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 811-3090
- -------------------------------------------------------------------------------
MFS SERIES TRUST VII
- -------------------------------------------------------------------------------
(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)
Susan S. Newton
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
- -------------------------------------------------------------------------------
(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: November 30
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Date of reporting period: May 31, 2007
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ITEM 1. REPORTS TO STOCKHOLDERS.
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
SEMIANNUAL REPORT
MFS(R) CAPITAL OPPORTUNITIES FUND
LETTER FROM THE CEO 1
- -------------------------------------------------------
PORTFOLIO COMPOSITION 2
- -------------------------------------------------------
EXPENSE TABLE 3
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS 5
- -------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 10
- -------------------------------------------------------
STATEMENT OF OPERATIONS 13
- -------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 14
- -------------------------------------------------------
FINANCIAL HIGHLIGHTS 15
- -------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 25
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BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 37
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PROXY VOTING POLICIES AND INFORMATION 37
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QUARTERLY PORTFOLIO DISCLOSURE 37
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CONTACT INFORMATION BACK COVER
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THE 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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NOT FDIC INSURED o MAY LOSE VALUE o
NO BANK OR CREDIT UNION GUARANTEE o NOT A DEPOSIT o
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR
NCUA/NCUSIF
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5/31/07
MVF-SEM
[Photo of Robert J. Manning]
LETTER FROM THE CEO
Dear Shareholders:
The past year has been a great example of why investors should keep their eyes
on the long term.
In 2006 the Dow Jones Industrial Average returned 19%. As of mid-May 2007, it
had returned another 8% and continued to reach new highs. But the Dow's upward
rise has not been without hiccups. After hitting new records in February, the
Dow lost 5.8% between February 20 and March 5, as stocks were sold off around
the globe. As we have said before, markets are volatile, and investors should
make sure they have an investment plan that can carry them through the peaks
and troughs.
If you are focused on a long-term investment strategy, the short-term ups and
downs of the markets should not necessarily dictate portfolio action on your
part. Both the bond and stock markets are cyclical. In our view, investors who
remain committed to a long-term plan are more likely to achieve their financial
goals. We believe you should not let the headlines guide you in your investment
decisions and should be cautious about overreacting to short-term volatility.
In any market environment, we believe individual investors are best served by
following a three-pronged investment strategy of allocating their holdings
across the major asset classes, diversifying within each class, and regularly
rebalancing their portfolios to maintain their desired allocations. Of course,
these strategies cannot guarantee a profit or protect against a loss. Investing
and planning for the long term require diligence and patience, two traits that
in our experience are essential to capitalizing on the many opportunities the
financial markets can offer -- through both up and down economic cycles.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
July 16, 2007
The opinions expresed in this letter ar esubject to change, may not be relied
upon for investment advice, and no forecasts can be guaranteed.
PORTFOLIO COMPOSITION
PORTFOLIO STRUCTURE
Common Stocks 96.7%
Cash & Other Net Assets 3.3%
TOP TEN HOLDINGS
Amgen, Inc. 3.1%
------------------------------------------------
Johnson & Johnson 2.8%
------------------------------------------------
Nestle S.A. 2.7%
------------------------------------------------
Wyeth 2.3%
------------------------------------------------
Travelers Cos., Inc. 2.3%
------------------------------------------------
Bayerische Motoren Werke AG 2.3%
------------------------------------------------
Global Payments, Inc. 2.1%
------------------------------------------------
Genzyme Corp. 2.1%
------------------------------------------------
Berkshire Hathaway, Inc., "B" 2.1%
------------------------------------------------
Tyco International Ltd. 2.0%
------------------------------------------------
EQUITY SECTORS
Financial Services 19.0%
------------------------------------------------
Health Care 19.0%
------------------------------------------------
Technology 13.4%
------------------------------------------------
Energy 8.3%
------------------------------------------------
Retailing 8.2%
------------------------------------------------
Consumer Staples 6.6%
------------------------------------------------
Industrial Goods & Services 6.0%
------------------------------------------------
Special Products & Services 6.0%
------------------------------------------------
Basic Materials 3.8%
------------------------------------------------
Autos & Housing 3.2%
------------------------------------------------
Transportation 1.3%
------------------------------------------------
Leisure 1.1%
------------------------------------------------
Utilities & Communications 0.8%
------------------------------------------------
Percentages are based on net assets as of 5/31/07.
The portfolio is actively managed and current holdings may be different.
EXPENSE TABLE
Fund expenses borne by the shareholders during the period,
December 1, 2006 through May 31, 2007.
As a shareholder of the fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on certain purchase or redemption
payments and redemption fees on certain exchanges and redemptions, and (2)
ongoing costs, including management fees; distribution and service (12b-1)
fees; and other fund expenses. This example is intended to help you understand
your ongoing costs (in dollars) of investing in the fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning
of the period and held for the entire period December 1, 2006 through
May 31, 2007.
ACTUAL EXPENSES
The first line for each share class in the following table provides
information about actual account values and actual expenses. You may use the
information in this line, together with the amount you invested, to estimate
the expenses that you paid over the period. Simply divide your account value
by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the first line under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your
account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each share class in the following table provides
information about hypothetical account values and hypothetical expenses based
on the fund's actual expense ratio and an assumed rate of return of 5% per
year before expenses, which is not the fund's actual return. The hypothetical
account values and expenses may not be used to estimate the actual ending
account balance or expenses you paid for the period. You may use this
information to compare the ongoing costs of investing in the fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption fees. Therefore, the second line for each share
class in the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have
been higher.
- --------------------------------------------------------------------------------
Expenses
Paid During
Annualized Beginning Ending Period(p)
Share Expense Account Value Account Value 12/01/06-
Class Ratio 12/01/06 5/31/07 5/31/07
- --------------------------------------------------------------------------------
Actual 1.21% $1,000.00 $1,121.90 $6.40
A -----------------------------------------------------------------------
Hypothetical (h) 1.21% $1,000.00 $1,018.90 $6.09
- --------------------------------------------------------------------------------
Actual 1.96% $1,000.00 $1,117.40 $10.35
B -----------------------------------------------------------------------
Hypothetical (h) 1.96% $1,000.00 $1,015.16 $9.85
- --------------------------------------------------------------------------------
Actual 1.96% $1,000.00 $1,118.10 $10.35
C -----------------------------------------------------------------------
Hypothetical (h) 1.96% $1,000.00 $1,015.16 $9.85
- --------------------------------------------------------------------------------
Actual 0.96% $1,000.00 $1,123.30 $5.08
I -----------------------------------------------------------------------
Hypothetical (h) 0.96% $1,000.00 $1,020.14 $4.84
- --------------------------------------------------------------------------------
Actual 1.46% $1,000.00 $1,120.40 $7.72
R -----------------------------------------------------------------------
Hypothetical (h) 1.46% $1,000.00 $1,017.65 $7.34
- --------------------------------------------------------------------------------
Actual 2.06% $1,000.00 $1,117.00 $10.87
R1 -----------------------------------------------------------------------
Hypothetical (h) 2.06% $1,000.00 $1,014.66 $10.35
- --------------------------------------------------------------------------------
Actual 1.71% $1,000.00 $1,119.10 $9.03
R2 -----------------------------------------------------------------------
Hypothetical (h) 1.71% $1,000.00 $1,016.40 $8.60
- --------------------------------------------------------------------------------
Actual 1.61% $1,000.00 $1,119.30 $8.51
R3 -----------------------------------------------------------------------
Hypothetical (h) 1.61% $1,000.00 $1,016.90 $8.10
- --------------------------------------------------------------------------------
Actual 1.35% $1,000.00 $1,121.40 $7.14
R4 -----------------------------------------------------------------------
Hypothetical (h) 1.35% $1,000.00 $1,018.20 $6.79
- --------------------------------------------------------------------------------
Actual 1.06% $1,000.00 $1,122.80 $5.61
R5 -----------------------------------------------------------------------
Hypothetical (h) 1.06% $1,000.00 $1,019.65 $5.34
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads).
