UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-6102
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MFS SERIES TRUST VI
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(Exact name of registrant as specified in charter)
500 Boylston Street, Boston, Massachusetts 02116
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(Address of principal executive offices) (Zip code)
Stephen E. Cavan
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
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(Name and address of agents for service)
Registrant's telephone number, including area code: (617) 954-5000
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Date of fiscal year end: October 31, 2002
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Date of reporting period: April 30, 2003
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ITEM 1. REPORTS TO STOCKHOLDERS.
MFS(R) Mutual Funds
SEMIANNUAL REPORT 4/30/03
MFS(R) GLOBAL EQUITY FUND
A path for pursuing opportunity
[graphic omitted]
[logo] M F S(R)
INVESTMENT MANAGEMENT
MFS(R) GLOBAL EQUITY FUND
The fund seeks capital appreciation.
TABLE OF CONTENTS
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LETTER FROM THE CHAIRMAN 1
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MFS ORIGINAL RESEARCH(R) 4
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MANAGEMENT REVIEW 5
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PERFORMANCE SUMMARY 8
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PORTFOLIO OF INVESTMENTS 11
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FINANCIAL STATEMENTS 17
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NOTES TO FINANCIAL STATEMENTS 32
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TRUSTEES AND OFFICERS 40
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MONEY MANAGEMENT FOR ALL TYPES
OF INVESTORS 42
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CONTACT INFORMATION 43
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ASSET ALLOCATION 44
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
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LETTER FROM THE CHAIRMAN
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Dear Shareholders,
[Photo of Jeffrey L. Shames]
Our firm was built on the philosophy that bottom-up fundamental research is the
best means of achieving superior long term investment performance. When you're
managing billions of dollars for investors, we think you have an obligation to
have in-depth, firsthand knowledge of every company you own whether it is in the
U.S. or anywhere across the globe.
We have structured our equity and fixed-income investment teams to capitalize on
the strength of our investment process and the global reach of our analysts
based around the world. Our global research team is composed of 45 equity
analysts, 27 based in the U.S. and 18 based abroad, and 26 credit research
analysts. Each analyst is assigned one or more specific industries and then
charged with identifying the most attractive investment ideas within these
industries. Our U.S. and non-U.S. equity research analysts are unified into one
team that emphasizes a collaborative process in analyzing securities across the
globe. Credit analysts also share their expertise in each segment of the
fixed-income market and work as part of the same team ensuring that every member
has access to information that may have a material effect on their investment
decisions. As MFS continues to grow and as markets become more complex, we
believe our structure will enable us to maintain a consistent investment process
with the goal of providing strong, long-term investment performance across
market capitalizations, investment disciplines, and country borders for our fund
shareholders.
THINKING GLOBALLY
More companies than ever compete globally and, therefore, we must make
investment decisions knowing what is occurring outside of a company's local
market. This trend plays to the strength of our environment of collaboration
between our analysts and portfolio managers across the globe. The analysts know
the most details about individual companies in specific industries and
geographic regions. The portfolio managers have broader, cross-industry insights
and a wider perspective on companies and industries. Our goal is to make sure
those two sets of perspectives coordinate and work well together. As markets
across the globe become more interdependent, we believe our collaborative
environment allows us to produce solid investment ideas for our portfolios.
BUILDING A NETWORK
Simply put, we believe our structure assures that our analysts maintain their
peripheral vision rather than becoming too immersed in a specific segment of the
market. We do not believe that analysts and portfolio managers - no matter how
talented they may be - can succeed by working in a vacuum. Through the latest
technology available, our entire research team meets frequently via video and
telephone teleconferences, email, and PDAs (Personal Digital Assistants). When
we hire new analysts, we require them to spend an average of one year in Boston
to learn MFS' culture and to build relationships with their peers. We believe
the interaction among our analysts is the key to making our collaborative
process work towards delivering superior long term investment performance for
our fund shareholders. Our analysts work out of four research offices in Boston,
London, Singapore, and Tokyo, and are assigned to specific regions and
industries. They meet regularly with their colleagues to discuss the trends
around the world affecting the companies they cover.
In addition, our equity and fixed-income analysts often visit company
managements as a team. This collaboration is vital because of the different
perspective they bring to their analysis. Because a company's stock price has
tended to follow its earnings over time, our equity research analysts tend to
focus on gauging earnings potential, a company's position within its industry
and its ability to grow its market share. Conversely, our fixed income analysts
will look at stability of a company's cash flow, the value of its assets, and
its capital structure to gauge whether the company can generate enough free cash
flow to pay off its debt. As a result of their collaboration, we believe we're
able to see a more complete view of a company.
WORKING TOGETHER
Our portfolio managers also work closely with the analysts to select the most
appropriate securities for their portfolios from the various recommendations
made by the analysts. Opinions are exchanged and ideas are challenged so that
each member of our team is involved in our investment process. In fact, our
portfolio managers will be the first ones to tell you that many of their best
ideas start with the research analysts. We believe our collaborative approach
also provides us with an effective way to assess risk. Our portfolio managers
are not discouraged from taking on an appropriate level of risk; however we have
rigorous guidelines to assure that the level of risk is measured and monitored
and consistent with the investment philosophies of each of our portfolios. All
told, we believe our culture empowers the members of our investment team to
continue to do their best work and allows them to make better investment
decisions.
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
MFS Investment Management(R)
May 30, 2003
The opinions expressed in this letter are those of MFS, and no forecasts can be
guaranteed.
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MFS ORIGINAL RESEARCH(R)
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THE HUMAN SIDE OF MONEY MANAGEMENT
For more than 75 years MFS has been offering investors clear paths to pursuing
specific investment objectives. Today, millions of individuals and thousands of
institutions all over the world look to MFS to manage their assets with insight
and care.
Our success, we believe, has to do with the fact that we see investors as people
with plans, not just dollars to invest.
When you invest with MFS, you invest with a company dedicated to helping you
realize your long-term financial goals.
INVESTORS CHOOSE MFS FOR OUR
o global asset management expertise across all asset classes
o time-tested money management process for pursuing consistent results
o full spectrum of investment products backed by MFS Original Research(R)
o resources and services that match real-life needs
TURNING INFORMATION INTO OPPORTUNITY
Sound investments begin with sound information. MFS has been doing its own
research and analyzing findings in-house for decades. The process we use to
uncover opportunity is called MFS Original Research(R).
MFS ORIGINAL RESEARCH INVOLVES:
o meeting with the management of 3,000 companies each year to assess their
business plans and the managers' ability to execute those plans
o making onsite visits to more than 2,000 companies annually to gain first-hand
knowledge of their operations and products
o analyzing financial statements and balance sheets
o talking extensively with companies' customers and competitors
o developing our own proprietary estimates of companies' earnings
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MANAGEMENT REVIEW
- --------------------------------------------------------------------------------
MARKET ENVIRONMENT
The period began on a positive note as global equity markets, which had declined
sharply over the summer of 2002, rallied in October and November. Investor
psychology seemed to turn around, in part because third-quarter 2002 earnings in
general were somewhat encouraging. By December, however, markets turned negative
again under the pressure of several factors including economic weakness in most
developed nations and geopolitical uncertainty in Iraq and North Korea.
Over the next few months, equity markets gave up most or all of their gains from
the previous rally. In mid-March, however, another rally began as geopolitical
uncertainty decreased with the start of war in Iraq. Rapid military success,
followed by a first-quarter U.S. earnings season that was better than many had
expected, allowed the rally to continue though the end of the period on April
30. For the six-month period overall, a combination of two rallies and one
downturn led to moderately positive overall market performance. In addition, the
decline of the U.S. dollar against the euro and other currencies helped U.S.
investors in overseas stocks.
- -------------------------------------------------
TOP 5 STOCK HOLDINGS
4/30/03
RECKITT BENCKISER PLC 2.8%
U.K.-based global manufacturer of
household cleaning products
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AIR LIQUIDE SA 2.7%
French industrial gas firm
- -------------------------------------------------
DIAGEO PLC 2.6%
U.K.-headquartered beer and premium
spirits conglomerate
- -------------------------------------------------
NOVARTIS AG 2.3%
Swiss pharmaceutical company
- -------------------------------------------------
SANOFI-SYNTHELABO SA 2.1%
French pharmaceutical company
- -------------------------------------------------
The portfolio is actively managed, and current
holdings may be different.
DETRACTORS FROM PERFORMANCE
While the fund outperformed its peer group, as measured by the average global
fund tracked by Lipper Inc., the fund underperformed the broad international
market as measured by its benchmark, the Morgan Stanley Capital International
World Index (the MSCI World Index).
Broadly speaking, we think a significant portion of the market's performance
over the period came from sharp rebounds in stocks that had fallen dramatically
over the previous year. In our opinion, those earlier declines had been caused
by balance sheet issues or poor earnings and/or cash flow outlooks. We did not
own many of those stocks because they did not fit our strategy of investing in
companies that we believe will deliver above-average earnings growth with
reasonable volatility over the longer term. For that reason, we did not
participate in some of the market's advance over the period.
More specifically, we were underweighted in technology stocks, compared to the
MSCI World Index, and that hurt relative performance as the technology sector
rallied. We maintained an underweighted position because our analysts felt, and
continued to feel at the end of the period, that technology valuations in
general were a bit high and that few stocks in the sector had compelling
fundamentals (business factors such as earnings and cash flow growth).
Syngenta and Akzo Nobel, two companies in the basic materials sector, were also
important detractors from performance. Stock in Swiss agricultural and chemical
firm Syngenta stumbled in February after helping portfolio performance in
earlier periods. Company earnings were hurt by competition that put pressure on
prices, higher pension fund costs, and a rising euro that lowered the value of
U.S. sales when converted back into euros.
Akzo Nobel, a Netherlands-based chemical and pharmaceutical firm, experienced
problems with its drug business. As costs grew faster than anticipated, sales of
several new products were lower than expected, and the launch of other new
products was delayed, the firm's stock declined over the period.
CONTRIBUTORS TO PERFORMANCE
Several individual holdings in the utilities & communications sector helped
relative performance. Iberdrola, a Spanish electric utility, appreciated as the
company delivered on earnings expectations. BCE, the parent company of Bell
Canada, and Spanish telecom firm Telefonica also appreciated on good earnings
news.
In the financial services sector, our overweighted position in Australia-based
QBE Insurance did well as the company's reinsurance and property & casualty
businesses benefited from, in our view, a global trend toward higher policy
pricing. In the health care sector, our position in Guidant, a U.S. medical
device company, helped performance. Late in the period, we sold our Guidant
position because we felt the stock had become fairly valued. Another health care
holding that aided performance was Chugai, a Japanese pharmaceutical maker whose
fundamentals improved after a 2002 merger with Roche Pharmaceutical's Japanese
division.
/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 report as stated on the cover. These views
are subject to change at any time based on market and other conditions, and no
forecasts can be guaranteed.
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PERFORMANCE SUMMARY THROUGH 4/30/03
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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. Performance results reflect the percentage change in
net asset value, including the reinvestment of any dividends and capital gains
distributions. (See Notes to Performance Summary.)
TOTAL RETURNS
- --------------
Cumulative
without
sales charge
- --------------
Class
Share inception
class date 6-mo 1-yr 3-yr 5-yr 10-yr
----------------------------------------------------------------------------
A 9/7/93 2.42% -10.93% -23.37% -8.46% 113.09%
----------------------------------------------------------------------------
B 12/29/86 1.98% -11.62% -25.10% -11.89% 96.68%
----------------------------------------------------------------------------
C 1/3/94 1.95% -11.62% -25.12% -11.93% 97.05%
----------------------------------------------------------------------------
I 1/2/97 2.51% -10.69% -22.88% -7.41% 109.54%
----------------------------------------------------------------------------
J 7/9/99 2.07% -11.51% -24.97% -11.55% 97.44%
----------------------------------------------------------------------------
R 12/31/02 2.12% -11.50% -24.99% -11.77% 96.96%
----------------------------------------------------------------------------
- ---------------
Average annual
without sales
charge
- ---------------
A -- -10.93% -8.49% -1.75% 7.86%
----------------------------------------------------------------------------
B -- -11.62% -9.18% -2.50% 7.00%
----------------------------------------------------------------------------
C -- -11.62% -9.19% -2.51% 7.02%
----------------------------------------------------------------------------
I -- -10.69% -8.29% -1.53% 7.68%
----------------------------------------------------------------------------
J -- -11.51% -9.13% -2.43% 7.04%
----------------------------------------------------------------------------
R -- -11.50% -9.14% -2.47% 7.01%
----------------------------------------------------------------------------
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Average annual
with sales
charge
- --------------
----------------------------------------------------------------------------
A -- -16.05% -10.28% -2.91% 7.22%
----------------------------------------------------------------------------
B -- -15.16% -10.05% -2.83% 7.00%
----------------------------------------------------------------------------
C -- -12.50% -9.19% -2.51% 7.02%
----------------------------------------------------------------------------
J -- -14.16% -10.05% -3.02% 6.71%
----------------------------------------------------------------------------
I and R class shares do not have a sales charge. Please see Notes to
Performance Summary for more details.
Comparative benchmarks
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Average Annual
- --------------
----------------------------------------------------------------------------
Average global fund+ 1.81% -16.75% -14.01% -3.65% 5.64%
----------------------------------------------------------------------------
MSCI World Index# 3.88% -14.16% -14.48% -3.90% 5.69%
----------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc., an independent firm that reports mutual fund performance.
# Source: Standard & Poor's Micropal, Inc.
INDEX DEFINITION
MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) WORLD INDEX - A measure of the
global stock market.
It is not possible to invest directly in an index.
NOTES TO PERFORMANCE SUMMARY
Class A results, including sales charge, reflects the deduction of the maximum
5.75% sales charge. Class B results, including sales charge, reflects the
deduction of the applicable contingent deferred sales charge (CDSC), which
declines over six years from 4% to 0%. Class C results, including sales charge,
redeemed within one year from the end of the calendar month of purchase reflects
the deduction of the 1% CDSC. Class I shares have no sales charges and are
available only to certain investors. Class J results, including sales charge,
reflects the deduction of the maximum 3% sales charge and are available only to
residents of Japan. Class R shares have no sales charges and are available only
to certain retirement plans.
Performance for share classes offered after class B shares includes the
performance of the fund's class B shares for periods prior to their offering.
Blended class performance has been adjusted to take into account differences in
sales loads, if any, applicable to these share classes, but has not been
adjusted to take into account differences in class specific operating expenses
(such as Rule 12b-1 fees). Compared to performance these share classes would
have experienced had they been offered for the entire period, the use of blended
performance generally results in higher performance for share classes with
higher operating expenses than the initial share class, and lower performance
for share classes with lower operating expenses than the initial share class.
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 and financial statements for details. All results
are historical and assume the reinvestment of dividends and capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN REDEEMED,
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS, AND THE PERFORMANCE SHOWN DOES NOT REFLECT THE
DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS
OR THE REDEMPTION OF FUND SHARES.
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE, AND MORE
RECENT RETURNS MAY BE DIFFERENT FROM THOSE SHOWN. VISIT WWW.MFS.COM FOR MORE
CURRENT PERFORMANCE RESULTS.
KEY RISK CONSIDERATIONS
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
These risks may increase share price volatility. Please see the prospectus for
details.
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.
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PORTFOLIO OF INVESTMENTS (unaudited) 4/30/03
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The Portfolio of Investments is a list of all securities owned by your fund.
Stocks - 96.3%
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ISSUER SHARES $ VALUE
- --------------------------------------------------------------------------------------------------
Foreign Stocks - 63.3%
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Australia - 2.6%
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News Corporation Ltd. (Media)* 791,148 $5,636,044
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QBE Insurance Group Ltd. (Insurance)* 1,536,004 8,211,539
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$13,847,583
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Bermuda - 1.8%
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Ace Ltd. (Insurance) 290,180 $9,599,155
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Canada - 2.8%
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BCE, Inc. (Telecommunications) 336,392 $6,652,747
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Canadian National Railway Co. (Railroads) 68,602 3,336,115
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Canadian Natural Resources Ltd. (Oils) 75,460 2,516,211
- --------------------------------------------------------------------------------------------------
Talisman Energy, Inc. (Oils) 55,900 2,231,711
- --------------------------------------------------------------------------------------------------
$14,736,784
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France - 11.9%
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Air Liquide SA (Industrial Gases) 92,237 $13,992,270
- --------------------------------------------------------------------------------------------------
Aventis SA (Pharmaceuticals) 108,330 5,511,359
- --------------------------------------------------------------------------------------------------
Bouygues SA (Construction) 120,480 2,952,288
- --------------------------------------------------------------------------------------------------
Cap Gemini SA (Computer Services) 115,400 3,596,679
- --------------------------------------------------------------------------------------------------
Carrefour SA (Supermarkets) 158,630 6,910,650
- --------------------------------------------------------------------------------------------------
France Telecom SA (Telecommunications)* 128,100 2,964,303
- --------------------------------------------------------------------------------------------------
Sanofi-Synthelabo SA (Pharmaceuticals) 183,860 10,985,962
- --------------------------------------------------------------------------------------------------
Societe Television Francaise 1 SA (Media) 88,111 2,479,228
- --------------------------------------------------------------------------------------------------
STMicroelectronics NV (Electronics) 196,030 4,058,510
- --------------------------------------------------------------------------------------------------
Total Fina Elf SA, "B" (Oils) 78,880 10,361,149
- --------------------------------------------------------------------------------------------------
$63,812,398
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Germany - 0.8%
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Bayerische Motoren Werke AG (Automotive) 122,710 $4,097,494
- --------------------------------------------------------------------------------------------------
Ireland - 0.8%
- --------------------------------------------------------------------------------------------------
Irish Life & Permanent PLC (Financial Institutions) 353,530 $4,110,198
- --------------------------------------------------------------------------------------------------
Italy - 0.6%
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Snam Rete Gas SpA (Natural Gas - Pipeline) 876,920 $3,186,005
- --------------------------------------------------------------------------------------------------
Japan - 7.3%
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Canon, Inc. (Business Machines) 177,000 $7,166,233
- --------------------------------------------------------------------------------------------------
Chugai Pharmaceutical Co., Ltd. (Pharmaceuticals) 537,100 5,639,437
- --------------------------------------------------------------------------------------------------
Credit Saison Co., Ltd. (Banks & Credit Cos.) 134,900 2,543,893
- --------------------------------------------------------------------------------------------------
Honda Motor Co., Ltd. (Automotive) 208,500 6,917,892
- --------------------------------------------------------------------------------------------------
Nissan Motor Co. (Automotive) 586,000 4,503,906
- --------------------------------------------------------------------------------------------------
Ono Pharmaceutical Co., Ltd. (Pharmaceuticals) 64,000 1,913,818
- --------------------------------------------------------------------------------------------------
Shiseido Co., Ltd. (Consumer Products) 439,000 4,015,716
- --------------------------------------------------------------------------------------------------
Sony Corp. (Electronics) 96,400 2,348,257
- --------------------------------------------------------------------------------------------------
Takeda Chemical Industries Co. (Pharmaceuticals) 55,800 2,048,265
- --------------------------------------------------------------------------------------------------
Tokyo Broadcasting System, Inc. (Broadcasting) 187,000 2,197,505
- --------------------------------------------------------------------------------------------------
$39,294,922
- --------------------------------------------------------------------------------------------------
Mexico - 0.4%
- --------------------------------------------------------------------------------------------------
Coca-Cola Femsa SA de CV, ADR (Food & Beverage Products) 108,400 $2,303,500
- --------------------------------------------------------------------------------------------------
Netherlands - 4.5%
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Akzo Nobel NV (Chemicals) 173,100 $3,854,691
- --------------------------------------------------------------------------------------------------
Elsevier NV (Publishing) 908,990 10,364,836
- --------------------------------------------------------------------------------------------------
Unilever NV (Consumer Products) 160,500 10,128,430
- --------------------------------------------------------------------------------------------------
$24,347,957
- --------------------------------------------------------------------------------------------------
Singapore - 1.9%
- --------------------------------------------------------------------------------------------------
DBS Group Holdings Ltd. (Financial Institutions) 744,000 $3,649,115
- --------------------------------------------------------------------------------------------------
Haw Par Corporation Ltd. (Banks & Credit Cos.) 16,516 30,354
- --------------------------------------------------------------------------------------------------
Singapore Telecommunications Ltd. (Telecommunications) 4,032,000 3,295,975
- --------------------------------------------------------------------------------------------------
United Overseas Bank Ltd. (Banks & Credit Cos.) 543,000 3,183,673
- --------------------------------------------------------------------------------------------------
$10,159,117
- --------------------------------------------------------------------------------------------------
South Korea - 0.4%
- --------------------------------------------------------------------------------------------------
Samsung Electronics Co., Ltd. (Electronics) 7,570 $1,901,070
- --------------------------------------------------------------------------------------------------
Spain - 2.7%
- --------------------------------------------------------------------------------------------------
Gas Natural SDG SA (Natural Gas - Pipeline) 112,150 $2,150,139
- --------------------------------------------------------------------------------------------------
Iberdrola SA (Utilities - Electric) 290,230 4,681,788
- --------------------------------------------------------------------------------------------------
Telefonica SA (Telecommunications) 675,200 7,480,132
- --------------------------------------------------------------------------------------------------
$14,312,059
- --------------------------------------------------------------------------------------------------
Switzerland - 7.7%
- --------------------------------------------------------------------------------------------------
Nestle SA (Food & Beverage Products) 33,083 $6,753,377
- --------------------------------------------------------------------------------------------------
Novartis AG (Pharmaceuticals) 301,500 11,908,638
- --------------------------------------------------------------------------------------------------
Syngenta AG (Chemicals)* 209,691 10,836,744
- --------------------------------------------------------------------------------------------------
Synthes-Stratec, Inc. (Medical & Health Products) 10,611 6,697,974
- --------------------------------------------------------------------------------------------------
UBS AG (Financial Institutions) 109,133 5,184,724
- --------------------------------------------------------------------------------------------------
$41,381,457
- --------------------------------------------------------------------------------------------------
United Kingdom - 17.1%
- --------------------------------------------------------------------------------------------------
AstraZeneca Group PLC (Medical & Health Products) 104,000 $4,083,330
- --------------------------------------------------------------------------------------------------
BOC Group PLC (Chemicals)* 755,540 9,533,757
- --------------------------------------------------------------------------------------------------
BP Amoco PLC (Oils)* 911,600 5,780,656
- --------------------------------------------------------------------------------------------------
British Sky Broadcasting Group PLC (Broadcasting) 367,350 3,809,953
- --------------------------------------------------------------------------------------------------
Capital Radio PLC (Broadcasting) 160,260 1,204,627
- --------------------------------------------------------------------------------------------------
Diageo PLC (Food & Beverage Products)* 1,206,512 13,391,239
- --------------------------------------------------------------------------------------------------
GlaxoSmithKline PLC (Pharmaceuticals)* 295,080 5,917,891
- --------------------------------------------------------------------------------------------------
Granada PLC (Broadcasting)* 4,531,600 4,946,339
- --------------------------------------------------------------------------------------------------
Kingfisher PLC (Retail)* 1,480,800 5,790,351
- --------------------------------------------------------------------------------------------------
Next PLC (Retail)* 397,730 6,001,501
- --------------------------------------------------------------------------------------------------
Reckitt Benckiser PLC (Consumer Products)* 803,340 14,177,556
- --------------------------------------------------------------------------------------------------
Royal Bank of Scotland Group PLC (Banks & Credit Cos.)* 287,616 7,548,336
- --------------------------------------------------------------------------------------------------
Vodafone Group PLC (Telecommunications)* 3,513,345 6,939,328
- --------------------------------------------------------------------------------------------------
William Hill PLC (Gaming) 741,590 2,769,366
- --------------------------------------------------------------------------------------------------
$91,894,230
- --------------------------------------------------------------------------------------------------
Total Foreign Stocks $338,983,929
- --------------------------------------------------------------------------------------------------
U.S. Stocks - 33.0%
- --------------------------------------------------------------------------------------------------
Apparel & Manufacturers - 1.0%
- --------------------------------------------------------------------------------------------------
Nike, Inc., "B" 100,440 $5,376,553
- --------------------------------------------------------------------------------------------------
Banks & Credit Cos. - 1.8%
- --------------------------------------------------------------------------------------------------
SouthTrust Corp. 162,310 $4,359,809
- --------------------------------------------------------------------------------------------------
SunTrust Banks, Inc. 92,720 5,305,438
- --------------------------------------------------------------------------------------------------
$9,665,247
- --------------------------------------------------------------------------------------------------
Business Machines - 1.5%
- --------------------------------------------------------------------------------------------------
Hewlett-Packard Co. 237,116 $3,864,991
- --------------------------------------------------------------------------------------------------
International Business Machines Corp. 49,560 4,207,644
- --------------------------------------------------------------------------------------------------
$8,072,635
- --------------------------------------------------------------------------------------------------
Business Services - 0.9%
- --------------------------------------------------------------------------------------------------
Aramark Corp.* 205,220 $4,711,851
- --------------------------------------------------------------------------------------------------
Computer Software - 2.9%
- --------------------------------------------------------------------------------------------------
Microsoft Corp. 182,400 $4,663,968
- --------------------------------------------------------------------------------------------------
Network Associates, Inc.* 209,810 2,398,128
- --------------------------------------------------------------------------------------------------
Oracle Corp.* 222,780 2,646,627
- --------------------------------------------------------------------------------------------------
Peoplesoft, Inc.* 246,000 3,697,380
- --------------------------------------------------------------------------------------------------
Symantec Corp.* 53,500 2,351,325
- --------------------------------------------------------------------------------------------------
$15,757,428
- --------------------------------------------------------------------------------------------------
Consumer Products - 0.6%
- --------------------------------------------------------------------------------------------------
Alberto Culver Co. 69,000 $3,400,320
- --------------------------------------------------------------------------------------------------
Entertainment - 3.3%
- --------------------------------------------------------------------------------------------------
AOL Time Warner, Inc.* 676,000 $9,247,680
- --------------------------------------------------------------------------------------------------
Viacom, Inc., "B"* 193,570 8,402,873
- --------------------------------------------------------------------------------------------------
$17,650,553
- --------------------------------------------------------------------------------------------------
Financial Institutions - 2.8%
- --------------------------------------------------------------------------------------------------
Citigroup, Inc. 151,200 $5,934,600
- --------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. 59,890 4,545,651
- --------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 114,940 4,718,287
- --------------------------------------------------------------------------------------------------
$15,198,538
- --------------------------------------------------------------------------------------------------
Food & Beverage Products - 2.0%
- --------------------------------------------------------------------------------------------------
J.M. Smucker Co. 85,400 $3,098,312
- --------------------------------------------------------------------------------------------------
PepsiCo, Inc. 177,200 7,669,216
- --------------------------------------------------------------------------------------------------
$10,767,528
- --------------------------------------------------------------------------------------------------
Industrial Gases - 2.5%
- --------------------------------------------------------------------------------------------------
Air Products & Chemicals, Inc. 122,860 $5,291,580
- --------------------------------------------------------------------------------------------------
Praxair, Inc. 142,170 8,257,234
- --------------------------------------------------------------------------------------------------
$13,548,814
- --------------------------------------------------------------------------------------------------
Insurance - 2.0%
- --------------------------------------------------------------------------------------------------
Allstate Corp. 42,450 $1,604,185
- --------------------------------------------------------------------------------------------------
MetLife, Inc. 144,360 4,147,463
- --------------------------------------------------------------------------------------------------
Safeco Corp. 70,380 2,710,334
- --------------------------------------------------------------------------------------------------
St. Paul Cos., Inc. 62,190 2,135,605
- --------------------------------------------------------------------------------------------------
$10,597,587
- --------------------------------------------------------------------------------------------------
Medical & Health Products - 1.3%
- --------------------------------------------------------------------------------------------------
Johnson & Johnson Co. 119,100 $6,712,476
- --------------------------------------------------------------------------------------------------
Medical & Health Technology Services - 0.8%
- --------------------------------------------------------------------------------------------------
Lincare Holdings, Inc.* 145,960 $4,432,805
- --------------------------------------------------------------------------------------------------
Oils - 0.7%
- --------------------------------------------------------------------------------------------------
ConocoPhillips, Inc. 74,496 $3,747,149
- --------------------------------------------------------------------------------------------------
Pharmaceuticals - 2.0%
- --------------------------------------------------------------------------------------------------
Eli Lilly & Co. 69,528 $4,437,277
- --------------------------------------------------------------------------------------------------
Pfizer, Inc. 180,440 5,548,530
- --------------------------------------------------------------------------------------------------
Schering Plough Corp. 53,900 975,590
- --------------------------------------------------------------------------------------------------
$10,961,397
- --------------------------------------------------------------------------------------------------
Restaurants & Lodging - 1.3%
- --------------------------------------------------------------------------------------------------
Yum! Brands, Inc.* 273,900 $6,765,330
- --------------------------------------------------------------------------------------------------
Retail - 1.7%
- --------------------------------------------------------------------------------------------------
Home Depot, Inc. 194,700 $5,476,911
- --------------------------------------------------------------------------------------------------
TJX Cos., Inc. 175,200 3,372,600
- --------------------------------------------------------------------------------------------------
$8,849,511
- --------------------------------------------------------------------------------------------------
Technology - 0.6%
- --------------------------------------------------------------------------------------------------
Waters Corp.* 129,800 $3,116,498
- --------------------------------------------------------------------------------------------------
Telecommunications - 2.2%
- --------------------------------------------------------------------------------------------------
BellSouth Corp. 281,700 $7,180,533
- --------------------------------------------------------------------------------------------------
Verizon Communications, Inc. 126,300 4,721,094
- --------------------------------------------------------------------------------------------------
$11,901,627
- --------------------------------------------------------------------------------------------------
Transportation - Services - 1.1%
- --------------------------------------------------------------------------------------------------
Fedex Corp. 96,650 $5,787,402
- --------------------------------------------------------------------------------------------------
Total U.S. Stocks $177,021,249
- --------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $488,393,407) $516,005,178
- --------------------------------------------------------------------------------------------------
Rights
- --------------------------------------------------------------------------------------------------
Telefonica SA (Telecommunications)* 13,504 $149,603
- --------------------------------------------------------------------------------------------------
Total Rights (Identified Cost, $126,465) $149,603
- --------------------------------------------------------------------------------------------------
Collateral for Securities Loaned - 9.2%
- --------------------------------------------------------------------------------------------------
CS First Boston Corp., 1.36% due 5/01/03 44,245,374 $44,245,374
- --------------------------------------------------------------------------------------------------
Goldman Sachs & Co., 1.24% due 5/30/03 5,000,000 5,000,000
- --------------------------------------------------------------------------------------------------
Total Collateral for Securities Loaned, at Amortized Cost $49,245,374
- --------------------------------------------------------------------------------------------------
Short-Term Obligations - 4.1%
- --------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 Omitted) $ VALUE
- --------------------------------------------------------------------------------------------------
Citigroup, Inc., due 5/01/03 $2,226 $2,226,000
- --------------------------------------------------------------------------------------------------
General Electric Co., due 5/01/03 19,933 19,933,000
- --------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $22,159,000
- --------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $559,924,246) $587,559,155
- --------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (9.6)% (51,423,342)
- --------------------------------------------------------------------------------------------------
Net Assets - 100.0% $536,135,813
- --------------------------------------------------------------------------------------------------
*Non-income producing security.
