UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-6102
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MFS SERIES TRUST VI
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(Exact name of registrant as specified in charter)
500 Boylston Street, Boston, Massachusetts 02116
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(Address of principal executive offices) (Zip code)
Susan S. Newton
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
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(Name and address of agents for service)
Registrant's telephone number, including area code: (617) 954-5000
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Date of fiscal year end: October 31
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Date of reporting period: October 31, 2007
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ITEM 1. REPORTS TO STOCKHOLDERS.
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
ANNUAL REPORT
MFS(R) GLOBAL TOTAL RETURN FUND
LETTER FROM THE CEO 1
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PORTFOLIO COMPOSITION 2
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MANAGEMENT REVIEW 3
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PERFORMANCE SUMMARY 6
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EXPENSE TABLE 9
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PORTFOLIO OF INVESTMENTS 11
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STATEMENT OF ASSETS AND LIABILITIES 24
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STATEMENT OF OPERATIONS 27
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STATEMENTS OF CHANGES IN NET ASSETS 29
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FINANCIAL HIGHLIGHTS 31
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NOTES TO FINANCIAL STATEMENTS 41
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 54
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TRUSTEES AND OFFICERS 55
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BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 61
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PROXY VOTING POLICIES AND INFORMATION 66
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QUARTERLY PORTFOLIO DISCLOSURE 66
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FEDERAL TAX INFORMATION 66
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MFS(R) PRIVACY NOTICE 67
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CONTACT INFORMATION BACK COVER
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SIPC CONTACT INFORMATION:
You may obtain information about the Securities Investor Protection Corporation
("SIPC"), including the SIPC Brochure, by contacting SIPC either by telephone
(202-371-8300) or by accessing SIPC's website address (www.sipc.org).
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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10/31/07
MWT-ANN
LETTER FROM THE CEO
[Photo of Robert J. Manning]
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% and was fairly stable.
This year we have seen a greater level of volatility than has been experienced
in recent years. The Dow hit several new highs but also experienced swift drops
as a global credit crisis swept through markets, spurred by defaults on U.S.
subprime loans and a liquidity crunch. Still, even with this volatility, the
Dow ended the first three quarters of 2007 with a return near 13%.
U.S. Treasury bonds gained ground, especially in the third quarter as investors
sought less risky asset classes. The spreads of many lower quality debt
investments widened.
In 2007 the U.S. dollar fell against the euro, oil prices have hit their
highest levels yet, and gold has spiked to its steepest price in 28 years.
Around the globe, stocks sold off as risk aversion mounted. As we have said
before, markets can be 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. In our view, investors who remain committed to a long-term plan are more
likely to achieve their financial goals.
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)
December 14, 2007
The opinions expressed in this letter are subject to change, may not be relied
upon for investment advice, and no forecasts can be guaranteed.
PORTFOLIO COMPOSITION
PORTFOLIO STRUCTURE (i)
Common Stocks 58.9%
Bonds 35.9%
Cash & Other Net Assets 5.2%
TOP TEN HOLDINGS (i)
Kingdom of Spain, 5.35%, 2011 2.5%
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Republic of France, 6%, 2025 1.7%
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NESTLE S.A. 1.7%
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Republic of Austria, 5%, 2012 1.7%
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TOTAL S.A., ADR 1.6%
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Federal Republic of Germany, 6.25%, 2030 1.5%
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Lockheed Martin Corp. 1.4%
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Japan Finance Corp. for Municipal
Enterprises, 2%, 2016 1.3%
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GlaxoSmithKline PLC 1.3%
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U.S. Treasury Notes, TIPS, 2%, 2014 1.3%
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FIXED INCOME SECTORS (i)
Non-U.S. Government Bonds 26.6%
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U.S. Treasury Securities 2.9%
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Commercial Mortgage-Backed Securities 2.5%
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Mortgage-Backed Securities 1.6%
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Emerging Market Bonds 1.5%
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U.S. Government Agencies 0.8%
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EQUITY SECTORS
Financial Services 13.8%
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Consumer Staples 6.7%
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Energy 6.4%
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Utilities & Communications 6.3%
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Health Care 6.1%
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Industrial Goods & Services 4.6%
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Technology 3.5%
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Autos & Housing 2.9%
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Leisure 2.6%
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Basic Materials 2.4%
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Retailing 1.8%
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Transportation 1.0%
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Special Products & Services 0.8%
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COUNTRY WEIGHTINGS (i)
United States 38.5%
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Japan 14.5%
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United Kingdom 10.0%
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Germany 6.7%
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France 5.7%
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Switzerland 3.9%
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Netherlands 3.8%
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Spain 3.1%
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Austria 2.1%
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Other Countries 11.7%
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(i) For purposes of this presentation, the bond component includes both accrued
interest amounts and the equivalent exposure from any derivative holdings,
if applicable.
Percentages are based on net assets as of 10/31/07, unless otherwise noted.
The portfolio is actively managed and current holdings may be different.
MANAGEMENT REVIEW
SUMMARY OF RESULTS
For the twelve months ended October 31, 2007, Class A shares of the MFS Global
Total Return Fund provided a total return of 13.89%, at net asset value. This
compares with a return of 20.97% for the fund's benchmark, the MSCI World
Index. The fund's other benchmark, a blended benchmark comprised of 60% of the
MSCI World Index and 40% of the JPMorgan Global Government Bond Index, which
closely resembles the equity and fixed income allocations of the fund,
generated a total return of 16.19%.
MARKET ENVIRONMENT
The U.S. economy continues to decouple from the rest of the world. Despite
seemingly robust growth rates during the second and third quarters of 2007,
underlying economic activity in the U.S. remains muted relative to other major
economies. Overall, global economies have seen moderate to strong growth over
the last twelve months as domestic demand improves and world trade accelerates.
With the strong global growth, however, has come increased concern about rising
global inflation, especially as capacity becomes more constrained, wages rise,
and energy and food prices advance. During the reporting period, global central
banks tightened monetary conditions, which in turn pushed global bond yields to
their highest levels during this economic expansion.
However, beginning in late July, heightened uncertainty and distress concerning
the subprime mortgage market caused several global credit markets to seize up,
forcing central banks to inject liquidity and to reassess their tightening
biases as sovereign bond yields declined and credit spreads widened. While
credit conditions improved somewhat by late October as the Federal Reserve
Board cut interest rates, the level of market turbulence remains significant.
Increased market volatility has also been exacerbated by U.S. home
foreclosures, falling housing prices, and a weakening trend in the labor
market. Despite increased volatility across all asset classes and the widening
in credit spreads, global equity markets remained elevated, generally having
erased losses incurred earlier in the summer.
DETRACTORS FROM PERFORMANCE
Within the equity portion of the fund, a combination of stock selection and an
underweighted position in the basic materials sector held back performance
relative to the MSCI World Index. Not holding strong-performing mining giant
BHP Billiton (U.K.) negatively affected relative performance. Strong demand for
a variety of metals commodities, spurred, in part, by the development of China
and India led to significant revenue and earnings upside and resulted in strong
share price appreciation for their stock over the reporting period.
Security selection within the health care sector also detracted from
performance. The fund's positioning in pharmaceutical firm Novartis
(Switzerland) dampened results as this stock underperformed the benchmark.
Underweighting the special products and services sector and, to a lesser
extent, security selection, was another negative for relative performance. No
individual securities within this sector were among the fund's top detractors.
Several of our holdings in the financial services sector were among the fund's
top detractors during the reporting period. These included insurance company
Allstate, consumer finance firm Aiful (Japan), financial services firm Bank of
America, and banking firm Credit Agricole (France). Investor concerns regarding
recent trends in Allstate's auto insurance business put pressure on its shares
during the period. Shares of Aiful suffered following regulatory changes which
capped their maximum lending rate on consumer loans and provided consumers an
opportunity to receive refunds for "excess" interest they had been charged by
Aiful.
Elsewhere, the fund's positioning in retailer Macy's and home improvements
products maker Masco, and not holding computer company Apple also hurt relative
performance.
The cash position in the equity portion of the fund was also a detractor from
relative performance. As with nearly all mutual funds, this portfolio holds
cash to buy new holdings and to provide liquidity. In a period when equity
markets rose, as measured by the fund's equity benchmark, holding cash hurt
performance versus the benchmark, which has no cash position.
During the reporting period, currency exposure in the equity portion of the
fund was also a detractor from relative performance. All of MFS' investment
decisions are driven by the fundamentals of each individual opportunity and, as
such, it is common for our portfolios to have different currency exposure than
the benchmark.
Within the fixed income portion of the fund, our Japanese yen position
detracted from performance. More recently, as swap and credit spreads have
widened, the fund's "AAA" rated commercial mortgage-backed securities, small
business association, and emerging markets debt holdings detracted from the
fund's performance.
