<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
MFS(R) GLOBAL
EQUITY FUND
SEMIANNUAL REPORT o APRIL 30, 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 ...................................................... 20
Notes to Financial Statements ............................................. 28
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,
Historically, there have been two ways that shareholders in stocks and stock
mutual funds could potentially make money: capital gains from share price
appreciation and dividend payments. Over the past decade, however, it appears
to us that dividends have become less and less relevant as a means of
profiting from stock investments. Investors who in the past may have counted
on dividend payments from stocks or stock funds as a source of income are
sometimes finding their payments are no longer meeting their needs. In the
balance of this letter, we'd like to address why that has happened, why this
may in some ways be good for investors, and what investors may want to do to
adjust to the new reality of shrinking dividends.
A FUNDAMENTAL CHANGE
When a company pays a dividend, it is essentially sharing its profits with
stockholders. Until the 1950s, paying a dividend was standard practice for a
majority of American companies; dividend payments were virtually required to
compensate investors for taking on the risks associated with investing
in stocks.
What has happened in the ensuing decades, however, is a fundamental change in
the way investors view the stock market. The tremendous popularity of
Individual Retirement Accounts and 401(k) retirement plans has introduced a
flood of new investors to stocks and stock mutual funds, and a generally
rising market through most of the past decade has made the experience a very
positive one for many of those shareholders.
As a result, investors appear to be focusing much more on share price and on
company earnings -- which we believe are the strongest long-term
driver of share prices -- than on dividend payments. Summing up the trend, The
New York Times commented on January 4, 2000, that "a growing portion of
corporate America appears to be concluding that dividends are no longer needed
to attract investors and are therefore an unnecessary cost of doing business.
Fewer companies are raising dividends, and more and more major companies do
not bother to pay them at all."
BENEFITS FOR INVESTORS
In assessing whether this trend is good for investors, it may help to look at
what shareholders have traditionally regarded as the benefits of dividends. One
benefit was that a dividend payment served as an indication that a company was
in good health, because it was generating profits that it could share with its
investors. However, there are other ways for a corporation to use its profits
that over the long term may benefit shareholders more than a dividend.
As part of the MFS Original Research(R) process that we use in evaluating
potential investments, one thing we look for is companies that are investing
their profits back in their businesses. Profits can be used to fund additional
research, product development, marketing, and other areas that may improve the
earnings of a company and potentially result in higher stock prices. Share
buybacks are another way we like to see a company reinvest its profits. By
buying back its own shares and thus reducing the number of shares outstanding,
a company may increase the value of existing shares. Over the long term, we
believe such actions may benefit shareholders more than a dividend payment. An
additional reason we feel dividends are an inefficient way for a company to
use its profits is that dividend payouts are subject to double taxation: once
as corporate profits and a second time as ordinary income to shareholders.
POTENTIAL DOWNSIDE PROTECTION
"Downside protection" is a second potential benefit that investors have
historically attributed to dividends. The reasoning went that, during a bad
market period, a stockholder could at least count on dividend payments to
somewhat counteract the effect of declining share prices. We believe, however,
that the best long-term protection against market volatility is simply
investing in good businesses -- which is why our research is focused on
identifying companies with the potential to grow earnings over the long haul,
taking down markets in their stride.
And although dividend payments may appear to provide some short-term
protection against volatility, over the past decade stock prices in general
have risen much faster than dividends, making most dividend payments too small
to provide significant protection. In 1999, for example, the average dividend
yield of stocks in the Standard & Poor's 500 Composite Index was only 1.21%(1)
-- whereas yields had averaged in the 3% - 4% range or greater during the
decades of the 1960s, '70s, and '80s.(2)
ALTERNATE INCOME STREAMS
A third benefit of stock dividend payments has traditionally been that they
may provide a steady stream of income, allowing an investor to receive money
from stock or stock mutual fund investments without selling shares. This
benefit has often been used to provide retirement income. Over the past
decade, however, many investors have found their dividend checks shrinking
while the value of their holdings may have appreciated considerably.
Intuitively, receiving a stream of dividend income without reducing the
principal in one's account may seem preferable to selling shares to generate
income. But investors should also bear in mind the tax consequences of
dividend income. Dividends are federally taxed as ordinary income, whereas
profits from selling stock or mutual fund shares held more than one year are
taxed at the capital gains rate of 20% -- which for many investors is lower
than their ordinary income tax bracket. Many shareholders may find themselves
paying lower taxes on profits from share appreciation than on dividend income.
Given the current reality of low and declining stock dividends, we would
suggest that investors seeking an income stream from their equity portfolio
talk with their investment professionals about alternate payout methods. Two
possible strategies are systematic withdrawals and bond investing.
With a systematic withdrawal, an investor's account is set up to sell shares
in order to pay out a fixed amount on a regular schedule. The advantage of
this approach is that the payout amount is always the same, regardless of
market fluctuations or variations in dividends paid by the holdings in the
account. In a period when the market is rising, share price appreciation may
in fact compensate for some selling of holdings. Of course, the disadvantage
of a systematic withdrawal is that, depending on the payout amount, the
principal balance in the account will most likely shrink as shares are sold.
At some point an investor can potentially run out of money.
For investors who feel more comfortable not drawing down their account
principal, bond funds may present an attractive alternative for providing an
income stream. High-yield bond funds, in particular, may offer the potential
for higher dividend yields than many stock funds are offering today. A
disadvantage is that, historically, bond funds have not tended to offer as
much potential for long-term share price appreciation as have stock funds.
Investors should also understand that, although investments in lower-rated
securities such as high-yield bonds may provide greater returns, they are also
associated with greater-than-average risk.(3) We suggest that investors work
with their investment professionals to determine whether a bond fund or
systematic withdrawal plan may meet their needs within their expected
time frames.
As with most major changes in the financial markets, the overall decline in
stock dividend payments presents a combination of challenges and potential
benefits for investors. We feel that most investors will be best served by
working with their investment professionals to continually monitor such
changes in the financial markets, as well as changes in their own situations,
and adjusting their portfolios accordingly. 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)
May 18, 2000
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(1) Source: Standard & Poor's. The Standard & Poor's 500 Composite Index (the
S&P 500) is a popular, unmanaged index of common stock total return
performance. It is not possible to invest directly in an index.