See notes to financial statements.
- ---------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES (unaudited)
- ---------------------------------------------------------------------------------------------------
This statement represents your fund's balance sheet, which details the assets and liabilities
composing the total value of your fund.
AT 4/30/03
ASSETS
Investments, at value, including $47,529,876 of
securities on loan (identified cost, $559,924,246) $587,559,155
- ---------------------------------------------------------------------------------------------------
Receivable for fund shares sold 990,377
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 3,638,583
- ---------------------------------------------------------------------------------------------------
Interest and dividends receivable 1,945,636
- ---------------------------------------------------------------------------------------------------
Other assets 6,809
- ---------------------------------------------------------------------------------------------------
Total assets $594,140,560
- ---------------------------------------------------------------------------------------------------
LIABILITIES
Payable to custodian $4,749
- ---------------------------------------------------------------------------------------------------
Payable for fund shares reacquired 2,529,178
- ---------------------------------------------------------------------------------------------------
Payable for investments purchased 5,915,464
- ---------------------------------------------------------------------------------------------------
Collateral for securities loaned, at value 49,245,374
- ---------------------------------------------------------------------------------------------------
Payable to affiliates
- ---------------------------------------------------------------------------------------------------
Management fee 13,597
- ---------------------------------------------------------------------------------------------------
Shareholder servicing agent fee 1,598
- ---------------------------------------------------------------------------------------------------
Distribution and service fee 8,158
- ---------------------------------------------------------------------------------------------------
Administrative fee 255
- ---------------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 286,374
- ---------------------------------------------------------------------------------------------------
Total liabilities $58,004,747
- ---------------------------------------------------------------------------------------------------
Net assets $536,135,813
- ---------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Paid-in capital $618,518,304
- ---------------------------------------------------------------------------------------------------
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 27,688,348
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (109,574,873)
- ---------------------------------------------------------------------------------------------------
Accumulated net investment loss (495,966)
- ---------------------------------------------------------------------------------------------------
Net assets $536,135,813
- ---------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 31,990,358
- ---------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued
Class A shares
Net assets $309,724,804
- ---------------------------------------------------------------------------------------------------
Shares outstanding 18,266,864
- ---------------------------------------------------------------------------------------------------
Net asset value per share $16.96
- ---------------------------------------------------------------------------------------------------
Offering price per share (100/94.25X$16.96) $17.99
- ---------------------------------------------------------------------------------------------------
Class B shares
Net assets $162,374,626
- ---------------------------------------------------------------------------------------------------
Shares outstanding 9,839,021
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per share $16.50
- ---------------------------------------------------------------------------------------------------
Class C shares
Net assets $29,599,839
- ---------------------------------------------------------------------------------------------------
Shares outstanding 1,826,415
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per share $16.21
- ---------------------------------------------------------------------------------------------------
Class I shares
Net assets $18,563,083
- ---------------------------------------------------------------------------------------------------
Shares outstanding 1,084,356
- ---------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price
per share $17.12
- ---------------------------------------------------------------------------------------------------
Class J shares
Net assets $15,766,879
- ---------------------------------------------------------------------------------------------------
Shares outstanding 967,409
- ---------------------------------------------------------------------------------------------------
Net asset value per share $16.30
- ---------------------------------------------------------------------------------------------------
Offering price per share (100/97X$16.30) $16.80
- ---------------------------------------------------------------------------------------------------
Class R shares
Net assets $106,582
- ---------------------------------------------------------------------------------------------------
Shares outstanding 6,293
- ---------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price
per share $16.94
- ---------------------------------------------------------------------------------------------------
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.
- ---------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF OPERATIONS (unaudited)
- ---------------------------------------------------------------------------------------------------
This statement describes how much your fund received in investment income and paid in expenses. It
also describes any gains and/or losses generated by fund operations.
FOR SIX MONTHS ENDED 4/30/03
NET INVESTMENT INCOME (LOSS)
Income
- ---------------------------------------------------------------------------------------------------
Dividends $5,053,604
- ---------------------------------------------------------------------------------------------------
Interest 123,211
- ---------------------------------------------------------------------------------------------------
Foreign taxes withheld (447,630)
- ---------------------------------------------------------------------------------------------------
Total investment income $4,729,185
- ---------------------------------------------------------------------------------------------------
Expenses
- ---------------------------------------------------------------------------------------------------
Management fee $2,602,822
- ---------------------------------------------------------------------------------------------------
Trustees' compensation 10,757
- ---------------------------------------------------------------------------------------------------
Shareholder servicing agent fee 264,523
- ---------------------------------------------------------------------------------------------------
Distribution and service fee (Class A) 375,089
- ---------------------------------------------------------------------------------------------------
Distribution and service fee (Class B) 811,472
- ---------------------------------------------------------------------------------------------------
Distribution and service fee (Class C) 147,946
- ---------------------------------------------------------------------------------------------------
Distribution and service fee (Class J) 76,628
- ---------------------------------------------------------------------------------------------------
Distribution and service fee (Class R) 40
- ---------------------------------------------------------------------------------------------------
Administrative fee 29,490
- ---------------------------------------------------------------------------------------------------
Custodian fee 220,340
- ---------------------------------------------------------------------------------------------------
Printing 37,101
- ---------------------------------------------------------------------------------------------------
Postage 73,423
- ---------------------------------------------------------------------------------------------------
Auditing fees 19,050
- ---------------------------------------------------------------------------------------------------
Miscellaneous 483,675
- ---------------------------------------------------------------------------------------------------
Total expenses $5,152,356
- ---------------------------------------------------------------------------------------------------
Fees paid indirectly (29,369)
- ---------------------------------------------------------------------------------------------------
Net expenses $5,122,987
- ---------------------------------------------------------------------------------------------------
Net investment loss $(393,802)
- ---------------------------------------------------------------------------------------------------
Statement of Operations (unaudited) - continued
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized loss (identified cost basis)
- ---------------------------------------------------------------------------------------------------
Investment transactions $(25,131,961)
- ---------------------------------------------------------------------------------------------------
Foreign currency transactions (21,035)
- ---------------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions $(25,152,996)
- ---------------------------------------------------------------------------------------------------
Change in unrealized appreciation
- ---------------------------------------------------------------------------------------------------
Investments $37,119,311
- ---------------------------------------------------------------------------------------------------
Translation of assets and liabilities in foreign currencies 39,123
- ---------------------------------------------------------------------------------------------------
Net unrealized gain on investments and foreign currency
translation $37,158,434
- ---------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and foreign
currency $12,005,438
- ---------------------------------------------------------------------------------------------------
Increase in net assets from operations $11,611,636
- ---------------------------------------------------------------------------------------------------
See notes to financial statements.
- ---------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------
This statement describes the increases and/or decreases in net assets resulting from operations, any
distributions, and any shareholder transactions.
SIX MONTHS YEAR
ENDED ENDED
4/30/03 10/31/02
(UNAUDITED)
OPERATIONS
Net investment loss $(393,802) $(2,099,020)
- ------------------------------------------------------------------------------------------------------
Net realized loss on investments and foreign
currency transactions (25,152,996) (51,829,093)
- ------------------------------------------------------------------------------------------------------
Net unrealized gain on investments and foreign
currency translation 37,158,434 14,913,820
- ----------------------------------------------------------- ------------ ------------
Increase (decrease) in net assets from operations $11,611,636 $(39,014,293)
- ----------------------------------------------------------- ------------ ------------
Net decrease in net assets from fund share transactions $(20,710,278) $(43,243,819)
- ----------------------------------------------------------- ------------ ------------
Total decrease in net assets $(9,098,642) $(82,258,112)
- ----------------------------------------------------------- ------------ ------------
NET ASSETS
At beginning of period $545,234,455 $627,492,567
- ------------------------------------------------------------------------------------------------------
At end of period (including accumulated net investment loss of
$495,966 and $102,164, respectively) $536,135,813 $545,234,455
- ------------------------------------------------------------------------------------------------------
See notes to financial statements.
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------------------------------------------------------
The Financial Highlights provide per share amounts and certain ratios to summarize the effect of fund operations and any
distributions to a shareholder of each share class.
SIX MONTHS YEAR ENDED 10/31
ENDED ---------------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS A (UNAUDITED)
Net asset value, beginning
of period $16.55 $17.58 $22.88 $22.50 $20.35 $20.09
- --------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS#
Net investment income (loss) $0.01 $--+++ $(0.01) $0.07 $--+++ $0.06
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gain (loss) on
investments and foreign
currency 0.40 (1.03) (3.81) 2.24 3.14 1.35
- ----------------------------- ------ ------ ------ ------ ------ ------
Total from investment
operations $0.41 $(1.03) $(3.82) $2.31 $3.14 $1.41
- ----------------------------- ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $-- $-- $-- $-- $-- $(0.11)
- --------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments and foreign
currency transactions -- -- (1.44) (1.93) (0.99) (1.04)
- --------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments and
foreign currency
transactions -- -- (0.04) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
From paid-in capital -- -- --+++ -- -- --
- ----------------------------- ------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $-- $-- $(1.48) $(1.93) $(0.99) $(1.15)
- ----------------------------- ------ ------ ------ ------ ------ ------
Net asset value, end of
period $16.96 $16.55 $17.58 $22.88 $22.50 $20.35
- ----------------------------- ------ ------ ------ ------ ------ ------
Total return (%)(+) 2.42++ (5.86) (17.67) 10.39 15.82 7.46
- --------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEAR ENDED 10/31
ENDED ---------------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS A (CONTINUED) (UNAUDITED)
RATIOS (%) TO AVERAGE
NET ASSETS AND
SUPPLEMENTAL DATA:
Expenses## 1.69+ 1.62 1.59 1.55 1.59 1.60
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income
(loss) 0.14+ (0.02) (0.06) 0.28 0.00 0.28
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 22 52 72 84 92 64
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $309,725 $322,006 $348,129 $450,481 $384,436 $280,454
- --------------------------------------------------------------------------------------------------------------------------------
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01. # 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.
SIX MONTHS YEAR ENDED 10/31
ENDED ---------------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS B (UNAUDITED)
Net asset value, beginning
of period $16.18 $17.31 $22.52 $22.17 $20.21 $19.97
- --------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS#
Net investment loss $(0.05) $(0.14) $(0.16) $(0.11) $(0.09) $(0.11)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gain (loss) on
investments and foreign
currency 0.37 (0.99) (3.75) 2.21 3.04 1.39
- ----------------------------- ------ ------ ------ ------ ------ ------
Total from investment
operations $0.32 $(1.13) $(3.91) $2.10 $2.95 $1.28
- ----------------------------- ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net realized gain on
investments and foreign
currency transactions $-- $-- $(1.26) $(1.75) $(0.99) $(1.04)
- --------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments and
foreign currency
transactions -- -- (0.04) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
From paid-in capital -- -- --+++ -- -- --
- ----------------------------- ------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $-- $-- $(1.30) $(1.75) $(0.99) $(1.04)
- ----------------------------- ------ ------ ------ ------ ------ ------
Net asset value, end of
period $16.50 $16.18 $17.31 $22.52 $22.17 $20.21
- ----------------------------- ------ ------ ------ ------ ------ ------
Total return (%) 1.98++ (6.53) (18.28) 9.60 14.90 6.75
- --------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEAR ENDED 10/31
ENDED ---------------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS B (CONTINUED) (UNAUDITED)
Financial Highlights - continued
RATIOS (%) TO AVERAGE
NET ASSETS AND
SUPPLEMENTAL DATA:
Expenses## 2.44+ 2.37 2.34 2.30 2.34 2.35
- --------------------------------------------------------------------------------------------------------------------------------
Net investment loss (0.62)+ (0.79) (0.81) (0.46) (0.76) (0.51)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 22 52 72 84 92 64
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $162,375 $172,094 $220,855 $301,816 $287,700 $267,886
- --------------------------------------------------------------------------------------------------------------------------------
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01. # 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.
Financial Highlights - continued
SIX MONTHS YEAR ENDED 10/31
ENDED ---------------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS C (UNAUDITED)
Net asset value, beginning
of period $15.89 $17.00 $22.16 $21.89 $19.97 $19.78
- --------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS#
Net investment loss $(0.05) $(0.14) $(0.16) $(0.11) $(0.16) $(0.10)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gain (loss) on
investments and foreign
currency 0.37 (0.97) (3.68) 2.18 3.07 1.34
- ----------------------------- ------ ------ ------ ------ ------ ------
Total from investment
operations $0.32 $(1.11) $(3.84) $2.07 $2.91 $1.24
- ----------------------------- ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $-- $-- $-- $-- $-- $(0.01)
- --------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments and foreign
currency transactions -- -- (1.28) (1.80) (0.99) (1.04)
- --------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments and
foreign currency
transactions -- -- (0.04) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
From paid-in capital -- -- --+++ -- -- --
- ----------------------------- ------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $-- $-- $(1.32) $(1.80) $(0.99) $(1.05)
- ----------------------------- ------ ------ ------ ------ ------ ------
Net asset value, end of
period $16.21 $15.89 $17.00 $22.16 $21.89 $19.97
- ----------------------------- ------ ------ ------ ------ ------ ------
Total return (%) 1.95++ (6.53) (18.30) 9.62 14.88 6.64
- --------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEAR ENDED 10/31
ENDED ---------------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS C (CONTINUED) (UNAUDITED)
RATIOS (%) TO AVERAGE
NET ASSETS AND
SUPPLEMENTAL DATA:
Expenses## 2.44+ 2.37 2.34 2.30 2.34 2.35
- --------------------------------------------------------------------------------------------------------------------------------
Net investment loss (0.62)+ (0.78) (0.82) (0.47) (0.76) (0.50)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 22 52 72 84 92 64
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $29,600 $31,594 $40,789 $56,755 $47,335 $29,123
- --------------------------------------------------------------------------------------------------------------------------------
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01. # 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.
Financial Highlights - continued
SIX MONTHS YEAR ENDED 10/31
ENDED ---------------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS I (UNAUDITED)
Net asset value, beginning
of period $16.70 $17.69 $23.04 $22.63 $20.42 $20.14
- --------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS#
Net investment income $0.05 $0.04 $0.02 $0.10 $0.06 $0.11
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gain (loss) on
investments and foreign
currency 0.37 (1.03) (3.83) 2.28 3.14 1.37
- ----------------------------- ------ ------ ------ ------ ------ ------
Total from investment
operations $0.42 $(0.99) $(3.81) $2.38 $3.20 $1.48
- ----------------------------- ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $-- $-- $-- $-- $-- $(0.16)
- --------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments and foreign
currency transactions -- -- (1.50) (1.97) (0.99) (1.04)
- --------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments and
foreign currency
transactions -- -- (0.04) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
From paid-in capital -- -- --+++ -- -- --
- ----------------------------- ------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $-- $-- $(1.54) $(1.97) $(0.99) $(1.20)
- ----------------------------- ------ ------ ------ ------ ------ ------
Net asset value, end of
period $17.12 $16.70 $17.69 $23.04 $22.63 $20.42
- ----------------------------- ------ ------ ------ ------ ------ ------
Total return (%) 2.51++ (5.60) (17.54) 10.73 16.02 7.78
- --------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEAR ENDED 10/31
ENDED ---------------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS I (CONTINUED) (UNAUDITED)
RATIOS (%) TO AVERAGE
NET ASSETS AND
SUPPLEMENTAL DATA:
Expenses## 1.44+ 1.37 1.34 1.30 1.34 1.35
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.65+ 0.23 0.10 0.41 0.26 0.51
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 22 52 72 84 92 64
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $18,563 $2,325 $2,274 $2,312 $817 $599
- --------------------------------------------------------------------------------------------------------------------------------
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01. # 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.
Financial Highlights - continued
SIX MONTHS YEAR ENDED 10/31
ENDED -------------------------------------------- PERIOD ENDED
4/30/03 2002 2001 2000 10/31/99*
CLASS J (UNAUDITED)
Net asset value, beginning of period $15.97 $17.08 $22.36 $22.21 $22.55
- --------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS#
Net investment loss $(0.05) $(0.13) $(0.15) $(0.06) $(0.10)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments and foreign
currency 0.38 (0.98) (3.71) 2.19 (0.24)
- ---------------------------------------- ------ ------ ------ ------ ------
Total from investment operations $0.33 $(1.11) $(3.86) $2.13 $(0.34)
- ---------------------------------------- ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net realized gain on investments
and foreign currency transactions $-- $-- $(1.38) $(1.98) $--
- --------------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on
investments and foreign currency
transactions -- -- (0.04) -- --
- --------------------------------------------------------------------------------------------------------------------------------
From paid-in capital -- -- --+++ -- --
- ---------------------------------------- ------ ------ ------ ------ ------
Total distributions declared to
shareholders $-- $-- $(1.42) $(1.98) $--
- ---------------------------------------- ------ ------ ------ ------ ------
Net asset value, end of period $16.30 $15.97 $17.08 $22.36 $22.21
- ---------------------------------------- ------ ------ ------ ------ ------
Total return (%)(+) 2.07++ (6.50) (18.29) 9.55 (1.51)++
- --------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEAR ENDED 10/31
ENDED -------------------------------------------- PERIOD ENDED
4/30/03 2002 2001 2000 10/31/99(7)
CLASS J (CONTINUED) (UNAUDITED)
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA:
Expenses## 2.39+ 2.32 2.29 2.25 2.37+
- --------------------------------------------------------------------------------------------------------------------------------
Net investment loss (0.58)+ (0.73) (0.78) (0.27) (1.34)+
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 22 52 72 84 92
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $15,767 $17,215 $15,446 $20,540 $724
- --------------------------------------------------------------------------------------------------------------------------------
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01. # 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.
* For the period from the inception of Class J shares, July 9, 1999, through October 31, 1999.
See notes to financial statements.
Financial Highlights - continued
PERIOD ENDED
4/30/03*
CLASS R (UNAUDITED)
Net asset value, beginning of period $16.67
- --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#
Net investment income $0.06
- --------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and foreign currency 0.21
- -------------------------------------------------------------------------------------- --------
Total from investment operations $0.27
- -------------------------------------------------------------------------------------- --------
Net asset value, end of period $16.94
- -------------------------------------------------------------------------------------- --------
Total return (%) 1.56++
- --------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA:
Expenses## 1.94+
- --------------------------------------------------------------------------------------------------
Net investment income 1.15+
- --------------------------------------------------------------------------------------------------
Portfolio turnover 22
- --------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $107
- --------------------------------------------------------------------------------------------------
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
* For the period from the inception of Class R shares, December 31, 2002, through April 30, 2003.
See notes to financial statements.
- ------------------------------------------------------------------------------
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 accounting
principles generally accepted in the United States of America 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 in the fund's portfolio for which
market quotations are available are valued at the last sale or official closing
price on the primary market or exchange on which they are primarily traded or at
the last quoted bid price for securities in which there were no sales during the
day. If no sales are reported, as is the case for most securities traded over
the counter, securities are valued on the basis of quotations obtained from
brokers and dealers or on the basis of valuations furnished by a pricing
service.
All other securities, other than short-term obligations, in the fund's portfolio
for which the principal market is one or more securities or commodities
exchanges (whether domestic or foreign) will be valued at the last reported sale
price or at the settlement price prior to the determination (or if there has
been no current sale, at the closing bid price) on the primary exchange on which
such securities are traded; but if a securities exchange is not the principal
market for securities, such securities will, if market quotations are readily
available, be valued at current bid prices.
Short-term obligations in the fund's portfolio are valued at amortized cost,
which constitutes fair value as determined by the Board of Trustees. Short- term
obligations with a remaining maturity in excess of 60 days will be valued upon
dealer supplied valuations.
Portfolio investments for which market quotations are not readily available, or
whose values have been materially affected by events occurring after the close
of their primary markets, are valued at fair value as determined in good faith
by or at the direction of the Board of 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.
SECURITY LOANS - State Street Bank and Trust Company ("State Street") and J.P.
Morgan 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.
INVESTMENT TRANSACTIONS AND INCOME - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
discount is amortized or accreted for financial statement purposes in accordance
with generally accepted accounting principles. All discount is accreted for tax
reporting purposes as required by federal income tax regulations. Dividends
received in cash are recorded on the ex-dividend date. Dividend and interest
payments received in additional securities are recorded on the ex-dividend or
ex-interest date in an amount equal to the value of the security on such date.
FEES PAID INDIRECTLY - The fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
fund. During the period, the fund's custodian fees were reduced by $27,409 under
this arrangement. The fund has entered into a directed brokerage agreement,
under which the broker will credit the fund a portion of the commissions
generated, to offset certain expenses of the fund. For the period, the fund's
other expenses were reduced by $1,960 under this agreement. These amounts are
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 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. Common types of book and tax differences that
could occur include differences in accounting for currency transactions.
The tax character of distributions declared for the years ended October 31, 2002
and October 31, 2001 was as follows:
10/31/02 10/31/01
Distributions declared from:
- --------------------------------------------------------------------------------
Ordinary income $-- $25,532,438
- --------------------------------------------------------------------------------
Long-term capital gain -- 24,740,951
- --------------------------------------------------------------------------------
$-- $50,273,389
- --------------------------------------------------------------------------------
Tax return of capital -- 4,529
- --------------------------------------------------------------------------------
Total distributions declared $-- $50,277,918
- --------------------------------------------------------------------------------
During the year ended October 31, 2002, accumulated net investment loss
decreased by $2,088,491, accumulated net realized loss on investments and
foreign currency transactions decreased by $313,082 and paid-in capital
decreased by $2,401,573 due to differences between book and tax accounting for
currency transactions and net operating losses. This change had no effect on the
net assets or net asset value per share.
As of October 31, 2002, the components of accumulated losses on a tax basis were
as follows:
Capital loss carryforward $(83,539,554)
---------------------------------------------------------------------------
Unrealized loss (10,352,409)
---------------------------------------------------------------------------
Other temporary differences (102,164)
---------------------------------------------------------------------------
For federal income tax purposes, the capital loss carryforward may be applied
against any net taxable realized gains of each succeeding year until the earlier
of its utilization or expiration on October 31, 2009 ($30,917,784) and October
31, 2010 ($52,621,770).
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 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%
------------------------------------------------------------------
Next $1.5 billion of average net assets 0.85%
------------------------------------------------------------------
The investment adviser has voluntarily agreed to reduce its management fee to
0.90% of the fund's average net assets in excess of $800 million up to $1
billion and to 0.75% of the fund's average net assets in excess of $2.5 billion.
This voluntary reduction in the management fee may be rescinded by MFS only with
the approval of the fund's Board of Trustees. Management fees incurred for the
six months ended April 30, 2003 were 1.00% of average daily net assets on an
annualized basis.
The fund pays compensation to the Independent Trustees ("Trustees") in the form
of both a retainer and attendance fees, and 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 inactive Trustees and an unfunded
retirement benefit deferral plan for active Trustees. Included in Trustees'
compensation is a net decrease of $13,698 as a result of the change in the
fund's pension liability for active Trustees and a pension expense of $2,672 for
inactive Trustees for the six months ended April 30, 2003.
ADMINISTRATOR - The fund has an administrative services agreement with MFS to
provide the fund with certain financial, legal, shareholder communications,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the fund pays MFS an administrative fee at
the following annual percentages of the fund's average daily net assets:
First $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
$15,227 for the six months ended April 30, 2003, 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,
Class J, and Class R 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 an annual
percentage of its average daily net assets attributable to certain share classes
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 based
on the average daily net assets of accounts attributable to such dealers. These
fees are calculated based on each class' average daily net assets. The maximum
distribution and service fees for each class of shares are as follows:
CLASS A CLASS B CLASS C CLASS J CLASS R
Distribution Fee 0.10% 0.75% 0.75% 0.70% 0.25%
- --------------------------------------------------------------------------------
Service Fee 0.25% 0.25% 0.25% 0.25% 0.25%
- --------------------------------------------------------------------------------
Total Distribution Plan 0.35% 1.00% 1.00% 0.95% 0.50%
- --------------------------------------------------------------------------------
MFD retains the service fee for accounts not attributable to a securities
dealer, which for the six months ended April 30, 2003, amounted to:
CLASS A CLASS B CLASS C
Service Fee Retained by MFD $6,362 $1,188 $43
- --------------------------------------------------------------------------------
Fees incurred under the distribution plan during the six months ended April 30,
2003, were as follows:
CLASS A CLASS B CLASS C CLASS J CLASS R
Total Distribution Plan 0.25% 1.00% 1.00% 0.95% 0.50%
- --------------------------------------------------------------------------------
Payment of the 0.10% per annum Class A distribution fee will commence on such
date as the Trustees of the fund may determine.
Class J shares are available for distribution through The Mizuho Bank Ltd.
("Mizuho Bank") and its network of financial intermediaries. Mizuho 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
Mizuho 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
the Mizuho Bank to cover its services as the fund's agent securities company.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within, for class A shares, 12
months following the purchase, and, for class C shares, the first year from the
end of the calendar month of 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 from the end of the calendar month of
purchase. MFD receives all contingent deferred sales charges. Contingent
deferred sales charges imposed during the six months ended April 30, 2003, were
as follows:
CLASS A CLASS B CLASS C
Contingent Deferred Sales
Charges Imposed $5,969 $115,462 $3,879
- --------------------------------------------------------------------------------
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 0.11%.
Prior to April 1, 2003, the fee was 0.10% of the fund's average daily net
assets.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$113,784,811 and $136,524,900, 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 $560,806,569
- --------------------------------------------------------------------------------
Gross unrealized appreciation $58,941,272
- --------------------------------------------------------------------------------
Gross unrealized depreciation (32,188,686)
- --------------------------------------------------------------------------------
Net unrealized appreciation $26,752,586
- --------------------------------------------------------------------------------
(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:
Six months ended Year ended
4/30/03 10/31/02
SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Shares sold 4,330,734 $70,292,031 12,574,948 $225,899,641
- ---------------------------------------------------------------------------------------------------------
Shares reacquired (5,515,044) (90,143,581) (12,925,159) (228,414,522)
- ---------------------------------------------------------------------------------------------------------
Net decrease (1,184,310) $(19,851,550) (350,211) $(2,514,881)
- ---------------------------------------------------------------------------------------------------------
CLASS B SHARES
Shares sold 815,745 $12,973,840 1,846,934 $32,706,309
- ---------------------------------------------------------------------------------------------------------
Shares reacquired (1,614,531) (25,490,667) (3,968,289) (69,490,614)
- ---------------------------------------------------------------------------------------------------------
Net decrease (798,786) $(12,516,827) (2,121,355) $(36,784,305)
- ---------------------------------------------------------------------------------------------------------
CLASS C SHARES
Shares sold 165,954 $2,598,897 456,602 $8,056,668
- ---------------------------------------------------------------------------------------------------------
Shares reacquired (328,470) (5,105,535) (867,502) (15,002,377)
- ---------------------------------------------------------------------------------------------------------
Net decrease (162,516) $(2,506,638) (410,900) $(6,945,709)
- ---------------------------------------------------------------------------------------------------------
CLASS I SHARES
Shares sold 1,219,394 $20,322,174 50,270 $921,915
- ---------------------------------------------------------------------------------------------------------
Shares reacquired (274,290) (4,549,060) (39,572) (721,750)
- ---------------------------------------------------------------------------------------------------------
Net increase 945,104 $15,773,114 10,698 $200,165
- ---------------------------------------------------------------------------------------------------------
CLASS J SHARES
Shares sold 36,891 $559,987 321,433 $5,372,013
- ---------------------------------------------------------------------------------------------------------
Shares reacquired (147,307) (2,268,525) (147,882) (2,571,102)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) (110,416) $(1,708,538) 173,551 $2,800,911
- ---------------------------------------------------------------------------------------------------------
Period ended
4/30/03*
SHARES AMOUNT
CLASS R SHARES
Shares sold 10,244 $163,890
- ------------------------------------------------------------------------
Shares reacquired (3,951) (63,729)
- ------------------------------------------------------------------------
Net increase 6,293 $100,161
- ------------------------------------------------------------------------
* For the period from the inception of Class R shares, December 31, 2002,
through April 30, 2003.
(6) LINE OF CREDIT
The fund and other affiliated funds participate in an $800 million 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 six months
ended April 30, 2003, was $1,746. The fund had no significant borrowings during
the period.
- --------------------------------------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------------------------------------
The following tables present certain information regarding the Trustees and officers of MFS Series Trust I, of
which the fund is a series, including their principal occupations, which, unless specific dates are shown, are
of more than five years' duration, although the titles may not have been the same throughout.
Name, age, position with the Trust, principal occupation, and other directorships(1)
INTERESTED TRUSTEES
JEFFREY L. SHAMES(2) (born 06/02/55) ABBY M. O'NEILL (born 04/27/28)
Chairman Trustee
Massachusetts Financial Services Company, Chairman Private investor; Rockefeller Financial Services,
Inc. (investment advisers), Chairman and Chief
JOHN W. BALLEN(2) (born 09/12/59) Executive Officer
Trustee and President
Massachusetts Financial Services Company, Chief LAWRENCE T. PERERA (born 06/23/35)
Executive Officer and Director Trustee
Hemenway & Barnes (attorneys), Partner
KEVIN R. PARKE(2) (born 12/14/59)
Trustee WILLIAM J. POORVU (born 04/10/35)
Massachusetts Financial Services Company, Trustee
President, Chief Investment Officer, and Director Private investor; Harvard University Graduate
School of Business Administration, Class of 1961
INDEPENDENT TRUSTEES Adjunct Professor in Entrepreneurship Emeritus;
CBL & Associates Properties, Inc. (real estate
LAWRENCE H. COHN, M.D. (born 03/11/37) investment trust), Director
Trustee
Brigham and Women's Hospital, Chief of Cardiac J. DALE SHERRATT (born 09/23/38)
Surgery; Harvard Medical School, Professor of Trustee
Surgery Insight Resources, Inc. (acquisition planning
specialists), President; Wellfleet Investments
WILLIAM R. GUTOW (born 09/27/41) (investor in health care companies), Managing
Trustee General Partner (since 1993); Cambridge
Private investor and real estate consultant; Nutraceuticals (professional nutritional
Capitol Entertainment Management Company (video products), Chief Executive Officer (until May
franchise), Vice Chairman 2001)
J. ATWOOD IVES (born 05/01/36) ELAINE R. SMITH (born 04/25/46)
Trustee Trustee
Private investor; KeySpan Corporation (energy Independent health care industry consultant
related services), Director; Eastern Enterprises
(diversified services company), Chairman, Trustee WARD SMITH (born 09/13/30)
and Chief Executive Officer (until November 2000) Trustee
Private investor
(1) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission
(i.e., "public companies").