CONTRIBUTORS TO PERFORMANCE
Within the equity portion of the fund, security selection and, to a lesser
extent, our overweighting in the utilities and communications sector benefited
relative performance. Our holdings in voice and data communications services
company Vodafone (U.K.) performed particularly well within this sector.
Better-than-expected results, and the company's significant free-cash flow
generation attracted the attention of investors during the period. Our
positioning in power and gas company E.ON (Germany) and telecommunications firm
Telefonica (Spain) also helped performance over the reporting period.
Stock selection in the energy sector was another positive factor. The fund's
holdings of global integrated energy company Hess and oil and gas company
ConocoPhillips(aa) bolstered performance as both stocks significantly outpaced
the fund's benchmark.
A combination of security selection and underweighting the retailing sector was
another positive contributor to relative performance. No individual securities
within this sector were among the fund's top contributors.
Several individual holdings significantly aided relative performance, including
agricultural equipment manufacturer Deere & Co, food company Nestle
(Switzerland), agrichemical products maker Syngenta (Switzerland), mechanical
engineering firm GEA(aa), and branded beverage and confectionary manufacturer
Cadbury Schweppes (U.K.)(g). Deere & Co's stock price gain was driven by strong
capital management and better-than-expected results throughout the period which
pushed its shares up in excess of the market. Nestle's better-than-expected
financial results were due, in part, to strong revenue growth and margin
expansion over the reporting period.
Within the fixed income portion of the fund, our currency exposure contributed
modestly to performance. Our underweighted position in U.S. dollars versus our
overweight in the Euro benefited the fund. Our duration(d) stance in Europe and
to a lesser extent Japan added to relative results over the reporting period.
Respectfully,
Nevin Chitkara Steven Gorham Matthew Ryan
Portfolio Manager Portfolio Manager Portfolio Manager
Erik Weisman Barnaby Wiener
Portfolio Manager Portfolio Manager
(aa) Security is not a benchmark constituent.
(d) Duration is a measure of how much a bond's price is likely to fluctuate
with general changes in interest rates, e.g., if rates rise 1.00%, a bond
with a 5-year duration is likely to lose about 5.00% of its value.
(g) Security was not held in the portfolio at period end.
The views expressed in this report are those of the portfolio managers only
through the end of the period of the report as stated on the cover and do not
necessarily reflect the views of MFS or any other person in the MFS
organization. These views are subject to change at any time based on market or
other conditions, and MFS disclaims any responsibility to update such views.
These views may not be relied upon as investment advice or an indication of
trading intent on behalf of any MFS portfolio. References to specific
securities are not recommendations of such securities, and may not be
representative of any MFS portfolio's current or future investments.
PERFORMANCE SUMMARY THROUGH 10/31/07
The following chart illustrates a representative class of the fund's historical
performance in comparison to its benchmark. Performance results include the
deduction of the maximum applicable sales charge and reflect the percentage
change in net asset value, including reinvestment of dividends and capital
gains distributions. The performance of other share classes will be greater
than or less than that of the class depicted below. Benchmark comparisons are
unmanaged; do not reflect sales charges, commissions or expenses; and cannot be
invested in directly. (See Notes to Performance Summary.)
PERFORMANCE DATA SHOWN REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE FLUCTUATE SO YOUR SHARES,
WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST; CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN QUOTED. THE PERFORMANCE SHOWN DOES NOT
REFLECT THE DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
60% MSCI World
MFS Global Total Index/40% JPMorgan
Return Fund- MSCI Global Government
Class A World Index Bond Index
10/97 $ 9,425 $10,000 $10,000
10/98 10,772 11,569 11,518
10/99 11,306 14,499 13,060
10/00 12,184 14,701 12,946
10/01 11,406 10,990 11,325
10/02 11,289 9,396 10,751
10/03 13,106 11,682 12,952
10/04 15,326 13,290 14,572
10/05 16,592 15,126 15,665
10/06 19,184 18,441 18,013
10/07 21,848 22,308 20,929
TOTAL RETURNS THROUGH 10/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
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A 9/04/90 13.89% 14.12% 8.77%
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B 9/07/93 13.16% 13.36% 8.06%
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C 1/03/94 13.12% 13.35% 8.06%
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I 1/02/97 14.31% 14.51% 9.17%
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R 12/31/02 13.72% 13.96% 8.70%
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R1 4/01/05 13.00% 13.30% 8.03%
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R2 4/01/05 13.42% 13.51% 8.13%
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R3 10/31/03 13.57% 13.64% 8.19%
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R4 4/01/05 13.84% 14.08% 8.76%
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R5 4/01/05 14.13% 14.26% 8.84%
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AVERAGE ANNUAL
Comparative benchmarks
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MSCI World Index (f) 20.97% 18.88% 8.35%
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60% MSCI World Index/40% JPMorgan
Global Government Bond Index (f) 16.19% 14.25% 7.67%
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AVERAGE ANNUAL WITH SALES CHARGE
Share class
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A 7.34% 12.77% 8.13%
With Initial Sales Charge (5.75%)
- ----------------------------------------------------------------------------
B 9.16% 13.12% 8.06%
With CDSC (Declining over six years
from 4% to 0%) (x)
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C 12.12% 13.35% 8.06%
With CDSC (1% for 12 months) (x)
- ----------------------------------------------------------------------------
Class I, R, R1, R2, R3, R4, and R5 shares do not have a sales charge. Please
see Notes to Performance Summary for more details.
CDSC - Contingent Deferred Sales Charge.
(f) Source: FactSet Research Systems Inc.
(x) Assuming redemption at the end of the applicable period.
INDEX DEFINITIONS
JPMorgan Global Government Bond Index - measures the performance of developed
government bond markets around the world.
Morgan Stanley Capital International (MSCI) World Index - a market
capitalization index that is designed to measure equity market performance in
the global developed markets.
It is not possible to invest directly in an index.
NOTES TO PERFORMANCE SUMMARY
Performance for Classes R, R4, and R5 shares includes the performance of the
fund's Class A shares for periods prior to their offering. Performance for
Classes R1, R2, and R3 shares includes the performance of the fund's Class B
shares for periods prior to their offering. This blended class performance has
been adjusted to take into account differences in sales loads, if any,
applicable to these share classes, but has not been adjusted to take into
account differences in class specific operating expenses (such as Rule 12b-1
fees). Compared to performance these share classes would have experienced had
they been offered for the entire period, the use of blended performance
generally results in higher performance for share classes with higher operating
expenses than the share class to which it is blended, and lower performance for
share classes with lower operating expenses than the share class to which it is
blended.
Performance results reflect any applicable expense subsidies and waivers in
effect during the periods shown. Without such subsidies and waivers the fund's
performance results would be less favorable. Please see the prospectus and
financial statements for complete details.
From time to time the fund may receive proceeds from litigation settlements,
without which performance would be lower.
EXPENSE TABLE
Fund Expenses Borne by the Shareholders During the Period,
May 1, 2007 through October 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 (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 May 1, 2007 through October 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). 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.
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Expenses
Paid During
Annualized Beginning Ending Period(p)
Share Expense Account Value Account Value 5/01/07-
Class Ratio 5/01/07 10/31/07 10/31/07
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Actual 1.30% $1,000.00 $1,057.57 $6.74
A ------------------------------------------------------------------------
Hypothetical (h) 1.30% $1,000.00 $1,018.65 $6.61
- --------------------------------------------------------------------------------
Actual 1.95% $1,000.00 $1,053.63 $10.09
B ------------------------------------------------------------------------
Hypothetical (h) 1.95% $1,000.00 $1,015.38 $9.91
- --------------------------------------------------------------------------------
Actual 1.95% $1,000.00 $1,053.71 $10.09
C ------------------------------------------------------------------------
Hypothetical (h) 1.95% $1,000.00 $1,015.38 $9.91
- --------------------------------------------------------------------------------
Actual 0.95% $1,000.00 $1,059.13 $4.93
I ------------------------------------------------------------------------
Hypothetical (h) 0.95% $1,000.00 $1,020.42 $4.84
- --------------------------------------------------------------------------------
Actual 1.45% $1,000.00 $1,056.30 $7.52
R ------------------------------------------------------------------------
Hypothetical (h) 1.45% $1,000.00 $1,017.90 $7.38
- --------------------------------------------------------------------------------
Actual 2.05% $1,000.00 $1,053.52 $10.61
R1 ------------------------------------------------------------------------
Hypothetical (h) 2.05% $1,000.00 $1,014.87 $10.41
- --------------------------------------------------------------------------------
Actual 1.70% $1,000.00 $1,054.70 $8.80
R2 ------------------------------------------------------------------------
Hypothetical (h) 1.70% $1,000.00 $1,016.64 $8.64
- --------------------------------------------------------------------------------
Actual 1.60% $1,000.00 $1,055.79 $8.29
R3 ------------------------------------------------------------------------
Hypothetical (h) 1.60% $1,000.00 $1,017.14 $8.13
- --------------------------------------------------------------------------------
Actual 1.35% $1,000.00 $1,056.90 $7.00
R4 ------------------------------------------------------------------------
Hypothetical (h) 1.35% $1,000.00 $1,018.40 $6.87
- --------------------------------------------------------------------------------
Actual 1.05% $1,000.00 $1,058.26 $5.45
R5 ------------------------------------------------------------------------
Hypothetical (h) 1.05% $1,000.00 $1,019.91 $5.35
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads). If
these transaction costs had been included, your costs would have been
higher.
