and $99,235 for Class B and Class C shares, respectively,
for the year ended October 31, 2000. Fees incurred under the distribution plan
during the year ended October 31, 2000, were 1.00% of average daily net assets
attributable to Class B and Class C shares, respectively, on an annualized
basis.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months following
purchase. A contingent deferred sales charge is imposed on shareholder
redemptions of Class B shares in the event of a shareholder redemption within
six years of purchase. MFD receives all contingent deferred sales charges.
Contingent deferred sales charges imposed during the year ended October 31,
2000, were $19,248, $196,112, and $26,564 for Class A, Class B, and Class C
shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the fund's average daily net assets at an annual rate of 0.10%
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, were as follows:
PURCHASES SALES
------------------------------------------------------------------------------
U.S. government securities $107,752,929 $116,638,148
------------ ------------
Investments (non-U.S. government
securities) $210,618,438 $216,688,953
------------ ------------
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 $310,851,109
------------
Gross unrealized appreciation $ 49,417,572
Gross unrealized depreciation (19,371,643)
------------
Net unrealized appreciation $ 30,045,929
============
(5) Shares of Beneficial Interest
The fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
fund shares were as follows:
<TABLE>
<CAPTION>
Class A shares
YEAR ENDED OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 1999
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 4,375,170 $ 60,505,261 9,527,402 $ 134,146,764
Shares issued to shareholders in
reinvestment of distributions 1,141,297 15,423,878 1,085,836 15,052,372
Shares reacquired (5,955,208) (82,372,751) (9,149,274) (128,731,794)
------------- ------------- ------------- -------------
Net increase (decrease) (438,741) $ (6,443,612) 1,463,964 $ 20,467,342
============= ============= ============= =============
<CAPTION>
Class B shares
YEAR ENDED OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 1999
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,175,541 $ 16,208,204 3,001,659 $ 42,221,918
Shares issued to shareholders in
reinvestment of distributions 667,902 9,008,101 605,278 8,397,365
Shares reacquired (2,540,589) (35,113,210) (2,084,987) (29,223,273)
------------- ------------- ------------- -------------
Net increase (decrease) (697,146) $ (9,896,905) 1,521,950 $ 21,396,010
============= ============= ============= =============
<CAPTION>
Class C shares
YEAR ENDED OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 1999
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,120,044 $ 15,459,232 2,526,464 $ 35,622,025
Shares issued to shareholders in
reinvestment of distributions 208,517 2,803,175 162,826 2,255,584
Shares reacquired (1,794,659) (24,697,500) (1,073,242) (14,982,438)
------------- ------------- ------------- -------------
Net increase (decrease) (466,098) $ (6,435,093) 1,616,048 $ 22,895,171
============= ============= ============= =============
<CAPTION>
Class I shares
YEAR ENDED OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 1999
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 126,150 $ 1,778,946 9,498 $ 132,481
Shares issued to shareholders in
reinvestment of distributions 10,643 144,174 12,261 169,958
Shares reacquired (132,567) (1,867,948) (34,292) (480,993)
------------- ------------- ------------- -------------
Net increase (decrease) 4,226 $ 55,172 (12,533) $ (178,554)
============= ============= ============= =============
</TABLE>
(6) Line of Credit
The fund and other affiliated funds participate in a $1.1 billion unsecured line
of credit provided by a syndication of banks under a line of credit agreement.
Borrowings may be made for temporary financing needs. Interest is charged to
each fund, based on its borrowings, at a rate equal to the bank's base rate. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating funds at the end of each
quarter. The commitment fee allocated to the fund for the year ended October 31,
2000, was $2,643. The fund had no borrowings during the year.
(7) Financial Instruments
The fund trades financial instruments with off-balance-sheet risk in the normal
course of its investing activities in order to manage exposure to market risks
such as interest rates and foreign currency exchange rates. These financial
instruments include written options, forward foreign currency exchange
contracts, swap agreements, and futures contracts. The notional or contractual
amounts of these instruments represent the investment the fund has in particular
classes of financial instruments and does not necessarily represent the amounts
potentially subject to risk. The measurement of the risks associated with these
instruments is meaningful only when all related and offsetting transactions are
considered.
Written Option Transactions
NUMBER OF
CONTRACTS PREMIUMS
-----------------------------------------------------------------------------
OUTSTANDING, BEGINNING OF YEAR 2 $ 200,516
Options written 3 172,002
Options terminated in closing transactions (4) (317,761)
----------
OUTSTANDING, END OF YEAR 1 $ 54,757
==========
At October 31, 2000, the fund had sufficient cash and/or securities at least
equal to the value of the written options.