(2) "Interested person" of MFS within the meaning of the Investment Company Act of 1940 (referred to as the
1940 Act) which is the principal federal law governing investment companies like the Trust. The address of
MFS is 500 Boylston Street, Boston, Massachusetts 02116.
Trustees and Officers - continued
OFFICERS
JEFFREY L. SHAMES (born 06/02/55) ROBERT R. FLAHERTY (born 09/18/63)
Chairman Assistant Treasurer
Massachusetts Financial Services Massachusetts Financial Services Company, Vice
Company, Chairman President (since August 2000); UAM Fund Services,
Senior Vice President (prior to August 2000)
JOHN W. BALLEN (born 09/12/59) RICHARD M. HISEY (born 08/29/58)
Trustee and President Treasurer
Massachusetts Financial Services Company, Chief Massachusetts Financial Services Company, Senior
Executive Officer and Director Vice President (since July 2002); The Bank of New
York, Senior Vice President (September 2000 to
July 2002); Lexington Global Asset Managers, Inc.,
JAMES R. BORDEWICK, JR. (born 03/06/59) Executive Vice President and Chief Financial
Assistant Secretary and Assistant Clerk Officer, General Manager, Mutual Funds (prior to
Massachusetts Financial Services Company, Senior September 2000)
Vice President and Associate General Counsel
ELLEN MOYNIHAN (born 11/13/57)
Assistant Treasurer
STEPHEN E. CAVAN (born 11/06/53) Massachusetts Financial Services Company, Vice
Secretary and Clerk President
Massachusetts Financial Services Company, Senior
Vice President, General Counsel and Secretary JAMES O. YOST (born 06/12/60)
Assistant Treasurer
Massachusetts Financial Services Company, Senior
STEPHANIE A. DESISTO (born 10/01/53) Vice President
Assistant Treasurer
Massachusetts Financial Services Company, Vice
President (since April 2003); Brown Brothers
Harriman & Co., Senior Vice President (November
2002 to April 2003); ING Groep N.V./Aeltus
Investment Management, Senior Vice President
(prior to November 2002)
The Trust does not hold annual shareholder meetings for the purpose of electing Trustees, and Trustees are
not elected for fixed terms. This means that each Trustee will be elected to hold office until his or her
successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Each
officer will hold office until his or her successor is chosen and qualified, or until he or she retires,
resigns or is removed from office.
Messrs. Shames, Cohn, Sherratt and Smith, and Ms. O'Neill, have served in their capacity as Trustee of the
Trust continuously since originally elected or appointed. Messrs. Ballen, Gutow, Ives, Perera and Poorvu, and
Ms. Smith, were elected by shareholders and have served as Trustees of the Trust since January 1, 2002. Mr.
Parke has served as Trustee of the Trust since January 1, 2002.
Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or
a subsidiary is the investment adviser or distributor and, in the case of the officers, with certain
affiliates of MFS. Each Trustee serves as a board member of 112 funds within the MFS Family of Funds.
The Statement of Additional Information contains further information about the
Trustees and is available without charge upon request, by calling
1-800-225-2606.
- --------------------------------------------------------------------------------------------------------------
PORTFOLIO MANAGER
INVESTMENT ADVISER David R. Mannheim(1)
Massachusetts Financial Services Company
500 Boylston Street, Boston, MA 02116-3741 CUSTODIANS
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
DISTRIBUTOR
MFS Fund Distributors, Inc. JP Morgan Chase Manhattan Bank
500 Boylston Street, Boston, MA 02116-3741 One Chase Manhattan Plaza
New York, NY 10081
(1)MFS Investment Management
- -------------------------------------------------------------------------------
MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS
- -------------------------------------------------------------------------------
YOUR GOALS ARE IMPORTANT
MFS offers a complete range of investments and investment services to address
specific financial needs over time. When your investing goals change, you can
easily stay with MFS for the products you need, when you need them. Whether
you're investing for college or retirement expenses or for tax management or
estate planning, MFS will be there.
Ask your investment professional how MFS can help you move toward the goals
you've set.
MFS FAMILY OF FUNDS(R)
More than 50 portfolios offer domestic and international
equity and fixed-income investment across the full risk
spectrum
VARIABLE ANNUITIES
A selection of annuity products with advantages for
building and preserving wealth
MFS 401(k) AND IRA SUITES
Retirement plans for businesses and individuals
MFS COLLEGE SAVINGS PLANS
Investment products to help meet education expenses
MFS PRIVATE PORTFOLIO SERVICES
Investment advisory services that provide custom products
for high-net-worth individuals
You can obtain a prospectus for any MFS product from your investment
professional. The prospectus contains complete information on the fees and
risks associated with investing. Read the prospectus carefully before
investing or sending money.
- -------------------------------------------------------------------------------
CONTACT INFORMATION
- -------------------------------------------------------------------------------
INVESTOR INFORMATION
For information on MFS mutual funds, call your investment professional or, for
an information kit, call toll free: 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
INVESTOR SERVICE
Write to us at: MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
Type of Information Phone number Hours, Eastern Time
- --------------------------------------------------------------------------------
General information 1-800-225-2606 8 a.m. to 8 p.m., any business day
- --------------------------------------------------------------------------------
Speech- or
hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m., any business day
- --------------------------------------------------------------------------------
Shares prices, account 1-800-MFS-TALK
balances exchanges or (1-800-637-8255)
stock and bond outlooks touch-tone required 24 hours a day, 365 days a year
- --------------------------------------------------------------------------------
WORLD WIDE WEB
Go to WWW.MFS.COM for a clear view of market events, investor education,
account access, and product and performance insights.
Go paperless with EDELIVERY: Join your fellow shareholders who are already
taking advantage of this great new benefit from MFS. With eDelivery, we send
you prospectuses, reports, and proxies electronically. You get timely
information without mailbox clutter (and help your fund save printing and
postage costs).
SIGN-UP instructions: If your account is registered with us, go to
www.mfs.com, log in to your account via MFS Access, and select the eDelivery
sign up options.
If you own your MFS fund shares through a financial institution or through a
retirement plan, MFS Talk, MFS Access, and eDelivery may not be available
to you.
[logo] M F S(R)
500 Boylston Street
Boston, MA 02116-3741
(C) 2003 MFS Investment Management(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.
500 Boylston Street, Boston, MA 02116
LGE-SEM-6/03 61.1M
MFS(R) Mutual Funds
SEMIANNUAL REPORT 4/30/03
MFS(R) GLOBAL TOTAL RETURN FUND
A path for pursuing opportunity
[graphic omitted]
[logo] M F S(R)
INVESTMENT MANAGEMENT
MFS(R) GLOBAL TOTAL RETURN FUND
The fund seeks total return by providing above average income (compared to a
portfolio invested entirely in equity securities) and opportunities for growth
of capital and income.
TABLE OF CONTENTS
- ------------------------------------------------------
LETTER FROM THE CHAIRMAN 1
- ------------------------------------------------------
MFS ORIGINAL RESEARCH(R) 4
- ------------------------------------------------------
MANAGEMENT REVIEW 5
- ------------------------------------------------------
PERFORMANCE SUMMARY 8
- ------------------------------------------------------
PORTFOLIO OF INVESTMENTS 12
- ------------------------------------------------------
FINANCIAL STATEMENTS 25
- ------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 39
- ------------------------------------------------------
TRUSTEES AND OFFICERS 48
- ------------------------------------------------------
MONEY MANAGEMENT FOR ALL TYPES
OF INVESTORS 50
- ------------------------------------------------------
CONTACT INFORMATION 51
- ------------------------------------------------------
ASSET ALLOCATION 52
- --------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
LETTER FROM THE CHAIRMAN
- ------------------------------------------------------------------------------
Dear Shareholders,
[Photo of Jeffrey L. Shames]
Our firm was built on the philosophy that bottom-up fundamental research is the
best means of achieving superior long term investment performance. When you're
managing billions of dollars for investors, we think you have an obligation to
have in-depth, firsthand knowledge of every company you own whether it is in the
U.S. or anywhere across the globe.
We have structured our equity and fixed-income investment teams to capitalize on
the strength of our investment process and the global reach of our analysts
based around the world. Our global research team is composed of 45 equity
analysts, 27 based in the U.S. and 18 based abroad, and 26 credit research
analysts. Each analyst is assigned one or more specific industries and then
charged with identifying the most attractive investment ideas within these
industries. Our U.S. and non-U.S. equity research analysts are unified into one
team that emphasizes a collaborative process in analyzing securities across the
globe. Credit analysts also share their expertise in each segment of the
fixed-income market and work as part of the same team ensuring that every member
has access to information that may have a material effect on their investment
decisions. As MFS continues to grow and as markets become more complex, we
believe our structure will enable us to maintain a consistent investment process
with the goal of providing strong, long-term investment performance across
market capitalizations, investment disciplines, and country borders for our fund
shareholders.
THINKING GLOBALLY
More companies than ever compete globally and, therefore, we must make
investment decisions knowing what is occurring outside of a company's local
market. This trend plays to the strength of our environment of collaboration
between our analysts and portfolio managers across the globe. The analysts know
the most details about individual companies in specific industries and
geographic regions. The portfolio managers have broader, cross-industry insights
and a wider perspective on companies and industries. Our goal is to make sure
those two sets of perspectives coordinate and work well together. As markets
across the globe become more interdependent, we believe our collaborative
environment allows us to produce solid investment ideas for our portfolios.
BUILDING A NETWORK
Simply put, we believe our structure assures that our analysts maintain their
peripheral vision rather than becoming too immersed in a specific segment of the
market. We do not believe that analysts and portfolio managers - no matter how
talented they may be - can succeed by working in a vacuum. Through the latest
technology available, our entire research team meets frequently via video and
telephone teleconferences, email, and PDAs (Personal Digital Assistants). When
we hire new analysts, we require them to spend an average of one year in Boston
to learn MFS' culture and to build relationships with their peers. We believe
the interaction among our analysts is the key to making our collaborative
process work towards delivering superior long term investment performance for
our fund shareholders. Our analysts work out of four research offices in Boston,
London, Singapore and Tokyo, and are assigned to specific regions and
industries. They meet regularly with their colleagues to discuss the trends
around the world affecting the companies they cover.
In addition, our equity and fixed-income analysts often visit company
managements as a team. This collaboration is vital because of the different
perspective they bring to their analysis. Because a company's stock price has
tended to follow its earnings over time, our equity research analysts tend to
focus on gauging earnings potential, a company's position within its industry
and its ability to grow its market share. Conversely, our fixed income analysts
will look at stability of a company's cash flow, the value of its assets, and
its capital structure to gauge whether the company can generate enough free cash
flow to pay off its debt. As a result of their collaboration, we believe we're
able to see a more complete view of a company.
WORKING TOGETHER
Our portfolio managers also work closely with the analysts to select the most
appropriate securities for their portfolios from the various recommendations
made by the analysts. Opinions are exchanged and ideas are challenged so that
each member of our team is involved in our investment process. In fact, our
portfolio managers will be the first ones to tell you that many of their best
ideas start with the research analysts. We believe our collaborative approach
also provides us with an effective way to assess risk. Our portfolio managers
are not discouraged from taking on an appropriate level of risk; however we have
rigorous guidelines to assure that the level of risk is measured and monitored
and consistent with the investment philosophies of each of our portfolios. All
told, we believe our culture empowers the members of our investment team to
continue to do their best work and allows them to make better investment
decisions.
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
MFS Investment Management
May 30, 2003
The opinions expressed in this letter are those of MFS, and no forecasts can
be guaranteed.
- --------------------------------------------------------------------------------
MFS ORIGINAL RESEARCH(R)
- --------------------------------------------------------------------------------
THE HUMAN SIDE OF MONEY MANAGEMENT
For more than 75 years MFS has been offering investors clear paths to pursuing
specific investment objectives. Today, millions of individuals and thousands of
institutions all over the world look to MFS to manage their assets with insight
and care.
Our success, we believe, has to do with the fact that we see investors as people
with plans, not just dollars to invest.
When you invest with MFS, you invest with a company dedicated to helping you
realize your long-term financial goals.
INVESTORS CHOOSE MFS FOR OUR
o global asset management expertise across all asset classes
o time-tested money management process for pursuing consistent results
o full spectrum of investment products backed by MFS Original Research(R)
o resources and services that match real-life needs
TURNING INFORMATION INTO OPPORTUNITY
Sound investments begin with sound information. MFS has been doing its own
research and analyzing findings in-house for decades. The process we use to
uncover opportunity is called MFS Original Research(R).
MFS ORIGINAL RESEARCH INVOLVES:
o meeting with the management of 3,000 companies each year to assess their
business plans and the managers' ability to execute those plans
o making onsite visits to more than 2,000 companies annually to gain
first-hand knowledge of their operations and products
o analyzing financial statements and balance sheets
o talking extensively with companies' customers and competitors
o developing our own proprietary estimates of companies' earnings
- --------------------------------------------------------------------------------
MANAGEMENT REVIEW
- --------------------------------------------------------------------------------
The portfolio recorded positive relative performance for the period, although
the equity portion of the fund underperformed its benchmarks slightly. We
believe that a major reason for the underperformance of the equity portion of
the portfolio versus its benchmark was its conservative positioning. This
conservative bias, in both stocks and bonds, has aided fund performance in the
past. We do not invest to any major extent in less-developed markets and have
benefited from our primary regional focus on the United States and Europe. Also,
we favor higher-quality companies in industries that we believe tend to hold up
better under volatile economic conditions. These are market sectors where we
have historically found more reliable and predictable earnings and cash flows.
POSITIVE EQUITY PERFORMERS
Financial services was our largest sector weighting and represented
approximately 14% of the equity portion of the fund at the end of period, which
was slightly underweight versus the MSCI World Index. Despite being
underweighted in the sector, strong stock selection in the banking and insurance
industries greatly helped performance.
- -------------------------------------------------
TOP 5 STOCK HOLDINGS
4/30/03
BP AMOCO PLC 1.4%
Crude oil, natural gas, and petroleum
products
- -------------------------------------------------
TOTAL FINA S.A. 1.3%
French oil company
- -------------------------------------------------
REED ELSEVIER PLC 1.0%
Publishing and information business
- -------------------------------------------------
BANK OF AMERICA CORP. 1.0%
Consumer and commercial banking
services
- -------------------------------------------------
EXXONMOBIL CORP. 1.0%
Crude oil, natural gas, and petroleum
products
- -------------------------------------------------
The portfolio is actively managed, and current
holdings may be different.
Financial services were previously under significant pressure because of rising
credit costs and fear of balance sheet write-offs, given concerns over corporate
balance sheets.
Property and casualty insurance companies fared well during the period, and our
overweight holdings in MetLife and the QBE Insurance Company of Australia
greatly helped the fund's performance.
Insurance companies maintain large investment portfolios, taking money in from
policyholders and investing the money. As a result, these companies are very
leveraged to the health of the equity markets. As the equity market improved
during the period, so did the standings of many insurance companies.
The portfolio's overweighted position in utilities and communications also
helped us during the period. Specifically our holdings in natural gas
distribution companies helped the fund, led by the performance of Snam Rete Gas
of Italy and Tokyo Gas of Japan.
POSITIVE FIXED INCOME PERFORMERS
Our overweight positions in Euro-bloc bonds and currency, as well as in certain
"dollar-bloc" bonds and currencies (e.g., Australia, New Zealand, Canada),
benefited the fund, particularly given the U.S. dollar weakness against those
currencies.
EQUITY DETRACTORS
Basic materials holdings detracted from performance during the period. While the
sector as a whole did well, several of the fund's key holdings did poorly. In
particular Syngenta, a Swiss agro-chemical company, disappointed on weakening
trends in the agricultural industry.
We also had weak performance from Dutch pharmaceutical company Akzo-Nobel, which
struggled over product issues and increased balance sheet concerns.
Our overweight position in the consumer staples sector hurt the fund, as that
sector trailed the MSCI World benchmark. Specifically, our overweight positions
in Shiseido, a Japanese cosmetics company, and the Altria Group, hurt
performance. Altria, the new name for Philip Morris, struggled over continued
litigation concerns.
FIXED INCOME DETRACTORS
We were too early in reducing our U.S. Treasury exposure, underestimating the
strong technical bid against a backdrop of persistent U.S. economic weakness and
the easing bias of the Federal Reserve.
/s/ Steven R. Gorham /s/ Barnaby Wiener
Steven R. Gorham Barnaby Wiener
Portfolio Manager Portfolio Manager
/s/ Matthew W. Ryan
Matthew W. Ryan
Portfolio Manager
Note to shareholders: Effective January 15, 2003, Barnaby Wiener became a
manager of the fund. Prior to May 1, 2003, Frederick J. Simmons also co-managed
the fund.
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. These views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY THROUGH 4/30/03
- --------------------------------------------------------------------------------
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. Performance results reflect the percentage change in
net asset value, including the reinvestment of any dividends and capital gains
distributions. (See Notes to Performance Summary.)
TOTAL RETURNS
Cumulative without sales charge
Class
Share inception
class date 6-mo 1-yr 3-yr 5-yr 10-yr
A 9/4/90 5.96% 2.02% -1.13% 13.11% 120.90%
- -----------------------------------------------------------------------------------------------------------
B 9/7/93 5.55% 1.35% -3.08% 9.42% 107.12%
- -----------------------------------------------------------------------------------------------------------
C 1/3/94 5.53% 1.35% -3.05% 9.46% 107.95%
- -----------------------------------------------------------------------------------------------------------
I 1/2/97 6.13% 2.36% -0.08% 15.23% 126.14%
- -----------------------------------------------------------------------------------------------------------
R 12/31/02 5.96% 2.02% -1.13% 13.11% 120.90%
Average annual without sales charge
A -- 2.02% -0.38% 2.49% 8.25%
- -----------------------------------------------------------------------------------------------------------
B -- 1.35% -1.04% 1.82% 7.55%
- -----------------------------------------------------------------------------------------------------------
C -- 1.35% -1.03% 1.82% 7.60%
- -----------------------------------------------------------------------------------------------------------
I -- 2.36% -0.03% 2.88% 8.50%
- -----------------------------------------------------------------------------------------------------------
R -- 2.02% -0.38% 2.49% 8.25%
Average annual with sales charge
A -- -2.82% -1.98% 1.50% 7.72%
- -----------------------------------------------------------------------------------------------------------
B -- -2.65% -1.94% 1.51% 7.55%
- -----------------------------------------------------------------------------------------------------------
C -- 0.35% -1.03% 1.82% 7.60%
I and R Class shares do not have a sales charge. Please see Notes to Performance
Summary for more details.
Average Annual
Comparative benchmarks 6-mo 1-yr 3-yr 5-yr 10-yr
Average global flexible fund+ 4.72% -7.77% -6.00% -0.33% 6.83%
- -----------------------------------------------------------------------------------------------------------
Lipper Global Flexible Fund
Index+ 4.34% -6.06% -5.88% 0.25% 6.18%
- -----------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Stock
Index# 4.47% -13.30% -12.96% -2.42% 9.66%
- -----------------------------------------------------------------------------------------------------------
60% MSCI World Index/
40% J.P. Morgan Global
Government Bond Index# 6.17% -0.70% -5.48% 0.25% 6.03%
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc., an independent firm that reports mutual fund performance.
# Source: Standard & Poor's Micropal, Inc.
INDEX DEFINITIONS
STANDARD & POOR'S 500 STOCK INDEX - A commonly used measure of the broad U.S.
stock market.
60% MSCI WORLD INDEX/40% J.P. MORGAN GLOBAL GOVERNMENT BOND INDEX - A customized
index composed of the MSCI World Index, which measures the performance of stock
markets of developed countries, and the J.P. Morgan Global Government Bond
Index, which measures the performance of the government bond markets around the
world.
LIPPER GLOBAL FLEXIBLE FUND INDEX - Measures the performance of funds that
allocate their investments across various asset classes.
It is not possible to invest directly in an index.
NOTES TO PERFORMANCE SUMMARY
Class A results, including sales charge, reflects the deduction of the maximum
4.75% sales charge. Class B results, including sales charge, reflects the
deduction of the applicable contingent deferred sales charge (CDSC), which
declines over six years from 4% to 0%. Class C results, including sales charge,
redeemed within one year from the end of the calendar month of purchase reflects
the deduction of the 1% CDSC. Class I shares have no sales charges and are
available only to certain investors. Class R shares have no sales charges and
are available only to certain retirement plans.
Performance for share classes offered after class A shares includes the
performance of the fund's class A shares for periods prior to their offering.
Blended class performance has been adjusted to take into account differences in
sales loads, if any, applicable to these share classes, but has not been
adjusted to take into account differences in class specific operating expenses
(such as Rule 12b-1 fees). Compared to performance these share classes would
have experienced had they been offered for the entire period, the use of blended
performance generally results in higher performance for share classes with
higher operating expenses than the initial share class, and lower performance
for share classes with lower operating expenses than the initial share class.
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 and financial statements for details. All results
are historical and assume the reinvestment of dividends and capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN REDEEMED,
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS, AND THE PERFORMANCE SHOWN DOES NOT REFLECT THE
DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS
OR THE REDEMPTION OF FUND SHARES.
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE, AND MORE
RECENT RETURNS MAY BE DIFFERENT FROM THOSE SHOWN. VISIT WWW.MFS.COM FOR MORE
CURRENT PERFORMANCE RESULTS.
KEY RISK CONSIDERATIONS
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
Investments in high yield or lower-rated securities may provide greater returns
but are subject to greater-than-average risk.
These risks may increase share price volatility. Please see the prospectus for
further information on these and other risk considerations.
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.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (unaudited ) 4/30/03
- --------------------------------------------------------------------------------
The Portfolio of Investments is a list of all securities owned by your fund. It
is categorized by broad-based asset classes.
Stocks - 57.8%
- ----------------------------------------------------------------------------------------------------
ISSUER SHARES $ VALUE
- ----------------------------------------------------------------------------------------------------
Foreign Stocks - 31.4%
- ----------------------------------------------------------------------------------------------------
Australia - 1.0%
- ----------------------------------------------------------------------------------------------------
Australia & New Zealand Banking Group Ltd. (Banks &
Credit Cos.)* 102,379 $1,195,265
- ----------------------------------------------------------------------------------------------------
QBE Insurance Group Ltd. (Insurance)* 402,530 2,151,941
- ----------------------------------------------------------------------------------------------------
$3,347,206
- ----------------------------------------------------------------------------------------------------
Austria - 0.2%
- ----------------------------------------------------------------------------------------------------
Erste Bank der Oesterreichischen Sparkassen AG (Banks &
Credit Cos.) 7,200 $570,666
- ----------------------------------------------------------------------------------------------------
Bermuda - 0.1%
- ----------------------------------------------------------------------------------------------------
Accenture Ltd. (Business Services)* 14,500 $232,290
- ----------------------------------------------------------------------------------------------------
Canada - 1.1%
- ----------------------------------------------------------------------------------------------------
Abitibi-Consolidated, Inc. (Forest & Paper Products) 57,100 $399,700
- ----------------------------------------------------------------------------------------------------
Alcan, Inc. (Metals) 15,200 445,968
- ----------------------------------------------------------------------------------------------------
BCE, Inc. (Telecommunications) 34,170 677,249
- ----------------------------------------------------------------------------------------------------
Canadian National Railway Co. (Railroads) 35,347 1,718,925
- ----------------------------------------------------------------------------------------------------
Encana Corp. (Utilities - Gas) 15,000 491,908
- ----------------------------------------------------------------------------------------------------
$3,733,750
- ----------------------------------------------------------------------------------------------------
Denmark - 0.7%
- ----------------------------------------------------------------------------------------------------
Danske Bank (Banks & Credit Cos.) 121,690 $2,345,725
- ----------------------------------------------------------------------------------------------------
France - 3.8%
- ----------------------------------------------------------------------------------------------------
Aventis S.A. (Pharmaceuticals) 24,880 $1,265,786
- ----------------------------------------------------------------------------------------------------
Carrefour S.A. (Supermarket) 20,600 897,430
- ----------------------------------------------------------------------------------------------------
France Telecom S.A. (Telecommunications)* 27,100 626,877
- ----------------------------------------------------------------------------------------------------
Sanofi-Synthelabo S.A. (Medical & Health Products) 41,110 2,456,396
- ----------------------------------------------------------------------------------------------------
Schneider Electric S.A. (Machinery) 17,322 821,433
- ----------------------------------------------------------------------------------------------------
Societe Television Francaise 1 (Television) 55,932 1,573,790
- ----------------------------------------------------------------------------------------------------
STMicroelectronics N.V. (Electronics) 47,730 988,179
- ----------------------------------------------------------------------------------------------------
Total Fina S.A., ADR (Oils) 70,120 4,606,884
- ----------------------------------------------------------------------------------------------------
$13,236,775
- ----------------------------------------------------------------------------------------------------
Germany - 1.7%
- ----------------------------------------------------------------------------------------------------
Bayerische Motoren Werke AG (Automotive) 57,400 $1,916,683
- ----------------------------------------------------------------------------------------------------
Deutsche Post AG (Transportation) 48,190 575,888
- ----------------------------------------------------------------------------------------------------
Fresenius AG (Medical & Health Products) 4,200 187,572
- ----------------------------------------------------------------------------------------------------
Linde AG (Engineering) 26,580 1,003,138
- ----------------------------------------------------------------------------------------------------
Porsche AG (Automotive) 1,671 616,444
- ----------------------------------------------------------------------------------------------------
Schering AG (Pharmaceuticals) 34,600 1,545,240
- ----------------------------------------------------------------------------------------------------
$5,844,965
- ----------------------------------------------------------------------------------------------------
Hong Kong - 0.2%
- ----------------------------------------------------------------------------------------------------
Hong Kong Electric Holdings Ltd. (Utilities - Electric) 169,000 $682,605
- ----------------------------------------------------------------------------------------------------
Ireland - 0.9%
- ----------------------------------------------------------------------------------------------------
Bank of Ireland (Banks & Credit Cos.) 155,770 $1,924,196
- ----------------------------------------------------------------------------------------------------
Irish Life & Permanent PLC (Financial Institutions) 112,360 1,306,316
- ----------------------------------------------------------------------------------------------------
$3,230,512
- ----------------------------------------------------------------------------------------------------
Italy - 0.3%
- ----------------------------------------------------------------------------------------------------
Snam Rete Gas S.p.A. (Gas)* 344,900 $1,253,083
- ----------------------------------------------------------------------------------------------------
Japan - 3.8%
- ----------------------------------------------------------------------------------------------------
Brother Industries, Ltd. (Business Machines) 170,000 $1,143,805
- ----------------------------------------------------------------------------------------------------
Canon, Inc. (Business Machines) 56,000 2,267,283
- ----------------------------------------------------------------------------------------------------
Chugai Pharmaceutical Co. Ltd. (Pharmaceuticals) 44,000 461,991
- ----------------------------------------------------------------------------------------------------
Credit Saison Co., Ltd. (Financial Institutions) 27,400 516,699
- ----------------------------------------------------------------------------------------------------
Honda Motor Co., Ltd. (Automotive) 53,600 1,778,412
- ----------------------------------------------------------------------------------------------------
KDDI Corp. (Telecommunications) 212 644,637
- ----------------------------------------------------------------------------------------------------
Nippon Electric Glass Co., Ltd. (Electronics) 53,000 581,420
- ----------------------------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. (Utilities -
Telephone) 87 305,468
- ----------------------------------------------------------------------------------------------------
Nissin Food Products Co., Ltd. (Food & Beverage Products) 12,900 281,730
- ----------------------------------------------------------------------------------------------------
Secom Co., Ltd. (Consumer Goods & Services) 14,300 333,927
- ----------------------------------------------------------------------------------------------------
Shiseido Co., Ltd. (Consumer Products) 141,000 1,289,786
- ----------------------------------------------------------------------------------------------------
Tokyo Broadcasting System, Inc. (Broadcasting) 36,000 423,049
- ----------------------------------------------------------------------------------------------------
Tokyo Gas Co., Ltd. (Gas) 761,000 2,480,202
- ----------------------------------------------------------------------------------------------------
Uni-Charm Corp. (Forest & Paper Products) 22,230 886,959
- ----------------------------------------------------------------------------------------------------
$13,395,368
- ----------------------------------------------------------------------------------------------------
Mexico - 0.1%
- ----------------------------------------------------------------------------------------------------
Telefonos de Mexico S.A. de CV, ADR (Telecommunications) 15,610 $471,578
- ----------------------------------------------------------------------------------------------------
Netherlands - 1.5%
- ----------------------------------------------------------------------------------------------------
Akzo Nobel N.V. (Chemicals) 48,360 $1,076,908
- ----------------------------------------------------------------------------------------------------
Euronext N.V. (Financial Institutions)* 30,600 677,314
- ----------------------------------------------------------------------------------------------------
Fugro N.V. (Special Products & Services)* 10,100 410,420
- ----------------------------------------------------------------------------------------------------
Koninklijke (Royal) KPN N.V. (Telecommunications) 36,110 240,590
- ----------------------------------------------------------------------------------------------------
Koninklijke (Royal) Philips Electronics N.V.