PORTFOLIO OF INVESTMENTS
10/31/07
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Common Stocks - 58.9%
- -----------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -----------------------------------------------------------------------------------------------------------------
Aerospace - 2.4%
- -----------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. 85,670 $ 9,427,127
Northrop Grumman Corp. 40,740 3,406,679
United Technologies Corp. 51,170 3,919,110
------------
$ 16,752,916
- -----------------------------------------------------------------------------------------------------------------
Alcoholic Beverages - 0.5%
- -----------------------------------------------------------------------------------------------------------------
Heineken N.V. 52,560 $ 3,681,676
- -----------------------------------------------------------------------------------------------------------------
Apparel Manufacturers - 0.5%
- -----------------------------------------------------------------------------------------------------------------
NIKE, Inc., "B" 54,010 $ 3,578,703
- -----------------------------------------------------------------------------------------------------------------
Automotive - 1.3%
- -----------------------------------------------------------------------------------------------------------------
Bayerische Motoren Werke AG 73,910 $ 4,955,302
Continental AG 20,174 3,054,175
Johnson Controls, Inc. 29,140 1,274,001
------------
$ 9,283,478
- -----------------------------------------------------------------------------------------------------------------
Broadcasting - 1.5%
- -----------------------------------------------------------------------------------------------------------------
Fuji Television Network, Inc. 1,096 $ 2,210,808
Nippon Television Network Corp. 8,870 1,145,187
Viacom, Inc., "B" (a) 49,033 2,024,573
Vivendi S.A. 65,480 2,951,432
WPP Group PLC 130,850 1,788,071
------------
$ 10,120,071
- -----------------------------------------------------------------------------------------------------------------
Brokerage & Asset Managers - 1.1%
- -----------------------------------------------------------------------------------------------------------------
Franklin Resources, Inc. 13,890 $ 1,801,255
Goldman Sachs Group, Inc. 18,170 4,504,706
Lehman Brothers Holdings, Inc. 19,510 1,235,763
------------
$ 7,541,724
- -----------------------------------------------------------------------------------------------------------------
Business Services - 0.8%
- -----------------------------------------------------------------------------------------------------------------
Accenture Ltd., "A" 48,600 $ 1,897,830
Bunzl PLC 111,490 1,679,000
USS Co. Ltd. 25,070 1,639,437
------------
$ 5,216,267
- -----------------------------------------------------------------------------------------------------------------
Chemicals - 1.2%
- -----------------------------------------------------------------------------------------------------------------
PPG Industries, Inc. 58,950 $ 4,405,923
Syngenta AG 16,580 3,989,265
------------
$ 8,395,188
- -----------------------------------------------------------------------------------------------------------------
Computer Software - 0.5%
- -----------------------------------------------------------------------------------------------------------------
Oracle Corp. (a) 144,270 $ 3,198,466
- -----------------------------------------------------------------------------------------------------------------
Computer Software - Systems - 0.9%
- -----------------------------------------------------------------------------------------------------------------
Fujitsu Ltd. 309,000 $ 2,437,158
Hewlett-Packard Co. 36,740 1,898,723
International Business Machines Corp. 13,920 1,616,390
------------
$ 5,952,271
- -----------------------------------------------------------------------------------------------------------------
Construction - 1.6%
- -----------------------------------------------------------------------------------------------------------------
CRH PLC 91,310 $ 3,488,006
Geberit AG 10,519 1,419,876
Masco Corp. 129,840 3,126,547
Sekisui Chemical Co. Ltd. 252,000 1,721,732
Toll Brothers, Inc. (a) 70,680 1,619,279
------------
$ 11,375,440
- -----------------------------------------------------------------------------------------------------------------
Consumer Goods & Services - 2.3%
- -----------------------------------------------------------------------------------------------------------------
Henkel KGaA, IPS 98,440 $ 5,029,529
Kao Corp. 126,000 3,615,931
Procter & Gamble Co. 61,740 4,292,165
Uni-Charm Corp. 53,800 3,205,728
------------
$ 16,143,353
- -----------------------------------------------------------------------------------------------------------------
Electrical Equipment - 1.4%
- -----------------------------------------------------------------------------------------------------------------
Legrand S.A. 82,790 $ 3,060,489
OMRON Corp. 89,000 2,179,946
Rockwell Automation, Inc. 15,500 1,067,640
Spectris PLC 76,960 1,389,667
W.W. Grainger, Inc. 20,910 1,880,227
------------
$ 9,577,969
- -----------------------------------------------------------------------------------------------------------------
Electronics - 2.1%
- -----------------------------------------------------------------------------------------------------------------
Intel Corp. 137,550 $ 3,700,095
Konica Minolta Holdings, Inc. 128,500 2,266,985
Ricoh Co. Ltd. 70,000 1,380,664
Samsung Electronics Co. Ltd. 5,242 3,254,590
Taiwan Semiconductor Manufacturing Co. Ltd., ADR 400,981 4,270,448
------------
$ 14,872,782
- -----------------------------------------------------------------------------------------------------------------
Energy - Independent - 1.1%
- -----------------------------------------------------------------------------------------------------------------
Apache Corp. 27,180 $ 2,821,556
Devon Energy Corp. 29,340 2,740,356
EOG Resources, Inc. 24,050 2,130,830
------------
$ 7,692,742
- -----------------------------------------------------------------------------------------------------------------
Energy - Integrated - 5.1%
- -----------------------------------------------------------------------------------------------------------------
ConocoPhillips 34,040 $ 2,892,038
Exxon Mobil Corp. 62,700 5,767,773
Hess Corp. 50,980 3,650,678
Royal Dutch Shell PLC, "A" 184,870 8,100,181
Statoil A.S.A. 116,950 3,959,824
TOTAL S.A., ADR 139,010 11,205,596
------------
$ 35,576,090
- -----------------------------------------------------------------------------------------------------------------
Food & Beverages - 2.7%
- -----------------------------------------------------------------------------------------------------------------
CSM N.V. 40,357 $ 1,408,763
Kellogg Co. 41,200 2,174,948
Nestle S.A. 24,875 11,496,984
Nong Shim Co. Ltd. 5,220 1,156,207
PepsiCo, Inc. 29,920 2,205,702
------------
$ 18,442,604
- -----------------------------------------------------------------------------------------------------------------
Food & Drug Stores - 0.6%
- -----------------------------------------------------------------------------------------------------------------
CVS Caremark Corp. 42,750 $ 1,785,667
Lawson, Inc. (l) 70,100 2,425,216
------------
$ 4,210,883
- -----------------------------------------------------------------------------------------------------------------
Forest & Paper Products - 0.4%
- -----------------------------------------------------------------------------------------------------------------
UPM-Kymmene Corp. 136,500 $ 3,058,470
- -----------------------------------------------------------------------------------------------------------------
Gaming & Lodging - 0.4%
- -----------------------------------------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd. 72,830 $ 3,122,950
- -----------------------------------------------------------------------------------------------------------------
General Merchandise - 0.5%
- -----------------------------------------------------------------------------------------------------------------
Macy's, Inc. 100,310 $ 3,212,929
- -----------------------------------------------------------------------------------------------------------------
Health Maintenance Organizations - 0.6%
- -----------------------------------------------------------------------------------------------------------------
WellPoint, Inc. (a) 49,600 $ 3,929,808
- -----------------------------------------------------------------------------------------------------------------
Insurance - 3.2%
- -----------------------------------------------------------------------------------------------------------------
Allstate Corp. 122,840 $ 6,436,816
Aviva PLC 144,630 2,274,412