Forward Foreign Currency Exchange Contracts
<TABLE>
<CAPTION>
NET
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION
DATE DELIVER/RECEIVE FOR AT VALUE (DEPRECIATION)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 12/15/00 AUD 1,223,476 $ 681,794 $ 634,147 $ 47,647
12/15/00 CAD 4,388,135 2,974,987 2,876,793 98,194
12/15/00 DKK 37,984,395 4,445,219 4,339,188 106,031
12/15/00 GRD 1,394,317,908 3,587,593 3,484,209 103,384
12/15/00 SEK 21,472,918 2,262,689 2,157,462 105,227
----------- ----------- --------
$13,952,282 $13,491,799 $460,483
=========== =========== ========
Purchases 12/15/00 AUD 1,499,187 $ 833,473 $ 777,052 $(56,421)
----------- ----------- --------
</TABLE>
At October 31, 2000, forward foreign currency purchases and sales under master
netting agreements excluded above amounted to a net receivable of $273,891 with
Merrill Lynch and $23,170 with C. S. First Boston and closed forward foreign
currency exchange contracts excluded above amount to a net payable of $26,930
with Deutsche Bank.
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees of the MFS Series Trust VI and Shareholders of MFS Global Total
Return Fund:
We have audited the accompanying statement of assets and liabilities of MFS
Global Total Return 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 five
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.
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 Total Return Fund at October 31, 2000, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the five years
in the period then ended, in conformity with accounting principles generally
accepted in the United States.
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 $27,483,197 AS A CAPITAL GAIN DIVIDEND FOR THE YEAR
ENDED OCTOBER 31, 2000.
FOR THE YEAR ENDED OCTOBER 31, 2000, THE AMOUNT OF DISTRIBUTIONS FROM INCOME
ELIGIBLE FOR THE 70% DIVIDENDS RECEIVED DEDUCTION FOR CORPORATIONS IS 7.73%.
FOR THE YEAR ENDED OCTOBER 31, 2000, INCOME FROM FOREIGN SOURCES WAS $9,209,226,
AND THE FUND DESIGNATED A FOREIGN TAX CREDIT OF $429,694.
<PAGE>
MFS(R) Global Total Return Fund
TRUSTEES
Marshall N. Cohan+ - Private Investor ASSISTANT TREASURERS
Mark E. Bradley*
Lawrence H. Cohn, M.D.+ - Chief of Robert R. Flaherty*
Cardiac Surgery, Brigham and Women's Laura F. Healy*
Hospital; Professor of Surgery, Ellen Moynihan*
Harvard Medical School
SECRETARY
The Hon. Sir J. David Gibbons, KBE+ - Stephen E. Cavan*
Chief Executive Officer, Edmund
Gibbons Ltd.; Chairman, Colonial ASSISTANT SECRETARY
Insurance Company, Ltd. James R. Bordewick, Jr.*
Abby M. O'Neill+ - Private Investor CUSTODIAN
State Street Bank and Trust Company
Walter E. Robb, III+ - President and
Treasurer, Benchmark Advisors, Inc. AUDITORS
(corporate financial consultants); Ernst & Young LLP
President, Benchmark Consulting
Group, Inc. (office services) INVESTOR INFORMATION
For information on MFS mutual funds,
Arnold D. Scott* - Senior Executive call your investment professional or,
Vice President, Director, and for an information kit, call toll
Secretary, MFS Investment Management free: 1-800-637-2929 any business day
from 9 a.m. to 5 p.m. Eastern time
Jeffrey L. Shames* - Chairman and (or leave a message anytime).
Chief Executive Officer, MFS
Investment Management INVESTOR SERVICE
MFS Service Center, Inc.
J. Dale Sherratt+ - President, P.O. Box 2281
Insight Resources, Inc. (acquisition Boston, MA 02107-9906
planning specialists)
For general information, call toll
Ward Smith+ - Former Chairman (until free: 1-800-225-2606 any business day
1994), NACCO Industries (holding from 8 a.m. to 8 p.m. Eastern time.
company)
For service to speech- or
INVESTMENT ADVISER hearing-impaired, call toll free:
Massachusetts Financial Services Company 1-800-637-6576 any business day from
500 Boylston Street 9 a.m. to 5 p.m. Eastern time. (To
Boston, MA 02116-3741 use this service, your phone must be
equipped with a Telecommunications
DISTRIBUTOR Device for the Deaf.)
MFS Fund Distributors, Inc.
500 Boylston Street For share prices, account balances,
Boston, MA 02116-3741 exchanges, or stock and bond
outlooks, call toll free:
CHAIRMAN AND PRESIDENT 1-800-MFS-TALK (1-800-637-8255)
Jeffrey L. Shames* anytime from a touch-tone telephone.
PORTFOLIO MANAGERS WORLD WIDE WEB
Stephen C. Bryant* www.mfs.com
Steven R. Gorham*
Frederick J. Simmons*
TREASURER
James O. Yost*
+ Independent Trustee
* MFS Investment Management
<PAGE>
MFS(R) GLOBAL TOTAL RETURN 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.
MWT-2 12/00 46M 24/224/324/824