(Electronics) 57,100 1,064,081
- ----------------------------------------------------------------------------------------------------
Unilever N.V. (Food & Beverage Products) 14,980 945,320
- ----------------------------------------------------------------------------------------------------
VNU N.V. (Printing & Publishing)* 30,506 886,670
- ----------------------------------------------------------------------------------------------------
$5,301,303
- ----------------------------------------------------------------------------------------------------
New Zealand - 0.2%
- ----------------------------------------------------------------------------------------------------
Telecom Corp. of New Zealand, Ltd. (Telecommunications)* 265,900 $712,868
- ----------------------------------------------------------------------------------------------------
Norway - 0.3%
- ----------------------------------------------------------------------------------------------------
Storebrand ASA (Insurance) 237,200 $967,235
- ----------------------------------------------------------------------------------------------------
Singapore - 0.1%
- ----------------------------------------------------------------------------------------------------
Singapore Telecommunications Ltd. (Telecommunications) 377,000 $308,180
- ----------------------------------------------------------------------------------------------------
South Korea - 0.2%
- ----------------------------------------------------------------------------------------------------
Korea Tobacco & Ginseng Corp., GDR (Tobacco)*## 98,420 $753,336
- ----------------------------------------------------------------------------------------------------
Spain - 2.4%
- ----------------------------------------------------------------------------------------------------
Altadis S.A. (Tobacco) 127,690 $3,297,403
- ----------------------------------------------------------------------------------------------------
Gas Natural SDG S.A. (Gas) 29,410 563,848
- ----------------------------------------------------------------------------------------------------
Iberdrola S.A. (Utilities - Electric) 133,750 2,157,562
- ----------------------------------------------------------------------------------------------------
Telefonica S.A. (Telecommunications) 221,616 2,455,150
- ----------------------------------------------------------------------------------------------------
$8,473,963
- ----------------------------------------------------------------------------------------------------
Switzerland - 3.8%
- ----------------------------------------------------------------------------------------------------
Converium Holding AG (Insurance) 15,700 $709,948
- ----------------------------------------------------------------------------------------------------
Credit Suisse Group (Financial Institutions) 17,700 423,389
- ----------------------------------------------------------------------------------------------------
Givaudan S.A. (Chemicals) 800 310,078
- ----------------------------------------------------------------------------------------------------
Nestle S.A. (Food & Beverage Products) 14,864 3,034,253
- ----------------------------------------------------------------------------------------------------
Novartis AG (Medical & Health Products) 73,300 2,895,201
- ----------------------------------------------------------------------------------------------------
Syngenta AG (Chemicals)* 63,791 3,296,692
- ----------------------------------------------------------------------------------------------------
Synthes-Stratec, Inc. (Medical & Health Products) 780 492,359
- ----------------------------------------------------------------------------------------------------
UBS AG (Financial Institutions) 41,683 1,980,289
- ----------------------------------------------------------------------------------------------------
$13,142,209
- ----------------------------------------------------------------------------------------------------
United Kingdom - 9.0%
- ----------------------------------------------------------------------------------------------------
AstraZeneca PLC (Medical & Health Products) 48,300 $1,896,393
- ----------------------------------------------------------------------------------------------------
BHP Billiton PLC (Metals & Mining) 141,200 722,627
- ----------------------------------------------------------------------------------------------------
BP Amoco PLC, ADR (Oils) 126,196 4,863,594
- ----------------------------------------------------------------------------------------------------
BT Group PLC (Telecommunications)* 147,900 423,991
- ----------------------------------------------------------------------------------------------------
Cadbury Schweppes PLC (Food & Beverage Products)* 176,590 984,234
- ----------------------------------------------------------------------------------------------------
Diageo PLC (Food & Beverage Products)* 297,149 3,298,097
- ----------------------------------------------------------------------------------------------------
GlaxoSmithKline PLC (Pharmaceutical)* 66,703 1,337,742
- ----------------------------------------------------------------------------------------------------
Granada Compass PLC (Media)* 203,700 222,343
- ----------------------------------------------------------------------------------------------------
Imperial Tobacco Group PLC (Tobacco)* 44,400 743,463
- ----------------------------------------------------------------------------------------------------
Johnston Press PLC (Printing & Publishing) 65,200 391,550
- ----------------------------------------------------------------------------------------------------
Kingfisher PLC (Retail)* 264,300 1,033,488
- ----------------------------------------------------------------------------------------------------
Lloyds TSB Group PLC (Banks & Credit Cos.)* 107,370 706,614
- ----------------------------------------------------------------------------------------------------
Marks & Spencer Group PLC (Retail)* 86,318 402,411
- ----------------------------------------------------------------------------------------------------
NEXT PLC (Retail)* 68,980 1,040,866
- ----------------------------------------------------------------------------------------------------
Reckitt Benckiser PLC (Consumer Goods & Services)* 142,148 2,508,665
- ----------------------------------------------------------------------------------------------------
Reed Elsevier PLC (Publishing) 456,910 3,646,371
- ----------------------------------------------------------------------------------------------------
Royal Bank of Scotland Group PLC (Banks & Credit Cos.)* 108,928 2,858,760
- ----------------------------------------------------------------------------------------------------
Smith & Nephew PLC (Medical & Health Products)* 38,900 259,583
- ----------------------------------------------------------------------------------------------------
Unilever PLC (Consumer Products) 129,900 1,277,656
- ----------------------------------------------------------------------------------------------------
Vodafone Group PLC (Telecommunications)* 951,694 1,879,723
- ----------------------------------------------------------------------------------------------------
Willis Group Holdings Ltd. (Insurance) 12,700 396,113
- ----------------------------------------------------------------------------------------------------
WPP Group PLC (Advertising) 46,400 330,409
- ----------------------------------------------------------------------------------------------------
$31,224,693
- ----------------------------------------------------------------------------------------------------
Total Foreign Stocks $109,228,310
- ----------------------------------------------------------------------------------------------------
U.S. Stocks - 26.4%
- ----------------------------------------------------------------------------------------------------
Aerospace & Defense - 0.2%
- ----------------------------------------------------------------------------------------------------
Northrop Grumman Corp. 8,600 $756,370
- ----------------------------------------------------------------------------------------------------
Apparel & Textiles - 0.1%
- ----------------------------------------------------------------------------------------------------
Nike, Inc., "B" 8,500 $455,005
- ----------------------------------------------------------------------------------------------------
Banks & Credit Cos. - 2.3%
- ----------------------------------------------------------------------------------------------------
Bank of America Corp. 48,240 $3,572,172
- ----------------------------------------------------------------------------------------------------
Comerica, Inc. 11,000 478,610
- ----------------------------------------------------------------------------------------------------
FleetBoston Financial Corp. 47,700 1,265,004
- ----------------------------------------------------------------------------------------------------
National City Corp. 20,400 $611,184
- ----------------------------------------------------------------------------------------------------
SunTrust Banks, Inc. 15,300 875,466
- ----------------------------------------------------------------------------------------------------
Wachovia Corp. 31,500 1,203,615
- ----------------------------------------------------------------------------------------------------
$8,006,051
- ----------------------------------------------------------------------------------------------------
Business Machines - 0.5%
- ----------------------------------------------------------------------------------------------------
Hewlett-Packard Co. 81,310 $1,325,353
- ----------------------------------------------------------------------------------------------------
International Business Machines Corp. 6,160 522,984
- ----------------------------------------------------------------------------------------------------
$1,848,337
- ----------------------------------------------------------------------------------------------------
Business Services - 0.1%
- ----------------------------------------------------------------------------------------------------
Automatic Data Processing, Inc. 9,100 $306,033
- ----------------------------------------------------------------------------------------------------
Chemicals - 1.7%
- ----------------------------------------------------------------------------------------------------
Air Products & Chemicals, Inc. 54,340 $2,340,424
- ----------------------------------------------------------------------------------------------------
Dow Chemical Co. 54,400 1,775,616
- ----------------------------------------------------------------------------------------------------
PPG Industries, Inc. 16,500 800,415
- ----------------------------------------------------------------------------------------------------
Praxair, Inc. 16,650 967,032
- ----------------------------------------------------------------------------------------------------
$5,883,487
- ----------------------------------------------------------------------------------------------------
Computer Hardware - Systems - 0.2%
- ----------------------------------------------------------------------------------------------------
Intel Corp. 31,200 $574,080
- ----------------------------------------------------------------------------------------------------
Computer Software - 0.3%
- ----------------------------------------------------------------------------------------------------
Microsoft Corp. 47,600 $1,217,132
- ----------------------------------------------------------------------------------------------------
Consumer Goods & Services - 0.7%
- ----------------------------------------------------------------------------------------------------
Kimberly-Clark Corp. 14,400 $716,688
- ----------------------------------------------------------------------------------------------------
Procter & Gamble Co. 18,480 1,660,428
- ----------------------------------------------------------------------------------------------------
$2,377,116
- ----------------------------------------------------------------------------------------------------
Container, Forest & Paper Products - 0.1%
- ----------------------------------------------------------------------------------------------------
Smurfit-Stone Container Corp.* 32,800 $461,496
- ----------------------------------------------------------------------------------------------------
Electronics - 0.2%
- ----------------------------------------------------------------------------------------------------
Texas Instruments, Inc. 35,100 $648,999
- ----------------------------------------------------------------------------------------------------
Entertainment - 0.7%
- ----------------------------------------------------------------------------------------------------
AOL Time Warner, Inc.* 30,600 $418,608
- ----------------------------------------------------------------------------------------------------
Viacom, Inc., "B"* 29,000 1,258,890
- ----------------------------------------------------------------------------------------------------
Walt Disney Co. 36,300 677,358
- ----------------------------------------------------------------------------------------------------
$2,354,856
- ----------------------------------------------------------------------------------------------------
Financial Institutions - 3.3%
- ----------------------------------------------------------------------------------------------------
Citigroup, Inc. 80,800 $3,171,400
- ----------------------------------------------------------------------------------------------------
Fannie Mae 22,500 1,628,775
- ----------------------------------------------------------------------------------------------------
Freddie Mac 27,860 1,613,094
- ----------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. 19,530 1,482,327
- ----------------------------------------------------------------------------------------------------
Mellon Financial Corp. 77,700 2,055,165
- ----------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 35,570 1,460,148
- ----------------------------------------------------------------------------------------------------
$11,410,909
- ----------------------------------------------------------------------------------------------------
Food & Beverage Products - 1.9%
- ----------------------------------------------------------------------------------------------------
Anheuser-Busch Cos., Inc. 20,700 $1,032,516
- ----------------------------------------------------------------------------------------------------
Archer-Daniels-Midland Co. 105,000 1,163,400
- ----------------------------------------------------------------------------------------------------
Del Monte Foods Co.* 8,788 69,864
- ----------------------------------------------------------------------------------------------------
H.J. Heinz Co. 22,200 663,336
- ----------------------------------------------------------------------------------------------------
Kellogg Co. 85,500 2,799,270
- ----------------------------------------------------------------------------------------------------
PepsiCo, Inc. 19,400 839,632
- ----------------------------------------------------------------------------------------------------
$6,568,018
- ----------------------------------------------------------------------------------------------------
Forest & Paper Products - 0.2%
- ----------------------------------------------------------------------------------------------------
International Paper Co. 15,500 $554,125
- ----------------------------------------------------------------------------------------------------
Gaming & Hotels - 0.1%
- ----------------------------------------------------------------------------------------------------
MGM Mirage, Inc.* 15,500 $440,510
- ----------------------------------------------------------------------------------------------------
Insurance - 1.8%
- ----------------------------------------------------------------------------------------------------
Allstate Corp. 28,400 $1,073,236
- ----------------------------------------------------------------------------------------------------
American International Group, Inc. 11,100 643,245
- ----------------------------------------------------------------------------------------------------
Gallagher (Arthur Jr.) & Co. 22,700 567,273
- ----------------------------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. 8,400 342,384
- ----------------------------------------------------------------------------------------------------
MetLife, Inc. 82,860 2,380,568
- ----------------------------------------------------------------------------------------------------
St. Paul Cos., Inc. 15,830 543,602
- ----------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp. 47,900 777,417
- ----------------------------------------------------------------------------------------------------
$6,327,725
- ----------------------------------------------------------------------------------------------------
Machinery - 1.1%
- ----------------------------------------------------------------------------------------------------
Caterpillar, Inc. 16,600 $873,160
- ----------------------------------------------------------------------------------------------------
Deere & Co. 68,300 3,007,249
- ----------------------------------------------------------------------------------------------------
$3,880,409
- ----------------------------------------------------------------------------------------------------
Medical & Health Products - 1.8%
- ----------------------------------------------------------------------------------------------------
Abbott Laboratories, Inc. 3,000 $121,890
- ----------------------------------------------------------------------------------------------------
Eli Lilly & Co. 35,840 2,287,309
- ----------------------------------------------------------------------------------------------------
Johnson & Johnson Co. 30,700 1,730,252
- ----------------------------------------------------------------------------------------------------
Pfizer, Inc. 69,000 2,121,750
- ----------------------------------------------------------------------------------------------------
$6,261,201
- ----------------------------------------------------------------------------------------------------
Medical & Health Technology Services - 0.1%
- ----------------------------------------------------------------------------------------------------
Lincare Holdings, Inc.* 13,100 $397,847
- ----------------------------------------------------------------------------------------------------
Metals & Minerals - 0.5%
- ----------------------------------------------------------------------------------------------------
Alcoa, Inc. 56,800 $1,302,424
- ----------------------------------------------------------------------------------------------------
Phelps Dodge Corp.* 15,100 470,969
- ----------------------------------------------------------------------------------------------------
$1,773,393
- ----------------------------------------------------------------------------------------------------
Oil Services - 1.0%
- ----------------------------------------------------------------------------------------------------
Baker Hughes, Inc. 15,900 $445,200
- ----------------------------------------------------------------------------------------------------
ConocoPhillips 22,300 1,121,690
- ----------------------------------------------------------------------------------------------------
Halliburton Co. 21,410 458,388
- ----------------------------------------------------------------------------------------------------
Noble Corp.* 20,400 631,380
- ----------------------------------------------------------------------------------------------------
Schlumberger Ltd. 19,400 813,442
- ----------------------------------------------------------------------------------------------------
$3,470,100
- ----------------------------------------------------------------------------------------------------
Oils - 1.3%
- ----------------------------------------------------------------------------------------------------
Anadarko Petroleum Corp. 6,300 $279,720
- ----------------------------------------------------------------------------------------------------
Devon Energy Corp. 8,000 378,000
- ----------------------------------------------------------------------------------------------------
ExxonMobil Corp. 94,340 3,320,768
- ----------------------------------------------------------------------------------------------------
Unocal Corp. 15,800 437,660
- ----------------------------------------------------------------------------------------------------
$4,416,148
- ----------------------------------------------------------------------------------------------------
Pharmaceuticals - 0.3%
- ----------------------------------------------------------------------------------------------------
Schering - Plough Corp. 50,600 $915,860
- ----------------------------------------------------------------------------------------------------
Printing & Publishing - 0.8%
- ----------------------------------------------------------------------------------------------------
Gannett Co., Inc. 26,740 $2,024,753
- ----------------------------------------------------------------------------------------------------
Tribune Co. 12,400 607,352
- ----------------------------------------------------------------------------------------------------
$2,632,105
- ----------------------------------------------------------------------------------------------------
Real Estate Investment Trusts - 0.1%
- ----------------------------------------------------------------------------------------------------
Starwood Hotels & Resorts Co. 14,900 $399,916
- ----------------------------------------------------------------------------------------------------
Retail - 1.0%
- ----------------------------------------------------------------------------------------------------
CVS Corp. 43,100 $1,043,451
- ----------------------------------------------------------------------------------------------------
Home Depot, Inc. 14,900 419,137
- ----------------------------------------------------------------------------------------------------
Lowe's Cos., Inc. 22,140 971,724
- ----------------------------------------------------------------------------------------------------
Sears, Roebuck & Co. 15,700 444,938
- ----------------------------------------------------------------------------------------------------
Target Corp. 20,600 688,864
- ----------------------------------------------------------------------------------------------------
$3,568,114
- ----------------------------------------------------------------------------------------------------
Special Products & Services - 0.3%
- ----------------------------------------------------------------------------------------------------
3M Co. 7,340 $925,134
- ----------------------------------------------------------------------------------------------------
Supermarkets - 0.6%
- ----------------------------------------------------------------------------------------------------
Kroger Co.* 107,200 $1,532,960
- ----------------------------------------------------------------------------------------------------
Safeway, Inc.* 35,400 588,348
- ----------------------------------------------------------------------------------------------------
$2,121,308
- ----------------------------------------------------------------------------------------------------
Telecommunications - 1.4%
- ----------------------------------------------------------------------------------------------------
AT&T Corp. 29,720 $506,726
- ----------------------------------------------------------------------------------------------------
BellSouth Corp. 89,410 2,279,061
- ----------------------------------------------------------------------------------------------------
Motorola, Inc. 59,500 470,645
- ----------------------------------------------------------------------------------------------------
SBC Communications, Inc. 39,800 929,728
- ----------------------------------------------------------------------------------------------------
Verizon Communications, Inc. 19,600 732,648
- ----------------------------------------------------------------------------------------------------
$4,918,808
- ----------------------------------------------------------------------------------------------------
Tobacco - 0.8%
- ----------------------------------------------------------------------------------------------------
Altria Group, Inc. 87,430 $2,689,347
- ----------------------------------------------------------------------------------------------------
Transportation - 0.1%
- ----------------------------------------------------------------------------------------------------
United Parcel Service, Inc. 3,540 $219,905
- ----------------------------------------------------------------------------------------------------
Utilities - Electric - 0.6%
- ----------------------------------------------------------------------------------------------------
Energy East Corp. 25,400 $462,788
- ----------------------------------------------------------------------------------------------------
FPL Group, Inc. 8,100 493,047
- ----------------------------------------------------------------------------------------------------
Keyspan Corp. 7,600 257,412
- ----------------------------------------------------------------------------------------------------
NSTAR Co. 13,700 591,840
- ----------------------------------------------------------------------------------------------------
PPL Corp. 5,660 204,892
- ----------------------------------------------------------------------------------------------------
TXU Corp. 11,700 233,064
- ----------------------------------------------------------------------------------------------------
$2,243,043
- ----------------------------------------------------------------------------------------------------
Utilities - Gas - 0.2%
- ----------------------------------------------------------------------------------------------------
National Fuel Gas Co. 24,300 $570,078
- ----------------------------------------------------------------------------------------------------
Total U.S. Stocks $91,592,965
- ----------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $187,781,680) $200,821,275
- ----------------------------------------------------------------------------------------------------
Bonds - 35.9%
- ----------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 Omitted) $ VALUE
- ----------------------------------------------------------------------------------------------------
Foreign Bonds - 27.7%
- ----------------------------------------------------------------------------------------------------
Australia - 0.5%
- ----------------------------------------------------------------------------------------------------
Australian Government, 5.75s, 2011 AUD 1,858 $1,203,362
- ----------------------------------------------------------------------------------------------------
Australian Government, 6.25s, 2015 825 550,263
- ----------------------------------------------------------------------------------------------------
$1,753,625
- ----------------------------------------------------------------------------------------------------
Austria - 1.5%
- ----------------------------------------------------------------------------------------------------
Republic of Austria, 5.5s, 2007 EUR 3,035 $3,712,812
- ----------------------------------------------------------------------------------------------------
Republic of Austria, 5s, 2012 1,314 1,573,215
- ----------------------------------------------------------------------------------------------------
$5,286,027
- ----------------------------------------------------------------------------------------------------
Belgium - 0.4%
- ----------------------------------------------------------------------------------------------------
Kingdom of Belgium, 3.75s, 2009 EUR 583 $660,198
- ----------------------------------------------------------------------------------------------------
Kingdom of Belgium, 5s, 2012 728 871,125
- ----------------------------------------------------------------------------------------------------
$1,531,323
- ----------------------------------------------------------------------------------------------------
Canada - 1.5%
- ----------------------------------------------------------------------------------------------------
Canadian Government, 5.25s, 2012 CAD 4,656 $3,323,348
- ----------------------------------------------------------------------------------------------------
Canadian Government, 8s, 2023 601 550,882
- ----------------------------------------------------------------------------------------------------
Quebec Province, 1.6s, 2013 JPY 153,000 1,385,329
- ----------------------------------------------------------------------------------------------------
$5,259,559
- ----------------------------------------------------------------------------------------------------
Denmark - 2.1%
- ----------------------------------------------------------------------------------------------------
Kingdom of Denmark, 7s, 2007 DKK 34,928 $6,042,382
- ----------------------------------------------------------------------------------------------------
Nordea Kredit Realkredit, 5s, 2035 (Financial
Institutions) 9,564 1,386,780
- ----------------------------------------------------------------------------------------------------
$7,429,162
- ----------------------------------------------------------------------------------------------------
Finland - 1.8%
- ----------------------------------------------------------------------------------------------------
Finnish Government, 2.75s, 2006 EUR 612 $682,968
- ----------------------------------------------------------------------------------------------------
Finnish Government, 5.375s, 2013 4,442 5,468,741
- ----------------------------------------------------------------------------------------------------
$6,151,709
- ----------------------------------------------------------------------------------------------------
France - 2.2%
- ----------------------------------------------------------------------------------------------------
Government of France, 6.5s, 2006 EUR 1,179 $1,469,293
- ----------------------------------------------------------------------------------------------------
Government of France, 3s, 2009 1,719 2,044,352
- ----------------------------------------------------------------------------------------------------
Government of France, 4s, 2009 655 745,256
- ----------------------------------------------------------------------------------------------------
Government of France, 5s, 2011 806 964,704
- ----------------------------------------------------------------------------------------------------
Government of France, 4.75s, 2012 707 830,901
- ----------------------------------------------------------------------------------------------------
Government of France, 6s, 2025 1,204 1,560,637
- ----------------------------------------------------------------------------------------------------
$7,615,143
- ----------------------------------------------------------------------------------------------------
Germany - 2.4%
- ----------------------------------------------------------------------------------------------------
Federal Republic of Germany, 4.75s, 2008 EUR 1,685 $2,007,265
- ----------------------------------------------------------------------------------------------------
Federal Republic of Germany, 4.5s, 2009 2,943 3,453,677
- ----------------------------------------------------------------------------------------------------
Federal Republic of Germany, 5.25s, 2010 2,392 2,909,987
- ----------------------------------------------------------------------------------------------------
$8,370,929
- ----------------------------------------------------------------------------------------------------
Greece - 0.2%
- ----------------------------------------------------------------------------------------------------
Republic of Greece, 6.5s, 2014 EUR 525 $693,887
- ----------------------------------------------------------------------------------------------------
Ireland - 1.8%
- ----------------------------------------------------------------------------------------------------
Republic of Ireland, 4.25s, 2007 EUR 1,690 $1,971,500
- ----------------------------------------------------------------------------------------------------
Republic of Ireland, 5s, 2013 2,262 2,704,182
- ----------------------------------------------------------------------------------------------------
Republic of Ireland, 4.6s, 2016 1,382 1,570,841
- ----------------------------------------------------------------------------------------------------
$6,246,523
- ----------------------------------------------------------------------------------------------------
Italy - 1.7%
- ----------------------------------------------------------------------------------------------------
Republic of Italy, 4.5s, 2007 EUR 1,953 $2,298,970
- ----------------------------------------------------------------------------------------------------
Republic of Italy, 5s, 2008 895 1,076,206
- ----------------------------------------------------------------------------------------------------
Republic of Italy, 4.75s, 2013 2,114 2,470,533
- ----------------------------------------------------------------------------------------------------
$5,845,709
- ----------------------------------------------------------------------------------------------------
Japan - 1.1%
- ----------------------------------------------------------------------------------------------------
International Bank For Reconstruction & Development,
5s, 2006 (Banks & Credit Cos.) $3,382 $3,649,486
- ----------------------------------------------------------------------------------------------------
Malaysia - 0.1%
- ----------------------------------------------------------------------------------------------------
Petronas Capital Ltd., 7.875s, 2022 (Oil Services)## $344 $378,848
- ----------------------------------------------------------------------------------------------------
Netherlands - 1.7%
- ----------------------------------------------------------------------------------------------------
Netherlands Government, 5.75s, 2007 EUR 1,233 $1,512,109
- ----------------------------------------------------------------------------------------------------
Netherlands Government, 5s, 2012 3,587 4,300,855
- ----------------------------------------------------------------------------------------------------
$5,812,964
- ----------------------------------------------------------------------------------------------------
New Zealand - 1.2%
- ----------------------------------------------------------------------------------------------------
Government of New Zealand, 7s, 2009 NZD 4,900 $2,925,746
- ----------------------------------------------------------------------------------------------------
Government of New Zealand, 6.5s, 2013 2,422 1,414,589
- ----------------------------------------------------------------------------------------------------
$4,340,335
- ----------------------------------------------------------------------------------------------------
Norway - 0.3%
- ----------------------------------------------------------------------------------------------------
Noregian Government, 5.5s, 2009 NOK 6,564 $960,424
- ----------------------------------------------------------------------------------------------------
Qatar - 0.1%
- ----------------------------------------------------------------------------------------------------
State of Qatar, 9.75s, 2030 $350 $459,725
- ----------------------------------------------------------------------------------------------------
Spain - 4.0%
- ----------------------------------------------------------------------------------------------------
Government of Spain, 5.35s, 2011 EUR 6,830 $8,388,616
- ----------------------------------------------------------------------------------------------------
Government of Spain, 5.5s, 2017 4,443 5,498,849
- ----------------------------------------------------------------------------------------------------
$13,887,465
- ----------------------------------------------------------------------------------------------------
Supra-National - 0.9%
- ----------------------------------------------------------------------------------------------------
Corporacion Andina De Fomento, 6.875s, 2012 (Financial
Institutions) $450 $479,579
- ----------------------------------------------------------------------------------------------------
European Investment Bank, 4s, 2005 2,637 2,750,027
- ----------------------------------------------------------------------------------------------------
$3,229,606
- ----------------------------------------------------------------------------------------------------
Sweden - 0.8%
- ----------------------------------------------------------------------------------------------------
Kingdom of Sweden, 8s, 2007 SEK 13,165 $1,860,827
- ----------------------------------------------------------------------------------------------------
Kingdom of Sweden, 5.25s, 2011 7,600 972,568
- ----------------------------------------------------------------------------------------------------
$2,833,395
- ----------------------------------------------------------------------------------------------------
United Kingdom - 1.4%
- ----------------------------------------------------------------------------------------------------
United Kingdom Treasury, 7.25s, 2007 GBP 617 $1,121,955
- ----------------------------------------------------------------------------------------------------
United Kingdom Treasury, 5.75s, 2009 2,106 3,671,591
- ----------------------------------------------------------------------------------------------------
$4,793,546
- ----------------------------------------------------------------------------------------------------
Total Foreign Bonds $96,529,390
- ----------------------------------------------------------------------------------------------------
U.S. Bonds - 8.2%
- ----------------------------------------------------------------------------------------------------
Aerospace & Defense - 0.1%
- ----------------------------------------------------------------------------------------------------
BAE Systems Holding, Inc., 6.4s, 2011## $318 $335,392
- ----------------------------------------------------------------------------------------------------
Commercial Services - 0.2%
- ----------------------------------------------------------------------------------------------------
Cendant Corp., 6.25s, 2008 $454 $484,913
- ----------------------------------------------------------------------------------------------------
Financial Institutions - 0.2%
- ----------------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 8.625s, 2022 $450 $499,500
- ----------------------------------------------------------------------------------------------------
Medical & Health Technology Services - 0.1%
- ----------------------------------------------------------------------------------------------------
HCA - The Healthcare Co., 8.75s, 2010 $400 $467,795
- ----------------------------------------------------------------------------------------------------
Metal Fabrication - 0.1%
- ----------------------------------------------------------------------------------------------------
Timken Co., 5.75s, 2010 $460 $468,804
- ----------------------------------------------------------------------------------------------------
U.S. Government Agencies - 1.5%
- ----------------------------------------------------------------------------------------------------
Federal National Mortgage Association, 6.5s, 2031 $697 $728,483
- ----------------------------------------------------------------------------------------------------
Federal National Mortgage Association, 6.5s, 2032 3,647 3,810,200
- ----------------------------------------------------------------------------------------------------
Federal National Mortgage Association, 5.5s, 2033 687 706,537
- ----------------------------------------------------------------------------------------------------
$5,245,220
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 6.0%
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 8s, 2021 $3,009 $4,220,944
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 5.375s, 2031 745 812,923
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Notes, 3.5s, 2006 2,684 2,797,861
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Notes, 3.375s, 2007 632 688,379
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Notes, 6.125s, 2007 3,169 3,624,914
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Notes, 4.25s, 2010 3,230 3,724,220
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Notes, 5.75s, 2010 2,065 2,367,489
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Notes, 4s, 2012 2,651 2,684,861
- ----------------------------------------------------------------------------------------------------
$20,921,591
- ----------------------------------------------------------------------------------------------------
Total U.S. Bonds $28,423,215
- ----------------------------------------------------------------------------------------------------
Municipal Bonds - 1.5%
- ----------------------------------------------------------------------------------------------------
Cleveland Ohio, 5.75s, 2012 $570 $669,254
- ----------------------------------------------------------------------------------------------------
Lakeville, Minnesota Independent School District, 4.5s, 2012 1,575 1,690,653
- ----------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority New York, 5s, 2032 790 808,865
- ----------------------------------------------------------------------------------------------------
New Jersey State Turnpike Authority Turnpike Revenue, 6s, 2013 1,740 2,071,087
- ----------------------------------------------------------------------------------------------------
Total Municipal Bonds $5,239,859
- ----------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $117,382,184) $130,192,464
- ----------------------------------------------------------------------------------------------------
Convertible Preferred Stock - 0.1%
- ----------------------------------------------------------------------------------------------------
ISSUER SHARES $ VALUE
- ----------------------------------------------------------------------------------------------------
U.S. Stocks - 0.1%
- ----------------------------------------------------------------------------------------------------
Insurance - Property & Casualty
- ----------------------------------------------------------------------------------------------------
Chubb Corp. 5,100 $122,910
- ----------------------------------------------------------------------------------------------------
Telecommunications - 0.1%
- ----------------------------------------------------------------------------------------------------
Motorola Inc. 7,100 $205,971
- ----------------------------------------------------------------------------------------------------
Total Convertible Preferred Stock (Identified Cost,
$461,229) $328,881
- ----------------------------------------------------------------------------------------------------
Collateral for Securities Loaned - 14.6%
- ----------------------------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio 35,435,617 $35,435,617
- ----------------------------------------------------------------------------------------------------
CS First Boston Corp., 1.36% due 5/01/03 15,255,280 15,255,280
- ----------------------------------------------------------------------------------------------------
Total Collateral for Securities Loaned, at Amortized Cost $50,690,897
- ----------------------------------------------------------------------------------------------------
Short-Term Obligations - 3.8%
- ----------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 Omitted) $ VALUE
- ----------------------------------------------------------------------------------------------------
General Electric Co., due 5/01/03, at Amortized Cost $13,274 $13,274,000
- ----------------------------------------------------------------------------------------------------
Call Options Purchased
- ----------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER/EXPIRATION MONTH/STRIKE PRICE (000 Omitted) $ VALUE
- ----------------------------------------------------------------------------------------------------
Japanese Yen/May/120.28 (Premiums Paid, $27,134) $305,011 $29,586
- ----------------------------------------------------------------------------------------------------
Put Options Purchased - 0.1%
- ----------------------------------------------------------------------------------------------------
Euro/May/1.0957 (Premiums Paid, $98,956) $8,558 $196,211
- ----------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $369,716,080) $395,533,314
- ----------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (13.8)% (47,979,942)
- ----------------------------------------------------------------------------------------------------
Net Assets - 100.0% $347,553,372
- ----------------------------------------------------------------------------------------------------
*Non-income producing security.