If these transaction costs had been included, your costs would have been
higher.
PORTFOLIO OF INVESTMENTS
5/31/07 (unaudited)
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Common Stocks - 96.7%
- -------------------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------
Aerospace - 1.7%
- -------------------------------------------------------------------------------------------------------------------------
United Technologies Corp. (l) 272,090 $ 19,195,950
- -------------------------------------------------------------------------------------------------------------------------
Alcoholic Beverages - 1.0%
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Diageo PLC 562,400 $ 11,990,237
- -------------------------------------------------------------------------------------------------------------------------
Apparel Manufacturers - 3.4%
- -------------------------------------------------------------------------------------------------------------------------
LVMH Moet Hennessy Louis Vuitton S.A. 144,200 $ 17,018,893
NIKE, Inc., "B" 389,240 22,089,370
---------------
$ 39,108,263
- -------------------------------------------------------------------------------------------------------------------------
Automotive - 3.2%
- -------------------------------------------------------------------------------------------------------------------------
Bayerische Motoren Werke AG 395,500 $ 26,483,876
Harley-Davidson, Inc. (l) 183,500 11,210,015
---------------
$ 37,693,891
- -------------------------------------------------------------------------------------------------------------------------
Biotechnology - 7.0%
- -------------------------------------------------------------------------------------------------------------------------
Amgen, Inc. (a)(l) 647,870 $ 36,494,517
Genzyme Corp. (a)(l) 374,681 24,174,418
Millipore Corp. (a)(l) 279,710 20,913,917
---------------
$ 81,582,852
- -------------------------------------------------------------------------------------------------------------------------
Broadcasting - 1.1%
- -------------------------------------------------------------------------------------------------------------------------
Viacom, Inc., "B" (a) 287,919 $ 12,933,321
- -------------------------------------------------------------------------------------------------------------------------
Brokerage & Asset Managers - 2.6%
- -------------------------------------------------------------------------------------------------------------------------
Affiliated Managers Group, Inc. (a)(l) 115,890 $ 15,088,878
Franklin Resources, Inc. (l) 111,950 15,196,093
---------------
$ 30,284,971
- -------------------------------------------------------------------------------------------------------------------------
Business Services - 4.1%
- -------------------------------------------------------------------------------------------------------------------------
Corporate Executive Board Co. (l) 78,600 $ 5,227,686
Fidelity National Information Services, Inc. (l) 124,600 6,718,432
Getty Images, Inc. (a) 225,000 11,261,250
Global Payments, Inc. (l) 624,000 24,984,960
---------------
$ 48,192,328
- -------------------------------------------------------------------------------------------------------------------------
Computer Software - 3.0%
- -------------------------------------------------------------------------------------------------------------------------
Oracle Corp. (a)(l) 1,052,719 $ 20,401,694
Symantec Corp. (a)(l) 705,339 14,099,727
---------------
$ 34,501,421
- -------------------------------------------------------------------------------------------------------------------------
Computer Software - Systems - 1.6%
- -------------------------------------------------------------------------------------------------------------------------
Dell, Inc. (a)(l) 707,340 $ 19,006,226
- -------------------------------------------------------------------------------------------------------------------------
Consumer Goods & Services - 2.3%
- -------------------------------------------------------------------------------------------------------------------------
eBay, Inc. (a)(l) 647,200 $ 21,072,832
Kimberly-Clark de Mexico S.A. de C.V., "A" 1,187,300 5,028,515
---------------
$ 26,101,347
- -------------------------------------------------------------------------------------------------------------------------
Containers - 1.5%
- -------------------------------------------------------------------------------------------------------------------------
Owens-Illinois, Inc. (a)(l) 522,560 $ 17,767,040
- -------------------------------------------------------------------------------------------------------------------------
Electrical Equipment - 4.2%
- -------------------------------------------------------------------------------------------------------------------------
Hubbell, Inc., "B" (l) 173,600 $ 9,778,888
Rockwell Automation, Inc. (l) 94,200 6,410,310
Tyco International Ltd. (l) 713,597 23,805,596
WESCO International, Inc. (a)(l) 142,400 9,230,368
---------------
$ 49,225,162
- -------------------------------------------------------------------------------------------------------------------------
Electronics - 3.3%
- -------------------------------------------------------------------------------------------------------------------------
Intel Corp. 1,013,660 $ 22,472,842
Samsung Electronics Co. Ltd., GDR 55,708 15,960,342
---------------
$ 38,433,184
- -------------------------------------------------------------------------------------------------------------------------
Energy - Integrated - 5.0%
- -------------------------------------------------------------------------------------------------------------------------
Exxon Mobil Corp. (l) 160,670 $ 13,362,924
Hess Corp. 364,910 21,609,970
TOTAL S.A., ADR 298,800 22,544,460
---------------
$ 57,517,354
- -------------------------------------------------------------------------------------------------------------------------
Engineering - Construction - 0.1%
- -------------------------------------------------------------------------------------------------------------------------
AECOM Technology Corp. 68,810 $ 1,575,749
- -------------------------------------------------------------------------------------------------------------------------
Food & Beverages - 3.7%
- -------------------------------------------------------------------------------------------------------------------------
Nestle S.A. 79,777 $ 31,057,849
PepsiCo, Inc. 180,000 12,299,400
---------------
$ 43,357,249
- -------------------------------------------------------------------------------------------------------------------------
Food & Drug Stores - 1.8%
- -------------------------------------------------------------------------------------------------------------------------
CVS Corp. 538,700 $ 20,761,498
- -------------------------------------------------------------------------------------------------------------------------
Insurance - 5.9%
- -------------------------------------------------------------------------------------------------------------------------
Aflac, Inc. (l) 346,900 $ 18,337,134
Berkshire Hathaway, Inc., "B" (a) 6,590 23,888,750
Travelers Cos., Inc. 490,470 26,568,760
---------------
$ 68,794,644
- -------------------------------------------------------------------------------------------------------------------------
Internet - 0.9%
- -------------------------------------------------------------------------------------------------------------------------
Yahoo!, Inc. (a)(l) 365,070 $ 10,477,509
- -------------------------------------------------------------------------------------------------------------------------
Major Banks - 4.0%
- -------------------------------------------------------------------------------------------------------------------------
Bank of America Corp. (l) 288,706 $ 14,640,281
JPMorgan Chase & Co. 405,480 21,016,028
PNC Financial Services Group, Inc. (l) 140,270 10,351,926
---------------
$ 46,008,235
- -------------------------------------------------------------------------------------------------------------------------
Medical Equipment - 3.7%
- -------------------------------------------------------------------------------------------------------------------------
Advanced Medical Optics, Inc. (a)(l) 537,600 $ 18,869,760
DENTSPLY International, Inc. 199,400 7,206,316
Medtronic, Inc. (l) 326,050 17,336,079
---------------
$ 43,412,155
- -------------------------------------------------------------------------------------------------------------------------
Metals & Mining - 1.0%
- -------------------------------------------------------------------------------------------------------------------------
BHP Billiton Ltd., ADR (l) 229,650 $ 12,088,776
- -------------------------------------------------------------------------------------------------------------------------
Network & Telecom - 4.6%
- -------------------------------------------------------------------------------------------------------------------------
Cisco Systems, Inc. (a) 732,040 $ 19,706,517
Juniper Networks, Inc. (a)(l) 488,580 11,926,238
NICE Systems Ltd., ADR (a)(l) 562,244 21,303,425
---------------
$ 52,936,180
- -------------------------------------------------------------------------------------------------------------------------
Oil Services - 3.3%
- -------------------------------------------------------------------------------------------------------------------------
Dresser-Rand Group, Inc. (a)(l) 249,200 $ 8,871,520
GlobalSantaFe Corp. (l) 215,812 14,739,960
Noble Corp. (l) 162,120 14,978,267
---------------
$ 38,589,747
- -------------------------------------------------------------------------------------------------------------------------
Other Banks & Diversified Financials - 6.5%
- -------------------------------------------------------------------------------------------------------------------------
American Express Co. (l) 322,370 $ 20,947,603
Commerce Bancorp, Inc. (l) 499,150 17,230,658
Investors Financial Services Corp. 281,254 17,302,744
New York Community Bancorp, Inc. (l) 829,100 14,492,668