(2) Source: FactSet Research. The dividend yield of a stock is calculated by
dividing the dividend per share by the current market price per share.
(3) These risks may increase share price volatility. Please see a prospectus for
details.
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 six months ended April 30, 2000, Class A shares of the Fund provided a
total return of 14.34%, Class B shares 13.98%, Class C shares 13.97%, Class I
shares 14.57%, and Class J shares 13.86%. These returns, which assume the
reinvestment of any distributions but exclude the effects of any sales
charges, compare to a 7.64% 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 16.44%.
Q. WHAT FACTORS AFFECTED PERFORMANCE OVER THE PAST SIX MONTHS?
A. In Asia and Europe, as well as in the United States, we witnessed the same
market phenomena: high volatility and rotation between new-economy stocks, or
companies seen as being technology rich, and old-economy stocks; that is,
companies viewed as being technology poor that are doing business the same
way they have been for a long time. Through the fourth quarter of 1999 and
into February 2000, we had a strong rally in new-economy stocks, or what
Europeans refer to as TMT: technology, media, and telecommunications. Then in
March and April we had what we view as a natural correction in high-valuation
TMT issues, with money rotating back toward old-economy stocks.
Although we outperformed the MSCI World Index by a significant margin, we
somewhat underperformed our Lipper peer group. We feel this was largely a
consequence of the relatively broad sector diversification of our portfolio,
as our competitors may have been more narrowly concentrated in TMT issues.
Over the long term, however, we believe diversification may serve investors
better by providing competitive returns over a variety of market cycles.
The market rotation away from TMT in March and April seemed to bear out that
strategy. For the first four months of the period, the big drivers of the
Fund's performance had been our TMT holdings. But when we gave back some of
our TMT gains at the end of the period, the rotation into old-economy stocks
helped some of our other holdings, such as insurance companies. We also
attempted to take advantage of this rotation by buying shares in what we
believe are fundamentally sound companies with depressed stock prices.
Another factor that hurt performance was the decline in the euro over the
period. Since our results must always be converted back into dollars, any
profits we made on European equities would be reduced if the euro declines
versus the dollar. Conversely, a rising euro would give an extra boost to
profits on our European holdings.
Q. OVER THE PAST SIX MONTHS, UTILITIES AND COMMUNICATIONS BECAME THE LARGEST
SECTOR IN THE FUND, REPLACING TECHNOLOGY. COULD YOU COMMENT ON THAT?
A. This is actually a byproduct of our style of individual bottom-up stock
picking. Utilities and communications, particularly telecommunications, is
simply the area where we have found the most individual companies with the
potential for strong earnings growth prospects at reasonable valuations -- as
opposed to some other areas of TMT, where we feel valuations have gotten
dangerously high. Although, as we mentioned, these holdings recently gave up
some of their gains, we still feel very positive about them as a group.
Our focus has been largely on wireless carriers and what are called
alternative carriers. These are companies that come into a market with new
technology, such as all-fiber-optic networks, and we feel are able to
undercut the incumbents' prices. Adelphia Business Solutions and Time Warner
Telecom are examples of alternative carriers. Major wireless carriers that we
hold include NTT Mobile Communications, the largest cellular company in
Japan, Sprint PCS in the United States, and Vodafone AirTouch in the United
Kingdom. Actually, our Vodafone holding began as a position in the German
company Mannesmann. At the time we bought the stock, we felt Mannesmann was a
good business with strong fundamentals at an attractive valuation. We did
quite well when the stock's price increased during an ultimately successful
takeover attempt by Vodafone, and we've held on to it because we have
confidence in the new company.
Q. TECHNOLOGY FELL FROM FIRST PLACE TO BECOME YOUR SECOND-LARGEST SECTOR. WHY
DID THAT HAPPEN?
A. Over the past three to six months, we've sold our positions in some
technology firms that did very well for us and that we still feel are great
companies with solid fundamentals, but whose valuations we felt had become
too high. Sun Microsystems in the United States and STMicroelectronics, a
French semiconductor company, are two examples.
That said, we still hold many technology companies in which we have great
confidence. Motorola, for example, is a company that we believe is well
positioned to expand its profit margins and produce above-average earnings,
yet it is selling at an attractive valuation compared to other companies in
similar businesses.
Q. IN WHAT AREAS ARE YOU FINDING NEW OPPORTUNITIES?
A. We believe the recent underperformance of some pharmaceutical stocks
presented an opportunity for the portfolio. Our research revealed that,
although prices were down, the fundamentals of these companies had not
changed and their growth rates appeared intact. So we felt their lower
valuations made these companies attractive holdings, and we took positions in
companies such as Warner-Lambert in the United States and Novartis, a Swiss
firm that is one of the world's largest drug companies.
A second area in which we've increased our holdings is energy. Here again, we
found companies that had underperformed during the period for reasons that we
believed were temporary and were thus trading at very attractive valuations.
Q. COULD YOU GIVE US YOUR OUTLOOK ON THE MARKETS?
A. On a cautionary note, we feel that valuations in the markets are high, so
investors should not expect overall returns to be what they've been in the
past. That said, we think fundamentals have actually improved over the past
year for a majority of the companies that we've invested in, for a number of
reasons.
One factor is the strong dollar. We talked about this earlier as a negative
for the Fund. But it is actually a positive factor for overseas firms
competing against dollar-based companies. In the United States, for example,
we have found that a strong dollar makes imported goods cheaper and therefore
more competitive.
We also see the establishment of the euro zone as a positive development. We
believe it is propelling European companies into a wider marketplace, forcing
them to act more competitively and focus more on delivering stock performance
for shareholders. Other factors contributing to an outlook for strong
earnings growth in our overseas investments include continued deregulation in
a lot of foreign marketplaces and industries and ongoing restructuring in
Europe and Asia -- trends that mirror earlier developments in the United
States that strongly contributed to our current boom.
Summing up, we're optimistic that the strength in the U.S. markets will
continue, albeit with some temporary bumps in the road, and our outlook for
our holdings in Europe and Asia continues to improve.
/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.