##SEC Rule 144A restriction.
Abbreviations have been used throughout this report to indicate amounts shown in
currencies other than the U.S. Dollar. A list of abbreviations is shown below.
AUD = Australian Dollar JPY = Japanese Yen
CAD = Canadian Dollar NOK = Norwegian Krone
DKK = Danish Kroner NZD = New Zealand Dollars
EUR = Euro PLN = Polish Zloty
GBP = British Pound SEK = Swedish Krona
See notes to financial statements.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES (unaudited)
- --------------------------------------------------------------------------------
This statement represents your fund's balance sheet, which details the assets
and liabilities composing the total value of your fund.
AT 4/30/03
ASSETS
Investments, at value, including $48,927,620 of
securities on loan (identified cost, $369,716,080) $395,533,314
- ---------------------------------------------------------------------------------------------------
Cash 305
- ---------------------------------------------------------------------------------------------------
Receivable for forward foreign currency exchange
contracts 122,560
- ---------------------------------------------------------------------------------------------------
Receivable for fund shares sold 378,353
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 1,556,965
- ---------------------------------------------------------------------------------------------------
Interest and dividends receivable 3,625,069
- ---------------------------------------------------------------------------------------------------
Other assets 3,806
- ---------------------------------------------------------------------------------------------------
Total assets $401,220,372
- ---------------------------------------------------------------------------------------------------
LIABILITIES
Payable for fund shares reacquired $1,103,762
- ---------------------------------------------------------------------------------------------------
Payable for investments purchased 1,300,769
- ---------------------------------------------------------------------------------------------------
Payable for forward foreign currency exchange contracts 357,330
- ---------------------------------------------------------------------------------------------------
Collateral for securities loaned, at value 50,690,897
- ---------------------------------------------------------------------------------------------------
Payable to affiliates
- ---------------------------------------------------------------------------------------------------
Management fee 8,009
- ---------------------------------------------------------------------------------------------------
Shareholder servicing agent fee 1,049
- ---------------------------------------------------------------------------------------------------
Distribution and service fee 5,092
- ---------------------------------------------------------------------------------------------------
Administrative fee 167
- ---------------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 199,925
- ---------------------------------------------------------------------------------------------------
Total liabilities $53,667,000
- ---------------------------------------------------------------------------------------------------
Net assets $347,553,372
- ---------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Paid-in capital $333,952,690
- ---------------------------------------------------------------------------------------------------
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 25,732,006
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (13,701,324)
- ---------------------------------------------------------------------------------------------------
Accumulated undistributed net investment income 1,570,000
- ---------------------------------------------------------------------------------------------------
Net assets $347,553,372
- ---------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 29,037,294
- ---------------------------------------------------------------------------------------------------
Class A shares
Net assets $175,920,468
- ---------------------------------------------------------------------------------------------------
Shares outstanding 14,712,789
- ---------------------------------------------------------------------------------------------------
Net asset value per share $11.96
- ---------------------------------------------------------------------------------------------------
Offering price per share (100/95.25X$11.96) $12.56
- ---------------------------------------------------------------------------------------------------
Class B shares
Net assets $85,650,027
- ---------------------------------------------------------------------------------------------------
Shares outstanding 7,130,657
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per share $12.01
- ---------------------------------------------------------------------------------------------------
Class C shares
Net assets $38,611,616
- ---------------------------------------------------------------------------------------------------
Shares outstanding 3,225,807
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per share $11.97
- ---------------------------------------------------------------------------------------------------
Class I shares
Net assets $47,366,081
- ---------------------------------------------------------------------------------------------------
Shares outstanding 3,967,608
- ---------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price
per share $11.94
- ---------------------------------------------------------------------------------------------------
Class R shares
Net assets $5,180
- ---------------------------------------------------------------------------------------------------
Shares outstanding 433
- ---------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price
per share $11.96
- ---------------------------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF OPERATIONS (unaudited)
- --------------------------------------------------------------------------------
This statement describes how much your fund received in investment income and
paid in expenses. It also describes any gains and/or losses generated by fund
operations.
FOR SIX MONTHS ENDED 4/30/03
NET INVESTMENT INCOME
Income
- --------------------------------------------------------------------------------------------------
Interest $3,161,879
- --------------------------------------------------------------------------------------------------
Dividends 2,388,076
- --------------------------------------------------------------------------------------------------
Foreign taxes withheld (175,992)
- --------------------------------------------------------------------------------------------------
Total investment income $5,373,963
- --------------------------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------------------------
Management fee $1,406,152
- --------------------------------------------------------------------------------------------------
Trustees' compensation 7,873
- --------------------------------------------------------------------------------------------------
Shareholder servicing agent fee 170,188
- --------------------------------------------------------------------------------------------------
Distribution and service fee (Class A) 309,574
- --------------------------------------------------------------------------------------------------
Distribution and service fee (Class B) 417,838
- --------------------------------------------------------------------------------------------------
Distribution and service fee (Class C) 181,198
- --------------------------------------------------------------------------------------------------
Distribution and service fee (Class R) 8
- --------------------------------------------------------------------------------------------------
Administrative fee 19,366
- --------------------------------------------------------------------------------------------------
Custodian fee 147,004
- --------------------------------------------------------------------------------------------------
Postage 24,055
- --------------------------------------------------------------------------------------------------
Auditing fees 21,800
- --------------------------------------------------------------------------------------------------
Printing 18,131
- --------------------------------------------------------------------------------------------------
Legal fees 8
- --------------------------------------------------------------------------------------------------
Miscellaneous 202,513
- --------------------------------------------------------------------------------------------------
Total expenses $2,925,708
- --------------------------------------------------------------------------------------------------
Fees paid indirectly (3,670)
- --------------------------------------------------------------------------------------------------
Net expenses $2,922,038
- --------------------------------------------------------------------------------------------------
Net investment income $2,451,925
- --------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) (identified cost basis)
- --------------------------------------------------------------------------------------------------
Investment transactions $1,964,587
- --------------------------------------------------------------------------------------------------
Foreign currency transactions (1,803,609)
- --------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign currency
transactions $160,978
- --------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
- --------------------------------------------------------------------------------------------------
Investments $16,846,374
- --------------------------------------------------------------------------------------------------
Translation of assets and liabilities in foreign
currencies (252,440)
- --------------------------------------------------------------------------------------------------
Net unrealized gain on investments and foreign currency
translation $16,593,934
- --------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and
foreign currency $16,754,912
- --------------------------------------------------------------------------------------------------
Increase in net assets from operations $19,206,837
- --------------------------------------------------------------------------------------------------
See notes to financial statements.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
This statement describes the increases and/or decreases in net assets resulting
from operations, any distributions, and any shareholder transactions.
SIX MONTHS YEAR
ENDED ENDED
4/30/03 10/31/02
(UNAUDITED)
OPERATIONS
Net investment income $2,451,925 $5,283,274
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign currency
transactions 160,978 (7,810,337)
- ------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments and foreign currency
translation 16,593,934 (1,867,700)
- ------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations $19,206,837 $(4,394,763)
- -------------------------------------------------------------------------------- -----------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS -
From net investment income (Class A) $(1,827,554) $(2,069,525)
- -------------------------------------------------------------------------------- -----------
From net investment income (Class B) (382,024) (287,878)
- -------------------------------------------------------------------------------- -----------
From net investment income (Class C) (181,926) (124,807)
- -------------------------------------------------------------------------------- -----------
From net investment income (Class I) (721,009) (19,444)
- -------------------------------------------------------------------------------- -----------
Total distributions declared to shareholders $(3,112,513) $(2,501,654)
- -------------------------------------------------------------------------------- -----------
Net increase (decrease) in net assets from fund share
transactions $(4,452,396) $1,454,730
- -------------------------------------------------------------------------------- -----------
Total increase (decrease) in net assets $11,641,928 $(5,441,687)
- -------------------------------------------------------------------------------- -----------
NET ASSETS
At beginning of period $335,911,444 $341,353,131
- ------------------------------------------------------------------------------------------------------
At end of period (including accumulated undistributed net
investment income of $1,570,000 and $2,230,588, respectively) $347,553,372 $335,911,444
- ------------------------------------------------------------------------------------------------------
See notes to financial statements.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Financial Highlights provide per share amounts and certain ratios to
summarize the effect of fund operations and any distributions to a shareholder
of each share class.
PERIOD YEAR ENDED 10/31
ENDED ----------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS A (UNAUDITED)
Net asset value, beginning of
period $11.41 $11.64 $13.76 $13.98 $14.59 $13.84
- ------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS#
Net investment income(S) $0.09 $0.21 $0.22 $0.36 $0.25 $0.28
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions 0.58 (0.33) (1.02) 0.70 0.45 1.57
- --------------------------------- ------ ------ ------ ------ ------ ------
Total from investment
operations $0.67 $(0.12) $(0.80) $1.06 $0.70 $1.85
- --------------------------------- ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $(0.12) $(0.11) $(0.48) $(0.23) $(0.24) $(0.18
- ------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments and foreign
currency transactions -- -- (0.82) (1.05) (0.96) (0.92)
- --------------------------------- ------ ------ ------ ------ ------ ------
In excess of net investment
income -- -- -- -- (0.11) --
- --------------------------------- ------ ------ ------ ------ ------ ------
From paid-in capital -- -- (0.02) -- -- --
- --------------------------------- ------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.12) $(0.11) $(1.32) $(1.28) $(1.31) $(1.10)
- --------------------------------- ------ ------ ------ ------ ------ ------
Net asset value, end
of period $11.96 $11.41 $11.64 $13.76 $13.98 $14.59
- --------------------------------- ------ ------ ------ ------ ------ ------
Total return (%)(+) 5.96++ (1.02) (6.38) 7.76 4.96 14.29
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET
ASSETS AND SUPPLEMENTAL DATA:
Expenses## 1.53+ 1.53 1.47 1.51 1.48 1.51
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 1.64+ 1.79 1.80 2.62 1.74 1.99
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 46 72 69 91 109 183
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $175,920 $213,983 $197,374 $178,773 $187,780 $174,576
- ------------------------------------------------------------------------------------------------------------------------------------
#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.
(S)As required, effective November 1, 2001, the fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium on debt securities. The effect of this change for the year
ended October 31, 2002, was to decrease net investment income per share and
increased net realized gains and losses per share. The impact of this change
calculates to less than $0.01 per share. In addition, the ratio of net
investment income to average net assets decreased by 0.03%. Per share ratios
and supplemental data for periods prior to November 1, 2001, have not been
restated to reflect this change in presentation.
+Annualized.
++Not annualized.
See notes to financial statements.
Financial Highlights - continued
PERIOD YEAR ENDED 10/31
ENDED ---------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS B (UNAUDITED)
Net asset value, beginning of
period $11.43 $11.65 $13.72 $13.95 $14.56 $13.82
- ------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS#
Net investment income(S) $0.06 $0.13 $0.14 $0.27 $0.16 $0.19
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments and
foreign currency transactions 0.57 (0.31) (1.03) 0.69 0.45 1.56
- --------------------------------- ------ ------ ------ ------ ------ ------
Total from investment operations $0.63 $(0.18) $(0.89) $0.96 $0.61 $1.75
- --------------------------------- ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $(0.05) $(0.04) $(0.34) $(0.14) $(0.18) $(0.09)
- ------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments and foreign
currency transactions -- -- (0.82) (1.05) (0.96) (0.92)
- --------------------------------- ------ ------ ------ ------ ------ ------
In excess of net investment
income -- -- -- -- (0.08) --
- --------------------------------- ------ ------ ------ ------ ------ ------
From paid-in capital -- -- (0.02) -- -- --
- --------------------------------- ------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.05) $(0.04) $(1.18) $(1.19) $(1.22) $(1.01)
- --------------------------------- ------ ------ ------ ------ ------ ------
Net asset value, end
of period $12.01 $11.43 $11.65 $13.72 $13.95 $14.56
- --------------------------------- ------ ------ ------ ------ ------ ------
Total return (%) 5.55++ (1.58) (7.05) 7.07 4.22 13.57
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA:
Expenses## 2.18+ 2.18 2.12 2.16 2.14 2.16
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income 1.01+ 1.12 1.14 1.98 1.13 1.33
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 46 72 69 91 109 183
- ------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $85,650 $84,729 $104,442 $118,676 $130,413 $113,966
- ------------------------------------------------------------------------------------------------------------------------------
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
(S)As required, effective November 1, 2001, the fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium on debt securities. The effect of this change for the year
ended October 31, 2002, was to decrease net investment income per share and
increased net realized gains and losses per share. The impact of this change
calculates to less than $0.01 per share. In addition, the ratio of net
investment income to average net assets decreased by 0.03%. Per share ratios
and supplemental data for periods prior to November 1, 2001, have not been
restated to reflect this change in presentation.
+Annualized.
++Not annualized.
See notes to financial statements.
Financial Highlights - continued
PERIOD YEAR ENDED 10/31
ENDED -----------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS C (UNAUDITED)
Net asset value, beginning
of year $11.40 $11.62 $13.68 $13.94 $14.56 $13.82
- ------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS#
Net investment income(S) $0.06 $0.13 $0.14 $0.27 $0.16 $0.19
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions 0.57 (0.31) (1.02) 0.69 0.45 1.56
- ----------------------------------- ------ ------ ------ ------ ------ ------
Total from investment operations $0.63 $(0.18) $(0.88) $0.96 $0.61 $1.75
- ----------------------------------- ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $(0.06) $(0.04) $(0.34) $(0.17) $(0.19) $(0.09
- ------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments and foreign currency
transactions -- -- (0.82) (1.05) (0.96) (0.92)
- ----------------------------------- ------ ------ ------ ------ ------ ------
In excess of net investment income -- -- -- -- (0.08) --
- ----------------------------------- ------ ------ ------ ------ ------ ------
From paid-in capital -- -- (0.02) -- -- --
- ----------------------------------- ------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.06) $(0.04) $(1.18) $(1.22) $(1.23) $(1.01)
- ----------------------------------- ------ ------ ------ ------ ------ ------
Net asset value, end
of period $11.97 $11.40 $11.62 $13.68 $13.94 $14.56
- ----------------------------------- ------ ------ ------ ------ ------ ------
Total return (%) 5.53++ (1.56) (7.03) 7.11 4.23 13.52
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA:
Expenses## 2.18+ 2.18 2.12 2.16 2.14 2.16
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income 1.02+ 1.13 1.14 1.97 1.13 1.33
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 46 72 69 91 109 183
- ------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $38,612 $35,660 $38,230 $44,468 $51,800 $30,580
- ------------------------------------------------------------------------------------------------------------------------------
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
(S)As required, effective November 1, 2001, the fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium on debt securities. The effect of this change for the year
ended October 31, 2002, was to decrease net investment income per share and
increased net realized gains and losses per share. The impact of this change
calculates to less than $0.01 per share. In addition, the ratio of net
investment income to average net assets decreased by 0.03%. Per share ratios
and supplemental data for periods prior to November 1, 2001, have not been
restated to reflect this change in presentation.
+Annualized.
++Not annualized.
See notes to financial statements.
Financial Highlights - continued
PERIOD YEAR ENDED 10/31
ENDED -----------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS I (UNAUDITED)
Net asset value, beginning
of period $11.42 $11.65 $13.80 $14.02 $14.60 $13.86
- ------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS#
Net investment income(S) $0.13 $0.25 $0.27 $0.41 $0.29 $0.33
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions 0.56 (0.32) (1.03) 0.69 0.49 1.56
- ----------------------------------- ------ ------ ------ ------ ------ ------
Total from investment operations $0.69 $(0.07) $(0.76) $1.10 $0.78 $1.89
- ----------------------------------- ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $(0.17) $(0.16) $(0.55) $(0.27) $(0.28) $(0.23
- ------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments and foreign currency
transactions -- -- (0.82) (1.05) (0.96) (0.92)
- ----------------------------------- ------ ------ ------ ------ ------ ------
In excess of net investment income -- -- -- -- (0.12) --
- ----------------------------------- ------ ------ ------ ------ ------ ------
From paid-in capital -- -- (0.02) -- -- --
- ----------------------------------- ------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.17) $(0.16) $(1.39) $(1.32) $(1.36) $(1.15)
- ----------------------------------- ------ ------ ------ ------ ------ ------
Net asset value, end
of period $11.94 $11.42 $11.65 $13.80 $14.02 $14.60
- ----------------------------------- ------ ------ ------ ------ ------ ------
Total return (%) 6.13++ (0.65) (6.06) 8.19 5.40 14.78
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA:
Expenses## 1.18+ 1.18 1.12 1.16 1.13 1.16
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income 2.11+ 2.14 2.14 2.98 2.08 2.33
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 46 72 69 91 109 183
- ------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $47,366 $1,540 $1,307 $1,621 $1,587 $1,837
- ------------------------------------------------------------------------------------------------------------------------------
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
(S)As required, effective November 1, 2001, the fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium on debt securities. The effect of this change for the year
ended October 31, 2002, was to decrease net investment income per share and
increased net realized gains and losses per share. The impact of this change
calculates to less than $0.01 per share. In addition, the ratio of net
investment income to average net assets decreased by 0.03%. Per share ratios
and supplemental data for periods prior to November 1, 2001, have not been
restated to reflect this change in presentation.
+Annualized.
++Not annualized.
See notes to financial statements.
Financial Highlights - continued
PERIOD ENDED
4/30/03*
(UNAUDITED)
CLASS R
Net asset value, beginning of period $11.56
- -----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#
Net investment income $0.06
- -----------------------------------------------------------------------------
Net realized and unrealized gain on investments and foreign
currency transactions 0.34+++
- -----------------------------------------------------------------------------
Total from investment operations $0.40
- -----------------------------------------------------------------------------
Net asset value, end of year $11.96
- -----------------------------------------------------------------------------
Total return (%) 3.64++
- -----------------------------------------------------------------------------
RATIOS (%) TO AVERAGE
NET ASSETS AND
SUPPLEMENTAL DATA:
Expenses## 1.68+
- -----------------------------------------------------------------------------
Net investment income 1.63+
- -----------------------------------------------------------------------------
Portfolio turnover 46
- -----------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $5
- -----------------------------------------------------------------------------
*For the period from the inception of Class R shares, December 31, 2002
through April 30, 2003.
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset
arrangements.
+Annualized.
++Not annualized.
+++The per share amount is not in accordance with net realized and unrealized
gain (loss) for the period because of the timing of sales of the fund shares
and the amount of per share realized and unrealized gains and losses at such
time.
See notes to financial statements.
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- ------------------------------------------------------------------------------
(1) BUSINESS AND ORGANIZATION
MFS Global Total Return Fund (the fund) is a non-diversified series of MFS
Series Trust VI (the trust). The trust is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended, as
an open-end management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 in the fund's portfolio for which
market quotations are available are valued at the last sale or official closing
price on the primary market or exchange on which they are primarily traded or at
the last quoted bid price for securities in which there were no sales during the
day. If no sales are reported, as is the case for most securities traded over
the counter, securities are valued on the basis of quotations obtained from
brokers and dealers or on the basis of valuations furnished by a pricing
service. Bonds and other fixed income securities (other than short-term
obligations) of U.S. issuers in the fund's portfolio are valued at an evaluated
bid price on the basis of quotes from brokers and dealers or on the basis of
valuations furnished by a pricing service. Prices obtained from pricing services
utilize both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate 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 quoted prices or exchange or
over-the-counter prices, since such valuations are believed to reflect more
accurately the fair value of such securities. Forward Contracts will be valued
using a pricing model taking into consideration market data from an external
pricing source. Use of the pricing services has been approved by the Board of
Trustees. All other securities (other than short-term obligations), in the
fund's portfolio for which the principal market is one or more securities or
commodities exchanges (whether domestic or foreign) will be valued at the last
reported sale price or at the settlement price prior to the determination (or if
there has been no current sale, at the closing bid price) on the primary
exchange on which such securities are traded; but if a securities exchange is
not the principal market for securities, such securities will, if market
quotations are readily available, be valued at current bid prices. Short-term
obligations in the fund's portfolio are valued at amortized cost, which
constitutes fair value as determined by the Board of Trustees. Short-term
obligations with a remaining maturity in excess of 60 days will be valued upon
dealer supplied valuations. Portfolio investments for which market quotations
are not readily available, or whose values have been materially affected by
events occurring after the close of their primary markets, are valued at fair
value as determined in good faith by or at the direction of the Board of
Trustees.
REPURCHASE AGREEMENTS - The fund may enter into repurchase 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.
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.
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 foreign currency exchange 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 tax reporting purposes as required by federal income tax
regulations. Dividends received in cash are recorded on the ex-dividend date.
Dividend and interest payments received in additional securities are recorded on
the ex-dividend or ex-interest date in an amount equal to the value of the
security on such date. Some securities may be purchased on a "when- issued" or
"forward delivery" basis, which means that the securities will be delivered to
the fund at a future date, usually beyond customary settlement time.
FEES PAID INDIRECTLY - The fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
fund. During the period, the fund's custodian fees were reduced by $2,313 under
this arrangement. The fund has entered into a directed brokerage agreement,
under which the broker will credit the fund a portion of the commissions
generated, to offset certain expenses of the fund. For the period, the fund's
other expenses were reduced by $1,357 under this agreement. These amounts are
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 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. Common
types of book and tax differences that could occur include differences in
accounting for currency transactions, derivatives, real estate investment
trusts, defaulted bonds, capital losses, and amortization and accretion on debt
securities
The tax character of distributions declared for the years ended October 31, 2002
and October 31, 2001 was as follows:
10/31/02 10/31/01
Distributions declared from:
- --------------------------------------------------------------------------------
Ordinary income $2,501,654 $10,745,332
- --------------------------------------------------------------------------------
Long-term capital gain -- 20,322,382
- --------------------------------------------------------------------------------
$2,501,654 $31,067,714
- --------------------------------------------------------------------------------
Tax return of capital -- 575,380
- --------------------------------------------------------------------------------
Total distributions declared $2,501,654 $31,643,094
- --------------------------------------------------------------------------------
As of October 31, 2002, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
Undistributed ordinary income $2,529,906
------------------------------------------------------------------------
Undistributed long-term capital gain --
------------------------------------------------------------------------
Capital loss carryforward (12,322,036)
------------------------------------------------------------------------
Unrealized appreciation 7,389,736
------------------------------------------------------------------------
Other temporary differences (91,248)
------------------------------------------------------------------------
For federal income tax purposes, the capital loss carryforward may be applied
against any net taxable realized gains of each succeeding year until the earlier
of its utilization or expiration on October 31, 2009 ($4,874,605) and October
31, 2010 ($7,447,431).
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 an annual rate of 0.84% of
the fund's average daily net assets.
The fund pays compensation to the Independent Trustees ("Trustees") in the form
of both a retainer and attendance fees, and 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). On January
1, 2002, the Trustees terminated the Independent Trustee unfunded defined
benefit plan for active Trustees and converted it to an unfunded retirement
benefit deferral plan for active Trustees. Under the new plan, the unfunded
pension liability was converted into an equivalent value of notional shares of
the fund that will fluctuate with the performance of the fund. Included in
Trustee's Compensation is a net decrease of $11,368 as a result of the change in
the fund's pension liability under this plan and a pension expense of $1,509 for
inactive trustees for the six months ended April 30, 2003.
ADMINISTRATOR - The fund has an administrative services agreement with MFS to
provide the fund with certain financial, legal, shareholder communications,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the fund pays MFS an administrative fee at
the following annual percentages of the fund's average daily net assets:
First $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
$12,403 for the period ended April 30, 2003, 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 R, 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 an annual
percentage of its average daily net assets attributable to certain share classes
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 based
on the average daily net assets of accounts attributable to such dealers. These
fees are calculated based on each class' average daily net assets. The maximum
distribution and service fees for each class of shares are as follows:
CLASS A CLASS B CLASS C CLASS R
Distribution Fee 0.10% 0.75% 0.75% 0.25%
- ------------------------------------------------------------------------------
Service Fee 0.25% 0.25% 0.25% 0.25%
- ------------------------------------------------------------------------------
Total Distribution Plan 0.35% 1.00% 1.00% 0.50%
- ------------------------------------------------------------------------------
MFD retains the service fee for accounts not attributable to a securities
dealer, which for the six months, ended April 30, 2003, amounted to:
CLASS A CLASS B CLASS C CLASS R
Service Fee Retained by MFD $3,970 $400 $321 $0
- ------------------------------------------------------------------------------
Fees incurred under the distribution plan during the six months ended April 30,
2003, were as follows:
CLASS A CLASS B CLASS C CLASS R
Total Distribution Plan 0.35% 1.00% 1.00% 0.50%
- ------------------------------------------------------------------------------
Certain Class A, and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within, for class A shares, 12
months following the purchase, and, for class B shares, the first year from the
end of the calendar month of purchase. A contingent deferred sales charge is
imposed on shareholder redemptions of Class B and Class 529B shares in the event
of a shareholder redemption within six years from the end of the calendar month
of purchase. MFD receives all contingent deferred sales charges. Contingent
deferred sales charges imposed during the six months ended April 30, 2003, were
as follows:
CLASS A CLASS B CLASS C
Contingent Deferred Sales Charges Imposed $1,632 $80,205 $6,760
- --------------------------------------------------------------------------------
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 0.11%.
Prior to April 1, 2003, the fee was 0.10% of the fund's average daily net
assets.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, were as follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
U.S. government securities $26,876,499 $37,884,539
- --------------------------------------------------------------------------------
Investments (non-U.S. government securities) $131,726,149 $104,767,850
- --------------------------------------------------------------------------------
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 $370,383,075
-----------------------------------------------------------------------
Gross unrealized appreciation $33,495,298
-----------------------------------------------------------------------
Gross unrealized depreciation (8,347,705
-----------------------------------------------------------------------
Net unrealized appreciation $25,147,593
-----------------------------------------------------------------------
(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:
Period ended Year ended
4/30/03 10/31/02
SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Shares sold 1,835,303 $21,119,440 7,853,096 $91,342,609
- ---------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 144,743 1,661,651 165,522 1,933,027
- ---------------------------------------------------------------------------------------------------------
Shares reacquired (6,018,064) (69,333,256) (6,225,812) (72,206,836)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) (4,038,018) $(46,552,165) 1,792,806 $21,068,800
- ---------------------------------------------------------------------------------------------------------
CLASS B SHARES
Shares sold 726,668 $8,377,767 1,670,394 $19,477,885
- ---------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 26,918 311,168 20,369 239,146
- ---------------------------------------------------------------------------------------------------------
Shares reacquired (1,037,149) (11,947,231) (3,237,842) (37,758,641)
- ---------------------------------------------------------------------------------------------------------
Net decrease (283,563) $(3,258,296) (1,547,079) $(18,041,610)
- ---------------------------------------------------------------------------------------------------------
CLASS C SHARES
Shares sold 406,340 $4,674,496 641,205 $7,453,130
- ---------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 10,372 119,480 7,147 83,694
- ---------------------------------------------------------------------------------------------------------
Shares reacquired (320,382) (3,679,508) (807,659) (9,377,687)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) 96,330 $1,114,468 (159,307) $(1,840,863)
- ---------------------------------------------------------------------------------------------------------
CLASS I SHARES
Shares sold 4,204,135 $48,500,589 40,899 $480,442
- ---------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 63,025 721,008 1,666 19,443
- ---------------------------------------------------------------------------------------------------------
Shares reacquired (434,359) (4,983,000) (19,940) (231,482)
- ---------------------------------------------------------------------------------------------------------
Net increase 3,832,801 $44,238,597 22,625 $268,403
- ---------------------------------------------------------------------------------------------------------
Period ended
4/30/03*
SHARES AMOUNT
CLASS R SHARES
Shares sold 433 $5,000
- ----------------------------------------------------------------------
Net increase 433 $5,000
- ----------------------------------------------------------------------
*For the period from the inception of Class R shares, December 31, 2002 through
April 30, 2003.
(6) LINE OF CREDIT
The fund and other affiliated funds participate in an $800 million 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 six months
ended April 30, 2003, was $1,117. The fund had no borrowings during the period.
(7) FINANCIAL INSTRUMENTS
The fund trades financial instruments with off-balance-sheet risk in the normal
course of its investing activities in order to manage exposure to market risks
such as interest rates and foreign currency exchange rates. These financial
instruments include written options, forward foreign currency exchange
contracts, 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.
Forward Foreign Currency Exchange Contracts
SALES
NET
UNREALIZED
CONTRACTS TO CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN EXCHANGE FOR AT VALUE (DEPRECIATION)
6/16/06 AUD 976,695 $600,570 $608,688 $(8,118)
6/16/03 DKK 39,422,840 5,814,578 5,926,850 (112,272)
5/5/03-6/30/03 EUR 4,318,120 4,656,666 4,817,666 (161,000)
6/18/03 JPY 162,133,821 1,388,917 1,364,342 24,575
6/16/03 NOK 6,967,546 967,903 992,021 (24,118)
6/16/03-6/18/03 NZD 7,918,153 4,390,690 4,407,238 (16,548)
6/16/03 SEK 15,482,175 1,853,931 1,889,205 (35,274)
----------- ----------- ---------
$19,673,255 $20,006,010 $(332,755)
=========== =========== =========
PURCHASES
6/16/03 AUD 2,037,810 $1,254,863 $1,269,988 $15,125
6/16/03 CAD 1,484,348 1,018,753 1,032,675 13,922
5/5/03-6/26/03 EUR 951,750 1,030,052 1,062,181 32,129
6/16/03 GBP 805,468 1,264,585 1,284,456 19,871
9/15/03 PLN 1,306,240 320,000 336,938 16,938
----------- ----------- ---------
$4,888,253 $4,986,238 $97,985
=========== =========== =========
At April 30, 2003, the fund had sufficient cash and/or securities to cover any
commitments under these contracts.
(8) CHANGE IN ACCOUNTING PRINCIPLE
As required, effective November 1, 2001, the fund adopted the provisions of the
AICPA Audit and Accounting Guide for Investment Companies and began amortizing
premium on debt securities. Prior to November 1, 2001, the fund did not amortize
premium on debt securities. The cumulative effect of this accounting change had
no impact on total net assets of the fund, but resulted in a $591,384 reduction
in cost of securities and a corresponding $591,384 increase in net unrealized
appreciation, based on securities held by the fund on November 1, 2001.
The effect of this change for the year ended October 31, 2002 was to decrease
net investment income by $98,978, decrease net unrealized appreciation by
$167,621 and decrease net realized losses by $266,599. The Statement of Changes
in Net Assets and Financial Highlights for prior periods has not been restated
to reflect this change in presentation.