Benfield Group PLC 184,450 1,166,195
Genworth Financial, Inc., "A" 57,650 1,573,845
Hartford Financial Services Group, Inc. 23,720 2,301,552
Jardine Lloyd Thompson Group PLC 217,830 1,736,572
MetLife, Inc. 70,050 4,822,942
Prudential Financial, Inc. 15,780 1,526,242
------------
$ 21,838,576
- -----------------------------------------------------------------------------------------------------------------
Leisure & Toys - 0.4%
- -----------------------------------------------------------------------------------------------------------------
Heiwa Corp. (l) 72,900 $ 820,637
NAMCO BANDAI Holdings, Inc. (l) 76,500 1,172,942
Sankyo Co. Ltd. 21,800 929,624
------------
$ 2,923,203
- -----------------------------------------------------------------------------------------------------------------
Machinery & Tools - 0.8%
- -----------------------------------------------------------------------------------------------------------------
Assa Abloy AB, "B" (l) 141,750 $ 2,969,381
Deere & Co. 8,140 1,260,886
GEA Group AG (a) 38,840 1,458,888
------------
$ 5,689,155
- -----------------------------------------------------------------------------------------------------------------
Major Banks - 4.9%
- -----------------------------------------------------------------------------------------------------------------
Bank of America Corp. 133,496 $ 6,445,187
Bank of New York Mellon Corp. 107,848 5,268,375
Credit Agricole S.A. 157,824 6,246,254
PNC Financial Services Group, Inc. 34,990 2,524,878
Royal Bank of Scotland Group PLC 484,062 5,204,123
State Street Corp. 18,460 1,472,554
SunTrust Banks, Inc. 26,780 1,944,228
Svenska Handelsbanken AB, "A" 67,100 2,224,671
UniCredito Italiano S.p.A. 274,000 2,344,475
------------
$ 33,674,745
- -----------------------------------------------------------------------------------------------------------------
Metals & Mining - 0.6%
- -----------------------------------------------------------------------------------------------------------------
Anglo American PLC 59,395 $ 4,097,119
- -----------------------------------------------------------------------------------------------------------------
Natural Gas - Distribution - 0.4%
- -----------------------------------------------------------------------------------------------------------------
Tokyo Gas Co. Ltd. 570,000 $ 2,548,831
- -----------------------------------------------------------------------------------------------------------------
Oil Services - 0.2%
- -----------------------------------------------------------------------------------------------------------------
Fugro N.V. 19,780 $ 1,735,500
- -----------------------------------------------------------------------------------------------------------------
Other Banks & Diversified Financials - 4.6%
- -----------------------------------------------------------------------------------------------------------------
Aiful Corp. (l) 67,500 $ 1,593,561
American Express Co. 35,930 2,189,933
Bangkok Bank Public Co. Ltd. 415,500 1,568,725
Citigroup, Inc. 85,476 3,581,444
DNB Holding A.S.A. 161,800 2,669,818
Fannie Mae 65,790 3,752,662
Hachijuni Bank Ltd. 166,000 1,267,453
Hana Financial Group, Inc. 50,010 2,548,269
ING Groep N.V. 133,760 6,021,311
Joyo Bank Ltd. (l) 163,000 1,008,101
Sapporo Hokuyo Holdings, Inc. 114 1,172,621
Shizuoka Bank Ltd. 130,000 1,360,466
Takefuji Corp. 47,380 1,208,024
Unione di Banche Italiane Scpa 62,543 1,740,591
------------
$ 31,682,979
- -----------------------------------------------------------------------------------------------------------------
Pharmaceuticals - 5.5%
- -----------------------------------------------------------------------------------------------------------------
Astellas Pharma, Inc. 70,500 $ 3,112,002
GlaxoSmithKline PLC 346,610 8,931,778
Hisamitsu Pharmaceutical Co., Inc. 65,800 1,810,654
Johnson & Johnson 81,580 5,316,569
Merck & Co., Inc. 61,500 3,582,990
Novartis AG 110,740 5,898,728
Pfizer, Inc. 57,910 1,425,165
Roche Holding AG 22,840 3,902,619
Wyeth 76,660 3,727,976
------------
$ 37,708,481
- -----------------------------------------------------------------------------------------------------------------
Printing & Publishing - 0.3%
- -----------------------------------------------------------------------------------------------------------------
Reed Elsevier PLC 179,150 $ 2,341,815
- -----------------------------------------------------------------------------------------------------------------
Railroad & Shipping - 0.3%
- -----------------------------------------------------------------------------------------------------------------
Burlington Northern Santa Fe Corp. 20,040 $ 1,746,486
- -----------------------------------------------------------------------------------------------------------------
Specialty Chemicals - 0.2%
- -----------------------------------------------------------------------------------------------------------------
Praxair, Inc. 15,430 $ 1,318,956
- -----------------------------------------------------------------------------------------------------------------
Specialty Stores - 0.2%
- -----------------------------------------------------------------------------------------------------------------
Praktiker Bau-und Heimwerkermaerkte Holding AG (l) 32,360 $ 1,171,376
- -----------------------------------------------------------------------------------------------------------------
Telecommunications - Wireless - 1.7%
- -----------------------------------------------------------------------------------------------------------------
KDDI Corp. 394 $ 2,984,031
Sprint Nextel Corp. 97,830 1,672,893
Vodafone Group PLC 1,860,205 7,318,108
------------
$ 11,975,032
- -----------------------------------------------------------------------------------------------------------------
Telephone Services - 2.3%
- -----------------------------------------------------------------------------------------------------------------
AT&T, Inc. 38,530 $ 1,610,169
Embarq Corp. 25,911 1,371,210
Royal KPN N.V. 199,140 3,760,214
Telefonica S.A. 144,200 4,765,985
Telekom Austria AG 112,430 3,228,423
TELUS Corp. (non-voting shares) 15,483 900,011
------------
$ 15,636,012
- -----------------------------------------------------------------------------------------------------------------
Tobacco - 1.2%
- -----------------------------------------------------------------------------------------------------------------
Altria Group, Inc. 116,330 $ 8,483,947
- -----------------------------------------------------------------------------------------------------------------
Trucking - 0.7%
- -----------------------------------------------------------------------------------------------------------------
TNT N.V. 119,230 $ 4,883,074
- -----------------------------------------------------------------------------------------------------------------
Utilities - Electric Power - 1.9%
- -----------------------------------------------------------------------------------------------------------------
Dominion Resources, Inc. 26,352 $ 2,414,634
E.ON AG 30,270 5,921,987
FPL Group, Inc. 36,640 2,506,909
United Utilities PLC 134,020 2,035,031
------------
$ 12,878,561
- -----------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $325,479,299) $407,270,628
- -----------------------------------------------------------------------------------------------------------------
Bonds - 32.6%
- -----------------------------------------------------------------------------------------------------------------
Asset Backed & Securitized - 2.4%
- -----------------------------------------------------------------------------------------------------------------
Bayview Commercial Asset Trust, FRN, 5.362%, 2023 (n) CAD 560,000 $ 559,580
Citigroup/Deutsche Bank Commercial Mortgage Trust, 5.648%, 2048 $ 1,700,000 1,687,975
Commercial Mortgage Asset Trust, FRN, 0.877%, 2032 (i)(n) 17,184,833 556,050
Commercial Mortgage Pass-Through Certificates, FRN, 5.281%, 2017 (n) 1,400,000 1,397,660
Commercial Mortgage Pass-Through Certificates, FRN, 5.291%, 2017 (n) 2,100,000 2,091,409
Credit Suisse Commercial Mortgage Trust, 5.509%, 2039 478,292 469,685
First Union National Bank Commercial Mortgage Trust, FRN,
0.935%, 2043 (i)(n) 25,052,773 635,722
IMPAC CMB Trust, FRN, 5.222%, 2036 1,886,834 1,836,779
JPMorgan Chase Commercial Mortgage Securities Corp., 5.44%, 2045 398,186 389,291
JPMorgan Chase Commercial Mortgage Securities Corp., 5.372%, 2047 270,000 262,592
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 5.21%, 2041 1,870,062 1,848,856
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 5.221%, 2044 570,000 557,213
Lehman Brothers Floating Rate Commercial Mortgage Trust, FRN,
5.251%, 2018 (n) 377,977 377,926
Merrill Lynch/Countrywide Commercial Mortgage Trust, FRN, 5.204%, 2049 1,250,000 1,202,148