It is not possible to invest directly in an index.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
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DAVID R. MANNHEIM IS SENIOR VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R) AND DIRECTOR OF INTERNATIONAL PORTFOLIO MANAGEMENT. HE IS
PORTFOLIO MANAGER OF MFS(R) GLOBAL EQUITY FUND, MFS(R) INTERNATIONAL
GROWTH FUND, MFS(R) INSTITUTIONAL INTERNATIONAL EQUITY FUND, AND THE
INTERNATIONAL GROWTH SERIES OFFERED THROUGH MFS(R)/SUN LIFE
ANNUITY PRODUCTS.
MR. MANNHEIM JOINED MFS IN 1988 AND WAS NAMED INVESTMENT OFFICER IN
1990, ASSISTANT VICE PRESIDENT IN 1991, 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 MASSACHUSETTS INSTITUTE OF TECHNOLOGY 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.
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This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any
other MFS product is available from your 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: $863.1 MILLION NET ASSETS AS OF APRIL 30, 2000
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PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
the applicable time periods. Investment results reflect the percentage change
in net asset value, including reinvestment of dividends. (See Notes to
Performance Summary.)
<TABLE>
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH APRIL 30, 2000
CLASS A
<CAPTION>
6 Months 1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +14.34% +17.91% +56.24% +121.07% +213.94%
------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales
Charge -- +17.91% +16.04% + 17.19% + 12.12%
------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales
Charge -- +11.13% +13.77% + 15.81% + 11.46%
------------------------------------------------------------------------------------------------------------------
CLASS B
<CAPTION>
6 Months 1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------------------------------------------
Cumulative Total Return Excluding Sales Charge +13.98% +17.04% +52.73% +112.66% +196.47%
------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales
Charge -- +17.04% +15.16% + 16.29% + 11.48%
------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales
Charge -- +13.04% +14.40% + 16.07% + 11.48%
------------------------------------------------------------------------------------------------------------------
CLASS C
<CAPTION>
6 Months 1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------------------------------------------
Cumulative Total Return Excluding Sales Charge +13.97% +17.02% +52.67% +112.76% +197.10%
------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales
Charge -- +17.02% +15.15% + 16.30% + 11.50%
------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales
Charge -- +16.02% +15.15% + 16.30% + 11.50%
------------------------------------------------------------------------------------------------------------------
CLASS I
<CAPTION>
6 Months 1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------------------------------------------
Cumulative Total Return Excluding Sales Charge +14.57% +18.23% +57.50% +120.03% +206.75%
------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales
Charge -- +18.23% +16.35% + 17.08% + 11.86%
------------------------------------------------------------------------------------------------------------------
CLASS J
<CAPTION>
6 Months 1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------------------------------------------
Cumulative Total Return Excluding Sales Charge +13.86% +17.29% +53.06% +113.12% +197.11%
------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales
Charge -- +17.29% +15.24% + 16.34% + 11.50%
------------------------------------------------------------------------------------------------------------------
Average Annual Total Return Including Sales
Charge -- +13.77% +14.08% + 15.63% + 11.17%
------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO PERFORMANCE SUMMARY
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 5.75% sales charge. Class B Share Performance Including
Sales Charge takes into account the deduction of the applicable contingent
deferred sales charge (CDSC), which declines over six years from 4% to 0%. Class
C Share Performance Including Sales Charge takes into account the deduction of
the 1% CDSC applicable to Class C shares redeemed within 12 months. Class I
shares have no sales charge and are only available to certain institutional
investors. Class 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 include 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,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details. All
results are historical and assume the reinvestment of capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MORE RECENT
RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
Investments in foreign and emerging market securities may provide superior
returns but also involve greater risk than U.S. investments. Investments in
foreign and emerging market securities may be favorably or unfavorably
affected by changes in interest rates and currency exchange rates, market
conditions, and the economic and political conditions of the countries where
investments are made. These risks may increase share price volatility. See the
prospectus for details.
<PAGE>
PORTFOLIO CONCENTRATION AS OF APRIL 30, 2000
FIVE LARGEST STOCK SECTORS
UTILITIES & COMMUNICATIONS 22.4%
TECHNOLOGY 13.2%
FINANCIAL SERVICES 11.3%
LEISURE 10.5%
HEALTH CARE 10.2%
TOP 10 STOCK HOLDINGS
NTT MOBILE COMMUNICATIONS CANON, INC. 1.8%
NETWORK, INC. 2.9% Japanese office equipment and
Japanese mobile phone company imaging company
COMPUTER ASSOCIATES HITACHI LTD. 1.7%
INTERNATIONAL, INC. 2.8% Japanese electronics company
U.S. computer software company
BAUSCH & LOMB, INC. 1.6%
VODAFONE AIRTOUCH PLC 2.2% U.S. manufacturer of vision-related
U.K. telecommunications company health care products
CHUGAI PHARMACEUTICAL CO. LTD. 2.0% AKZO NOBEL N.V. 1.6%
Japanese pharmaceutical manufacturer Diversified Dutch pharmaceutical
and chemical company
RELIASTAR FINANCIAL CORP. 1.8%
U.S. life and health insurance company SAAB AB, "B" 1.6%
Swedish aircraft, space, and
defense company
The portfolio is actively managed, and current holdings may be different.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- April 30, 2000
Stocks - 97.2%
------------------------------------------------------------------------------------------------------
<CAPTION>
ISSUER SHARES VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Stocks - 56.3%
Argentina
IMPSAT Fiber Networks, Inc. (Telecommunications)* 6,580 $ 104,046
------------------------------------------------------------------------------------------------------