UBS AG 90,544 5,904,481
---------------
$ 75,878,154
- -------------------------------------------------------------------------------------------------------------------------
Pharmaceuticals - 8.3%
- -------------------------------------------------------------------------------------------------------------------------
Bayer AG 234,100 $ 16,847,731
Johnson & Johnson 517,830 32,763,104
Roche Holding AG 106,700 19,576,544
Wyeth (l) 462,259 26,737,061
---------------
$ 95,924,440
- -------------------------------------------------------------------------------------------------------------------------
Specialty Chemicals - 1.3%
- -------------------------------------------------------------------------------------------------------------------------
Praxair, Inc. (l) 216,130 $ 14,716,292
- -------------------------------------------------------------------------------------------------------------------------
Specialty Stores - 3.0%
- -------------------------------------------------------------------------------------------------------------------------
Advance Auto Parts, Inc. (l) 276,600 $ 11,456,772
CarMax, Inc. (a) 473,260 11,358,240
PetSmart, Inc. (l) 167,450 5,730,139
Staples, Inc. 232,600 5,828,956
---------------
$ 34,374,107
- -------------------------------------------------------------------------------------------------------------------------
Tobacco - 1.5%
- -------------------------------------------------------------------------------------------------------------------------
Altria Group, Inc. 237,130 $ 16,859,943
- -------------------------------------------------------------------------------------------------------------------------
Trucking - 1.3%
- -------------------------------------------------------------------------------------------------------------------------
United Parcel Service, Inc., "B" (l) 213,800 $ 15,387,186
- -------------------------------------------------------------------------------------------------------------------------
Utilities - Electric Power - 0.8%
- -------------------------------------------------------------------------------------------------------------------------
NRG Energy, Inc. (a) 111,280 $ 9,780,399
- -------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $986,835,746) $ 1,124,455,810
- -------------------------------------------------------------------------------------------------------------------------
Short-Term Obligations - 3.5%
- -------------------------------------------------------------------------------------------------------------------------
General Electric Co., 5.3%, due 6/01/07, at Amortized
Cost and Value (y) $ 41,071,000 $ 41,071,000
- -------------------------------------------------------------------------------------------------------------------------
Collateral for Securities Loaned - 14.2%
- -------------------------------------------------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio, at Cost and
Net Asset Value 165,654,545 $ 165,654,545
- -------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements - 0.0%
- -------------------------------------------------------------------------------------------------------------------------
Merrill Lynch, 5.31%, dated 5/31/07, due 6/01/07, total to be
received $282,042 (secured by various U.S. Treasury and
Federal Agency obligations and Mortgage Backed securities in
a jointly traded account), at Cost $ 282,000 $ 282,000
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $1,193,843,291) $ 1,331,463,355
- -------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (14.4)% (167,841,877)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 1,163,621,478
- -------------------------------------------------------------------------------------------------------------------------
(a) Non-income producing security.
(l) All or a portion of this security is on loan.
(y) The rate shown represents an annualized yield at time of purchase.
The following abbreviations are used in this report and are defined:
ADR American Depository Receipt
GDR Global Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 5/31/07 (unaudited)
This statement represents your fund's balance sheet, which details the assets and liabilities comprising the
total value of the fund.
ASSETS
- -------------------------------------------------------------------------------------------------------
Investments, at value, including $181,951,845 of securities
on loan (identified cost, $1,193,843,291) $1,331,463,355
Cash 1,839
Receivable for fund shares sold 192,394
Interest and dividends receivable 1,633,558
Other assets 12,322
- -------------------------------------------------------------------------------------------------------
Total assets $1,333,303,468
- -------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------
Payable for fund shares reacquired $2,895,236
Collateral for securities loaned, at value (c) 165,654,545
Payable to affiliates
Management fee 41,901
Shareholder servicing costs 744,315
Distribution and service fees 33,506
Administrative services fee 1,148
Retirement plan administration and services fees 60
Payable for independent trustees' compensation 230,168
Accrued expenses and other liabilities 81,111
- -------------------------------------------------------------------------------------------------------
Total liabilities $169,681,990
- -------------------------------------------------------------------------------------------------------
Net assets $1,163,621,478
- -------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- -------------------------------------------------------------------------------------------------------
Paid-in capital $3,342,849,359
Unrealized appreciation (depreciation) on investments and
translation of assets and liabilities in foreign currencies 137,617,341
Accumulated net realized gain (loss) on investments and
foreign currency transactions (2,316,436,919)
Accumulated net investment loss (408,303)
- -------------------------------------------------------------------------------------------------------
Net assets $1,163,621,478
- -------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 69,851,912
- -------------------------------------------------------------------------------------------------------
(c) Non-cash collateral not included.
Statement of Assets and Liabilities (unaudited) - continued
Class A shares
- -------------------------------------------------------------------------------------------------------
Net assets $696,674,687
Shares outstanding 40,271,110
- -------------------------------------------------------------------------------------------------------
Net asset value per share $17.30
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/94.25Xnet asset value per share) $18.36
- -------------------------------------------------------------------------------------------------------
Class B shares
- -------------------------------------------------------------------------------------------------------
Net assets $334,833,982
Shares outstanding 21,326,321
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $15.70
- -------------------------------------------------------------------------------------------------------
Class C shares
- -------------------------------------------------------------------------------------------------------
Net assets $100,136,040
Shares outstanding 6,411,397
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $15.62
- -------------------------------------------------------------------------------------------------------
Class I shares
- -------------------------------------------------------------------------------------------------------
Net assets $21,829,408
Shares outstanding 1,241,882
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $17.58
- -------------------------------------------------------------------------------------------------------
Class R shares
- -------------------------------------------------------------------------------------------------------
Net assets $4,796,835
Shares outstanding 280,243
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $17.12
- -------------------------------------------------------------------------------------------------------
Class R1 shares
- -------------------------------------------------------------------------------------------------------
Net assets $1,307,282
Shares outstanding 83,461
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $15.66
- -------------------------------------------------------------------------------------------------------
Class R2 shares
- -------------------------------------------------------------------------------------------------------
Net assets $162,953
Shares outstanding 10,329
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $15.78
- -------------------------------------------------------------------------------------------------------
Class R3 shares
- -------------------------------------------------------------------------------------------------------
Net assets $2,573,003
Shares outstanding 151,487
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $16.98
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued
Class R4 shares
- -------------------------------------------------------------------------------------------------------
Net assets $1,239,562
Shares outstanding 71,782
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $17.27
- -------------------------------------------------------------------------------------------------------
Class R5 shares
- -------------------------------------------------------------------------------------------------------
Net assets $67,726
Shares outstanding 3,900
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $17.37
- -------------------------------------------------------------------------------------------------------
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.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF OPERATIONS
Six months ended 5/31/07 (unaudited)
This statement describes how much your fund earned in investment income and accrued in expenses.
It also describes any gains and/or losses generated by fund operations.