Wachovia Bank Commercial Mortgage Trust, FRN, 5.795%, 2045 670,000 671,492
Wachovia Bank Commercial Mortgage Trust, FRN, 5.591%, 2047 680,000 669,960
Wachovia Bank Commercial Mortgage Trust, FRN, 5.603%, 2048 1,700,000 1,679,853
------------
$ 16,894,191
- -----------------------------------------------------------------------------------------------------------------
Emerging Market Quasi-Sovereign - 0.6%
- -----------------------------------------------------------------------------------------------------------------
Codelco, Inc., 6.15%, 2036 $ 532,000 $ 540,539
Gazprom International S.A., 7.201%, 2020 1,364,138 1,402,646
Gazprom International S.A., 6.51%, 2022 (n) 570,000 558,600
Pemex Project Funding Master Trust, 5.75%, 2018 (z) 251,000 253,133
Petronas Capital Ltd., 7.875%, 2022 1,296,000 1,573,726
------------
$ 4,328,644
- -----------------------------------------------------------------------------------------------------------------
Emerging Market Sovereign - 0.7%
- -----------------------------------------------------------------------------------------------------------------
Republic of Argentina, FRN, 5.389%, 2012 $ 1,269,375 $ 1,152,239
Republic of South Africa, 5.875%, 2022 531,000 533,867
United Mexican States, 5.625%, 2017 1,524,000 1,546,098
United Mexican States, 6.75%, 2034 1,252,000 1,400,362
------------
$ 4,632,566
- -----------------------------------------------------------------------------------------------------------------
International Market Quasi-Sovereign - 6.0%
- -----------------------------------------------------------------------------------------------------------------
Canada Housing Trust, 4.6%, 2011 CAD 1,649,000 $ 1,753,257
Development Bank of Japan, 1.75%, 2010 JPY 195,000,000 1,727,324
Development Bank of Japan, 1.4%, 2012 JPY 718,000,000 6,289,682
Development Bank of Japan, 1.6%, 2014 JPY 390,000,000 3,450,389
Development Bank of Japan, 1.05%, 2023 JPY 1,026,000,000 7,738,804
Development Bank of Japan, 2.3%, 2026 JPY 440,000,000 3,873,889
Eksportfinans A.S.A., 1.6%, 2014 JPY 512,000,000 4,502,332
Japan Finance Corp. for Municipal Enterprises, 2%, 2016 JPY 1,010,000,000 9,117,748
KfW Bankengruppe, 1.35%, 2014 JPY 357,000,000 3,111,748
------------
$ 41,565,173
- -----------------------------------------------------------------------------------------------------------------
International Market Sovereign - 17.4%
- -----------------------------------------------------------------------------------------------------------------
Federal Republic of Germany, 5.25%, 2010 EUR 5,375,000 $ 8,011,567
Federal Republic of Germany, 3.75%, 2015 EUR 2,437,000 3,437,139
Federal Republic of Germany, 6.25%, 2030 EUR 5,499,000 9,860,600
Government of Canada, 4.5%, 2015 CAD 2,240,000 2,402,814
Government of Japan, 1.7%, 2017 JPY 289,000,000 2,540,147
Kingdom of Belgium, 5.5%, 2017 EUR 5,200,000 8,212,932
Kingdom of Denmark, 4%, 2015 DKK 8,385,000 1,600,928
Kingdom of Netherlands, 3.75%, 2014 EUR 3,198,000 4,515,183
Kingdom of Spain, 5.35%, 2011 EUR 11,212,000 16,941,025
Kingdom of Sweden, 4.5%, 2015 SEK 10,515,000 1,681,492
Quebec Province, 1.6%, 2013 JPY 302,000,000 2,656,788
Republic of Austria, 5%, 2012 (z) EUR 7,530,000 11,284,582
Republic of Finland, 5.375%, 2013 EUR 3,428,000 5,258,561
Republic of France, 6%, 2025 EUR 6,917,000 11,841,446
Republic of France, 4.75%, 2035 EUR 2,619,000 3,905,430
Republic of Ireland, 4.6%, 2016 EUR 3,856,000 5,704,960
United Kingdom Treasury, 9%, 2011 GBP 1,230,000 2,897,172
United Kingdom Treasury, 8%, 2015 GBP 3,197,000 7,972,620
United Kingdom Treasury, 8%, 2021 GBP 1,421,000 3,852,843
United Kingdom Treasury, 4.25%, 2036 GBP 2,832,000 5,623,055
------------
$120,201,284
- -----------------------------------------------------------------------------------------------------------------
Mortgage Backed - 1.6%
- -----------------------------------------------------------------------------------------------------------------
Fannie Mae, 4.517%, 2013 $ 83,109 $ 81,016
Fannie Mae, 5.37%, 2013 272,723 275,288
Fannie Mae, 4.78%, 2015 363,363 353,667
Fannie Mae, 4.79%, 2015 378,708 368,912
Fannie Mae, 4.856%, 2015 286,992 277,975
Fannie Mae, 4.98%, 2015 211,104 207,841
Fannie Mae, 5.09%, 2016 362,000 357,043
Fannie Mae, 5.423%, 2016 345,291 348,464
Fannie Mae, 4.994%, 2017 264,478 261,455
Fannie Mae, 5.05%, 2017 330,000 324,577
Fannie Mae, 5.32%, 2017 281,799 281,342
Fannie Mae, 5.5%, 2024 648,352 649,920
Fannie Mae, 5%, 2025 1,000,000 998,245
Freddie Mac, 4.5%, 2021 364,537 363,184
Freddie Mac, 5%, 2022 - 2027 4,904,521 4,900,820
Freddie Mac, 4%, 2024 631,135 624,019
Freddie Mac, 5.5%, 2026 493,116 496,416
------------
$ 11,170,184
- -----------------------------------------------------------------------------------------------------------------
Natural Gas - Pipeline - 0.1%
- -----------------------------------------------------------------------------------------------------------------
Intergas Finance B.V., 6.875%, 2011 $ 611,000 $ 616,346
- -----------------------------------------------------------------------------------------------------------------
Telecommunications - Wireless - 0.1%
- -----------------------------------------------------------------------------------------------------------------
OJSC Vimpel-Communications, 8.25%, 2016 $ 527,000 $ 545,445
- -----------------------------------------------------------------------------------------------------------------
U.S. Government Agencies - 0.8%
- -----------------------------------------------------------------------------------------------------------------
Aid-Egypt, 4.45%, 2015 $ 1,113,000 $ 1,083,773
Small Business Administration, 5.09%, 2025 210,339 209,286
Small Business Administration, 5.21%, 2026 2,552,346 2,556,203
Small Business Administration, 5.31%, 2027 1,300,000 1,303,953
------------
$ 5,153,215
- -----------------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 2.9%
- -----------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 8%, 2021 $ 3,609,000 $ 4,802,507
U.S. Treasury Notes, 4.75%, 2012 1,322,000 1,355,050
U.S. Treasury Notes, 4%, 2015 (f) 5,111,000 5,004,788
U.S. Treasury Notes, TIPS, 2%, 2014 8,881,025 8,874,089
------------
$ 20,036,434
- -----------------------------------------------------------------------------------------------------------------
TOTAL BONDS (IDENTIFIED COST, $216,311,424) $225,143,482
- -----------------------------------------------------------------------------------------------------------------
Short-Term Obligations - 4.0%
- -----------------------------------------------------------------------------------------------------------------
Falcon Asset Securitization Co. LLC, 4.95%, due 11/01/07, at
Amortized Cost and Value (t)(y) $ 27,492,000 $ 27,492,000
- -----------------------------------------------------------------------------------------------------------------
Repurchase Agreements - 3.6%
- -----------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., 4.94%, dated 10/31/07, due 11/01/07,
total to be received $24,848,409 (secured by various U.S.
Treasury and Federal Agency obligations and Mortgage Backed
securities in a jointly traded account), at Cost $ 24,845,000 $ 24,845,000
- -----------------------------------------------------------------------------------------------------------------
Collateral for Securities Loaned - 0.9%
- -----------------------------------------------------------------------------------------------------------------
Citigroup Global Markets, Inc., Repurchase Agreement, 4.83%,
dated 10/31/07, due 11/01/07, total to be received $6,705,183
(secured by various U.S. Treasury and Federal Agency
obligations and Mortgage Backed securities in an individually
traded account), at Cost $ 6,704,284 $ 6,704,284
- -----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $600,832,007) (k) $691,455,394
- -----------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 0% (343,443)
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $691,111,951
- -----------------------------------------------------------------------------------------------------------------
(a) Non-income producing security.
(f) All or a portion of the security has been segregated as collateral for an open futures contract.
(k) As of October 31, 2007, the fund held securities fair valued in accordance with the policies adopted by the
Board of Trustees, aggregating $270,115,500 and 39.06% of market value. An independent pricing service
provided an evaluated bid for 31.76% of the market value.
(i) Interest only security for which the fund receives interest on notional principal (Par amount). Par amount
shown is the notional principal and does not reflect the cost of the security.
(l) All or a portion of this security is on loan.