Australia - 1.8%
Publishing & Broadcasting Ltd. (Broadcasting) 592,124 $ 4,595,208
QBE Insurance Group Ltd. (Insurance)* 2,544,923 10,681,336
------------
$ 15,276,544
------------------------------------------------------------------------------------------------------
Bermuda - 0.3%
FLAG Telecom Holdings Ltd. (Telecommunications)* 151,930 $ 2,962,635
------------------------------------------------------------------------------------------------------
Canada - 2.2%
724 Solutions, Inc. (Internet)* 5,750 $ 290,375
Anderson Exploration Ltd. (Oils)* 277,500 4,442,549
AT&T Canada, Inc. (Telecommunications)* 2,500 106,563
BCE, Inc. (Telecommunications) 37,900 4,390,604
Canadian National Railway Co. (Railroads) 348,600 9,782,587
GT Group Telecom, Inc., "B" (Telecommunications)* 8,200 106,088
------------
$ 19,118,766
------------------------------------------------------------------------------------------------------
Finland - 1.5%
Helsingin Puhelin Oyj (Telecommunications) 160,975 $ 12,714,355
------------------------------------------------------------------------------------------------------
France - 7.4%
Aventis S.A. (Pharmaceuticals) 72,700 $ 3,997,660
Banque Nationale de Paris (Banks and Credit Cos.) 80,800 6,528,738
Bouygues S.A. (Telecommunications) 15,200 9,698,327
Castorama Dubois Investisse (Retail) 28,329 6,179,575
Sanofi-Synthelabo S.A. (Medical and Health Products)* 231,200 8,626,152
Technip S.A. (Construction) 56,200 6,410,563
Television Francaise (Entertainment) 5,200 3,558,889
Total S.A., "B" (Oils) 71,000 10,770,375
Vivendi S.A. (Business Services) 85,000 8,405,508
------------
$ 64,175,787
------------------------------------------------------------------------------------------------------
Germany - 1.7%
Henkel KGaA, Preferred (Chemicals) 41,900 $ 2,437,306
Prosieben Media AG, Preferred (Entertainment)* 132,735 11,847,128
------------
$ 14,284,434
------------------------------------------------------------------------------------------------------
Greece - 0.3%
Antenna TV S.A., ADR (Broadcasting)* 132,600 $ 2,560,837
------------------------------------------------------------------------------------------------------
Ireland - 0.4%
Anglo Irish Bank Corp. PLC (Banks and Credit Cos.) 1,496,839 $ 3,308,570
------------------------------------------------------------------------------------------------------
Israel - 0.2%
Partner Communications Co. Ltd., ADR (Cellular Telephones)* 178,200 $ 1,904,512
------------------------------------------------------------------------------------------------------
Italy - 1.0%
Telecom Italia Mobile S.p.A., Saving Shares
(Telecommunications)* 2,178,000 $ 8,571,600
------------------------------------------------------------------------------------------------------
Japan - 13.4%
Canon, Inc. (Special Products and Services) 335,000 $ 15,324,567
Chugai Pharmaceutical Co. Ltd. (Pharmaceuticals) 855,000 16,468,192
Chukyo Coca-Cola Bottling Co. Ltd. (Food and
Beverage Products) 177,000 1,712,798
Fast Retailing Co. (Retail) 24,300 10,710,992
Fuji Heavy Industries Ltd. (Automotive) 699,000 5,340,078
Fujitsu Ltd. (Computer Hardware - Systems) 88,000 2,493,564
Hitachi Ltd. (Electronics) 1,164,000 13,904,621
Mikuni Coca-Cola Bottling Co. Ltd. (Food and
Beverage Products) 269,000 3,661,728
Mitsubishi Motors Corp. (Automotive) 885,000 3,122,373
Nippon Telegraph & Telephone Co. (Utilities -
Telephone) 570 7,072,877
NTT Mobile Communications Network, Inc.
(Telecommunications) 718 24,002,038
Sony Corp. (Electronics) 20,800 2,390,295
Sony Corp., New Shares (Electronics)* 20,800 2,407,630
Toshiba Corp. (Electronics) 678,000 6,579,720
------------
$115,191,473
------------------------------------------------------------------------------------------------------
Mexico - 0.4%
Grupo Television S.A. de C.V., GDR (Entertainment)* 11,100 $ 704,156
Kimberly-Clark de Mexico S.A. de C.V. (Forest and
Paper Products) 835,060 2,690,305
------------
$ 3,394,461
------------------------------------------------------------------------------------------------------
Netherlands - 5.3%
Akzo Nobel N.V. (Chemicals) 327,700 $ 13,412,030
Completel Europe N.V. (Telecommunications)* 9,390 164,717
Fox Kids Europe N.V. (Telecommunications)* 44,410 728,575
ING Groep N.V. (Financial Services)* 139,271 7,597,537
Koninklijke (Royal) Philips Electronics N.V
(Electronics) 219,200 9,776,259
KPN N.V. (Telecommunications)* 108,800 10,961,771
Libertel N.V. (Cellular Telecommunications)* 177,907 3,120,804
------------
$ 45,761,693
------------------------------------------------------------------------------------------------------
Norway - 0.9%
NetCom ASA (Telecommunications)* 37,680 $ 1,493,569
Schibsted ASA (Publishing) 175,910 3,653,334
Sparebanken NOR (Banks and Credit Cos.) 169,400 3,007,436
------------
$ 8,154,339
------------------------------------------------------------------------------------------------------
Portugal - 0.5%
Telecel - Comunicacoes Pessoais, S.A
(Cellular Telecommunications) 266,000 $ 4,206,753
------------------------------------------------------------------------------------------------------
Singapore - 2.0%
Overseas Union Bank Ltd. (Banks and Credit Cos.) 1,747,332 $ 7,988,974
Overseas-Chinese Banking Corp. Ltd. (Banks and
Credit Cos.) 771,000 5,287,632
Singapore Press Holdings Ltd. (Printing and
Publishing) 205,000 4,013,482
------------
$ 17,290,088
------------------------------------------------------------------------------------------------------
South Korea
Mirae Corp., ADR (Electronics)* 24,300 $ 230,850
------------------------------------------------------------------------------------------------------
Spain - 0.6%
Repsol S.A. (Oils) 265,500 $ 5,429,542
------------------------------------------------------------------------------------------------------
Sweden - 1.8%
NetCom AB, "B" (Telecommunications)* 22,100 $ 1,570,997
Saab AB, "B" (Aerospace) 1,643,859 13,391,553
Tele1 Europe Holdings AB (Telecommunications)* 7,260 114,235
------------
$ 15,076,785
------------------------------------------------------------------------------------------------------
Switzerland - 1.4%
Jomed N.V. (Medical and Health Products)* 33,190 $ 1,010,540
Nestle S.A. (Food and Beverage Products) 2,325 4,099,055
Novartis AG (Medical and Health Products) 4,510 6,300,870
Synthes-Stratec, Inc. (Medical Products)* 1,781 756,925
------------
$ 12,167,390
------------------------------------------------------------------------------------------------------
United Kingdom - 13.2%
AstraZeneca Group PLC (Medical and Health Products) 193,824 $ 8,100,334
BP Amoco PLC (Oils) 867,600 7,488,554
BP Amoco PLC, ADR (Oils) 82,820 4,223,820