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
The following tables present certain information regarding the Trustees and
officers of MFS Series Trust VI, of which the fund is a series, including their
principal occupations, which, unless specific dates are shown, are of more than
five years' duration, although the titles may not have been the same throughout.
Name, age, position with the Trust, principal occupation, and other
directorships(1)
INTERESTED TRUSTEES
JEFFREY L. SHAMES(2) (born 06/02/55) ABBY M. O'NEILL (born 04/27/28)
Chairman Trustee
Massachusetts Financial Services Private investor; Rockefeller
Company, Financial Services, Inc. (investment
Chairman advisers), Chairman and
Chief Executive Officer
JOHN W. BALLEN(2) (born 09/12/59)
Trustee and President LAWRENCE T. PERERA (born 06/23/35)
Massachusetts Financial Services Trustee
Company, Hemenway & Barnes (attorneys),
Chief Executive Officer and Director Partner
KEVIN R. PARKE(2) (born 12/14/59) WILLIAM J. POORVU (born 04/10/35)
Trustee Trustee
Massachusetts Financial Services Private investor; Harvard University
Company, Graduate School of Business
President, Chief Investment Officer, and Administration, Class of 1961
Director Adjunct Professor in
Entrepreneurship Emeritus;
INDEPENDENT TRUSTEES CBL & Associates Properties, Inc.
(real estate investment trust),
LAWRENCE H. COHN, M.D. (born 03/11/37) Director
Trustee
Brigham and Women's Hospital, Chief of J. DALE SHERRATT (born 09/23/38)
Cardiac Surgery; Harvard Medical School, Trustee
Professor of Surgery Insight Resources, Inc. (acquisition
planning specialists), President;
WILLIAM R. GUTOW (born 09/27/41) Wellfleet Investments (investor in
Trustee health care companies), Managing
Private investor and real estate General Partner (since 1993);
consultant; Cambridge Nutraceuticals
Capitol Entertainment Management Company (professional nutritional products),
(video franchise), Vice Chairman Chief Executive Officer (until May
2001)
J. ATWOOD IVES (born 05/01/36)
Trustee ELAINE R. SMITH (born 04/25/46)
Private investor; KeySpan Corporation Trustee
(energy related services), Director; Independent health care industry
Eastern Enterprises (diversified consultant
services company), Chairman, Trustee and
Chief Executive Officer (until November WARD SMITH (born 09/13/30)
2000) Trustee
Private investor
(1) Directorships or trusteeships of companies required to report to the
Securities and Exchange Commission (i.e., "public companies").
(2) "Interested person" of MFS within the meaning of the Investment Company Act
of 1940 (referred to as the 1940 Act) which is the principal federal law
governing investment companies like the Trust. The address of MFS is 500
Boylston Street, Boston, Massachusetts 02116.
OFFICERS
JEFFREY L. SHAMES (born 06/02/55) ROBERT R. FLAHERTY (born 09/18/63)
Chairman Assistant Treasurer
Massachusetts Financial Services Massachusetts Financial Services
Company, Chairman Company, Vice President (since
August 2000); UAM Fund Services,
JOHN W. BALLEN (born 09/12/59) Senior Vice President (prior to
Trustee and President August 2000)
Massachusetts Financial Services
Company, Chief Executive Officer and RICHARD M. HISEY (born 08/29/58)
Director Treasurer
Massachusetts Financial Services
JAMES R. BORDEWICK, JR. (born 03/06/59) Company, Senior Vice President
Assistant Secretary and Assistant Clerk (since July 2002); The Bank of New
Massachusetts Financial Services York, Senior Vice President
Company, Senior Vice President and (September 2000 to July 2002);
Associate General Counsel Lexington Global Asset Managers,
Inc., Executive Vice President and
STEPHEN E. CAVAN (born 11/06/53) Chief Financial Officer,
Secretary and Clerk General Manager, Mutual Funds (prior
Massachusetts Financial Services to
Company, Senior Vice President, General September 2000)
Counsel and Secretary
ELLEN MOYNIHAN (born 11/13/57)
STEPHANIE A. DESISTO (born 10/01/53) Assistant Treasurer
Assistant Treasurer Massachusetts Financial Services
Massachusetts Financial Services Company,
Company, Vice President (since April Vice President
2003); Brown Brothers Harriman & Co.,
Senior Vice President (November 2002 to JAMES O. YOST (born 06/12/60)
April 2003); ING Groep N.V./Aeltus Assistant Treasurer
Investment Management, Senior Vice Massachusetts Financial Services
President (prior to November 2002) Company, Senior Vice President
The Trust does not hold annual shareholder meetings for the purpose of electing
Trustees, and Trustees are not elected for fixed terms. This means that each
Trustee will be elected to hold office until his or her successor is chosen and
qualified or until his or her earlier death, resignation, retirement or removal.
Each officer will hold office until his or her successor is chosen and
qualified, or until he or she retires, resigns or is removed from office.
Messrs. Shames, Cohn, Sherratt and Smith, and Ms. O'Neill, have served in their
capacity as Trustee of the Trust continuously since originally elected or
appointed. Messrs. Ballen, Gutow, Ives, Perera and Poorvu, and Ms. Smith were
elected by shareholders and have served as Trustees of the Trust since January
1, 2002. Mr. Parke has served as Trustee of the Trust since January 1, 2002.
Each of the Trust's Trustees and officers holds comparable positions with
certain other funds of which MFS or a subsidiary is the investment adviser or
distributor and, in the case of the officers, with certain affiliates of MFS.
Each Trustee serves as a board member of 112 funds within the MFS Family of
Funds.
The Statement of Additional Information contains further information about the
Trustees and is available without charge upon request, by calling
1-800-225-2606.
- --------------------------------------------------------------------------------
INVESTMENT ADVISER PORTFOLIO MANAGERS
Massachusetts Financial Services Company Steven R. Gorham(1)
500 Boylston Street, Boston, MA Matthew W. Ryan(1)
02116-3741 Barnaby Wiener(1)
DISTRIBUTOR CUSTODIAN
MFS Fund Distributors, Inc. State Street Bank and Trust Company
500 Boylston Street, Boston, MA 225 Franklin Street, Boston, MA 02110
02116-3741
(1)MFS Investment Management
- ------------------------------------------------------------------------------
MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS
- ------------------------------------------------------------------------------
YOUR GOALS ARE IMPORTANT
MFS offers a complete range of investments and investment services to address
specific financial needs over time. When your investing goals change, you can
easily stay with MFS for the products you need, when you need them. Whether
you're investing for college or retirement expenses or for tax management or
estate planning, MFS will be there.
Ask your investment professional how MFS can help you move toward the goals
you've set.
MFS FAMILY OF FUNDS(R)
More than 50 portfolios offer domestic and international equity and
fixed-income investment across the full risk spectrum
VARIABLE ANNUITIES
A selection of annuity products with advantages for building and
preserving wealth
MFS 401(k) AND IRA SUITES
Retirement plans for businesses and individuals
MFS COLLEGE SAVINGS PLANS
Investment products to help meet education expenses
MFS PRIVATE PORTFOLIO SERVICES
Investment advisory services that provide custom products for
high-net-worth individuals
You can obtain a prospectus for any MFS product from your investment
professional. The prospectus contains complete information on the fees and risks
associated with investing. Read the prospectus carefully before investing or
sending money.
- --------------------------------------------------------------------------------
CONTACT INFORMATION
- --------------------------------------------------------------------------------
INVESTOR INFORMATION
For information on MFS mutual funds, call your investment professional or, for
an information kit, call toll free: 1-800-225-2606 any business day from 8 a.m.
to 8 p.m. Eastern time.
INVESTOR SERVICE
Write to us at: MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
Type of Information Phone number Hours, Eastern Time
- --------------------------------------------------------------------------------
General information 1-800-225-2606 8 a.m. to 8 p.m., any
business day
- --------------------------------------------------------------------------------
Speech- or hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m., any
business day
- --------------------------------------------------------------------------------
Shares prices, account 1-800-MFS-TALK
balances (1-800-637-8255)
exchanges or stock and touch-tone required 24 hours a day, 365 days a
bond outlooks year
- --------------------------------------------------------------------------------
WORLD WIDE WEB
Go to WWW.MFS.COM for a clear view of market events, investor education, account
access, and product and performance insights.
Go paperless with EDELIVERY: Join your fellow shareholders who are already
taking advantage of this great new benefit from MFS. With eDelivery, we send you
prospectuses, reports, and proxies electronically. You get timely information
without mailbox clutter (and help your fund save printing and postage costs).
SIGN-UP instructions: If your account is registered with us, go to www.mfs.com,
log in to your account via MFS Access, and select the eDelivery sign up options.
If you own your MFS fund shares through a financial institution or through a
retirement plan, MFS Talk, MFS Access, and eDelivery may not be available to
you.
- ------------------------------------------------------------------------------
[Logo] M F S(R)
INVESTMENT MANAGEMENT
500 Boylston Street
Boston, MA 02116-3741
(C)2003 MFS Investment Management(R).
MFS(R) investment products are offered through MFS Fund Distributors, Inc.
500 Boylston Street, Boston, MA 02116.
MWT-SEM-6/03 59.6M
MFS(R) Mutual Funds
SEMIANNUAL REPORT 4/30/03
MFS(R) Utilities Fund
A path for pursuing opportunity
[MFS LOGO]
INVESTMENT MANAGEMENT
MFS(R) UTILITIES FUND
The fund seeks capital growth and current income
(income above that available from a portfolio invested entirely in equities).
TABLE OF CONTENTS
- ------------------------------------------------------
LETTER FROM THE CHAIRMAN 1
- ------------------------------------------------------
MFS ORIGINAL RESEARCH(R) 4
- ------------------------------------------------------
MANAGEMENT REVIEW 5
- ------------------------------------------------------
PERFORMANCE SUMMARY 7
- ------------------------------------------------------
PORTFOLIO OF INVESTMENTS 11
- ------------------------------------------------------
FINANCIAL STATEMENTS 20
- ------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 34
- ------------------------------------------------------
TRUSTEES AND OFFICERS 42
- ------------------------------------------------------
MONEY MANAGEMENT FOR ALL TYPES
OF INVESTORS 44
- ------------------------------------------------------
CONTACT INFORMATION 45
- --------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
LETTER FROM THE CHAIRMAN
- ------------------------------------------------------------------------------
Dear Shareholders,
[Photo of Jeffrey L. Shames]
Our firm was built on the philosophy that bottom-up fundamental research is
the best means of achieving superior long term investment performance. When
you're managing billions of dollars for investors, we think you have an
obligation to have in-depth, firsthand knowledge of every company you own
whether it is in the U.S. or anywhere across the globe.
We have structured our equity and fixed-income investment teams to capitalize
on the strength of our investment process and the global reach of our analysts
based around the world. Our global research team is composed of 45 equity
analysts, 27 based in the U.S. and 18 based abroad, and 26 credit research
analysts. Each analyst is assigned one or more specific industries and then
charged with identifying the most attractive investment ideas within these
industries. Our U.S. and non-U.S. equity research analysts are unified into
one team that emphasizes a collaborative process in analyzing securities
across the globe. Credit analysts also share their expertise in each segment
of the fixed-income market and work as part of the same team ensuring that
every member has access to information that may have a material effect on
their investment decisions. As MFS continues to grow and as markets become
more complex, we believe our structure will enable us to maintain a consistent
investment process with the goal of providing strong, long-term investment
performance across market capitalizations, investment disciplines, and country
borders for our fund shareholders.
THINKING GLOBALLY
More companies than ever compete globally and, therefore, we must make
investment decisions knowing what is occurring outside of a company's local
market. This trend plays to the strength of our environment of collaboration
between our analysts and portfolio managers across the globe. The analysts
know the most details about individual companies in specific industries and
geographic regions. The portfolio managers have broader, cross-industry
insights and a wider perspective on companies and industries. Our goal is to
make sure those two sets of perspectives coordinate and work well together. As
markets across the globe become more interdependent, we believe our
collaborative environment allows us to produce solid investment ideas for our
portfolios.
BUILDING A NETWORK
Simply put, we believe our structure assures that our analysts maintain their
peripheral vision rather than becoming too immersed in a specific segment of
the market. We do not believe that analysts and portfolio managers - no matter
how talented they may be - can succeed by working in a vacuum. Through the
latest technology available, our entire research team meets frequently via
video and telephone teleconferences, email, and PDAs (Personal Digital
Assistants). When we hire new analysts, we require them to spend an average of
one year in Boston to learn MFS' culture and to build relationships with their
peers. We believe the interaction among our analysts is the key to making our
collaborative process work towards delivering superior long term investment
performance for our fund shareholders. Our analysts work out of four research
offices in Boston, London, Singapore, and Tokyo and are assigned to specific
regions and industries. They meet regularly with their colleagues to discuss
the trends around the world affecting the companies
they cover.
In addition, our equity and fixed-income analysts often visit company
managements as a team. This collaboration is vital because of the different
perspective they bring to their analysis. Because a company's stock price has
tended to follow its earnings over time, our equity research analysts tend to
focus on gauging earnings potential, a company's position within its industry
and its ability to grow its market share. Conversely, our fixed income
analysts will look at stability of a company's cash flow, the value of its
assets, and its capital structure to gauge whether the company can generate
enough free cash flow to pay off its debt. As a result of their collaboration,
we believe we're able to see a more complete view of a company.
WORKING TOGETHER
Our portfolio managers also work closely with the analysts to select the most
appropriate securities for their portfolios from the various recommendations
made by the analysts. Opinions are exchanged and ideas are challenged so that
each member of our team is involved in our investment process. In fact, our
portfolio managers will be the first ones to tell you that many of their best
ideas start with the research analysts. We believe our collaborative approach
also provides us with an effective way to assess risk. Our portfolio managers
are not discouraged from taking on an appropriate level of risk; however we
have rigorous guidelines to assure that the level of risk is measured and
monitored and consistent with the investment philosophies of each of our
portfolios. All told, we believe our culture empowers the members of our
investment team to continue to do their best work and allows them to make
better investment decisions.
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
MFS Investment Management(R)
May 30, 2003
The opinions expressed in this letter are those of MFS, and no forecasts can
be guaranteed.
- --------------------------------------------------------------------------------
MFS ORIGINAL RESEARCH(R)
- --------------------------------------------------------------------------------
THE HUMAN SIDE OF MONEY MANAGEMENT
For more than 75 years MFS has been offering investors clear paths to pursuing
specific investment objectives. Today, millions of individuals and thousands
of institutions all over the world look to MFS to manage their assets with
insight and care.
Our success, we believe, has to do with the fact that we see investors as
people with plans, not just dollars to invest.
When you invest with MFS, you invest with a company dedicated to helping you
realize your long-term financial goals.
INVESTORS CHOOSE MFS FOR OUR
o global asset management expertise across all asset classes
o time-tested money management process for pursuing consistent results
o full spectrum of investment products backed by MFS Original Research(R)
o resources and services that match real-life needs
TURNING INFORMATION INTO OPPORTUNITY
Sound investments begin with sound information. MFS has been doing its own
research and analyzing findings in-house for decades. The process we use to
uncover opportunity is called MFS Original Research(R).
MFS ORIGINAL RESEARCH INVOLVES:
o meeting with the management of 3,000 companies each year to assess their
business plans and the managers' ability to execute those plans
o making onsite visits to more than 2,000 companies annually to gain
first-hand knowledge of their operations and products
o analyzing financial statements and balance sheets
o talking extensively with companies' customers and competitors
o developing our own proprietary estimates of companies' earnings
- --------------------------------------------------------------------------------
MANAGEMENT REVIEW
- --------------------------------------------------------------------------------
MARKET ENVIRONMENT
Over the six-month period, we witnessed a dramatic recovery from what we would
term a near-panic in the utilities sector. In mid-2002, in the wake of the
Enron scandal, utilities became the poster children for what was wrong with
American business. Credit rating agencies seemed to take a dim view of any
company with energy trading or electric generation exposure and viewed most
utilities as having too much debt on their balance sheets. This initiated a
downward spiral in the middle of last year that decimated both stocks and
bonds of many utilities. In our view, the rating agencies and investors
largely ignored the fact that Enron went bankrupt because of fraud, not
because it was in the energy trading or electric generation business.
As the six-month period opened, the panic started to subside. Utilities began
to improve their balance sheets by issuing equity to pay down debt. Banks
restructured utility debt at lower rates and longer maturities. Investors
seemed to realize that most utilities were not going to go bankrupt and that
perhaps those securities had become undervalued. The result was strong
performance over the period, as beaten-down utility securities recovered from
the turmoil of mid-2002.
In the telecommunications area, however, performance was weaker. Earnings of
regional Bell operating companies (RBOCs), the phone companies created by the
breakup of AT&T, continued to be hampered by the slow economy and by
competition. Long distance firms, on the other hand, were pressured by
increasing competition from RBOCs. The wireless business, in our view,
continued to be overcrowded, which created intense price competition
throughout the industry.
------------------------------------------
"OVER THE SIX-MONTH PERIOD, WE
WITNESSED A DRAMATIC RECOVERY FROM
WHAT WE WOULD TERM A NEAR-PANIC IN THE
UTILITIES SECTOR."
------------------------------------------
CONTRIBUTORS TO PERFORMANCE
For the six-month period, the fund outperformed both its peer group, as
measured by the average utilities fund tracked by Lipper Inc., and the
utilities sector as measured by its benchmark, the S&P 500 Utilities Index.
In terms of industries, the top contributor to performance, relative to the S&P
Index, was electric power generators. Spanish electric utility Iberdrola, one of
the fund's better performing holdings, benefited from new management that
delivered on earnings expectations. The company's stock also received a boost
when another utility attempted a takeover. We sold our holdings on that news.
(The takeover bid failed after the reporting period ended.)
Convertible preferred stocks of electric power generator AES Corp. also
contributed strongly to performance. The firm's credit outlook, and thus its
bond prices, strengthened over the period as the company improved its cash
flow and negotiated more favorable terms on its debt. The fund also benefited
from not having positions in several utilities in the S&P 500 Utilities Index
that performed poorly over the period, including Duke Energy, Southern Co.,
and Consolidated Edison.
Performance was also helped by holdings in the natural gas distribution and
pipeline industries, as gas prices appreciated over the winter of 2002-2003.
Kinder Morgan was a strong contributor in this area. And in the cable and
satellite television industry, the fund's holdings in Comcast and EchoStar
Communications helped relative performance.
DETRACTORS FROM PERFORMANCE
Several of the biggest detractors from relative performance were strong-
performing electric generation and natural gas companies that we didn't own or
in which we were underweighted, relative to the S&P 500 Utilities Index. In
several cases, we did not own these securities because we felt they were
relatively risky positions. For example, AES stock, in which we were
underweighted, performed very well; as mentioned earlier, we had chosen to
concentrate on the company's convertible bonds, which we felt entailed less
risk. At natural gas company Williams Cos., which we did not own, management
succeeded in turning around a failing firm. Natural gas firm Dynegy was
another successful turnaround in which we did not fully participate.
In the telecommunications area, several RBOCs detracted from relative
performance, including Verizon, SBC Communications, and BellSouth.
/s/ Maura Shaughnessy
Maura Shaughnessy
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. These views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
The portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY THROUGH 4/30/03
- --------------------------------------------------------------------------------
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. Performance results reflect the percentage change
in net asset value, including the reinvestment of any dividends and capital
gains distributions. (See Notes to Performance Summary.)
TOTAL RETURNS
Cumulative
without sales charge
Class
Share inception
class date 6-mo 1-yr 3-yr 5-yr 10-yr
----------------------------------------------------------------------------
A 2/14/92 16.11% -7.75% -35.53% -6.46% 126.93%
----------------------------------------------------------------------------
B 9/7/93 15.73% -8.33% -36.92% -9.72% 109.86%
----------------------------------------------------------------------------
C 1/3/94 15.73% -8.45% -36.98% -9.92% 110.66%
----------------------------------------------------------------------------
I 1/2/97 16.22% -7.51% -35.07% -5.29% 130.69%
----------------------------------------------------------------------------
R 12/31/02 16.01% -7.82% -35.58% -6.53% 126.74%
----------------------------------------------------------------------------
Average annual
without sales charge
----------------------------------------------------------------------------
A -- -7.75% -13.61% -1.33% 8.54%
----------------------------------------------------------------------------
B -- -8.33% -14.24% -2.03% 7.69%
----------------------------------------------------------------------------
C -- -8.45% -14.27% -2.07% 7.74%
----------------------------------------------------------------------------
I -- -7.51% -13.41% -1.08% 8.72%
----------------------------------------------------------------------------
R -- -7.82% -13.64% -1.34% 8.53%
----------------------------------------------------------------------------
Average annual
with sales charge
----------------------------------------------------------------------------
A -- -12.13% -15.00% -2.28% 8.01%
----------------------------------------------------------------------------
B -- -11.93% -14.97% -2.30% 7.69%
----------------------------------------------------------------------------
C -- -9.35% -14.27% -2.07% 7.74%
----------------------------------------------------------------------------
Class I and R shares do not have a sales charge. Please see Notes to
Performance Summary for more details.
Average
Annual
Comparative benchmarks 6-mo 1-yr 3-yr 5-yr 10-yr
----------------------------------------------------------------------------
Average utility fund+ 6.96% -16.47% -12.98% -2.81% 4.87%
----------------------------------------------------------------------------
Standard & Poor's
500 Utilities Index# 12.42% -27.38% -11.40% -4.03% 2.86%
----------------------------------------------------------------------------
Periods less than one year are actual, not annualized.
+ Source: Lipper Inc., an independent firm that reports mutual fund
performance.
# Source: Standard & Poor's Micropal, Inc.
INDEX DEFINITIONS
THE STANDARD & POOR'S 500 UTILITIES INDEX - Measures the performance of the
utility sector.
It is not possible to invest directly in an index.
NOTES TO PERFORMANCE SUMMARY
Class A results, including sales charge, reflects the deduction of the maximum
4.75% sales charge. Class B results, including sales charge, reflects the
deduction of the applicable contingent deferred sales charge (CDSC), which
declines over six years from 4% to 0%. Class C results, including sales
charge, redeemed within one year from the end of the calendar month of
purchase reflects the deduction of the 1% CDSC. Class I shares have no sales
charges and are available only to certain investors. Class R shares have no
sales charges and are available only to certain retirement plans.
Performance for share classes initially offered after class A shares includes
the performance of the fund's class A shares for periods prior to the
offering. Blended class performance has been adjusted to take into account
differences in sales loads, if any, applicable to these share classes, but has
not been adjusted to take into account differences in class specific operating
expenses (such as Rule 12b-1 fees). Compared to performance these share
classes would have experienced had they been offered for the entire period,
the use of blended performance generally results in higher performance for
share classes with higher operating expenses than the initial share class, and
lower performance for share classes with lower operating expenses than the
initial share class.
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 and financial statements for details. All
results are historical and assume the reinvestment of dividends and capital
gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS, AND THE PERFORMANCE SHOWN DOES NOT REFLECT
THE DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE, AND MORE
RECENT RETURNS MAY BE DIFFERENT FROM THOSE SHOWN. VISIT WWW.MFS.COM FOR MORE
CURRENT PERFORMANCE RESULTS.
KEY RISK CONSIDERATIONS
Investing in foreign and/or emerging markets securities involves risks
relating to interest rates, currency exchange rates, economic, and political
conditions.
Investments in high yield or lower-rated securities may provide greater
returns but are subject to greater-than-average risk.
Because the portfolio invests in a limited number of companies a change in one
security's value may have a more significant effect on the portfolio's value.
By concentrating on one industry or on a group of related industries, the
portfolio is more susceptible to adverse economic, political or regulatory
developments affecting those industries than is a portfolio that invest
more broadly.
These risks may increase share price volatility. Please see the prospectus for
further information on these and other risk considerations.
Further information on these and other risk considerations.
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.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (unaudited) 4/30/03
- --------------------------------------------------------------------------------
The Portfolio of Investments is a list of all securities owned by your fund. It
is categorized by broad-based asset classes.