(n) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be
sold in the ordinary course of business in transactions exempt from registration, normally to qualified
institutional buyers. At period end, the aggregate value of these securities was $6,176,947, representing 0.9%
of net assets.
(t) Security exempt from registration with the U.S. Securities and Exchange Commission under Section 4(2) of the
Securities Act of 1933.
(y) The rate shown represents an annualized yield at time of purchase.
(z) Restricted securities are not registered under the Securities Act of 1933 and are subject to legal
restrictions on resale. These securities generally may be resold in transactions exempt from registration or
to the public if the securities are subsequently registered. Disposal of these securities may involve
time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the
following restricted securities:
ACQUISITION ACQUISITION CURRENT TOTAL % OF
RESTRICTED SECURITIES DATE COST MARKET VALUE NET ASSETS
- -----------------------------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust,
5.75%, 2018 10/17/07 $ 249,283 $ 253,133
Republic of Austria, 5%, 2012 1/07/05 - 10/24/07 10,428,875 11,284,582
- -----------------------------------------------------------------------------------------------------------------
Total Restricted Securities $11,537,715 1.7%
- -----------------------------------------------------------------------------------------------------------------
The following abbreviations are used in this report and are defined:
ADR American Depository Receipt
FRN Floating Rate Note. Interest rate resets periodically and may not be the rate reported at
period end.
IPS International Preference Stock
TIPS Treasury Inflation Protected Security
Abbreviations indicate amounts shown in currencies other than the U.S. dollar.
All amounts are stated in U.S. dollars unless otherwise indicated. A list of
abbreviations is shown below:
AUD Australian Dollar
BRL Brazilian Real
CAD Canadian Dollar
CHF Swiss Franc
CLP Chilean Peso
DKK Danish Krone
EUR Euro
GBP British Pound
IDR Indonesian Rupiah
JPY Japanese Yen
MXN Mexican Peso
MYR Malaysian Ringgit
NOK Norwegian Krone
NZD New Zealand Dollar
PHP Philippine Peso
PLN Polish Zloty
RUB Russian Ruble
SEK Swedish Krona
SGD Singapore Dollar
TRY Turkish Lira
DERIVATIVE CONTRACTS -
FUTURES CONTRACTS OUTSTANDING AT 10/31/07
UNREALIZED
EXPIRATION APPRECIATION
DESCRIPTION CONTRACTS VALUE DATE (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------------
Japan Government Bonds
10 yr (Long) 17 $20,048,825 Dec-07 $68,241
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS AT 10/31/07
NET
UNREALIZED
CONTRACTS TO SETTLEMENT IN EXCHANGE CONTRACTS APPRECIATION
TYPE CURRENCY DELIVER/RECEIVE DATE RANGE FOR AT VALUE (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------------
APPRECIATION
- ----------------------------------------------------------------------------------------------------------------
BUY AUD 3,562,521 11/19/07 $3,082,605 $3,322,961 $240,356
BUY BRL 737,011 11/13/07 406,089 423,750 17,661
BUY CAD 3,316,214 11/13/07 3,350,158 3,505,657 155,499
BUY CHF 1,570,640 12/03/07 1,351,216 1,361,294 10,078
BUY CLP 201,763,141 11/26/07 399,927 409,428 9,501
BUY DKK 9,416,092 12/10/07 1,808,705 1,833,134 24,429
BUY EUR 38,511,028 11/19/07 - 12/19/07 54,067,679 55,873,035 1,805,356
BUY GBP 2,647,967 12/14/07 - 12/19/07 5,318,461 5,503,215 184,754
BUY JPY 659,170,835 11/13/07 5,654,547 5,725,278 70,731
SELL JPY 325,809,675 11/13/07 2,851,259 2,829,845 21,414
BUY MXN 7,460,775 12/18/07 672,414 696,056 23,642
BUY MYR 1,405,435 11/27/07 418,658 421,755 3,097
BUY NOK 3,757,065 12/14/07 670,988 699,968 28,980
BUY NZD 967,525 11/19/07 705,849 746,345 40,496
BUY PHP 36,446,709 11/19/07 824,108 833,726 9,618
BUY PLN 2,235,234 11/30/07 836,508 894,666 58,158
BUY RUB 9,863,866 11/26/07 396,617 399,874 3,257
BUY SEK 18,471,538 11/13/07 2,732,881 2,909,984 177,103
BUY SGD 13,205 11/23/07 9,038 9,144 106
BUY TRY 486,553 11/16/07 403,477 415,413 11,936
-----------
$2,896,172
===========
DEPRECIATION
- ----------------------------------------------------------------------------------------------------------------
SELL AUD 837,550 11/19/07 $711,733 $781,229 $(69,496)
SELL CAD 3,370,280 11/13/07 3,450,757 3,562,810 (112,053)
SELL CHF 799,116 12/03/07 680,000 692,604 (12,604)
SELL DKK 7,019,834 12/10/07 1,333,375 1,366,628 (33,253)
SELL EUR 28,196,799 12/14/07 - 12/19/07 39,433,563 40,918,422 (1,484,859)
SELL GBP 4,469,688 12/14/07 9,038,275 9,290,494 (252,219)
BUY IDR 3,736,769,078 11/27/07 410,860 409,898 (962)
BUY JPY 4,695,381,399 11/13/07 40,949,857 40,782,090 (167,767)
SELL JPY 701,314,168 11/13/07 6,075,872 6,091,316 (15,444)
SELL MXN 7,586,550 12/18/07 690,000 707,791 (17,791)
SELL NOK 3,802,190 12/14/07 700,000 708,375 (8,375)
SELL NZD 967,526 11/19/07 685,724 746,346 (60,622)
SELL PLN 2,235,234 11/30/07 879,923 894,666 (14,743)
SELL SEK 10,727,537 11/13/07 1,649,277 1,690,004 (40,727)
-----------
$(2,290,915)
===========
At October 31, 2007, the fund had sufficient cash and/or securities to cover any commitments under these
derivative contracts.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 10/31/07
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 $6,356,199 of securities on
loan (identified cost, $600,832,007) $691,455,394
Receivable for forward foreign currency exchange contracts 2,896,172
Receivable for investments sold 8,477,069
Receivable for fund shares sold 1,283,408
Interest and dividends receivable 4,404,717
Receivable from investment adviser 75,784
- -------------------------------------------------------------------------------------------------------
Total assets $708,592,544
- -------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------
Payable to custodian $999,209
Payable for forward foreign currency exchange contracts 2,290,915
Payable for daily variation margin on open futures contracts 7,841
Payable for investments purchased 4,799,354
Payable for fund shares reacquired 2,018,432
Collateral for securities loaned, at value 6,704,284
Payable to affiliates
Management fee 30,761
Shareholder servicing costs 219,843
Distribution and service fees 21,241
Administrative services fee 638
Retirement plan administration and services fees 75
Payable for independent trustees' compensation 68,581
Accrued expenses and other liabilities 319,419
- -------------------------------------------------------------------------------------------------------
Total liabilities $17,480,593
- -------------------------------------------------------------------------------------------------------
Net assets $691,111,951
- -------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- -------------------------------------------------------------------------------------------------------
Paid-in capital $551,698,927
Unrealized appreciation (depreciation) on investments and
translation of assets and liabilities in foreign currencies
(net of $24,398 deferred country tax) 91,426,243
Accumulated net realized gain (loss) on investments and
foreign currency transactions 42,460,816
Undistributed net investment income 5,525,965
- -------------------------------------------------------------------------------------------------------
Net assets $691,111,951
- -------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 43,959,501
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
Class A shares
- -------------------------------------------------------------------------------------------------------
Net assets $450,365,739
Shares outstanding 28,765,304
- -------------------------------------------------------------------------------------------------------
Net asset value per share $15.66
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/94.25Xnet asset value per share) $16.62
- -------------------------------------------------------------------------------------------------------
Class B shares
- -------------------------------------------------------------------------------------------------------
Net assets $95,689,119
Shares outstanding 6,005,908
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $15.93
- -------------------------------------------------------------------------------------------------------
Class C shares
- -------------------------------------------------------------------------------------------------------
Net assets $132,343,101
Shares outstanding 8,373,587
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $15.80
- -------------------------------------------------------------------------------------------------------
Class I shares
- -------------------------------------------------------------------------------------------------------
Net assets $3,691,466
Shares outstanding 237,363
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $15.55
- -------------------------------------------------------------------------------------------------------
Class R shares
- -------------------------------------------------------------------------------------------------------
Net assets $1,154,542
Shares outstanding 74,038
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $15.59
- -------------------------------------------------------------------------------------------------------
Class R1 shares
- -------------------------------------------------------------------------------------------------------
Net assets $1,043,936
Shares outstanding 66,199
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $15.77
- -------------------------------------------------------------------------------------------------------
Class R2 shares
- -------------------------------------------------------------------------------------------------------
Net assets $138,623
Shares outstanding 8,767
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $15.81
- -------------------------------------------------------------------------------------------------------
Class R3 shares
- -------------------------------------------------------------------------------------------------------
Net assets $2,306,229
Shares outstanding 148,084
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $15.57
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
Class R4 shares
- -------------------------------------------------------------------------------------------------------
Net assets $3,951,254
Shares outstanding 252,915
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $15.62
- -------------------------------------------------------------------------------------------------------
Class R5 shares
- -------------------------------------------------------------------------------------------------------
Net assets $427,942
Shares outstanding 27,336
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $15.65
- -------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A is reduced. A contingent deferred sales
charge may be imposed on redemptions of Class A, Class B, and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF OPERATIONS
Year ended 10/31/07
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 INCOME
- ----------------------------------------------------------------------------------------------------
Income
Interest $12,099,663
Dividends 10,248,776
Foreign taxes withheld (673,427)
- ----------------------------------------------------------------------------------------------------
Total investment income $21,675,012
- ----------------------------------------------------------------------------------------------------
Expenses
Management fee $5,564,635
Distribution and service fees 3,755,228
Shareholder servicing costs 944,002
Administrative services fee 121,565
Retirement plan administration and services fees 10,629
Independent trustees' compensation 27,412
Custodian fee 371,395
Shareholder communications 71,217
Auditing fees 56,041
Legal fees 10,128
Miscellaneous 173,469
- ----------------------------------------------------------------------------------------------------
Total expenses $11,105,721
- ----------------------------------------------------------------------------------------------------
Fees paid indirectly (7,789)
Reduction of expenses by investment adviser (1,040,263)
- ----------------------------------------------------------------------------------------------------
Net expenses $10,057,669
- ----------------------------------------------------------------------------------------------------
Net investment income $11,617,343
- ----------------------------------------------------------------------------------------------------
Statement of Operations - continued
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis)
Investment transactions (net of $334 country tax) $61,066,116
Futures contracts 234,556
Foreign currency transactions (1,186,399)
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions $60,114,273
- ----------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
Investments (net of $24,398 deferred country tax) $11,982,639
Futures contracts 44,579
Translation of assets and liabilities in foreign currencies 876,240
- ----------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments and foreign
currency translation $12,903,458
- ----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and
foreign currency $73,017,731
- ----------------------------------------------------------------------------------------------------
Change in net assets from operations $84,635,074
- ----------------------------------------------------------------------------------------------------
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.