BAE Systems PLC (Aerospace)* 1,053,062 6,474,823
Cable & Wireless Communications PLC
(Telecommunications) 869,622 13,035,680
Cable & Wireless PLC (Telecommunications) 159,300 2,643,321
Capital Radio PLC (Broadcasting) 140,800 3,232,746
Carlton Communicatons PLC (Broadcasting) 705,310 8,547,036
CGU PLC (Insurance)* 587,400 8,421,132
Diageo PLC (Food and Beverage Products)* 630,794 5,086,209
NDS Group PLC, ADR (Internet)* 9,480 535,620
Next PLC (Retail) 672,200 5,257,890
Reckitt Benckiser PLC (Consumer Goods and Services)* 504,900 5,193,013
Royal Bank of Scotland PLC (Banks and Credit Cos.)* 445,444 6,947,647
United News & Media PLC (Broadcasting) 787,800 10,239,514
Vodafone AirTouch PLC (Telecommunications)* 4,072,805 18,638,795
------------
$114,066,134
------------------------------------------------------------------------------------------------------
Total Foreign Stocks $485,951,594
------------------------------------------------------------------------------------------------------
U.S. Stocks - 40.9%
Aerospace - 0.4%
TRW, Inc. 59,400 $ 3,474,900
------------------------------------------------------------------------------------------------------
Automotive - 0.7%
Delphi Automotive Systems Corp. 290,100 $ 5,548,163
------------------------------------------------------------------------------------------------------
Business Machines - 1.3%
Hewlett-Packard Co. 54,000 $ 7,290,000
International Business Machines Corp. 35,500 3,962,687
------------
$ 11,252,687
------------------------------------------------------------------------------------------------------
Business Services - 1.3%
Computer Sciences Corp.* 123,900 $ 10,105,594
United Parcel Service, Inc., "B" 16,890 1,123,185
------------
$ 11,228,779
------------------------------------------------------------------------------------------------------
Cellular Telephones - 2.8%
Motorola, Inc. 109,100 $ 12,989,719
Sprint Corp. (PCS Group)* 195,300 10,741,500
------------
$ 23,731,219
------------------------------------------------------------------------------------------------------
Computer Software - Systems - 4.4%
Electronic Data Systems Corp. 67,700 $ 4,654,375
BMC Software, Inc.* 154,375 7,226,680
Computer Associates International, Inc. 415,400 23,184,512
Compuware Corp.* 257,000 3,228,563
------------
$ 38,294,130
------------------------------------------------------------------------------------------------------
Entertainment - 3.2%
Disney (Walt) Co. 262,300 $ 11,360,869
Hearst-Argyle Television, Inc.* 216,100 4,605,631
Time Warner, Inc. 129,300 11,628,919
------------
$ 27,595,419
------------------------------------------------------------------------------------------------------
Food and Beverage Products - 0.9%
Keebler Foods Co. 249,200 $ 7,834,225
------------------------------------------------------------------------------------------------------
Insurance - 4.8%
CIGNA Corp. 87,000 $ 6,938,250
Hartford Financial Services Group, Inc. 220,800 11,523,000
Marsh & McLennan Cos., Inc. 65,800 6,485,412
MetLife, Inc.* 72,670 1,203,597
ReliaStar Financial Corp. 359,100 15,463,744
------------
$ 41,614,003
------------------------------------------------------------------------------------------------------
Machinery - 2.1%
Deere & Co., Inc. 269,500 $ 10,881,062
Ingersoll Rand Co. 156,000 7,322,250
------------
$ 18,203,312
------------------------------------------------------------------------------------------------------
Medical and Health Products - 3.9%
Bausch & Lomb, Inc. 223,800 $ 13,511,925
Bristol-Myers Squibb Co. 63,300 3,319,294
Pharmacia Corp. 174,500 8,714,094
Warner-Lambert Co. 70,000 7,966,875
------------
$ 33,512,188
------------------------------------------------------------------------------------------------------
Oils - 4.1%
Apache Corp. 132,400 $ 6,413,125
Coastal Corp. 177,000 8,883,188
Conoco, Inc., "A" 408,700 9,732,169
EOG Resources, Inc. 430,500 10,708,687
------------
$ 35,737,169
------------------------------------------------------------------------------------------------------
Photographic Products - 0.8%
Polaroid Corp. 328,200 $ 6,625,537
------------------------------------------------------------------------------------------------------
Retail - 2.5%
BJ's Wholesale Club, Inc.* 193,700 $ 6,864,244
CVS Corp. 230,600 10,031,100
Federated Department Stores, Inc.* 71,200 2,420,800
Gap, Inc. 71,200 2,616,600
------------
$ 21,932,744
------------------------------------------------------------------------------------------------------
Supermarkets - 1.2%
Safeway, Inc.* 226,800 $ 10,007,550
------------------------------------------------------------------------------------------------------
Telecommunications - 6.5%
Adelphia Business Solutions, "A"* 155,500 $ 5,442,500
AT&T Wireless Group* 133,460 4,245,696
Bell Atlantic Corp. 75,700 4,485,225
BroadWing, Inc.* 162,300 4,595,119
Corning, Inc. 15,400 3,041,500
GTE Corp. 93,600 6,341,400
Lucent Technologies, Inc. 55,700 3,463,844
NTL, Inc.* 114,000 8,721,000
Sprint Corp.* 83,400 5,129,100
Tellabs, Inc.* 145,400 7,969,737
Time Warner Telecom, Inc., "A"* 52,700 2,885,325
------------
$ 56,320,446
------------------------------------------------------------------------------------------------------
Total U.S. Stocks $352,912,471
------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $725,702,114) $838,864,065
------------------------------------------------------------------------------------------------------
Short-Term Obligations - 4.3%
------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 5/01/00 $ 16,930 $ 16,930,000
General Electric Capital Corp., due 5/01/00 20,000 20,000,000
------------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 36,930,000
------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $762,632,114) $875,794,065
Other Assets, Less Liabilities - (1.5)% (12,734,911)
------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $863,059,154
------------------------------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
-------------------------------------------------------------------------------------
APRIL 30, 2000
-------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at value (identified cost, $762,632,114) $875,794,065
Investments of cash collateral for securities loaned, at
identified cost and value 49,611,025
Cash 1,991
Foreign currency, at value (identified cost, $1,389,243) 1,386,693
Receivable for Fund shares sold 2,209,459
Receivable for investments sold 3,026,106
Dividends and interest receivable 2,049,490
Other assets 6,538
------------
Total assets $934,085,367
------------
Liabilities:
Payable for Fund shares reacquired $ 11,527,306