NET INVESTMENT LOSS
- ------------------------------------------------------------------------------------------------------
Income
Dividends $7,882,563
Interest 862,565
Other 80,499
Foreign taxes withheld (339,660)
- ------------------------------------------------------------------------------------------------------
Total investment income $8,485,967
- ------------------------------------------------------------------------------------------------------
Expenses
Management fee $4,349,057
Distribution and service fees 3,111,916
Program manager fees 430
Shareholder servicing costs 1,151,641
Administrative services fee 104,837
Retirement plan administration and services fees 5,579
Independent trustees' compensation 44,964
Custodian fee 186,958
Shareholder communications 95,961
Auditing fees 23,931
Legal fees 13,769
Miscellaneous 121,666
- ------------------------------------------------------------------------------------------------------
Total expenses $9,210,709
- ------------------------------------------------------------------------------------------------------
Fees paid indirectly (6,144)
Reduction of expenses by investment adviser (526,047)
- ------------------------------------------------------------------------------------------------------
Net expenses $8,678,518
- ------------------------------------------------------------------------------------------------------
Net investment loss $(192,551)
- ------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis)
Investment transactions $90,117,084
Foreign currency transactions 18,967
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions $90,136,051
- ------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
Investments $41,490,691
Translation of assets and liabilities in foreign currencies (1,667)
- ------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments and foreign
currency translation $41,489,024
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and
foreign currency $131,625,075
- ------------------------------------------------------------------------------------------------------
Change in net assets from operations $131,432,524
- ------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
These statements describe the increases and/or decreases in net assets resulting from operations, any distributions,
and any shareholder transactions.
SIX MONTHS ENDED YEAR ENDED
5/31/07 11/30/06
(UNAUDITED)
CHANGE IN NET ASSETS
FROM OPERATIONS
- -------------------------------------------------------------------------------------------------------
Net investment loss $(192,551) $(4,118,377)
Net realized gain (loss) on investments and foreign
currency transactions 90,136,051 202,324,442
Net unrealized gain (loss) on investments and foreign
currency translation 41,489,024 (14,285,390)
- -------------------------------------------------------------------------------------------------------
Change in net assets from operations $131,432,524 $183,920,675
- -------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(176,959,769) $(604,017,579)
- -------------------------------------------------------------------------------------------------------
Total change in net assets $(45,527,245) $(420,096,904)
- -------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------
At beginning of period 1,209,148,723 1,629,245,627
At end of period (including accumulated net investment
loss of $408,303 and $215,752, respectively) $1,163,621,478 $1,209,148,723
- -------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's financial performance for the semiannual period
and the past 5 fiscal years (or life of a particular share class, if shorter). Certain information reflects financial results
for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on
an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 11/30
ENDED -------------------------------------------------------------------------------
CLASS A 5/31/07 2006 2005 2004 2003 2002
(UNAUDITED)
Net asset value,
beginning of period $15.42 $13.36 $12.83 $11.36 $10.08 $13.08
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income
(loss) (d) $0.02 $(0.00)(w) $0.02 $0.06 $0.01 $(0.02)
Net realized and unrealized
gain (loss) on investments
and foreign currency 1.86 2.06 0.56 1.41 1.27 (2.98)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations $1.88 $2.06 $0.58 $1.47 $1.28 $(3.00)
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $-- $-- $(0.05) $-- $-- $--
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $17.30 $15.42 $13.36 $12.83 $11.36 $10.08
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 12.19(n) 15.42 4.54 12.94(b) 12.70 (22.94)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense
reductions (f) 1.30(a) 1.30 1.30 1.28 1.29 1.30
Expenses after expense
reductions (f) 1.21(a) 1.21 1.21 1.20 1.25 1.23
Net investment income (loss) 0.26(a) (0.01) 0.12 0.53 0.14 (0.18)
Portfolio turnover 22 102 62 73 63 95
Net assets at end of period
(000 omitted) $696,675 $702,892 $961,213 $1,294,118 $1,481,073 $1,678,738
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED -------------------------------------------------------------------------
CLASS B 5/31/07 2006 2005 2004 2003 2002
(UNAUDITED)
Net asset value,
beginning of period $14.05 $12.26 $11.82 $10.54 $9.42 $12.32
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment loss (d) $(0.04) $(0.10) $(0.08) $(0.03) $(0.06) $(0.10)
Net realized and unrealized gain
(loss) on investments and foreign
currency 1.69 1.89 0.52 1.31 1.18 (2.80)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.65 $1.79 $0.44 $1.28 $1.12 $(2.90)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.70 $14.05 $12.26 $11.82 $10.54 $9.42
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 11.74(n) 14.60 3.72 12.14(b) 11.89 (23.54)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense
reductions (f) 2.05(a) 2.05 2.05 2.02 2.04 2.05
Expenses after expense
reductions (f) 1.96(a) 1.96 1.96 1.94 2.00 1.98
Net investment loss (0.50)(a) (0.76) (0.63) (0.23) (0.61) (0.94)
Portfolio turnover 22 102 62 73 63 95
Net assets at end of period
(000 omitted) $334,834 $371,052 $496,824 $696,034 $853,669 $936,956
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED -------------------------------------------------------------------------
CLASS C 5/31/07 2006 2005 2004 2003 2002
(UNAUDITED)
Net asset value,
beginning of period $13.97 $12.20 $11.76 $10.48 $9.37 $12.25
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment loss (d) $(0.04) $(0.10) $(0.08) $(0.03) $(0.06) $(0.10)
Net realized and unrealized gain
(loss) on investments and foreign
currency 1.69 1.87 0.52 1.31 1.17 (2.78)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.65 $1.77 $0.44 $1.28 $1.11 $(2.88)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.62 $13.97 $12.20 $11.76 $10.48 $9.37
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 11.81(n) 14.51 3.74 12.21(b) 11.85 (23.51)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense
reductions (f) 2.05(a) 2.05 2.05 2.02 2.05 2.05
Expenses after expense
reductions (f) 1.96(a) 1.96 1.96 1.94 2.01 1.98
Net investment loss (0.49)(a) (0.76) (0.63) (0.24) (0.61) (0.95)
Portfolio turnover 22 102 62 73 63 95
Net assets at end of period
(000 omitted) $100,136 $102,253 $128,510 $177,553 $228,101 $275,361
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED --------------------------------------------------------------------
CLASS I 5/31/07 2006 2005 2004 2003 2002
(UNAUDITED)
Net asset value, beginning of period $15.65 $13.52 $12.99 $11.46 $10.14 $13.13
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.04 $0.03 $0.05 $0.08 $0.04 $0.01
Net realized and unrealized gain (loss)
on investments and foreign currency 1.89 2.10 0.57 1.45 1.28 (3.00)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.93 $2.13 $0.62 $1.53 $1.32 $(2.99)
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $-- $-- $(0.09) $-- $-- $--
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.58 $15.65 $13.52 $12.99 $11.46 $10.14
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 12.33(n) 15.75 4.76 13.35(b) 13.02 (22.77)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.05(a) 1.05 1.05 1.07 1.04 1.05
Expenses after expense reductions (f) 0.96(a) 0.96 0.96 0.99 1.00 0.98
Net investment income 0.50(a) 0.24 0.38 0.59 0.37 0.07
Portfolio turnover 22 102 62 73 63 95
Net assets at end of period
(000 omitted) $21,829 $22,780 $30,034 $35,836 $80,341 $77,534
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED ------------------------------------------------------------
CLASS R 5/31/07 2006 2005 2004 2003(i)
(UNAUDITED)
Net asset value, beginning of period $15.28 $13.27 $12.78 $11.34 $9.32
- ----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $(0.00)(w) $(0.04) $(0.01) $0.09 $(0.00)(w)
Net realized and unrealized gain (loss) on
investments and foreign currency 1.84 2.05 0.56 1.35 2.02
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.84 $2.01 $0.55 $1.44 $2.02
- ----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------------------
From net investment income $-- $-- $(0.06) $-- $--
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.12 $15.28 $13.27 $12.78 $11.34
- ----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 12.04(n) 15.15 4.28 12.70(b) 21.67(n)
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.55(a) 1.56 1.54 1.45 1.53(a)
Expenses after expense reductions (f) 1.46(a) 1.47 1.45 1.37 1.49(a)
Net investment income (loss) (0.02)(a) (0.27) (0.11) 0.77 (0.04)(a)
Portfolio turnover 22 102 62 73 63
Net assets at end of period
(000 omitted) $4,797 $5,817 $9,221 $4,902 $638
- ----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED ----------------------------
CLASS R1 5/31/07 2006 2005(i)
(UNAUDITED)
Net asset value, beginning of period $14.02 $12.25 $11.82
- --------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------
Net investment loss (d) $(0.04) $(0.11) $(0.07)
Net realized and unrealized gain (loss) on
investments and foreign currency 1.68 1.88 0.50
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.64 $1.77 $0.43