Stocks - 81.2%
- -----------------------------------------------------------------------------------------------------
ISSUER SHARES $ VALUE
- -----------------------------------------------------------------------------------------------------
U.S. Stocks - 59.4%
- -----------------------------------------------------------------------------------------------------
Broadcast & Cable TV - 3.4%
- -----------------------------------------------------------------------------------------------------
Comcast Corp., "A"* 165,993 $5,296,837
- -----------------------------------------------------------------------------------------------------
Comcast Corp., "Special A"* 283,800 8,531,028
- -----------------------------------------------------------------------------------------------------
Cox Communications, Inc.* 225,600 7,467,360
- -----------------------------------------------------------------------------------------------------
EchoStar Communications Corp.* 221,990 6,650,821
- -----------------------------------------------------------------------------------------------------
E.W. Scripps Co. 106,070 8,406,047
- -----------------------------------------------------------------------------------------------------
$36,352,093
- -----------------------------------------------------------------------------------------------------
Energy - Independent - 0.9%
- -----------------------------------------------------------------------------------------------------
Forest Oil Corp.* 210,200 $4,367,956
- -----------------------------------------------------------------------------------------------------
XTO Energy, Inc. 259,600 5,062,200
- -----------------------------------------------------------------------------------------------------
$9,430,156
- -----------------------------------------------------------------------------------------------------
Energy - Integrated - 1.4%
- -----------------------------------------------------------------------------------------------------
ConocoPhillips, Inc. 305,800 $15,381,740
- -----------------------------------------------------------------------------------------------------
Entertainment - 3.2%
- -----------------------------------------------------------------------------------------------------
AOL Time Warner, Inc.* 1,516,200 $20,741,616
- -----------------------------------------------------------------------------------------------------
Viacom, Inc., "B"* 306,500 13,305,165
- -----------------------------------------------------------------------------------------------------
$34,046,781
- -----------------------------------------------------------------------------------------------------
Natural Gas - Pipeline - 5.3%
- -----------------------------------------------------------------------------------------------------
Enbridge Energy Management LLC* 73,555 $2,984,126
- -----------------------------------------------------------------------------------------------------
Kinder Morgan, Inc. 586,316 27,568,578
- -----------------------------------------------------------------------------------------------------
Kinder Morgan Management LLC 572,582 19,633,837
- -----------------------------------------------------------------------------------------------------
Questar Corp. 175,900 5,312,180
- -----------------------------------------------------------------------------------------------------
$55,498,721
- -----------------------------------------------------------------------------------------------------
Oil Services - 3.0%
- -----------------------------------------------------------------------------------------------------
BJ Services Co.* 128,900 $4,706,139
- -----------------------------------------------------------------------------------------------------
GlobalSantaFe Corp. 314,600 6,656,936
- -----------------------------------------------------------------------------------------------------
Grant Pride Co., Inc.* 183,400 2,092,594
- -----------------------------------------------------------------------------------------------------
Noble Corp.* 260,200 8,053,190
- -----------------------------------------------------------------------------------------------------
Smith International, Inc.* 254,700 9,057,132
- -----------------------------------------------------------------------------------------------------
Weatherford International Ltd.* 36,100 1,452,303
- -----------------------------------------------------------------------------------------------------
$32,018,294
- -----------------------------------------------------------------------------------------------------
Telecommunications - 10.7%
- -----------------------------------------------------------------------------------------------------
BellSouth Corp. 1,034,300 $26,364,307
- -----------------------------------------------------------------------------------------------------
CenturyTel, Inc. 302,400 8,905,680
- -----------------------------------------------------------------------------------------------------
Citizens Communications Co.* 1,028,300 11,239,319
- -----------------------------------------------------------------------------------------------------
SBC Communications, Inc. 1,216,000 28,405,760
- -----------------------------------------------------------------------------------------------------
Verizon Communications, Inc. 1,005,812 37,597,253
- -----------------------------------------------------------------------------------------------------
Winstar Communications, Inc.* 677,700 203
- -----------------------------------------------------------------------------------------------------
$112,512,522
- -----------------------------------------------------------------------------------------------------
Telecommunications - Wireless - 1.6%
- -----------------------------------------------------------------------------------------------------
AT&T Wireless Services, Inc.* 2,598,453 $16,786,006
- -----------------------------------------------------------------------------------------------------
Utilities - Electric - 23.0%
- -----------------------------------------------------------------------------------------------------
AES Corp.* 415,500 $2,497,155
- -----------------------------------------------------------------------------------------------------
Allegheny Energy, Inc. 1,181,300 9,804,790
- -----------------------------------------------------------------------------------------------------
Constellation Energy Group, Inc. 749,500 21,945,360
- -----------------------------------------------------------------------------------------------------
Dominion Resources, Inc. 343,400 20,322,412
- -----------------------------------------------------------------------------------------------------
Edison International* 559,900 8,168,941
- -----------------------------------------------------------------------------------------------------
Energy East Corp. 818,900 14,920,358
- -----------------------------------------------------------------------------------------------------
Entergy Corp. 322,700 15,041,047
- -----------------------------------------------------------------------------------------------------
Exelon Corp. 756,800 40,140,672
- -----------------------------------------------------------------------------------------------------
FirstEnergy Corp. 375,100 12,652,123
- -----------------------------------------------------------------------------------------------------
FPL Group, Inc. 15,700 955,659
- -----------------------------------------------------------------------------------------------------
Pepco Holdings, Inc. 202,000 3,470,360
- -----------------------------------------------------------------------------------------------------
PG&E Corp.* 546,400 8,185,072
- -----------------------------------------------------------------------------------------------------
Pinnacle West Capital Corp. 80,695 2,680,688
- -----------------------------------------------------------------------------------------------------
PPL Corp. 467,500 16,923,500
- -----------------------------------------------------------------------------------------------------
Progress Energy, Inc. 37,000 1,545,860
- -----------------------------------------------------------------------------------------------------
Public Service Enterprise Group 248,500 9,559,795
- -----------------------------------------------------------------------------------------------------
Reliant Resources, Inc.* 3,169,500 17,812,590
- -----------------------------------------------------------------------------------------------------
TXU Corp. 1,728,800 34,437,696
- -----------------------------------------------------------------------------------------------------
Weststar Energy, Inc. 124,800 1,754,688
- -----------------------------------------------------------------------------------------------------
$242,818,766
- -----------------------------------------------------------------------------------------------------
Utilities - Gas - 6.9%
- -----------------------------------------------------------------------------------------------------
AGL Resources, Inc. 397,015 $10,215,196
- -----------------------------------------------------------------------------------------------------
Energen Corp. 97,800 3,207,840
- -----------------------------------------------------------------------------------------------------
Equitable Resources, Inc. 1,182,100 45,416,282
- -----------------------------------------------------------------------------------------------------
Keyspan Corp. 27,700 938,199
- -----------------------------------------------------------------------------------------------------
MDU Resources Group, Inc. 392,800 11,689,728
- -----------------------------------------------------------------------------------------------------
NICOR, Inc. 52,400 1,575,144
- -----------------------------------------------------------------------------------------------------
$73,042,389
- -----------------------------------------------------------------------------------------------------
Total U.S. Stocks $627,887,468
- -----------------------------------------------------------------------------------------------------
Foreign Stocks - 21.8%
- -----------------------------------------------------------------------------------------------------
Canada - 0.7%
- -----------------------------------------------------------------------------------------------------
BCE, Inc. (Telecommunications) 196,100 $3,886,702
- -----------------------------------------------------------------------------------------------------
Encana Corp. (Utilities - Gas) 97,696 3,203,829
- -----------------------------------------------------------------------------------------------------
$7,090,531
- -----------------------------------------------------------------------------------------------------
Chile - 0.1%
- -----------------------------------------------------------------------------------------------------
Empresa Nacional de Electricidad, ADR (Utilities -
Electric)* 116,500 $1,048,500
- -----------------------------------------------------------------------------------------------------
China - 0.8%
- -----------------------------------------------------------------------------------------------------
China Mobile (Hong Kong) Ltd., ADR (Telecommunications) 47,800 $478,478
- -----------------------------------------------------------------------------------------------------
China Telecom Corp. (Telecommunications)* 38,306,000 7,367,672
- -----------------------------------------------------------------------------------------------------
Huaneng Power International, Inc. (Energy) 568,000 538,955
- -----------------------------------------------------------------------------------------------------
$8,385,105
- -----------------------------------------------------------------------------------------------------
France - 2.9%
- -----------------------------------------------------------------------------------------------------
France Telecom S.A. (Telecommunications - Wireline)* 1,030,900 $23,855,583
- -----------------------------------------------------------------------------------------------------
Vivendi Environnement (Utilities - Electric) 306,811 6,636,744
- -----------------------------------------------------------------------------------------------------
$30,492,327
- -----------------------------------------------------------------------------------------------------
Germany - 1.3%
- -----------------------------------------------------------------------------------------------------
VEBA AG (Oil & Gas) 288,300 $13,823,049
- -----------------------------------------------------------------------------------------------------
Greece - 0.6%
- -----------------------------------------------------------------------------------------------------
Cosmote S.A. (Telecommunications) 575,500 $5,970,304
- -----------------------------------------------------------------------------------------------------
Hungary - 0.3%
- -----------------------------------------------------------------------------------------------------
Magyar Tavkozlesi Rt., ADR (Telecommunications) 160,500 $3,115,305
- -----------------------------------------------------------------------------------------------------
Israel - 0.3%
- -----------------------------------------------------------------------------------------------------
Partner Communications Co. Ltd., ADR (Cellular Phones)* 619,090 $2,767,332
- -----------------------------------------------------------------------------------------------------
Italy - 0.8%
- -----------------------------------------------------------------------------------------------------
Snam Rete Gas S.p.A. (Gas)* 2,153,700 $7,824,772
- -----------------------------------------------------------------------------------------------------
Telecom Italia S.p.A. (Telecommunications) 120,500 985,382
- -----------------------------------------------------------------------------------------------------
$8,810,154
- -----------------------------------------------------------------------------------------------------
Japan
- -----------------------------------------------------------------------------------------------------
Tokyo Gas Co., Ltd. (Gas) 156,000 $508,425
- -----------------------------------------------------------------------------------------------------
Mexico - 3.3%
- -----------------------------------------------------------------------------------------------------
America Movil S.A. de C.V., ADR (Telecommunications) 1,139,600 $19,111,092
- -----------------------------------------------------------------------------------------------------
Telefonos de Mexico S.A., ADR (Telecommunications) 515,000 15,558,150
- -----------------------------------------------------------------------------------------------------
$34,669,242
- -----------------------------------------------------------------------------------------------------
Netherlands
- -----------------------------------------------------------------------------------------------------
Complete Europe N.V. (Telecommunications - Wireline) 17,288 $175,869
- -----------------------------------------------------------------------------------------------------
Completel Europe N.V., "Preferred" (Telecommunications - Wireline) 171 178,736
- -----------------------------------------------------------------------------------------------------
$354,605
- -----------------------------------------------------------------------------------------------------
Singapore - 1.0%
- -----------------------------------------------------------------------------------------------------
MobileOne Asia Ltd. (Telecommunications - Wireless) 11,669,000 $8,288,950
- -----------------------------------------------------------------------------------------------------
Singapore Telecommunications Ltd. (Telecommunications) 3,064,000 2,504,679
- -----------------------------------------------------------------------------------------------------
$10,793,629
- -----------------------------------------------------------------------------------------------------
South Korea - 2.3%
- -----------------------------------------------------------------------------------------------------
KT Corp. (Telecommunications) 750,550 $15,191,132
- -----------------------------------------------------------------------------------------------------
SK Telecom Co., Ltd., ADR (Telecommunications) 288,600 4,386,720
- -----------------------------------------------------------------------------------------------------
SK Telecom Co., Ltd. (Telecommunications) 35,150 4,891,190
- -----------------------------------------------------------------------------------------------------
$24,469,042
- -----------------------------------------------------------------------------------------------------
Spain - 2.4%
- -----------------------------------------------------------------------------------------------------
Enagas S.A. (Gas) 1,127,577 $8,180,767
- -----------------------------------------------------------------------------------------------------
Endesa S.A., ADR (Utilities - Electric) 818,800 11,633,932
- -----------------------------------------------------------------------------------------------------
Red Electrica De Espana (Electric) 134,920 1,606,309
- -----------------------------------------------------------------------------------------------------
Telefonica S.A. (Telecommunications) 308,400 3,416,577
- -----------------------------------------------------------------------------------------------------
$24,837,585
- -----------------------------------------------------------------------------------------------------
United Kingdom - 5.0%
- -----------------------------------------------------------------------------------------------------
BP Amoco PLC (Oils) 1,964,000 $12,454,156
- -----------------------------------------------------------------------------------------------------
National Grid Group PLC (Telecommunications) 2,905,500 19,098,195
- -----------------------------------------------------------------------------------------------------
Vodafone Group PLC (Telecommunications) 10,811,646 21,354,451
- -----------------------------------------------------------------------------------------------------
$52,906,802
- -----------------------------------------------------------------------------------------------------
Total Foreign Stocks $230,041,937
- -----------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $898,789,543) $857,929,405
- -----------------------------------------------------------------------------------------------------
Bonds - 7.6%
- -----------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 Omitted) $ VALUE
- -----------------------------------------------------------------------------------------------------
U.S. Bonds - 7.0%
- -----------------------------------------------------------------------------------------------------
Aerospace - 0.1%
- -----------------------------------------------------------------------------------------------------
Northrop Grumman Corp., 7.75s, 2031 $969 $1,230,971
- -----------------------------------------------------------------------------------------------------
Automotive
- -----------------------------------------------------------------------------------------------------
DaimlerChrysler AG, 7.45s, 2097 $344 $367,071
- -----------------------------------------------------------------------------------------------------
Banks & Credit Cos. - 0.1%
- -----------------------------------------------------------------------------------------------------
Credit Suisse First Boston USA, 4.625s, 2008 $216 $225,106
- -----------------------------------------------------------------------------------------------------
Credit Suisse First Boston USA, 6.125s, 2011 157 170,490
- -----------------------------------------------------------------------------------------------------
Credit Suisse First Boston USA, 6.5s, 2012 403 448,922
- -----------------------------------------------------------------------------------------------------
$844,518
- -----------------------------------------------------------------------------------------------------
Broadcast & Cable TV - 0.2%
- -----------------------------------------------------------------------------------------------------
Continental Cablevision, Inc., 9.5s, 2013 $412 $486,382
- -----------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 8.125s, 2009 385 408,100
- -----------------------------------------------------------------------------------------------------
TCI Communications, Inc., 9.8s, 2012 664 856,686
- -----------------------------------------------------------------------------------------------------
$1,751,168
- -----------------------------------------------------------------------------------------------------
Building - 0.1%
- -----------------------------------------------------------------------------------------------------
American Standard, Inc., 7.375s, 2008 $730 $788,400
- -----------------------------------------------------------------------------------------------------
Corporate Asset-Backed - 1.1%
- -----------------------------------------------------------------------------------------------------
Falcon Auto Dealership LLC, 3.408s, 2023## $4,844 $734,981
- -----------------------------------------------------------------------------------------------------
PSE&G Transition Funding LLC, 5.74s, 2007 2,709 2,822,808
- -----------------------------------------------------------------------------------------------------
PSE&G Transition Funding LLC, 5.98s, 2008 1,470 1,612,166
- -----------------------------------------------------------------------------------------------------
TIAA Retail Commercial Mortgage Trust, 7.17s, 2032## 2,717 3,001,497
- -----------------------------------------------------------------------------------------------------
Vanderbilt Mortgage & Finance, Inc., 5.17s, 2014 3,431 3,493,501
- -----------------------------------------------------------------------------------------------------
$11,664,953
- -----------------------------------------------------------------------------------------------------
Energy - Independent - 0.1%
- -----------------------------------------------------------------------------------------------------
Devon Financing Corp., ULC, 6.875s, 2011 $1,028 $1,182,381
- -----------------------------------------------------------------------------------------------------
Entertainment - 0.2%
- -----------------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 8.875s, 2012 $2,050 $2,580,557
- -----------------------------------------------------------------------------------------------------
Financial Institutions - 0.1%
- -----------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc., 6.85s, 2004 $739 $780,921
- -----------------------------------------------------------------------------------------------------
Financial Services
- -----------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 7.5s, 2005 $227 $237,438
- -----------------------------------------------------------------------------------------------------
Forest & Paper Products - 0.1%
- -----------------------------------------------------------------------------------------------------
MeadWestvaco Corp., 6.8s, 2032 $735 $777,823
- -----------------------------------------------------------------------------------------------------
Medical & Health Technology Services - 0.1%
- -----------------------------------------------------------------------------------------------------
HCA Healthcare Co., 7.125s, 2006 $975 $1,048,173
- -----------------------------------------------------------------------------------------------------
Natural Gas - Pipeline - 0.2%
- -----------------------------------------------------------------------------------------------------
Kern River Funding Corp., 4.893s, 2018## $1,021 $1,019,714
- -----------------------------------------------------------------------------------------------------
Kinder Morgan Energy Partners, 7.3s, 2033 707 825,632
- -----------------------------------------------------------------------------------------------------
Williams Cos, Inc., 7.75s, 2031 463 416,700
- -----------------------------------------------------------------------------------------------------
$2,262,046
- -----------------------------------------------------------------------------------------------------
Pollution Control - 0.1%
- -----------------------------------------------------------------------------------------------------
WMX Technologies, Inc., 6.375s, 2003 $1,033 $1,055,812
- -----------------------------------------------------------------------------------------------------
Restaurants & Lodging - 0.1%
- -----------------------------------------------------------------------------------------------------
Tricon Global Restaurants, Inc., 8.875s, 2011 $937 $1,089,263
- -----------------------------------------------------------------------------------------------------
Telecommunications - Wireless
- -----------------------------------------------------------------------------------------------------
Verizon Wireless Capital LLC, 5.375s, 2006 $537 $578,681
- -----------------------------------------------------------------------------------------------------
Telecommunications - Wireline - 0.2%
- -----------------------------------------------------------------------------------------------------
Citizens Communications Co., 8.5s, 2006 $215 $249,080
- -----------------------------------------------------------------------------------------------------
Sprint Capital Corp., 6.875s, 2028 420 388,500
- -----------------------------------------------------------------------------------------------------
Telecomunicaciones de Puerto Rico, Inc., 6.65s, 2006 296 315,823
- -----------------------------------------------------------------------------------------------------
Telecomunicaciones de Puerto Rico, Inc., 6.8s, 2009 687 750,997
- -----------------------------------------------------------------------------------------------------
$1,704,400
- -----------------------------------------------------------------------------------------------------
U.S. Government Agencies - 0.6%
- -----------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., 6s, 2016 $3,814 $3,997,905
- -----------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., 6.5s, 2032 1,891 1,976,082
- -----------------------------------------------------------------------------------------------------
Government National Mortgage Assn., 7s, 2031 806 854,963
- -----------------------------------------------------------------------------------------------------
$6,828,950
- -----------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 0.4%
- -----------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 5.375s, 2031 $917 $1,000,605
- -----------------------------------------------------------------------------------------------------
U.S. Treasury Notes, 3.25s, 2007 2,760 2,835,254
- -----------------------------------------------------------------------------------------------------
$3,835,859
- -----------------------------------------------------------------------------------------------------
Utilities - Electric - 3.1%
- -----------------------------------------------------------------------------------------------------
Beaver Valley Funding Corp. II, 9s, 2017 $83 $95,933
- -----------------------------------------------------------------------------------------------------
Centerpoint Energy Resources Corp., 7.875s, 2013## 808 927,180
- -----------------------------------------------------------------------------------------------------
DTE Energy Co., 6.45s, 2006 7,076 7,750,555
- -----------------------------------------------------------------------------------------------------
FirstEnergy Corp., 5.5s, 2006 920 972,167
- -----------------------------------------------------------------------------------------------------
Midamerican Energy Holdings Co., 5.875s, 2012 2,416 2,525,034
- -----------------------------------------------------------------------------------------------------
Midamerican Funding LLC, 6.927s, 2029 1,230 1,298,342
- -----------------------------------------------------------------------------------------------------
Niagara Mohawk Power Corp., 8.77s, 2018 1,433 1,492,518
- -----------------------------------------------------------------------------------------------------
NiSource Finance Corp., 7.625s, 2005 1,579 1,774,128
- -----------------------------------------------------------------------------------------------------
NSTAR Co., 8s, 2010 2,443 2,957,601
- -----------------------------------------------------------------------------------------------------
Progress Energy, Inc., 6.75s, 2006 4,849 5,348,631
- -----------------------------------------------------------------------------------------------------
Progress Energy, Inc., 7.1s, 2011 1,758 2,021,669
- -----------------------------------------------------------------------------------------------------
PSE&G Energy Holdings LLC, 7.75s, 2007## 97 101,607
- -----------------------------------------------------------------------------------------------------
PSE&G Power LLC, 7.75s, 2011 1,956 2,319,415
- -----------------------------------------------------------------------------------------------------
PSE&G Power LLC, 8.625s, 2031 1,210 1,591,713
- -----------------------------------------------------------------------------------------------------
TXU Corp., 6.375s, 2006 1,690 1,799,850
- -----------------------------------------------------------------------------------------------------
TXU Eastern Funding Co., 6.75s, 2009** 793 65,423
- -----------------------------------------------------------------------------------------------------
$33,041,766
- -----------------------------------------------------------------------------------------------------
Utilities - Telephone - 0.1%
- -----------------------------------------------------------------------------------------------------
Verizon New York, Inc., 6.875s, 2012 $622 $716,649
- -----------------------------------------------------------------------------------------------------
Total U.S. Bonds $74,367,800
- -----------------------------------------------------------------------------------------------------
Foreign Bonds - 0.6%
- -----------------------------------------------------------------------------------------------------
Canada - 0.1%
- -----------------------------------------------------------------------------------------------------
Abitibi Consolidated, Inc., 8.85s, 2030 (Forest & Paper Products) $934 $1,034,993
- -----------------------------------------------------------------------------------------------------
France - 0.1%
- -----------------------------------------------------------------------------------------------------
France Telecom S.A., 10s, 2031 (Telecommunications - Wireline) $1,010 $1,343,417
- -----------------------------------------------------------------------------------------------------
Grand Cayman Islands - 0.1%
- -----------------------------------------------------------------------------------------------------
DBS Capital Funding Corp., 7.657s, 2049 (Banks & Credit Cos.)## $1,024 $1,166,433
- -----------------------------------------------------------------------------------------------------
Malaysia - 0.1%
- -----------------------------------------------------------------------------------------------------
Petronas Capital Ltd., 7.875s, 2022 (Oil Services)## $383 $421,800
- -----------------------------------------------------------------------------------------------------
Mexico - 0.1%
- -----------------------------------------------------------------------------------------------------
United Mexican States, 11.5s, 2026 $872 $1,261,868
- -----------------------------------------------------------------------------------------------------
Netherlands
- -----------------------------------------------------------------------------------------------------
Deutsche Telekom, 8.75s, 2030 (Telecommunications) $283 $349,721
- -----------------------------------------------------------------------------------------------------
United Kingdom - 0.1%
- -----------------------------------------------------------------------------------------------------
British Sky Broadcasting Group, 7.3s, 2006 (Advertising
& Broadcasting) $669 $722,520
- -----------------------------------------------------------------------------------------------------
Total Foreign Bonds $6,300,752
- -----------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $73,528,484) $80,668,552
- -----------------------------------------------------------------------------------------------------
Convertible Preferred Stocks - 6.2%
- -----------------------------------------------------------------------------------------------------
ISSUER SHARES $ VALUE
- -----------------------------------------------------------------------------------------------------
U.S. Stocks - 6.2%
- -----------------------------------------------------------------------------------------------------
Utilities - Electric - 4.8%
- -----------------------------------------------------------------------------------------------------
AES Trust III, 6.75s 352,600 $11,054,010
- -----------------------------------------------------------------------------------------------------
AES Trust VII, 6.00s 134,500 4,875,625
- -----------------------------------------------------------------------------------------------------
PPL Capital Funding Trust I, 7.75s 86,950 1,645,094
- -----------------------------------------------------------------------------------------------------
TXU Corp., 8.75s 1,105,030 33,128,799
- -----------------------------------------------------------------------------------------------------
$50,703,528
- -----------------------------------------------------------------------------------------------------
Utilities - Gas - 1.4%
- -----------------------------------------------------------------------------------------------------
Keyspan Corp., 8.75s 113,370 $5,753,528
- -----------------------------------------------------------------------------------------------------
Sempra Energy, 8.5s 345,600 9,020,160
- -----------------------------------------------------------------------------------------------------
$14,773,688
- -----------------------------------------------------------------------------------------------------
Total Convertible Preferred Stocks
(Identified Cost, $69,532,226) $65,477,216
- -----------------------------------------------------------------------------------------------------
Convertible Bonds - 1.3%
- -----------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 Omitted) $ VALUE
- -----------------------------------------------------------------------------------------------------
U.S. Bonds - 1.3%
- -----------------------------------------------------------------------------------------------------
Cable & Satellite - 1.3%
- -----------------------------------------------------------------------------------------------------
Charter Communications, Inc., 5.75s, 2005 $1,130 $483,075
- -----------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 4.875s, 2007 13,350 13,283,250
- -----------------------------------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $15,997,292) $13,766,325
- -----------------------------------------------------------------------------------------------------
Collateral for Securities Loaned - 11.4%
- -----------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL
ISSUER AMOUNT $ VALUE
- -----------------------------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio 89,648,044 $89,648,044
- -----------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corp. - Repurchase
Agreement, 1.36% $25,887,183 $25,887,183
- -----------------------------------------------------------------------------------------------------
Goldman Sachs & Co. - Repurchase Agreement, 1.24% 5,000,000 5,000,000
- -----------------------------------------------------------------------------------------------------
Total Collateral for Securities Loaned $120,535,227
- -----------------------------------------------------------------------------------------------------
Short-Term Obligations - 2.3%
- -----------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 Omitted) $ VALUE
- -----------------------------------------------------------------------------------------------------
Citigroup, Inc., due 5/01/03 $4,954 $4,954,000
- -----------------------------------------------------------------------------------------------------
General Electric Co., due 5/01/03 18,976 18,976,000
- -----------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $23,930,000
- -----------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,202,312,772) $1,162,306,725
- -----------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (10.0)% (105,340,938)
- -----------------------------------------------------------------------------------------------------
Net Assets - 100.0% $1,056,965,787
- -----------------------------------------------------------------------------------------------------
*Non-income producing security.
**Non-income producing security - in default.
##SEC Rule 144A restriction.
See notes to financial statements.
- --------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES (unaudited)
- --------------------------------------------------------------------------------------------
This statement represents your fund's balance sheet, which details the assets
and liabilities composing the total value of your fund.
AT 4/30/03
ASSETS
Investments, at value, including $115,857,273 of
securities on loan (identified cost, $1,202,312,772) $1,162,306,725
- ----------------------------------------------------------------------------------------------
Cash 897
- ----------------------------------------------------------------------------------------------
Receivable for investments sold 29,105,193
- ----------------------------------------------------------------------------------------------
Receivable for fund shares sold 1,327,996
- ----------------------------------------------------------------------------------------------
Interest and dividends receivable 3,909,650
- ----------------------------------------------------------------------------------------------
Other assets 5,799
- ----------------------------------------------------------------------------------------------
Total assets $1,196,656,260
- ----------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable $1,129,171
- ----------------------------------------------------------------------------------------------
Payable for investments purchased 15,890,255
- ----------------------------------------------------------------------------------------------
Payable for fund shares reacquired 1,873,627
- ----------------------------------------------------------------------------------------------
Collateral for securities loaned, at value 120,535,227
- ----------------------------------------------------------------------------------------------
Payable to affiliates
- ----------------------------------------------------------------------------------------------
Management fee 17,368
- ----------------------------------------------------------------------------------------------
Shareholder servicing agent fee 3,175
- ----------------------------------------------------------------------------------------------
Administrative fee 505
- ----------------------------------------------------------------------------------------------
Distribution and service fee 20,265
- ----------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 220,880
- ----------------------------------------------------------------------------------------------
Total liabilities $139,690,473
- ----------------------------------------------------------------------------------------------
Net assets $1,056,965,787
- ----------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Paid-in capital $2,148,371,203
- ----------------------------------------------------------------------------------------------
Unrealized depreciation on investments and translation
of assets and liabilities in foreign currencies (39,997,845)
- ----------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (1,051,308,359)
- ----------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment
income (99,212)
- ----------------------------------------------------------------------------------------------
Net assets $1,056,965,787
- ----------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 150,815,750
- ----------------------------------------------------------------------------------------------
See notes to financial statements.
Statement of Assets and Liabilities (unaudited) - continued
Class A shares
Net assets $412,772,882
- --------------------------------------------------------------------------------------------
Shares outstanding 58,778,426
- --------------------------------------------------------------------------------------------
Net asset value per share $7.02
- --------------------------------------------------------------------------------------------
Offering price per share (100/95.25X$7.02) $7.37
- --------------------------------------------------------------------------------------------
Class B shares
Net assets $492,876,226
- --------------------------------------------------------------------------------------------
Shares outstanding 70,435,260
- --------------------------------------------------------------------------------------------
Net asset value and offering price per share $7.00
- --------------------------------------------------------------------------------------------
Class C shares
Net assets $149,683,393
- --------------------------------------------------------------------------------------------
Shares outstanding 21,369,821
- --------------------------------------------------------------------------------------------
Net asset value and offering price per share $7.00
- --------------------------------------------------------------------------------------------
Class I shares
Net assets $1,551,665
- --------------------------------------------------------------------------------------------
Shares outstanding 220,619
- --------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price
per share $7.03
- --------------------------------------------------------------------------------------------
Class R shares
Net assets $81,621
- --------------------------------------------------------------------------------------------
Shares outstanding 11,624
- --------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price
per share $7.02
- --------------------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF OPERATIONS (unaudited)
- --------------------------------------------------------------------------------------------
This statement describes how much your fund received in investment income and
paid in expenses. It also describes any gains and/or losses generated by fund
operations.
FOR SIX MONTHS ENDED 4/30/03
NET INVESTMENT INCOME (LOSS)
Income
- --------------------------------------------------------------------------------------------
Dividends $14,331,565
- --------------------------------------------------------------------------------------------
Interest 3,644,983
- --------------------------------------------------------------------------------------------
Foreign taxes withheld (249,549)
- --------------------------------------------------------------------------------------------
Total investment income $17,726,999
- --------------------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------------------
Management fee $3,015,219
- --------------------------------------------------------------------------------------------
Trustees' compensation 21,305
- --------------------------------------------------------------------------------------------
Shareholder servicing agent fee 510,872
- --------------------------------------------------------------------------------------------
Distribution and service fee (Class A) 483,511
- --------------------------------------------------------------------------------------------
Distribution and service fee (Class B) 2,373,995
- --------------------------------------------------------------------------------------------
Distribution and service fee (Class C) 710,547
- --------------------------------------------------------------------------------------------
Distribution and service fee (Class R) 36
- --------------------------------------------------------------------------------------------
Administrative fee 57,966
- --------------------------------------------------------------------------------------------
Custodian fee 230,254
- --------------------------------------------------------------------------------------------
Printing 55,669
- --------------------------------------------------------------------------------------------
Postage 85,561
- --------------------------------------------------------------------------------------------
Auditing fees 17,995
- --------------------------------------------------------------------------------------------
Miscellaneous 672,455
- --------------------------------------------------------------------------------------------
Total expenses $8,235,385
- --------------------------------------------------------------------------------------------
Fees paid indirectly (23,113)
- --------------------------------------------------------------------------------------------
Net expenses $8,212,272
- --------------------------------------------------------------------------------------------
Net investment income $9,514,727
- --------------------------------------------------------------------------------------------
See notes to financial statements.
Statement of Operations (unaudited) - continued
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized loss (identified cost basis)
- --------------------------------------------------------------------------------------------
Investment transactions $(24,156,229)
- --------------------------------------------------------------------------------------------
Foreign currency transactions (91,351)
- --------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency
transactions $(24,247,580)
- --------------------------------------------------------------------------------------------
Change in unrealized appreciation
- --------------------------------------------------------------------------------------------
Investments $164,068,731
- --------------------------------------------------------------------------------------------
Translation of assets and liabilities in foreign
currencies 3,043
- --------------------------------------------------------------------------------------------
Net unrealized gain on investments and foreign currency
translation $164,071,774
- --------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and
foreign currency $139,824,194
- --------------------------------------------------------------------------------------------
Increase in net assets from operations $149,338,921
- --------------------------------------------------------------------------------------------
See notes to financial statements.
- -------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------
This statement describes the increases and/or decreases in net assets
resulting from operations, any distributions, and any shareholder
transactions.
SIX MONTHS YEAR
ENDED ENDED
4/30/03 10/31/02
(UNAUDITED)
OPERATIONS
Net investment income $9,514,727 $25,052,477
- -------------------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency
transactions (24,247,580) (653,546,000)
- -------------------------------------------------------------------------------------------------------
Net unrealized gain on investments and foreign currency
translation 164,071,774 120,111,526
- ------------------------------------------------------------------------------- ---------------
Increase (decrease) in net assets from operations $149,338,921 $(508,381,997)
- ------------------------------------------------------------------------------- ---------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income (Class A) $(5,438,725) $(12,210,698)
- ------------------------------------------------------------------------------- ---------------
From net investment income (Class B) (4,947,735) (10,444,740)
- ------------------------------------------------------------------------------- ---------------
From net investment income (Class C) (1,481,900) (3,326,331)
- ------------------------------------------------------------------------------- ---------------
From net investment income (Class I) (20,373) (45,752)
- ------------------------------------------------------------------------------- ---------------
From net investment income (Class R) (122) --
- ------------------------------------------------------------------------------- ---------------
Total distributions declared to shareholders $(11,888,855) $(26,027,521)
- ------------------------------------------------------------------------------- ---------------
Net decrease in net assets from fund share transactions $(90,723,891) $(504,257,523)
- ------------------------------------------------------------------------------- ---------------
Total increase (decrease) in net assets $46,726,175 $(1,038,667,041)
- ------------------------------------------------------------------------------- ---------------
NET ASSETS
At beginning of period $1,010,239,612 $2,048,906,653
- -------------------------------------------------------------------------------------------------------
At end of period (including accumulated distributions in
excess of net investment income of $(99,212) and
undistributed net investment income of $2,274,916,
respectively) $1,056,965,787 $1,010,239,612
- -------------------------------------------------------------------------------------------------------
See notes to financial statements.
- ---------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------
The Financial Highlights provide per share amounts and certain ratios to
summarize the effect of fund operations and any distributions to a shareholder
of each share class.
SIX MONTHS YEAR ENDED 10/31
ENDED ----------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS A (UNAUDITED)
Net asset value, beginning of
period $6.13 $8.68 $13.66 $12.23 $10.76 $10.39
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS#(S)(S)
Net investment income(S) $0.08 $0.16 $0.21 $0.55 $0.21 $0.27
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments
and foreign currency 0.90 (2.55) (3.70) 2.40 2.13 1.78
- ------------------------------------------- ----- ----- ----- ----- -----
Total from investment
operations $0.98 $(2.39) $(3.49) $2.95 $2.34 $2.05
- ------------------------------------------- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $(0.09) $(0.16) $(0.27) $(0.42) $(0.25) $(0.27)
- ------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments and foreign
currency transactions -- -- (1.19) (1.10) (0.61) (1.39)
- ------------------------------------------- ----- ----- ----- ----- -----
In excess of net investment
income -- -- -- -- (0.01) (0.02)
- ------------------------------------------- ----- ----- ----- ----- -----
In excess of net realized
gain on investments and
foreign currency transactions -- -- (0.03) -- -- --
- ------------------------------------------- ----- ----- ----- ----- -----
Total distributions declared
to shareholders $(0.09) $(0.16) $(1.49) $(1.52) $(0.87) $(1.68)
- ------------------------------------------- ----- ----- ----- ----- -----
Net asset value, end
of period $7.02 $6.13 $8.68 $13.66 $12.23 $10.76
- ------------------------------------------- ----- ----- ----- ----- -----
Total return (%)(+) 16.11++ (27.78) (27.72) 25.88 23.05 22.13
- ------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED 10/31
ENDED ---------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
(UNAUDITED)
RATIOS (%) TO AVERAGE NET
ASSETS AND SUPPLEMENTAL
DATA(S):
Expenses## 1.17+ 1.11 1.03 0.98 1.05 1.05
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 2.35+ 2.10 1.95 4.11 1.88 2.60
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 72 80 110 113 137 124
- ------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $412,773 $382,712 $733,848 $899,682 $447,121 $324,098
- ------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser voluntarily waived a portion of its fee for the
periods indicated. If this fee had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income $-- $0.15 $0.21 $0.53 $0.20 $0.26
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
Expenses## -- 1.15 1.06 1.16 1.10 1.15
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income -- 2.06 1.92 3.93 1.83 2.50
- ------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective November 1, 2001, the fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premium on debt securities. The effect of
this change for the year ended October 31, 2002 was to decrease net
investment income per share and increase net realized and unrealized
gains and losses per share. The impact of this change calculates to less
than $0.01 per share. In addition, the ratio of net investment income to
average net assets decreased by 0.04%. Per share, ratios, and
supplemental data for periods prior to November 1, 2001 have not been
restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) 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.