Payable for investments purchased 9,447,618
Collateral for securities loaned, at value 49,611,025
Payable to affiliates -
Management fee 70,538
Shareholder servicing agent fee 7,054
Distribution and service fee 48,872
Administrative fee 1,234
Accrued expenses and other liabilities 312,566
------------
Total liabilities $ 71,026,213
------------
Net assets $863,059,154
============
Net assets consist of:
Paid-in capital $674,074,595
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 113,080,657
Accumulated undistributed net realized gain on
investments and foreign transactions 77,748,386
Accumulated net investment loss (1,844,484)
------------
Total $863,059,154
============
Shares of beneficial interest outstanding 36,659,003
============
Class A shares:
Net asset value per share
(net assets of $456,937,486 / 19,277,530 shares of
beneficial interest outstanding) $23.70
======
Offering price per share (100 / 94.25 of net asset value
per share) $25.15
======
Class B shares:
Net asset value and offering price per share
(net assets of $334,259,816 / 14,270,537 shares of
beneficial interest outstanding) $23.42
======
Class C shares:
Net asset value and offering price per share
(net assets of $56,379,272 / 2,446,165 shares of
beneficial interest outstanding) $23.05
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $982,304 / 41,210 shares of beneficial
interest outstanding) $23.84
======
Class J shares:
Net asset value and redemption price per share
(net assets of $14,500,276 / 623,561 shares of
beneficial interest outstanding) $23.25
======
Offering price per share (100 / 97 of net asset value
per share) $23.97
======
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.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
----------------------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2000
----------------------------------------------------------------------------------------------
<S> <C>
Net investment income (loss):
Income -
Dividends $ 5,144,372
Interest 1,270,238
Foreign taxes withheld (417,591)
------------
Total investment income $ 5,997,019
------------
Expenses -
Management fee $ 4,081,646
Trustees' compensation 19,496
Shareholder servicing agent fee 408,165
Distribution and service fee (Class A) 543,352
Distribution and service fee (Class B) 1,618,850
Distribution and service fee (Class C) 265,892
Distribution and service fee (Class J) 17,977
Administrative fee 46,913
Custodian fee 330,202
Printing 35,223
Postage 83,450
Auditing fees 16,896
Legal fees 6,861
Miscellaneous 330,169
------------
Total expenses $ 7,805,092
Fees paid indirectly (36,770)
------------
Net expenses $ 7,768,322
------------
Net investment loss $ (1,771,303)
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 78,646,307
Foreign currency transactions (81,220)
------------
Net realized gain on investments and foreign currency transactions $ 78,565,087
------------
Change in unrealized appreciation (depreciation) -
Investments $ 25,824,532
Translation of assets and liabilities in foreign currencies (74,740)
------------
Net unrealized gain on investments $ 25,749,792
------------
Net realized and unrealized gain on investments and foreign
currency $104,314,879
------------
Increase in net assets from operations $102,543,576
============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Statement of Changes in Net Assets
-------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, 1999
(UNAUDITED)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (1,771,303) $ (2,511,114)
Net realized gain on investments and foreign currency
transactions 78,565,087 90,716,444
Net unrealized gain on investments and foreign currency
translation 25,749,792 5,150,895
------------ ------------
Increase in net assets from operations $102,543,576 $ 93,356,225
------------ ------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) (32,586,365) (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 $(59,180,738) $(27,669,006)
------------ ------------
Net increase in net assets from Fund share transactions $ 98,684,279 $ 77,262,844
------------ ------------
Total increase in net assets $142,047,117 $142,950,063
Net assets:
At beginning of period 721,012,037 578,061,974
------------ ------------
At end of period (including accumulated net investment
loss of $1,844,484 and $73,181, respectively) $863,059,154 $721,012,037
============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights
---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED --------------------------------------------------------------
APRIL 30, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
---------------------------------------------------------------------------------------------------------------------------------
CLASS A
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 $16.95
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.01) $ -- $ 0.06 $ 0.08 $ 0.07 $ 0.09
Net realized and unrealized
gain on investments and
foreign currency 3.14 3.14 1.35 3.49 2.60 1.37
------ ------ ------ ------ ------ ------
Total from investment operations $ 3.13 $ 3.14 $ 1.41 $ 3.57 $ 2.67 $ 1.46
------ ------ ------ ------ ------ ------
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) (1.73)
------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.93) $(0.99) $(1.15) $(1.93) $(0.90) $(1.73)
------ ------ ------ ------ ------ ------
Net asset value - end of period $23.70 $22.50 $20.35 $20.09 $18.45 $16.68
====== ====== ====== ====== ====== ======
Total return(+) 14.34%++ 15.82% 7.46% 20.81% 16.72% 10.16%
Ratios (to average net assets)/
Supplemental data:
Expenses## 1.55%+ 1.59% 1.60% 1.63% 1.65% 1.61%
Net investment income (loss) (0.08)%+ 0.00% 0.28% 0.42% 0.38% 0.58%
Portfolio turnover 48% 92% 64% 65% 83% 73%
Net assets at end of period (000 Omitted) $456,937 $384,436 $280,454 $167,390 $94,909 $52,164
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
(+) Total returns for Class A shares do not include the applicable sales charge. If the 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,
SIX MONTHS ENDED -------------------------------------------------------------
APRIL 30, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
---------------------------------------------------------------------------------------------------------------------------------
CLASS B
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 $16.78
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.10) $(0.09) $(0.11) $(0.07) $(0.08) $(0.05)
Net realized and unrealized
gain on investments and foreign currency 3.10 3.04 1.39 3.46 2.60 1.37
------ ------ ------ ------ ------ ------
Total from investment operations $ 3.00 $ 2.95 $ 1.28 $ 3.39 $ 2.52 $ 1.32