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.66 $14.02 $12.25
- --------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 11.70(n) 14.45 3.64(n)
- --------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.21(a) 2.24 2.30(a)
Expenses after expense reductions (f) 2.06(a) 2.05 2.16(a)
Net investment loss (0.55)(a) (0.84) (0.78)(a)
Portfolio turnover 22 102 62
Net assets at end of period
(000 omitted) $1,307 $1,023 $649
- --------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED -----------------------------
CLASS R2 5/31/07 2006 2005(i)
(UNAUDITED)
Net asset value, beginning of period $14.10 $12.27 $11.82
- --------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------
Net investment loss (d) $(0.02) $(0.06) $(0.04)
Net realized and unrealized gain (loss) on
investments and foreign currency 1.70 1.89 0.49
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.68 $1.83 $0.45
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.78 $14.10 $12.27
- --------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 11.91(n) 14.91 3.81(n)
- --------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.89(a) 1.98 1.97(a)
Expenses after expense reductions (f) 1.71(a) 1.74 1.82(a)
Net investment loss (0.24)(a) (0.51) (0.47)(a)
Portfolio turnover 22 102 62
Net assets at end of period
(000 omitted) $163 $86 $263
- --------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED ------------------------------------------------------------
CLASS R3 5/31/07 2006 2005 2004 2003(i)
(UNAUDITED)
Net asset value, beginning of period $15.17 $13.20 $12.75 $11.34 $11.22
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $(0.01) $(0.06) $(0.04) $0.09 $0.00(w)
Net realized and unrealized gain (loss) on
investments and foreign currency 1.82 2.03 0.55 1.32 0.12
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.81 $1.97 $0.51 $1.41 $0.12
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
From net investment income $-- $-- $(0.06) $-- $--
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.98 $15.17 $13.20 $12.75 $11.34
- -----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 11.93(n) 14.92 4.04 12.43(b) 1.07(n)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.76(a) 1.80 1.78 1.55 1.33(a)
Expenses after expense reductions (f) 1.61(a) 1.61 1.67 1.47 1.29(a)
Net investment income (loss) (0.10)(a) (0.41) (0.29) 0.86 0.24(a)
Portfolio turnover 22 102 62 73 63
Net assets at end of period
(000 omitted) $2,573 $1,995 $1,932 $435 $5
- -----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED -----------------------------
CLASS R4 5/31/07 2006 2005(i)
(UNAUDITED)
Net asset value, beginning of period $15.40 $13.35 $12.82
- --------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.02 $(0.02) $0.01
Net realized and unrealized gain (loss) on
investments and foreign currency 1.85 2.07 0.52
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.87 $2.05 $0.53
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.27 $15.40 $13.35
- --------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 12.14(n) 15.36 4.13(n)
- --------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.44(a) 1.45 1.40(a)
Expenses after expense reductions (f) 1.35(a) 1.36 1.31(a)
Net investment income (loss) 0.26(a) (0.16) 0.11(a)
Portfolio turnover 22 102 62
Net assets at end of period
(000 omitted) $1,240 $669 $105
- --------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED ----------------------------
CLASS R5 5/31/07 2006 2005(i)
(UNAUDITED)
Net asset value, beginning of period $15.47 $13.38 $12.82
- --------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.03 $0.02 $0.04
Net realized and unrealized gain (loss) on
investments and foreign currency 1.87 2.07 0.52
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.90 $2.09 $0.56
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.37 $15.47 $13.38
- --------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 12.28(n) 15.62 4.37(n)
- --------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.15(a) 1.15 1.06(a)
Expenses after expense reductions (f) 1.06(a) 1.05 0.97(a)
Net investment income 0.43(a) 0.15 0.43(a)
Portfolio turnover 22 102 62
Net assets at end of period
(000 omitted) $68 $60 $52
- --------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2004 and 2005 fiscal years resulted in a per share impact of less than $0.01.
(a) Annualized.
(b) The fund's net asset value and total return calculation include a non-recurring accrual recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales. The
non-recurring accrual resulted in an increase in the net asset value of $0.01 per share based on shares outstanding on the
day the proceeds were recorded. Excluding the effect of this accrual from the ending net asset value per share, Class A,
Class B, Class C, Class I, Class R and Class R3 total returns for the year ended November 30, 2004 would have been lower by
0.12%.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(i) For the period from the class' inception, December 31, 2002 (Class R), October 31, 2003 (Class R3), and April 1, 2005
(Classes R1, R2, R4, and R5) through the stated period end.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
Excluding the effect of the proceeds received from a non-recurring litigation against Dynegy, Inc., the total return for
the year ended November 30, 2006 would have been lower by approximately 0.48%.
(t) Total returns do not include any applicable sales charges.
(w) Per share amount was less than $0.01.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(unaudited)
(1) BUSINESS AND ORGANIZATION
MFS Capital Opportunities Fund (the fund) is a series of MFS Series Trust VII
(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 U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The fund can
invest in foreign securities, including securities of emerging market issuers.
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. The
markets of emerging market countries are generally more volatile than the
markets of developed countries with more mature economies. All of the risks of
investing in foreign securities previously described are heightened when
investing in emerging markets countries.
INVESTMENT VALUATIONS - Equity securities, including restricted equity
securities, are generally valued at the last sale or official closing price as
reported by an independent pricing service on the market or exchange on which
they are primarily traded. For securities for which there were no sales reported
that day, equity securities are generally valued at the last quoted daily bid
quotation as reported by an independent pricing service on the market or
exchange on which they are primarily traded. For securities held short for which
there were no sales reported for the day, the position is generally valued at
the last quoted daily ask quotation as reported by an independent pricing
service on the market or exchange on which such securities are primarily traded.
Short-term instruments with a maturity at issuance of 60 days or less may be
valued at amortized cost, which approximates market value. Open-end investment
companies are generally valued at their net asset value per share. Securities
and other assets generally valued on the basis of information from an
independent pricing service may also be valued at a broker-dealer bid quotation.
The values of foreign securities and other assets and liabilities expressed in
foreign currencies are converted to U.S. dollars using the mean of bid and asked
prices for rates reported by an independent pricing service.
The Board of Trustees has delegated primary responsibility for determining or
causing to be determined the value of the fund's investments (including any fair
valuation) to the adviser pursuant to valuation policies and procedures approved
by the Board. If the adviser determines that reliable market quotations are not
readily available, investments are valued at fair value as determined in good
faith by the adviser in accordance with such procedures under the oversight of
the Board of Trustees. Under the fund's valuation policies and procedures,
market quotations are not considered to be readily available for many types of
debt instruments and certain types of derivatives. These investments are
generally valued at fair value based on information from independent pricing
services. In addition, investments may be valued at fair value if the adviser
determines that an investment's value has been materially affected by events
occurring after the close of the exchange or market on which the investment is
principally traded (such as foreign exchange or market) and prior to the
determination of the fund's net asset value, or after the halting of trading of
a specific security where trading does not resume prior to the close of the
exchange or market on which the security is principally traded. Events that
occur on a frequent basis after foreign markets close (such as developments in
foreign markets and significant movements in the U.S. markets) and prior to the
determination of the fund's net asset value may be deemed to have a material
affect on the value of securities traded in foreign markets. Accordingly, the
fund's foreign equity securities may often be valued at fair value. The adviser
may rely on independent pricing services or other information (such as the
correlation with price movements of similar securities in the same or other
markets; the type, cost and investment characteristics of the security; the
business and financial condition of the issuer; and trading and other market
data) to assist in determining whether to fair value and at what value to fair
value an investment. The value of an investment for purposes of calculating the
fund's net asset value can differ depending on the source and method used to
determine value. When fair valuation is used, the value of investments used to
determine the fund's net asset value may differ from quoted or published prices
for the same investments.