YEARS ENDED 10/31
-----------------------------
2007 2006
CHANGE IN NET ASSETS
FROM OPERATIONS
- -------------------------------------------------------------------------------------------
Net investment income $11,617,343 $9,930,822
Net realized gain (loss) on investments and foreign
currency transactions 60,114,273 48,637,642
Net unrealized gain (loss) on investments and foreign
currency translation 12,903,458 24,371,558
- -------------------------------------------------------------------------------------------
Change in net assets from operations $84,635,074 $82,940,022
- -------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------
From net investment income
Class A $(8,643,261) $(5,593,645)
Class B (1,337,012) (715,557)
Class C (1,627,882) (585,189)
Class I (93,542) (65,432)
Class R (25,056) (29,988)
Class R1 (11,267) (1,946)
Class R2 (1,853) (1,176)
Class R3 (27,433) (8,358)
Class R4 (58,933) (9,161)
Class R5 (6,598) (3,213)
Statements of Changes in Net Assets - continued
YEARS ENDED 10/31
-----------------------------
2007 2006
From net realized gain on investments
Class A $(28,109,668) $(27,058,316)
Class B (7,838,388) (9,148,385)
Class C (7,029,814) (5,867,929)
Class I (294,017) (248,822)
Class R (130,716) (161,515)
Class R1 (56,034) (6,293)
Class R2 (6,592) (9,823)
Class R3 (80,623) (12,793)
Class R4 (107,918) (4,033)
Class R5 (48,474) (3,950)
- -------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(55,535,081) $(49,535,524)
- -------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $33,706,278 $35,594,361
- -------------------------------------------------------------------------------------------
Total change in net assets $62,806,271 $68,998,859
- -------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------
At beginning of period 628,305,680 559,306,821
At end of period (including undistributed net investment
income of $5,525,965 and $113,950, respectively) $691,111,951 $628,305,680
- -------------------------------------------------------------------------------------------
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
past 5 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.
CLASS A YEARS ENDED 10/31
------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $15.05 $14.30 $14.73 $12.98 $11.41
- -------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.29 $0.28 $0.24 $0.19 $0.18
Net realized and unrealized gain (loss)
on investments and foreign currency 1.67 1.80 0.94 1.97 1.63
- -------------------------------------------------------------------------------------------------------------
Total from investment operations $1.96 $2.08 $1.18 $2.16 $1.81
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------
From net investment income $(0.30) $(0.22) $(0.56) $(0.41) $(0.24)
From net realized gain on investments (1.05) (1.11) (1.05) -- --
- -------------------------------------------------------------------------------------------------------------
Total distributions declared to
shareholders $(1.35) $(1.33) $(1.61) $(0.41) $(0.24)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.66 $15.05 $14.30 $14.73 $12.98
- -------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 13.89 15.62 8.26 16.94 16.09
- -------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.46 1.52 1.52 1.54 1.54
Expenses after expense reductions (f) 1.30 1.30 1.48 1.54 N/A
Net investment income 1.97 1.95 1.64 1.37 1.53
Portfolio turnover 66 82 82 76 105
Net assets at end of period (000 Omitted) $450,366 $403,848 $353,745 $298,826 $261,042
- -------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS B YEARS ENDED 10/31
-----------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $15.28 $14.47 $14.82 $13.03 $11.43
- -------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.20 $0.19 $0.14 $0.10 $0.11
Net realized and unrealized gain (loss)
on investments and foreign currency 1.70 1.82 0.95 1.99 1.62
- -------------------------------------------------------------------------------------------------------------
Total from investment operations $1.90 $2.01 $1.09 $2.09 $1.73
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------
From net investment income $(0.20) $(0.09) $(0.39) $(0.30) $(0.13)
From net realized gain on investments (1.05) (1.11) (1.05) -- --
- -------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(1.25) $(1.20) $(1.44) $(0.30) $(0.13)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.93 $15.28 $14.47 $14.82 $13.03
- -------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 13.16 14.84 7.56 16.14 15.33
- -------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.11 2.17 2.17 2.20 2.20
Expenses after expense reductions (f) 1.95 1.95 2.13 2.20 N/A
Net investment income 1.32 1.29 0.98 0.72 0.88
Portfolio turnover 66 82 82 76 105
Net assets at end of period (000 Omitted) $95,689 $115,336 $124,013 $129,141 $129,378
- -------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS C YEARS ENDED 10/31
------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $15.18 $14.39 $14.76 $12.99 $11.40
- -------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.20 $0.19 $0.15 $0.10 $0.11
Net realized and unrealized gain (loss)
on investments and foreign currency 1.68 1.81 0.94 1.97 1.62
- -------------------------------------------------------------------------------------------------------------
Total from investment operations $1.88 $2.00 $1.09 $2.07 $1.73
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------
From net investment income $(0.21) $(0.10) $(0.41) $(0.30) $(0.14)
From net realized gain on investments (1.05) (1.11) (1.05) -- --
- -------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(1.26) $(1.21) $(1.46) $(0.30) $(0.14)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.80 $15.18 $14.39 $14.76 $12.99
- -------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 13.12 14.87 7.59 16.12 15.27
- -------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.11 2.17 2.16 2.20 2.20
Expenses after expense reductions (f) 1.95 1.95 2.12 2.20 N/A
Net investment income 1.32 1.29 1.00 0.72 0.89
Portfolio turnover 66 82 82 76 105
Net assets at end of period (000 Omitted) $132,343 $99,019 $75,974 $57,119 $54,438
- -------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS I YEARS ENDED 10/31
----------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $14.95 $14.23 $14.69 $12.96 $11.42
- -------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.35 $0.32 $0.29 $0.24 $0.25
Net realized and unrealized gain (loss)
on investments and foreign currency 1.66 1.79 0.93 1.96 1.60
- -------------------------------------------------------------------------------------------------------------
Total from investment operations $2.01 $2.11 $1.22 $2.20 $1.85
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------
From net investment income $(0.36) $(0.28) $(0.63) $(0.47) $(0.31)
From net realized gain on investments (1.05) (1.11) (1.05) -- --
- -------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(1.41) $(1.39) $(1.68) $(0.47) $(0.31)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.55 $14.95 $14.23 $14.69 $12.96
- -------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 14.31 16.00 8.65 17.31 16.49
- -------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.11 1.12 1.16 1.16 1.20
Expenses after expense reductions (f) 0.95 0.95 1.12 1.16 N/A
Net investment income 2.34 2.28 1.99 1.59 1.93
Portfolio turnover 66 82 82 76 105
Net assets at end of period (000 Omitted) $3,691 $4,133 $3,170 $2,286 $56,010
- -------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R YEARS ENDED 10/31
----------------------------------------------------------
2007 2006 2005 2004 2003(i)
Net asset value, beginning of period $14.98 $14.24 $14.71 $12.97 $11.54
- -------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.26 $0.26 $0.22 $0.21 $0.14
Net realized and unrealized gain (loss)
on investments and foreign currency 1.67 1.78 0.93 1.94 1.40(g)
- -------------------------------------------------------------------------------------------------------------
Total from investment operations $1.93 $2.04 $1.15 $2.15 $1.54
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------
From net investment income $(0.27) $(0.19) $(0.57) $(0.41) $(0.11)
From net realized gain on investments (1.05) (1.11) (1.05) -- --
- -------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(1.32) $(1.30) $(1.62) $(0.41) $(0.11)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.59 $14.98 $14.24 $14.71 $12.97
- -------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 13.72 15.39 8.08 16.89 13.41(n)
- -------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.61 1.68 1.65 1.71 1.68(a)
Expenses after expense reductions (f) 1.45 1.45 1.61 1.71 N/A