------ ------ ------ ------ ------ ------
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) $(1.55)
------ ------ ------ ------ ------ ------
Net asset value - end of period $23.42 $22.17 $20.21 $19.97 $18.36 $16.55
====== ====== ====== ====== ====== ======
Total return 13.98%++ 14.90% 6.75% 19.74% 15.75% 9.07%
Ratios (to average net assets)/
Supplemental data:
Expenses## 2.30%+ 2.34% 2.35% 2.39% 2.45% 2.55%
Net investment loss (0.84)%+ (0.76)% (0.51)% (0.36)% (0.44)% (0.35)%
Portfolio turnover 48% 92% 64% 65% 83% 73%
Net assets at end of period (000 Omitted) $334,260 $287,700 $267,886 $253,354 $182,139 $156,286
+ 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
---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED --------------------------------------------------------------
APRIL 30, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
---------------------------------------------------------------------------------------------------------------------------------
CLASS C
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $21.89 $19.97 $19.78 $18.24 $16.53 $16.80
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.10) $(0.16) $(0.10) $(0.06) $(0.06) $(0.05)
Net realized and unrealized gain on
investments and foreign currency 3.06 3.07 1.34 3.44 2.57 1.37
------ ------ ------ ------ ------ ------
Total from investment operations $ 2.96 $ 2.91 $ 1.24 $ 3.38 $ 2.51 $ 1.32
------ ------ ------ ------ ------ ------
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) (1.59)
------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.80) $(0.99) $(1.05) $(1.84) $(0.80) $(1.59)
------ ------ ------ ------ ------ ------
Net asset value - end of period $23.05 $21.89 $19.97 $19.78 $18.24 $16.53
====== ====== ====== ====== ====== ======
Total return 13.97%++ 14.88% 6.64% 19.86% 15.82% 9.20%
Ratios (to average net assets)/
Supplemental data:
Expenses## 2.30%+ 2.34% 2.35% 2.36% 2.39% 2.49%
Net investment loss (0.83)%+ (0.76)% (0.50)% (0.33)% (0.34)% (0.31)%
Portfolio turnover 48% 92% 64% 65% 83% 73%
Net assets at end of period (000 Omitted) $56,379 $47,335 $29,123 $16,658 $7,503 $2,908
+ 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
--------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD ENDED
SIX MONTHS ENDED ---------------------- OCTOBER 31,
APRIL 30, 2000 1999 1998 1997*
(UNAUDITED)
--------------------------------------------------------------------------------------------------------------
CLASS I
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $22.63 $20.42 $20.14 $17.57
------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.02 $ 0.06 $ 0.11 $ 0.13
Net realized and unrealized gain on
investments and foreign currency 3.16 3.14 1.37 2.44
------ ------ ------ ------
Total from investment operations $ 3.18 $ 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 $23.84 $22.63 $20.42 $20.14
====== ====== ====== ======
Total return 14.57%++ 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 0.16%+ 0.26% 0.51% 0.77%+
Portfolio turnover 48% 92% 64% 65%
Net assets at end of period (000 Omitted) $982 $817 $599 $472
* For the period from the inception of Class I, 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
------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
APRIL 30, 2000 OCTOBER 31, 1999*
(UNAUDITED)
------------------------------------------------------------------------------------------------------
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 $(0.02) $(0.10)
Net realized and unrealized gain (loss) on investments and
foreign currency 3.04 (0.27)
------ ------
Total from investment operations $ 3.02 $(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 $23.25 $22.21
====== ======
Total return(+) 13.86%++ (1.55)%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.25%+ 2.37%+
Net investment loss (0.22)%+ (1.34)%+
Portfolio turnover 48% 92%
Net assets at end of period (000 Omitted) $14,500 $724
* For the period from the inception of Class J, 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 (Unaudited)
(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") 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/or 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 April 30, 2000, the value of securities loaned was $66,053,500. These loans
were collateralized by U.S. Treasury securities of $20,697,411 and cash of
$49,611,025, which was invested in the following short-term obligations:
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED COST
AMOUNT AND VALUE
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Morgan Stanley Dean Witter & Co., 6.21%, due 5/1/2000 $ 1,000,000 $ 1,000,000
Salomon Smith Barney, Inc., 5.85%, due 5/1/2000 37,219,646 37,219,646
Federal National Mortgage Association, 5.89%, due 5/18/2000 4,938,566 4,938,566
Federal Home Loan Mortgage Corporation, 6.03%, due 5/30/2000 4,953,528 4,953,528
Deutsche Bank N.Y., 6.53%, due 1/12/2001 1,499,285 1,499,285
-----------
Total investment of cash collateral for securities loaned $49,611,025
===========
</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 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 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.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits be reported in the financial statements as distributions from paid-in
capital. Differences in the recognition or classification of income between
the financial statements and tax earnings and profits, which result in
temporary over-distributions for financial statement purposes, are classified
as distributions in excess of net investment income or net realized gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. Differences in per share dividend rates
are generally due to differences in separate class expenses. Class B shares
will convert to Class A shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at the following annual
rates:
First $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 and Mr. Bailey.
Included in Trustees' compensation is a net periodic pension expense of $6,226
for the six months ended April 30, 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
$86,460 for the six months ended April 30, 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. Payment of the 0.10% per annum
Class A distribution fee will commence on such date as the Trustees of the
Trust may determine. MFD retains the service fee for accounts not attributable
to a securities dealer, which amounted to $25,530 for the six months ended
April 30, 2000. Fees incurred under the distribution plan during the six
months ended April 30, 2000, were 0.25% of average daily net assets
attributable to Class A shares on an annualized basis.