In September 2006, FASB Statement No. 157, Fair Value Measurements (the
"Statement") was issued, and is effective for fiscal years beginning after
November 15, 2007 and for all interim periods within those fiscal years. This
Statement provides a single definition of fair value, a hierarchy for measuring
fair value and expanded disclosures about fair value measurements. Management is
evaluating the application of the Statement to the fund, and believes the impact
will be limited to expanded disclosures resulting from the adoption of this
Statement in the fund's financial statements.
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 and other funds managed by 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 - Purchases and sales of foreign investments,
income, and expenses are converted into U.S. dollars based upon currency
exchange rates prevailing on the respective dates of such transactions. Gains
and losses attributable to foreign currency exchange rates on sales of
securities are recorded for financial statement purposes as net realized gains
and losses on investments. Gains and losses attributable to foreign exchange
rate movements on income and expenses are recorded for financial statement
purposes as foreign currency transaction gains and losses. That portion of both
realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed.
SECURITY LOANS - State Street Bank and Trust Company ("State Street"), as
lending agent, may loan the securities of the fund to certain qualified
institutions (the "Borrowers") approved by the fund. The loans are
collateralized at all times by cash and/or U.S. Treasury securities in an amount
at least equal to the market value of the securities loaned. State Street
provides the fund with indemnification against Borrower default. The fund bears
the risk of loss with respect to the investment of cash collateral. On loans
collateralized by cash, the cash collateral is invested in a money market fund
or 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 agent. On loans collateralized by U.S. Treasury
securities, a fee is received from the Borrower, and is allocated between the
fund and the lending agent. Net income from securities lending is included in
interest income on the Statement of Operations. The dividend and interest income
earned on the securities loaned is accounted for in the same manner as other
dividend and interest income.
At May 31, 2007, the value of the securities loaned was $181,951,845. These
loans were collateralized by cash of $165,654,545 and U.S. Treasury obligations
of $20,574,732.
INDEMNIFICATIONS - Under the fund's organizational documents, its officers and
trustees may be indemnified against certain liabilities and expenses arising out
of the performance of their duties to the fund. Additionally, in the normal
course of business, the fund enters into agreements with service providers that
may contain indemnification clauses. The fund's maximum exposure under these
agreements is unknown as this would involve future claims that may be made
against the fund that have not yet occurred.
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 U.S. 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. Certain dividends from
foreign securities will be recorded when the fund is informed of the dividend if
such information is obtained subsequent to the ex- dividend date. Dividend and
interest payments received in additional securities are recorded on the
ex-dividend or ex-interest date in an amount equal to the value of the security
on such date.
The fund may receive proceeds from litigation settlements. Any proceeds received
from litigation involving portfolio holdings are reflected in the Statement of
Operations in realized gain/loss if the security has been disposed of by the
fund or in unrealized gain/loss if the security is still held by the fund. Any
other proceeds from litigation not related to portfolio holdings are reflected
as other income in the Statement of Operations.
FEES PAID INDIRECTLY - The fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
fund. This amount, for the six months ended May 31, 2007, is shown as a
reduction of total expenses on the Statement of Operations.
TAX MATTERS AND DISTRIBUTIONS - The fund intends to qualify as a regulated
investment company, as defined under Subchapter M of the Internal Revenue
Code, and to distribute all of its taxable income, including realized capital
gains. Accordingly, no provision for federal income tax is required in the
financial statements. Foreign taxes, if any, have been accrued by the fund in
the accompanying financial statements.
Distributions to shareholders are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations, which may differ from U.S. generally accepted accounting
principles. Certain capital accounts in the financial statements are
periodically adjusted for permanent differences in order to reflect their tax
character. These adjustments have no impact on net assets or net asset value per
share. Temporary differences which arise from recognizing certain items of
income, expense, gain or loss in different periods for financial statement and
tax purposes will reverse at some time in the future. Distributions in excess of
net investment income or net realized gains are temporary overdistributions for
financial statement purposes resulting from differences in the recognition or
classification of income or distributions for financial statement and tax
purposes.
Book/tax differences primarily relate to net operating losses and wash sale loss
deferrals.
The fund declared no distributions for the year ended November 30, 2006.
The federal tax cost and the tax basis components of distributable earnings were
as follows:
AS OF 5/31/07
Cost of investments $1,195,140,280
----------------------------------------------------------
Gross appreciation $168,351,060
Gross depreciation (32,027,985)
----------------------------------------------------------
Net unrealized appreciation (depreciation) $136,323,075
AS OF 11/30/06
Capital loss carryforwards $(2,405,275,981)
Other temporary differences (216,808)
Net unrealized appreciation (depreciation) $94,832,384
The aggregate cost above includes prior fiscal year end tax adjustments.
As of November 30, 2006, the fund had capital loss carryforwards available to
offset future realized gains. Such losses expire as follows:
11/30/09 $(734,649,927)
11/30/10 (1,596,472,098)
11/30/11 (74,153,956)
---------------------------------------------------------
$(2,405,275,981)
In June 2006, FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (the "Interpretation") was issued, and is effective for fiscal years
beginning after December 15, 2006 and is to be applied to all open tax years as
of the effective date. On December 22, 2006, the SEC delayed the implementation
of the Interpretation for regulated investment companies for an additional six
months. This Interpretation prescribes a minimum threshold for financial
statement recognition of the benefit of a tax position taken or expected to be
taken in a tax return, and requires certain expanded disclosures. Management has
evaluated the application of the Interpretation to the fund, and has determined
that there is no impact resulting from the adoption of this Interpretation on
the fund's financial statements.
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. Class 529A,
Class 529B, and Class 529C shares closed on March 31, 2007.
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The fund has an investment advisory agreement with MFS to
provide overall investment management and related administrative services and
facilities to the fund. The management fee is computed daily and paid monthly at
an annual rate of 0.75% of the fund's average daily net assets.
As part of a settlement agreement with the New York Attorney General
concerning market timing and related matters, MFS has agreed to reduce the
management fee of the fund's average daily net assets to the following rates
for the period March 1, 2004 through February 28, 2009:
First $3 billion of average daily net assets 0.66%
Next $2 billion of average daily net assets 0.625%
Next $5 billion of average daily net assets 0.60%
Average daily net assets in excess of $10 billion 0.575%
For the six months ended May 31, 2007, this waiver amounted to $522,019 and is
reflected as a reduction of total expenses in the Statement of Operations. The
management fee incurred for the six months ended May 31, 2007 was equivalent to
an annual effective rate of 0.66% of the fund's average daily net assets.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of
MFS, as distributor, received $20,634 and $294 for the six months ended May 31,
2007, as its portion of the initial sales charge on sales of Class A and Class
529A shares of the fund, respectively.
The Board of Trustees has adopted a distribution plan for certain class shares
pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund's distribution plan provides that the fund will pay MFD for services
provided by MFD and financial intermediaries in connection with the distribution
and servicing of certain share classes. One component of the plan is a
distribution fee paid to MFD and another component of the plan is a service fee
paid to MFD. MFD may subsequently pay all, or a portion, of the distribution
and/or service fees to financial intermediaries.