Financial Highlights - continued
SIX MONTHS YEAR ENDED 10/31
ENDED ------------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS B (UNAUDITED)
Net asset value, beginning
of period $6.11 $8.65 $13.62 $12.19 $10.73 $10.36
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS#(S)(S)
Net investment income(S) $0.05 $0.10 $0.13 $0.45 $0.12 $0.19
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments
and foreign currency 0.91 (2.53) (3.69) 2.40 2.12 1.79
- ----------------------------------------- ------ ------ ----- ----- -----
Total from investment
operations $0.96 $(2.43) $(3.56) $2.85 $2.24 $1.98
- ----------------------------------------- ------ ------ ----- ----- -----
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $(0.07) $(0.11) $(0.19) $(0.32) $(0.16) $(0.20)
- -------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments and foreign
currency transactions -- -- (1.19) (1.10) (0.61) (1.39)
- ----------------------------------------- ------ ------ ----- ----- -----
In excess of net investment
income -- -- -- -- (0.01) (0.02)
- ----------------------------------------- ------ ------ ----- ----- -----
In excess of net realized
gain on investments and
foreign currency
transactions -- -- (0.03) -- -- --
- ----------------------------------------- ------ ------ ----- ----- -----
Total distributions
declared to shareholders $(0.07) $(0.11) $(1.41) $(1.42) $(0.78) $(1.61)
- ----------------------------------------- ------ ------ ----- ----- -----
Net asset value, end
of period $7.00 $6.11 $8.65 $13.62 $12.19 $10.73
- ----------------------------------------- ------ ------ ----- ----- -----
Total return (%) 15.73++ (28.30) (28.28) 25.04 22.11 21.27
- -------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED 10/31
ENDED -----------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
(UNAUDITED)
RATIOS (%) TO AVERAGE NET
ASSETS AND SUPPLEMENTAL
DATA(S):
Expenses## 1.92+ 1.86 1.78 1.73 1.80 1.80
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 1.60+ 1.35 1.20 3.40 1.08 1.85
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 72 80 110 113 137 124
- -------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $492,876 $481,361 $984,740 $1,279,547 $691,115 $361,439
- -------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser voluntarily waived a portion of its fee for the
periods indicated. If this fee had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income $-- $0.10 $0.13 $0.43 $0.11 $0.18
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
Expenses## -- 1.90 1.81 1.91 1.85 1.90
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income -- 1.31 1.17 3.22 1.03 1.75
- -------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective November 1, 2001, the fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premium on debt securities. The effect of
this change for the year ended October 31, 2002 was to decrease net
investment income per share and increase net realized and unrealized
gains and losses per share. The impact of this change calculates to less
than $0.01 per share. In addition, the ratio of net investment income to
average net assets decreased by 0.04%. Per share, ratios, and
supplemental data for periods prior to November 1, 2001 have not been
restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
See notes to financial statements.
Financial Highlights - continued
SIX MONTHS YEAR ENDED 10/31
ENDED -----------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS C (UNAUDITED)
Net asset value, beginning of
period $6.11 $8.66 $13.63 $12.21 $10.75 $10.37
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS#(S)(S)
Net investment income(S) $0.05 $0.10 $0.13 $0.44 $0.12 $0.19
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments
and foreign currency 0.91 (2.54) (3.69) 2.40 2.12 1.80
- ------------------------------------------- ------ ------ ----- ----- -----
Total from investment
operations $0.96 $(2.44) $(3.56) $2.84 $2.24 $1.99
- ------------------------------------------- ------ ------ ----- ----- -----
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $(0.07) $(0.11) $(0.19) $(0.32) $(0.16) $(0.20)
- -------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments and foreign
currency transactions -- -- (1.19) (1.10) (0.61) (1.39)
- ------------------------------------------- ------ ------ ----- ----- -----
In excess of net investment
income -- -- -- -- (0.01) (0.02)
- ------------------------------------------- ------ ------ ----- ----- -----
In excess of net realized
gain on investments and
foreign currency transactions -- -- (0.03) -- -- --
- ------------------------------------------- ------ ------ ----- ----- -----
Total distributions declared
to shareholders $(0.07) $(0.11) $(1.41) $(1.42) $(0.78) $(1.61)
- ------------------------------------------- ------ ------ ----- ----- -----
Net asset value, end
of period $7.00 $6.11 $8.66 $13.63 $12.21 $10.75
- ------------------------------------------- ------ ------ ----- ----- -----
Total return (%) 15.73++ (28.38) (28.26) 24.91 22.18 21.25
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED 10/31
SIX MONTHS
ENDED ----------------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
(UNAUDITED)
RATIOS (%) TO AVERAGE NET
ASSETS AND SUPPLEMENTAL
DATA(S):
Expenses## 1.92+ 1.86 1.78 1.73 1.81 1.80
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 1.60+ 1.35 1.20 3.35 1.08 1.85
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 72 80 110 113 137 124
- -------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period
(000 Omitted) $149,683 $144,861 $327,715 $433,998 $211,924 $95,856
- -------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser voluntarily waived a portion of its fee for the
periods indicated. If this fee had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income $-- $0.10 $0.13 $0.42 $0.11 $0.18
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
Expenses## -- 1.90 1.81 1.91 1.86 1.90
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income -- 1.31 1.17 3.17 1.03 1.75
- -------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective November 1, 2001, the fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premium on debt securities. The effect of
this change for the year ended October 31, 2002 was to decrease net
investment income per share and increase net realized and unrealized
gains and losses per share. The impact of this change calculates to less
than $0.01 per share. In addition, the ratio of net investment income to
average net assets decreased by 0.04%. Per share, ratios, and
supplemental data for periods prior to November 1, 2001 have not been
restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
See notes to financial statements.
Financial Highlights - continued
SIX MONTHS YEAR ENDED 10/31
ENDED --------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
CLASS I (UNAUDITED)
Net asset value, beginning of period $6.14 $8.69 $13.68 $12.25 $10.78 $10.39
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS#(S)(S)
Net investment income(S) $0.08 $0.18 $0.24 $0.57 $0.24 $0.30
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments and foreign currency 0.91 (2.55) (3.71) 2.41 2.13 1.80
- ---------------------------------------------------- ------ ------ ----- ----- -----
Total from investment operations $0.99 $(2.37) $(3.47) $2.98 $2.37 $2.10
- ---------------------------------------------------- ------ ------ ----- ----- -----
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income $(0.10) $(0.18) $(0.30) $(0.45) $(0.28) $(0.29)
- -------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
and foreign currency transactions -- -- (1.19) (1.10) (0.61) (1.39)
In excess of net investment income -- -- -- -- (0.01) (0.03)
- ---------------------------------------------------- ------ ------ ----- ----- -----
In excess of net realized gain on
investments and foreign currency
transactions -- -- (0.03) -- -- --
- ---------------------------------------------------- ------ ------ ----- ----- -----
Total distributions declared to
shareholders $(0.10) $(0.18) $(1.52) $(1.55) $(0.90) $(1.71)
- ---------------------------------------------------- ------ ------ ----- ----- -----
Net asset value, end
of period $7.03 $6.14 $8.69 $13.68 $12.25 $10.78
- ---------------------------------------------------- ------ ------ ----- ----- -----
Total return (%) 16.22++ (27.56) (27.58) 26.14 23.44 22.52
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED 10/31
SIX MONTHS
ENDED ------------------------------------------------------------
4/30/03 2002 2001 2000 1999 1998
(UNAUDITED)
RATIOS (%) TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA(S):
Expenses## 0.92+ 0.86 0.78 0.73 0.80 0.80
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income(S)(S) 2.60+ 2.33 2.19 4.38 2.14 2.84
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 72 80 110 113 137 124
- -------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $1,552 $1,306 $2,604 $4,155 $1,437 $1,145
- -------------------------------------------------------------------------------------------------------------------------------
(S) The investment adviser voluntarily waived a portion of its fee for the
periods indicated. If this fee had been incurred by the fund, the net
investment income per share and the ratios would have been:
Net investment income $-- $0.17 $0.24 $0.55 $0.23 $0.29
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
Expenses## -- 0.90 0.81 0.91 0.85 0.90
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income -- 2.29 2.17 4.20 2.09 2.74
- -------------------------------------------------------------------------------------------------------------------------------
(S)(S) As required, effective November 1, 2001, the fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premium on debt securities. The effect of
this change for the year ended October 31, 2002 was to decrease net
investment income per share and increase net realized and unrealized
gains and losses per share. The impact of this change calculates to less
than $0.01 per share. In addition, the ratio of net investment income to
average net assets decreased by 0.04%. Per share, ratios, and
supplemental data for periods prior to November 1, 2001 have not been
restated to reflect this change in presentation.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
See notes to financial statements.
Financial Highlights - continued
PERIOD ENDED
4/30/03*
(UNAUDITED)
CLASS R
Net asset value, beginning of period $6.43
- ------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS#
Net investment income $0.07
- ------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and foreign currency 0.56
- ------------------------------------------------------------------------------------------------
Total from investment operations $0.63
- ------------------------------------------------------------------------------------------------
Less distributions declared to shareholders from net investment income $(0.04)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $7.02
- ------------------------------------------------------------------------------------------------
Total return (%) 9.77++
- ------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE
NET ASSETS AND
SUPPLEMENTAL DATA:
Expenses## 1.42+
- ------------------------------------------------------------------------------------------------
Net investment income 2.10+
- ------------------------------------------------------------------------------------------------
Portfolio turnover (%) 72
- ------------------------------------------------------------------------------------------------
Net assets at end of period (000 Omitted) $82
- ------------------------------------------------------------------------------------------------
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
* For the period from the inception of Class R shares, December 31, 2002,
through April 30, 2003.
See notes to financial statements.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
(1) BUSINESS AND ORGANIZATION
MFS Utilities 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
accounting principles generally accepted in the United States of America
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 in the fund's portfolio for which
market quotations are available are valued at the last sale or official
closing price on the primary market or exchange on which they are primarily
traded or at the last quoted bid price for securities in which there were no
sales during the day. If no sales are reported, as is the case for most
securities traded over the counter, securities are valued on the basis of
quotations obtained from brokers and dealers or on the basis of valuations
furnished by a pricing service. Bonds and other fixed income securities (other
than short-term obligations) of U.S. issuers in the fund's portfolio are
valued at an evaluated bid price on the basis of quotes from brokers and
dealers or on the basis of valuations furnished by a pricing service. Prices
obtained from pricing services utilize both dealer-supplied valuations and
electronic data processing techniques which take into account appropriate
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 quoted prices or
exchange or over-the-counter prices, since such valuations are believed to
reflect more accurately the fair value of such securities. Short-term
obligations in the fund's portfolio are valued at amortized cost, which
constitutes fair value as determined by the Board of Trustees. Short-term
obligations with a remaining maturity in excess of 60 days will be valued upon
dealer supplied valuations. Portfolio investments for which market quotations
are not readily available, or whose values may have been materially affected
by events occurring after the close of their primary markets, are valued at
fair value as determined in good faith by or at the discretion of the Board of
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.
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.
INVESTMENT TRANSACTIONS AND INCOME - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and discount is amortized or accreted for financial statement purposes in
accordance with generally accepted accounting principles. All discount is
accreted for tax reporting purposes as required by federal income tax
regulations. Dividends received in cash are recorded on the ex-dividend date.
Dividend and interest payments received in additional securities are recorded
on the ex-dividend or ex-interest date in an amount equal to the value of the
security on such date.
FEES PAID INDIRECTLY - The fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the fund. During the period, the fund's custodian fees were reduced by $7,195
under this arrangement. The fund has entered into a directed brokerage
agreement, under which the broker will credit the fund a portion of the
commissions generated, to offset certain expenses of the fund. For the period,
the fund's other expenses were reduced by $15,918 under this agreement. These
amounts are 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 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. Common
types of book and tax differences that could occur include differences in
accounting for currency transactions, mortgage-backed securities, and
amortization and accretion on debt securities.
The tax character of distributions declared for the years ended October 31,
2002 and October 31, 2001 was as follows:
10/31/02 10/31/01
Distributions declared from:
- --------------------------------------------------------------------------------
Ordinary income $26,027,521 $214,388,480
- --------------------------------------------------------------------------------
Long-term capital gain -- 75,381,649
- --------------------------------------------------------------------------------
Total distributions declared $26,027,521 $289,770,129
- --------------------------------------------------------------------------------
As of October 31, 2002, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
Undistributed ordinary income $2,940,334
- ---------------------------------------------------------------------------
Undistributed long-term capital gain --
- ---------------------------------------------------------------------------
Capital loss carryforward (1,012,228,610)
- ---------------------------------------------------------------------------
Unrealized loss (218,883,694)
- ---------------------------------------------------------------------------
Other temporary differences (683,512)
- ---------------------------------------------------------------------------
For federal income tax purposes, the capital loss carryforward may be applied
against any net taxable realized gains of each succeeding year until the
earlier of its utilization or expiration.
EXPIRATION DATE CARRYOVER
October 31, 2009 $338,848,523
-------------------------------------------------------
October 31, 2010 673,398,181
-------------------------------------------------------
Total $1,012,246,704
-------------------------------------------------------
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 the value
of settled shares outstanding 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 Financials 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 0.60%
of the fund's average daily net assets.
The fund pays the compensation of the Independent Trustees in the form of both
a retainer and attendance fees and 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 inactive Trustees and an
unfunded retirement benefit deferral plan for active Trustees. Included in
Trustees' compensation is a net decrease of $5,783 as a result of the change
in the fund's pension liability for active Trustees and a pension expense of
$1,687 for inactive trustees for the six months ended April 30, 2003.
ADMINISTRATOR - The fund has an administrative services agreement with MFS to
provide the fund with certain financial, legal, shareholder communications,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the fund pays MFS an administrative fee
at the following annual percentages of the fund's average daily net assets:
First $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
$29,101 for the six months ended April 30, 2003, as its portion of the sales
charge on sales of Class A shares of the fund, respectively.
The Trustees have adopted a distribution plan for Class A, Class B, Class C
and Class R 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 an annual
percentage of its average daily net assets attributable to certain share
classes 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
based on the average daily net assets of accounts attributable to such
dealers. These fees are calculated based on each class' average daily net
assets. The maximum distribution and service fees for each class of shares are
as follows:
CLASS A CLASS B CLASS C CLASS R
Distribution Fee 0.10% 0.75% 0.75% 0.25%
- --------------------------------------------------------------------------------
Service Fee 0.25% 0.25% 0.25% 0.25%
- --------------------------------------------------------------------------------
Total Distribution Plan 0.35% 1.00% 1.00% 0.50%
- --------------------------------------------------------------------------------
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 for the six months ended April 30, 2003, amounted to:
CLASS A CLASS B CLASS C CLASS R
Service Fee Retained by MFD $6,046 $1,748 $5,105 $ --
- --------------------------------------------------------------------------------
Fees incurred under the distribution plan during the six months ended
April 30, 2003 were as follows:
CLASS A CLASS B CLASS C CLASS R
Total Distribution Plan 0.25% 1.00% 1.00% 0.50%
- --------------------------------------------------------------------------------
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within, for Class A shares, 12
months following the purchase, and, for Class C shares, the first year from
the end of the calendar month of 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 from the end of the calendar month of
purchase. MFD receives all contingent deferred sales charges. Contingent
deferred sales charges imposed during the six months ended April 30, 2003 were
as follows:
CLASS A CLASS B CLASS C
Contingent Deferred Sales Charges Imposed $1,807 $832,993 $8,749
- --------------------------------------------------------------------------------
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
0.11%. Prior to April 1, 2003, the fee was 0.10% of the fund's average daily
net assets.
(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 $30,809,078 $38,079,360
- --------------------------------------------------------------------------------
Investments (non-U.S. government securities) $674,536,28 $769,283,35
- --------------------------------------------------------------------------------
2 7
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 $1,210,204,734
- --------------------------------------------------------------------------------
Gross unrealized depreciation $(106,394,352)
- --------------------------------------------------------------------------------
Gross unrealized appreciation 58,496,343
- --------------------------------------------------------------------------------
Net unrealized depreciation $(47,898,009)
- --------------------------------------------------------------------------------
(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:
Six months ended Year ended
4/30/03 10/31/02
SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Shares sold 16,910,894 $109,115,935 18,791,841 $138,587,955
- ----------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 786,108 4,989,115 1,198,951 8,963,731
- ----------------------------------------------------------------------------------------------------------
Shares reacquired (21,359,744) (136,933,390) (42,124,512) (302,327,009)
- ----------------------------------------------------------------------------------------------------------
Net decrease (3,662,742) $(22,828,340) (22,133,720) $(154,775,323)
- ----------------------------------------------------------------------------------------------------------
CLASS B SHARES
Shares sold 2,601,239 $16,855,456 7,540,841 $58,339,831
- ----------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 743,401 4,696,448 986,495 7,355,083
- ----------------------------------------------------------------------------------------------------------
Shares reacquired (11,724,843) (74,872,814) (43,600,043) (313,190,167)
- ----------------------------------------------------------------------------------------------------------
Net decrease (8,380,203) $(53,320,910) (35,072,707) $(247,495,253)
- ----------------------------------------------------------------------------------------------------------
CLASS C SHARES
Shares sold 1,413,007 $9,200,242 3,594,427 $27,925,616
- ----------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 194,460 1,229,787 277,527 2,082,748
- ----------------------------------------------------------------------------------------------------------
Shares reacquired (3,932,779) (25,139,668) (18,040,479) (131,327,020)
- ----------------------------------------------------------------------------------------------------------
Net decrease (2,325,312) $(14,709,639) (14,168,525) $(101,318,656)
- ----------------------------------------------------------------------------------------------------------
CLASS I SHARES
Shares sold 41,202 $272,1353 6,860 $276,610
- ----------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 3,198 20,333 4,633 34,743
- ----------------------------------------------------------------------------------------------------------
Shares reacquired (36,509) (233,275) (128,419) (979,644)
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) 7,891 $59,193 (86,926) $(668,291)
- ----------------------------------------------------------------------------------------------------------
Period ended
4/30/03*
SHARES AMOUNT
CLASS R SHARES
Shares sold 22,448 $146,480
- -------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions 3 21
- -------------------------------------------------------------------
Shares reacquired (10,827) (70,696)
- -------------------------------------------------------------------
Net increase 11,624 $75,805
- -------------------------------------------------------------------
* For the period from the inception of Class R shares, December 31, 2002,
through April 30, 2003.
(6) Line of Credit
The fund and other affiliated funds participate in an $800 million 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. A commitment fee of $4,043 which is based on the average daily unused
portion of the line of credit is included in miscellaneous expense. The fund had
no borrowings during the period.
(7) Change in Accounting Principle
As required, effective November 1, 2001, the fund adopted the provisions of the
AICPA Audit and Accounting Guide for Investment Companies and began amortizing
premium on debt securities. Prior to November 1, 2001, the fund did not amortize
premium on debt securities. The cumulative effect of this accounting change had
no impact on total net assets of the fund, but resulted in a $479,926 reduction
in cost of securities and a corresponding $479,926 decrease in net unrealized
depreciation, based on securities held by the fund on November 1, 2001.
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
The following tables present certain information regarding the Trustees and
officers of MFS Series Trust VI, of which the fund is a series, including
their principal occupations, which, unless specific dates are shown, are of
more than five years' duration, although the titles may not have been the
same throughout.
Name, age, position with the Trust, principal occupation, and other
directorships(1)
INTERESTED TRUSTEES
JEFFREY L. SHAMES(2) (born 06/02/55) ABBY M. O'NEILL (born 04/27/28)
Chairman Trustee
Massachusetts Financial Services Private investor; Rockefeller
Company, Financial Services, Inc. (investment
Chairman advisers), Chairman and
Chief Executive Officer
JOHN W. BALLEN(2) (born 09/12/59)
Trustee and President LAWRENCE T. PERERA (born 06/23/35)
Massachusetts Financial Services Trustee
Company, Hemenway & Barnes (attorneys),
Chief Executive Officer and Director Partner
KEVIN R. PARKE(2) (born 12/14/59) WILLIAM J. POORVU (born 04/10/35)
Trustee Trustee
Massachusetts Financial Services Private investor; Harvard University
Company, Graduate School of Business
President, Chief Investment Officer, and Administration, Class of 1961
Director Adjunct Professor in
Entrepreneurship Emeritus;
INDEPENDENT TRUSTEES CBL & Associates Properties, Inc.
(real estate investment trust),
LAWRENCE H. COHN, M.D. (born 03/11/37) Director
Trustee
Brigham and Women's Hospital, Chief of J. DALE SHERRATT (born 09/23/38)
Cardiac Surgery; Harvard Medical School, Trustee
Professor of Surgery Insight Resources, Inc. (acquisition
planning specialists), President;
WILLIAM R. GUTOW (born 09/27/41) Wellfleet Investments (investor in
Trustee health care companies), Managing
Private investor and real estate General Partner (since 1993);
consultant; Cambridge Nutraceuticals
Capitol Entertainment Management Company (professional nutritional products),
(video franchise), Vice Chairman Chief Executive Officer (until May
2001)
J. ATWOOD IVES (born 05/01/36)
Trustee ELAINE R. SMITH (born 04/25/46)
Private investor; KeySpan Corporation Trustee
(energy related services), Director; Independent health care industry
Eastern Enterprises (diversified consultant
services company), Chairman, Trustee and
Chief Executive Officer (until November WARD SMITH (born 09/13/30)
2000) Trustee
Private investor
(1) Directorships or trusteeships of companies required to report to the
Securities and Exchange Commission (i.e., "public companies").
(2) "Interested person" of MFS within the meaning of the Investment Company Act
of 1940 (referred to as the 1940 Act) which is the principal federal law
governing investment companies like the Trust. The address of MFS is 500
Boylston Street, Boston, Massachusetts 02116.
Trustees and Officers - continued
OFFICERS
JEFFREY L. SHAMES (born 06/02/55) ROBERT R. FLAHERTY (born 09/18/63)
Chairman Assistant Treasurer
Massachusetts Financial Services Massachusetts Financial Services
Company, Chairman Company, Vice President (since
August 2000); UAM Fund Services,
JOHN W. BALLEN (born 09/12/59) Senior Vice President (prior to
Trustee and President August 2000)
Massachusetts Financial Services
Company, Chief Executive Officer and RICHARD M. HISEY (born 08/29/58)
Director Treasurer
Massachusetts Financial Services
JAMES R. BORDEWICK, JR. (born 03/06/59) Company, Senior Vice President
Assistant Secretary and Assistant Clerk (since July 2002); The Bank of New
Massachusetts Financial Services York, Senior Vice President
Company, Senior Vice President and (September 2000 to July 2002);
Associate General Counsel Lexington Global Asset Managers,
Inc., Executive Vice President and
STEPHEN E. CAVAN (born 11/06/53) Chief Financial Officer,
Secretary and Clerk General Manager, Mutual Funds (prior
Massachusetts Financial Services to September 2000)
Company, Senior Vice President, General
Counsel and Secretary
ELLEN MOYNIHAN (born 11/13/57)
STEPHANIE A. DESISTO (born 10/1/53) Assistant Treasurer
Assistant Treasurer Massachusetts Financial Services
Massachusetts Financial Services Company,
Company, Vice President (since April Vice President
2003); Brown Brothers Harriman & Co.,
Senior Vice President (November 2002 to JAMES O. YOST (born 06/12/60)
April 2003); ING Groep N.V./Aeltus Assistant Treasurer
Investment Management, Senior Vice Massachusetts Financial Services
President (prior to November 2002) Company, Senior Vice President
The Trust does not hold annual shareholder meetings for the purpose of
electing Trustees, and Trustees are not elected for fixed terms. This means
that each Trustee will be elected to hold office until his or her successor is
chosen and qualified or until his or her earlier death, resignation,
retirement or removal. Each officer will hold office until his or her
successor is chosen and qualified, or until he or she retires, resigns or is
removed from office.
Messrs. Shames, Cohn, Sherratt and Smith, and Ms. O'Neill, have served in
their capacity as Trustee of the Trust continuously since originally elected
or appointed. Messrs. Ballen, Gutow, Ives, Perera and Poorvu, and Ms. Smith
were elected by shareholders and have served as Trustees of the Trust
since January 1, 2002. Mr. Parke has served as Trustee of the Trust since
January 1, 2002.
Each of the Trust's Trustees and officers holds comparable positions with
certain other funds of which MFS or a subsidiary is the investment adviser or
distributor and, in the case of the officers, with certain affiliates of MFS.
Each Trustee serves as a board member of 112 funds within the MFS Family of
Funds.
The Statement of Additional Information contains further information about the
Trustees and is available without charge upon request, by calling
1-800-225-2606.
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INVESTMENT ADVISER CUSTODIANS
Massachusetts Financial Services Company State Street Bank and Trust Company
500 Boylston Street, Boston, MA 225 Franklin Street, Boston, MA
02116-3741 02110
DISTRIBUTOR JP Morgan Chase Bank
MFS Fund Distributors, Inc. One Chase Manhattan Plaza
500 Boylston Street, Boston, MA New York, NY 10081
02116-3741
PORTFOLIO MANAGER
Maura Shaughnessy(1)
(1)MFS Investment Management
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MONEY MANAGEMENT FOR ALL TYPES OF INVESTORS
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YOUR GOALS ARE IMPORTANT
MFS offers a complete range of investments and investment services to address
specific financial needs over time. When your investing goals change, you can
easily stay with MFS for the products you need, when you need them. Whether
you're investing for college or retirement expenses or for tax management or
estate planning, MFS will be there.
Ask your investment professional how MFS can help you move toward the goals
you've set.
MFS FAMILY OF FUNDS(R)
More than 50 portfolios offer domestic and international
equity and fixed-income investment across the full risk
spectrum
VARIABLE ANNUITIES
A selection of annuity products with advantages for
building and preserving wealth
MFS 401(k) AND IRA SUITES
Retirement plans for businesses and individuals
MFS COLLEGE SAVINGS PLANS
Investment products to help meet education expenses
MFS PRIVATE PORTFOLIO SERVICES
Investment advisory services that provide custom products
for high-net-worth individuals
You can obtain a prospectus for any MFS product from your investment
professional. The prospectus contains complete information on the fees and
risks associated with investing. Read the prospectus carefully before
investing or sending money.
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CONTACT INFORMATION
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INVESTOR INFORMATION
For information on MFS mutual funds, call your investment professional or, for
an information kit, call toll free: 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
INVESTOR SERVICE
Write to us at: MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
Type of Information Phone number Hours, Eastern Time
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General information 1-800-225-2606 8 a.m. to 8 p.m., any
business day
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Speech- or hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m., any
business day
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Shares prices, account 1-800-MFS-TALK
balances (1-800-637-8255)
exchanges or stock and touch-tone required 24 hours a day, 365 days a
bond outlooks year
- --------------------------------------------------------------------------------
WORLD WIDE WEB
Go to WWW.MFS.COM for a clear view of market events, investor education,
account access, and product and performance insights.
Go paperless with EDELIVERY: Join your fellow shareholders who are already
taking advantage of this great new benefit from MFS. With eDelivery, we send
you prospectuses, reports, and proxies electronically. You get timely
information without mailbox clutter (and help your fund save printing and
postage costs).
SIGN-UP instructions: If your account is registered with us, go to
www.mfs.com, log in to your account via MFS Access, and select the eDelivery
sign up options.
If you own your MFS fund shares through a financial institution or through a
retirement plan, MFS Talk, MFS Access, and eDelivery may not be available
to you.
[MFS LOGO]
500 Boylston Street
Boston, MA 02116-3741
(C) 2003 MFS Investment Management(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.
500 Boylston Street, Boston, MA 02116
MMU-SEM-6/03 91M
ITEM 2. CODE OF ETHICS.
Not applicable at this time. Applicable for annual reports filed for fiscal
years ending on or after July 15, 2003.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time. Applicable for annual reports filed for fiscal
years ending on or after July 15, 2003.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time. Applicable for annual reports filed for the first
fiscal year ending after December 15, 2003.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
If applicable, not applicable at this time. Applicable for annual reports
covering periods ending on or after the compliance date for the listing
standards applicable to the particular issuer. Listed issuers must be in
compliance with the new listing rules by the earlier of the registrant's first
annual shareholders meeting after January 15, 2004 or October 31, 2004.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
If applicable, not applicable at this time. Applicable for annual reports filed
on or after July 1, 2003.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures as conducted within 90 days of the filing date of this Form
N-CSR, the registrant's principal financial officer and principal
executive officer have concluded that those disclosure controls and
procedures provide reasonable assurance that the material information
requir ed to be disclosed by the registrant on this report is recorded,
processed, summarized and reported within the time periods specified in
the Securities and Exchange Commission's rules and forms.
(b) There were no significant changes in the registrant's internal controls
or in other factors that could significantly affect these controls
subsequent to the date of their evaluation.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of
the disclosure required by Item 2, to the extent that the registrant
intends to satisfy the Item 2 requirements through filing of an
exhibit: Not applicable.
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule
30a-2(a) under the Act (17 CFR 270.30a-2): Attached hereto.
[If the report is filed under Section 13(a) or 15(d) of the Exchange
Act, provide the certifications required by Rule 30a-2(b) under the Act
(17 CFR 270.30a-2(b)) and Section 1350 of Chapter 63 of Title 18 of the
United States Code (18 U.S.C. 1350) as an exhibit. A certification
furnished pursuant to this paragraph will not be deemed "filed" for the
purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or
otherwise subject to the liability of that section. Such certification
will not be deemed to be incorporated by reference into any filing
under the Securities Act of 1933 or the Exchange Act, except to the
extent that the registrant specifically incorporates it by reference:
Attached hereto.][The submission of Section 906 certifications has been
proposed by the SEC, but has not yet been finalized. The SEC has
encouraged issuers to submit Section 906 certifications as an exhibit
to Form N-CSR until the final rule has been adopted. Please see
Proposed Rule: Certification of Disclosure in Certain Exchange Act
Reports, Release No. 33-8212 (March 21, 2003)].
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) MFS SERIES TRUST VI
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By (Signature and Title)* /s/ JOHN W. BALLEN
---------------------------------------------------
John W. Ballen, President
Date: June 23, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ JOHN W. BALLEN
----------------------------------------------------
John W. Ballen, President
(Principal Executive Officer)
Date: June 23, 2003
By (Signature and Title)* /s/ RICHARD M. HISEY
-----------------------------------------------
Richard M. Hisey, Treasurer
(Principal Financial Officer and
Accounting Officer)
Date: June 23, 2003
* Print name and title of each signing officer under his or her signature.