The Fund's distribution plan provides that the Fund will pay MFD a
distribution fee of 0.75% per annum, and a service fee of up to 0.25% per
annum, of the Fund's average daily net assets attributable to Class B and
Class C shares. MFD will pay to securities dealers that enter into a sales
agreement with MFD all or a portion of the service fee attributable to Class B
and Class C shares, and will pay to such securities dealers all of the
distribution fee attributable to Class C shares. The service fee is intended
to be consideration for services rendered by the dealer with respect to Class
B and Class C shares. MFD retains the service fee for accounts not
attributable to a securities dealer, which amounted to $16,652 and $472 for
Class B and Class C shares, respectively, for the six months ended April 30,
2000. Fees incurred under the distribution plan during the six months ended
April 30, 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 up to 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 Fund's 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 six months ended April
30, 2000, were 0.95% of average 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 six months ended April
30, 2000, were $10,669, $170,550, and $4,770 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
$427,117,635 and $369,762,242, 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 $762,632,114
------------
Gross unrealized appreciation $146,148,956
Gross unrealized depreciation (32,987,005)
------------
Net unrealized appreciation $113,161,951
============
(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>
SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED OCTOBER 31, 1999
------------------------------------- ---------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 10,167,371 $ 240,813,734 63,109,043 $ 1,369,325,357
Shares issued to
shareholders in
reinvestment of
distributions 1,382,578 31,365,834 642,440 13,367,581
Shares reacquired (9,355,164) (223,010,642) (60,450,001) (1,314,372,776)
----------- ------------- ----------- ---------------
Net increase 2,194,785 $ 49,168,926 3,301,482 $ 68,320,162
=========== ============= =========== ===============
Class B Shares
<CAPTION>
SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED OCTOBER 31, 1999
------------------------------------- ---------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------
Shares sold 2,614,820 $ 60,765,551 4,761,616 $ 102,673,871
Shares issued to
shareholders in
reinvestment of
distributions 921,718 20,701,057 584,724 12,010,215
Shares reacquired (2,241,287) (52,497,579) (5,627,951) (121,304,803)
----------- ------------- ----------- ---------------
Net increase (decrease) 1,295,251 $ 28,969,029 (281,611) $ (6,620,717)
=========== ============= =========== ===============
Class C Shares
<CAPTION>
SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED OCTOBER 31, 1999
------------------------------------- ---------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------
Shares sold 1,158,706 $ 26,678,288 3,608,010 $ 76,600,971
Shares issued to
shareholders in
reinvestment of
distributions 154,992 3,425,313 63,158 1,280,840
Shares reacquired (1,030,381) (23,817,896) (2,966,772) (63,177,836)
----------- ------------- ----------- ---------------
Net increase 283,317 $ 6,285,705 704,396 $ 14,703,975
=========== ============= =========== ===============
Class I Shares
<CAPTION>
SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED OCTOBER 31, 1999
------------------------------------- ---------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------
Shares sold 45,312 $ 1,116,395 12,469 $ 272,774
Shares issued to
shareholders in
reinvestment of
distributions 3,029 68,977 1,469 30,528
Shares reacquired (43,235) (1,066,601) (7,198) (161,537)
----------- ------------- ----------- ---------------
Net increase 5,106 $ 118,771 6,740 $ 141,765
=========== ============= =========== ===============
Class J Shares
<CAPTION>
SIX MONTHS ENDED APRIL 30, 2000 PERIOD ENDED OCTOBER 31, 1999*
------------------------------------- ---------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------
Shares sold 622,217 $ 14,887,215 32,609 $ 717,659
Shares reacquired (31,265) (745,367) -- --
----------- ------------- ----------- ---------------
Net increase 590,952 $ 14,141,848 32,609 $ 717,659
=========== ============= =========== ===============
* For the period from the inception of Class J, July 7, 1999, through October 31, 1999.
</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 to temporarily finance the repurchase of
Fund shares. Interest is charged to each fund, based on its borrowings, at a
rate equal to the bank's base rate. In addition, a commitment fee, based on
the average daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated
to the Fund for the six months ended April 30, 2000, was $2,927. The Fund had
no borrowings during the period.
<PAGE>
<TABLE>
MFS(R) GLOBAL EQUITY FUND
<S> <C>
TRUSTEES ASSISTANT TREASURERS
Richard B. Bailey - Private Investor; Mark E. Bradley*
Former Chairman and Director (until 1991), Ellen Moynihan*
MFS Investment Management(R) James O. Yost*
Marshall N. Cohan - Private Investor SECRETARY
Stephen E. Cavan*
Lawrence H. Cohn, M.D. - Chief of Cardiac
Surgery, Brigham and Women's Hospital; ASSISTANT SECRETARY
Professor of Surgery, Harvard Medical School James R. Bordewick, Jr.*
The Hon. Sir J. David Gibbons, KBE - Chief CUSTODIAN
Executive Officer, Edmund Gibbons Ltd.; State Street Bank and Trust Company
Chairman, Colonial Insurance Company, Ltd.
INVESTOR INFORMATION
Abby M. O'Neill - Private Investor For information on MFS mutual funds, call your
investment professional or, for an information
Walter E. Robb, III - President and Treasurer, kit, call toll free: 1-800-637-2929 any
Benchmark Advisors, Inc. (corporate financial business day from 9 a.m. to 5 p.m. Eastern time
consultants); President, Benchmark Consulting (or leave a message anytime).
Group, Inc. (office services)
INVESTOR SERVICE
Arnold D. Scott* - Senior Executive Vice MFS Service Center, Inc.
President, Director, and Secretary, MFS P.O. Box 2281
Investment Management Boston, MA 02107-9906
Jeffrey L. Shames* - Chairman and Chief For general information, call toll free:
Executive Officer, MFS Investment Management 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
J. Dale Sherratt - President, Insight
Resources, Inc. (acquisition planning For service to speech- or hearing-impaired,
specialists) Ward Smith - Former Chairman call toll free: 1-800-637-6576 any business day
(until 1994), NACCO Industries (holding from 9 a.m. to 5 p.m. Eastern time. (To use
company) this service, your phone must be equipped with
a Telecommunications Device for the Deaf.)
INVESTMENT ADVISER
Massachusetts Financial Services Company For share prices, account balances, exchanges,
500 Boylston Street or stock and bond outlooks, call toll free:
Boston, MA 02116-3741 1-800-MFS-TALK (1-800-637-8255) anytime from a
touch-tone telephone.
DISTRIBUTOR
MFS Fund Distributors, Inc. WORLD WIDE WEB
500 Boylston Street www.mfs.com
Boston, MA 02116-3741
CHAIRMAN AND PRESIDENT
Jeffrey L. Shames*
PORTFOLIO MANAGER
David R. Mannheim*
TREASURER
W. Thomas London*
+Independent Trustee
*MFS Investment Management
</TABLE>
<PAGE>
MFS(R) GLOBAL EQUITY FUND ------------
BULK RATE
U.S. POSTAGE
PAID
[Logo] M F S(R) MFS
INVESTMENT MANAGEMENT ------------
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-3 6/00 140M 04/204/304/804