Distribution Fee Plan Table:
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(d) RATE(e) FEE
Class A 0.10% 0.25% 0.35% 0.25% $850,390
Class B 0.75% 0.25% 1.00% 1.00% 1,739,302
Class C 0.75% 0.25% 1.00% 1.00% 496,451
Class R 0.25% 0.25% 0.50% 0.50% 13,368
Class R1 0.50% 0.25% 0.75% 0.75% 4,212
Class R2 0.25% 0.25% 0.50% 0.50% 232
Class R3 0.25% 0.25% 0.50% 0.50% 5,864
Class R4 -- 0.25% 0.25% 0.25% 981
Class 529A 0.25% 0.25% 0.50% 0.35% 325
Class 529B 0.75% 0.25% 1.00% 1.00% 584
Class 529C 0.75% 0.25% 1.00% 1.00% 207
- ---------------------------------------------------------------------------------------------------------------------
Total Distribution and Service Fees $3,111,916
(d) In accordance with the distribution plan for certain classes, the fund pays distribution and/or service fees up
to these annual percentage rates of each class' average daily net assets.
(e) The annual effective rates represent actual fees incurred under the distribution plan for the six months ended
May 31, 2007 based on each class' average daily net assets. Assets attributable to Class A shares sold prior to
October 1, 1989 are subject to a service fee of 0.15% annually. Payment of the 0.10% annual Class A distribution
fee is not yet in effect and will be implemented on such date as the fund's Board of Trustees may determine.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months of purchase.
Class B shares are subject to a contingent deferred sales charge in the event of
a shareholder redemption within six years of purchase. All contingent deferred
sales charges are paid to MFD and during the six months ended May 31, 2007, were
as follows:
AMOUNT
Class A $6,539
Class B $139,874
Class C $2,739
The fund has entered into and may from time to time enter into contracts with
program managers and other parties which administer the tuition programs
through which an investment in the fund's 529 share classes is made. The fund
has entered into an agreement with MFD pursuant to which MFD receives an
annual fee of up to 0.35% of the average daily net assets attributable to each
529 share class. The fee is based on average daily net assets and is currently
established at 0.25% annually of average daily net assets of the fund's 529
share classes. The fee may only be increased with the approval of the Board of
Trustees who oversees the fund. The services provided by MFD, or a third party
with which MFD contracts, include recordkeeping and tax reporting and account
services, as well as services designed to maintain the program's compliance
with the Internal Revenue Code and other regulatory requirements. Class 529A,
Class 529B, and Class 529C shares closed on March 31, 2007. Program manager
fees for the six months ended May 31, 2007, were as follows:
AMOUNT
Class 529A $232
Class 529B 146
Class 529C 52
--------------------------------------------------
Total Program Manager Fees $430
SHAREHOLDER SERVICING AGENT - MFS Service Center, Inc. (MFSC), a wholly-owned
subsidiary of MFS, receives a fee from the fund for its services as shareholder
servicing agent calculated as a percentage of the average daily net assets of
the fund as determined periodically under the supervision of the fund's Board of
Trustees. For the six months ended May 31, 2007, the fee was $337,103, which
equated to 0.0581% annually of the fund's average daily net assets. MFSC also
receives payment from the fund for out-of-pocket expenses, sub-accounting and
other shareholder servicing costs which may be paid to affiliated and
unaffiliated service providers. For the six months ended May 31, 2007, these
out-of-pocket expenses, sub-accounting and other shareholder servicing costs
amounted to $717,557. The fund may also pay shareholder servicing related costs
directly to non-related parties.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to the fund. Under
an administrative services agreement, the fund partially reimburses MFS the
costs incurred to provide these services. The fund is charged a fixed amount
plus a fee based on calendar year average net assets. The fund's annual fixed
amount is $17,500.
The administrative services fee incurred for the six months ended May 31, 2007
was equivalent to an annual effective rate of 0.0181% of the fund's average
daily net assets.
In addition to the administrative services provided by MFS to the fund as
described above, MFS is responsible for providing certain retirement plan
administration and services with respect to certain shares. These services
include various administrative, recordkeeping, and communication/educational
services with respect to the retirement plans which invest in these shares, and
may be provided directly by MFS or by a third party. MFS may subsequently pay
all, or a portion, of the retirement plan administration and services fee to
affiliated or unaffiliated third parties. For the six months ended May 31, 2007,
the fund paid MFS an annual retirement plan administration and services fee up
to the following annual percentage rates of each class' average daily net
assets:
BEGINNING OF ANNUAL
PERIOD THROUGH EFFECTIVE EFFECTIVE TOTAL
3/31/07 4/01/07 RATE(g) AMOUNT
Class R1 0.45% 0.35% 0.35% $2,317
Class R2 0.40% 0.25% 0.25% 160
Class R3 0.25% 0.15% 0.15% 2,483
Class R4 0.15% 0.15% 0.15% 588
Class R5 0.10% 0.10% 0.10% 31
- -----------------------------------------------------------------------------------------------------------------
Total Retirement Plan Administration and Services Fees $5,579
(g) Prior to April 1, 2007, MFS had agreed in writing to waive a portion of
the retirement plan administration and services fee equal to 0.10% for
Class R1, 0.15% for Class R2, and 0.10% for Class R3 shares. This
agreement was discontinued on March 31, 2007. On April 1, 2007, the annual
retirement plan administration and services fee for Class R1, Class R2,
and Class R3 shares was lowered to 0.35%, 0.25%, and 0.15%, respectively.
For the six months ended May 31, 2007, the waiver amounted to $1,118 and
is reflected as a reduction of total expenses in the Statement of
Operations.
TRUSTEES' AND OFFICERS' COMPENSATION - The fund pays compensation to independent
trustees in the form of a retainer, attendance fees, and additional compensation
to Board and Committee chairpersons. The fund does not pay compensation directly
to trustees or officers of the fund who are also officers of the investment
adviser, 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,
MFD, and MFSC. The fund has an unfunded, defined benefit plan for certain
retired independent trustees which resulted in a pension expense of $4,548. The
fund also has an unfunded retirement benefit deferral plan for certain
independent trustees which resulted in an expense of $22,133. Both amounts are
included in independent trustees' compensation for the six months ended May 31,
2007. The liability for deferred retirement benefits payable to certain
independent trustees under both plans amounted to $229,879 at May 31, 2007, and
is included in payable for independent trustees' compensation.
OTHER - This fund and certain other MFS funds (the funds) have entered into a
services agreement (the Agreement) which provides for payment of fees by the
funds to Tarantino LLC in return for the provision of services of an Independent
Chief Compliance Officer (ICCO) for the funds. The ICCO is an officer of the
funds and the sole member of Tarantino LLC. The funds can terminate the
Agreement with Tarantino LLC at any time under the terms of the Agreement. For
the six months ended May 31, 2007, the fee paid to Tarantino LLC was $4,539. MFS
has agreed to reimburse the fund for a portion of the payments made by the funds
to Tarantino LLC in the amount of $2,910, which is shown as a reduction of total
expenses in the Statement of Operations. Additionally, MFS has agreed to bear
all expenses associated with office space, other administrative support, and
supplies provided to the ICCO.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$249,498,556 and $440,073,387, respectively.
(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
5/31/07 11/30/06
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 3,773,747 $61,344,581 6,714,568 $93,631,364
Class B 555,554 8,181,184 1,258,995 16,073,856
Class C 146,414 2,140,411 273,967 3,480,982
Class I 66,394 1,075,869 172,444 2,421,826
Class R 30,105 477,537 77,683 1,070,122
Class R1 88,152 1,278,065 49,125 624,093
Class R2 4,360 67,623 3,263 40,560
Class R3 185,074 2,932,110 68,580 942,988
Class R4 80,551 1,289,214 45,240 620,176
Class R5 -- -- 6 75
Class 529A (c) 3,484 53,931 4,241 58,434
Class 529B (c) 1,111 15,623 659 8,535
Class 529C (c) 237 3,393 461 5,816
- ----------------------------------------------------------------------------------------------------------
4,935,183 $78,859,541 8,669,232 $118,978,827
Shares reacquired
Class A (9,087,533) $(145,985,122) (33,088,177) $(462,045,025)
Class B (5,645,561) (82,649,084) (15,367,666) (196,222,875)
Class C (1,052,819) (15,300,995) (3,493,453) (44,355,267)
Class I (280,329) (4,597,839) (938,126) (12,959,157)
Class R (130,692) (2,087,733) (391,987) (5,410,999)
Class R1 (77,688) (1,123,601) (29,146) (373,202)
Class R2 (102) (1,449) (18,615) (238,745)
Class R3 (165,101) (2,631,424) (83,512) (1,197,009)
Class R4 (52,221) (828,335) (9,649) (135,088)
Class R5 -- -- (6) (76)
Class 529A (c) (21,068) (332,608) (3,101) (42,213)
Class 529B (c) (14,536) (209,038) (620) (7,939)
Class 529C (c) (5,048) (72,082) (723) (8,811)
- ----------------------------------------------------------------------------------------------------------
(16,532,698) $(255,819,310) (53,424,781) $(722,996,406)
Net change
Class A (5,313,786) $(84,640,541) (26,373,609) $(368,413,661)
Class B (5,090,007) (74,467,900) (14,108,671) (180,149,019)
Class C (906,405) (13,160,584) (3,219,486) (40,874,285)
Class I (213,935) (3,521,970) (765,682) (10,537,331)
Class R (100,587) (1,610,196) (314,304) (4,340,877)
Class R1 10,464 154,464 19,979 250,891
Class R2 4,258 66,174 (15,352) (198,185)
Class R3 19,973 300,686 (14,932) (254,021)
Class R4 28,330 460,879 35,591 485,088
Class R5 -- -- -- (1)
Class 529A (c) (17,584) (278,677) 1,140 16,221
Class 529B (c) (13,425) (193,415) 39 596
Class 529C (c) (4,811) (68,689) (262) (2,995)
- ----------------------------------------------------------------------------------------------------------
(11,597,515) $(176,959,769) (44,755,549) $(604,017,579)
(c) Class 529A, Class 529B, and Class 529C shares closed on March 31, 2007.
(6) LINE OF CREDIT
The fund and other funds managed by MFS participate in a $1 billion unsecured
committed line of credit provided by a syndication of banks under a credit
agreement. In addition, the fund and other funds managed by MFS have established
uncommitted borrowing arrangements with certain banks. Borrowings may be made
for temporary financing needs. Interest is charged to each fund, based on its
borrowings, generally at a rate equal to the Federal Reserve funds rate plus
0.30%. In addition, a commitment fee, based on the average daily, unused portion
of the committed line of credit, is allocated among the participating funds at
the end of each calendar quarter. For the six months ended May 31, 2007, the
fund's commitment fee and interest expense were $3,279 and $357, respectively,
and are included in miscellaneous expense on the Statement of Operations.
(7) SUBSEQUENT EVENT
On February 27, 2007, the trustees of the fund approved the proposed Agreement
and Plan of Reorganization, whereby MFS Capital Opportunities Fund would be
reorganized into MFS Core Equity Fund. The Agreement and Plan of Reorganization
provides for the transfer of the assets of the MFS Capital Opportunities Fund to
the MFS Core Equity Fund and the assumption by the MFS Core Equity Fund of the
liabilities of the MFS Capital Opportunities Fund in exchange solely for shares
of beneficial interest in the MFS Core Equity Fund. Immediately following the
transfer, the MFS Core Equity Fund shares received by the MFS Capital
Opportunities Fund will be distributed to shareholders, pro rata, and the MFS
Capital Opportunities Fund will be liquidated and terminated. The reorganization
occurred on June 22, 2007.
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT
A discussion regarding the Board's most recent review and renewal of the Fund's
investment advisory agreement is available by clicking on the fund's name under
"Select a fund" on the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
A general description of the MFS funds' proxy voting policies and procedures is
available without charge, upon request, by calling 1-800-225-2606, by visiting
the Proxy Voting section of mfs.com or by visiting the SEC's Web site at
http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is available
without charge by visiting the Proxy Voting section of mfs.com or by visiting
the SEC's Web site at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The fund will file a complete schedule of portfolio holdings with the Securities
and Exchange Commission (the Commission) for the first and third quarters of
each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed and copied at
the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-551-5850. The fund's Form N-Q is available on
the EDGAR database on the Commission's Internet Web site at http://www.sec.gov,
and copies of this information may be obtained, upon payment of a duplicating
fee, by electronic request at the following e-mail address: publicinfo@sec.gov
or by writing the Public Reference Section at the above address.
A shareholder can also obtain the quarterly portfolio holdings report at
mfs.com.
CONTACT US
WEB SITE MAILING ADDRESS
mfs.com MFS Service Center, Inc.
P.O.Box 55824
MFS TALK Boston, MA
1-800-637-8255 02205-5824
24 hours a day
OVERNIGHT MAIL
ACCOUNT SERVICE AND MFS Service Center, Inc.
LITERATURE 500 Boylston Street
Shareholders Boston, MA 02116-3741
1-800-225-2606
8 a.m. to 8 p.m. ET
INVESTMENT PROFESSIONALS
1-800-343-2829
8 a.m.to 8 p.m.ET
RETIREMENT PLAN SERVICES
1-800-637-1255
8 a.m.to 8 p.m.ET
- -------------------------------------------------------------------------------
Go paperless with eDELIVERY: Arrange to have MFS(R) send prospectuses, reports,
and proxies directly to your e-mail inbox. You'll get timely information and
less clutter in your mailbox (not to mention help your fund save printing and
postage costs).
SIGN UP: If your account is registered with us, simply go to mfs.com, log in to
your account via MFS(R) Access, and select the eDelivery sign up options.
If you own your MFS fund shares through a financial institution or a retirement
plan, MFS(R) TALK, MFS Access, and eDelivery may not be available to you.
- -------------------------------------------------------------------------------
M F S(R)
INVESTMENT MANAGEMENT
ITEM 2. CODE OF ETHICS.
The Registrant has not amended any provision in its Code of Ethics (the "Code")
that relates to any element of the Code's definition enumerated in paragraph
(b) of Item 2 of this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the Registrant.
ITEM 6. SCHEDULE OF INVESTMENTS
A schedule of investments for each series of the Registrant is included as part
of the report to shareholders of such series under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the Registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no material changes to the procedures by which shareholders may send
recommendations to the Board for nominees to the Registrant's Board since the
Registrant last provided disclosure as to such procedures in response to the
requirements of Item 407(c)(2)(iv) of Regulation S-K (as required by Item
22(b)(15) of Schedule 14A), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the effectiveness of the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the "Act")) as conducted within 90 days of
the filing date of this report on 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 required 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 changes in the registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the second fiscal quarter of the period covered by the report that have
materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(1) 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.
(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule
30a-2 under the Act (17 CFR 270.30a-2): Attached hereto.
(b) 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)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17
CFR 240.13a-14(b) or 240.15d-14(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.
NOTICE
A copy of the Amended and Restated Declaration of Trust of the Registrant is on
file with the Secretary of State of The Commonwealth of Massachusetts and
notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not individually
and the obligations of or arising out of this instrument are not binding upon
any of the Trustees or shareholders individually, but are binding only upon the
assets and property of the respective constituent series of the Registrant.
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 VII
------------------------------------------------------------------
By (Signature and Title)* MARIA F. DWYER
-----------------------------------------------------
Maria F. Dwyer, President
Date: July 11, 2007
-------------
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)* MARIA F. DWYER
-----------------------------------------------------
Maria F. Dwyer, President (Principal Executive
Officer)
Date: July 11, 2007
-------------
By (Signature and Title)* TRACY ATKINSON
-----------------------------------------------------
Tracy Atkinson, Treasurer (Principal Financial Officer
and Accounting Officer)
Date: July 11, 2007
-------------
* Print name and title of each signing officer under his or her signature.