Net investment income 1.81 1.81 1.52 1.24 1.34(a)
Portfolio turnover 66 82 82 76 105
Net assets at end of period (000 Omitted) $1,155 $2,364 $2,043 $1,043 $12
- -------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R1 YEARS ENDED 10/31
----------------------------
2007 2006 2005(i)
Net asset value, beginning of period $15.17 $14.40 $14.42
- ----------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income (d) $0.17 $0.18 $0.08
Net realized and unrealized gain (loss)
on investments and foreign currency 1.69 1.81 0.06(g)
- ----------------------------------------------------------------------------
Total from investment operations $1.86 $1.99 $0.14
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------
From net investment income $(0.21) $(0.11) $(0.16)
From net realized gain on investments (1.05) (1.11) --
- ----------------------------------------------------------------------------
Total distributions declared to shareholders $(1.26) $(1.22) $(0.16)
- ----------------------------------------------------------------------------
Net asset value, end of period $15.77 $15.17 $14.40
- ----------------------------------------------------------------------------
Total return (%) (r)(s) 13.00 14.78 0.99(n)
- ----------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------
Expenses before expense reductions (f) 2.24 2.39 2.34(a)
Expenses after expense reductions (f) 2.05 2.05 2.28(a)
Net investment income 1.11 1.23 0.91(a)
Portfolio turnover 66 82 82
Net assets at end of period (000 Omitted) $1,044 $363 $52
- ----------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R2 YEARS ENDED 10/31
----------------------------
2007 2006 2005(i)
Net asset value, beginning of period $15.19 $14.42 $14.42
- ----------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income (d) $0.23 $0.23 $0.10
Net realized and unrealized gain (loss)
on investments and foreign currency 1.69 1.81 0.07(g)
- ----------------------------------------------------------------------------
Total from investment operations $1.92 $2.04 $0.17
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------
From net investment income $(0.25) $(0.16) $(0.17)
From net realized gain on investments (1.05) (1.11) --
- ----------------------------------------------------------------------------
Total distributions declared to shareholders $(1.30) $(1.27) $(0.17)
- ----------------------------------------------------------------------------
Net asset value, end of period $15.81 $15.19 $14.42
- ----------------------------------------------------------------------------
Total return (%) (r)(s) 13.42 15.16 1.20(n)
- ----------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------
Expenses before expense reductions (f) 1.92 2.07 2.03(a)
Expenses after expense reductions (f) 1.70 1.70 1.97(a)
Net investment income 1.51 1.54 1.23(a)
Portfolio turnover 66 82 82
Net assets at end of period (000 Omitted) $139 $94 $51
- ----------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R3 YEARS ENDED 10/31
--------------------------------------
2007 2006 2005 2004
Net asset value, beginning of period $14.97 $14.24 $14.67 $12.97
- --------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------
Net investment income (d) $0.23 $0.25 $0.18 $0.12
Net realized and unrealized gain (loss)
on investments and foreign currency 1.68 1.77 0.94 1.99
- --------------------------------------------------------------------------------------
Total from investment operations $1.91 $2.02 $1.12 $2.11
- --------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------
From net investment income $(0.26) $(0.18) $(0.50) $(0.41)
From net realized gain on investments (1.05) (1.11) (1.05) --
- --------------------------------------------------------------------------------------
Total distributions declared to shareholders $(1.31) $(1.29) $(1.55) $(0.41)
- --------------------------------------------------------------------------------------
Net asset value, end of period $15.57 $14.97 $14.24 $14.67
- --------------------------------------------------------------------------------------
Total return (%) (r)(s) 13.57 15.19 7.87 16.52
- --------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.80 1.94 1.92 1.95
Expenses after expense reductions (f) 1.60 1.60 1.87 1.95
Net investment income 1.58 1.76 1.24 0.91
Portfolio turnover 66 82 82 76
Net assets at end of period (000 Omitted) $2,306 $1,185 $159 $133
- --------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R4 YEARS ENDED 10/31
----------------------------
2007 2006 2005(i)
Net asset value, beginning of period $15.02 $14.28 $14.26
- ----------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income (d) $0.29 $0.31 $0.14
Net realized and unrealized gain (loss)
on investments and foreign currency 1.66 1.75 0.07(g)
- ----------------------------------------------------------------------------
Total from investment operations $1.95 $2.06 $0.21
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------
From net investment income $(0.30) $(0.21) $(0.19)
From net realized gain on investments (1.05) (1.11) --
- ----------------------------------------------------------------------------
Total distributions declared to shareholders $(1.35) $(1.32) $(0.19)
- ----------------------------------------------------------------------------
Net asset value, end of period $15.62 $15.02 $14.28
- ----------------------------------------------------------------------------
Total return (%) (r)(s) 13.84 15.53 1.48(n)
- ----------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------
Expenses before expense reductions (f) 1.50 1.57 1.54(a)
Expenses after expense reductions (f) 1.35 1.35 1.50(a)
Net investment income 1.94 2.10 1.70(a)
Portfolio turnover 66 82 82
Net assets at end of period (000 Omitted) $3,951 $1,303 $51
- ----------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R5 YEARS ENDED 10/31
----------------------------
2007 2006 2005(i)
Net asset value, beginning of period $15.03 $14.29 $14.26
- ----------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income (d) $0.28 $0.25 $0.17
Net realized and unrealized gain (loss)
on investments and foreign currency 1.71 1.87 0.06(g)
- ----------------------------------------------------------------------------
Total from investment operations $1.99 $2.12 $0.23
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------
From net investment income $(0.32) $(0.27) $(0.20)
From net realized gain on investments (1.05) (1.11) --
- ----------------------------------------------------------------------------
Total distributions declared to shareholders $(1.37) $(1.38) $(0.20)
- ----------------------------------------------------------------------------
Net asset value, end of period $15.65 $15.03 $14.29
- ----------------------------------------------------------------------------
Total return (%) (r)(s) 14.13 15.95 1.62(n)
- ----------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------
Expenses before expense reductions (f) 1.21 1.30 1.24(a)
Expenses after expense reductions (f) 1.05 1.05 1.20(a)
Net investment income 2.00 1.77 2.00(a)
Portfolio turnover 66 82 82
Net assets at end of period (000 Omitted) $428 $661 $51
- ----------------------------------------------------------------------------
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.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(g) The per share amount is not in accordance with the net realized and
unrealized gain/loss for the period because of the timing of sales of fund
shares and the per share amount of realized and unrealized gains and losses
at such time.
(i) For the period from the class' inception, December 31, 2002 (Class R) 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.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(1) BUSINESS AND ORGANIZATION
MFS Global Total Return Fund (the fund) is a series of MFS Series Trust VI (the
trust). The trust is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-
end management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with 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 markets 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. Debt instruments (other than short-term instruments),
including restricted debt instruments, are generally valued at an evaluated or
composite bid as reported by an independent pricing service. Short-term
instruments with a maturity at issuance of 60 days or less may be valued at
amortized cost, which approximates market value. Exchange-traded options are
generally valued at the last sale or official closing price as reported by an
independent pricing service on the exchange on which such options are primarily
traded. Exchange-traded options for which there were no sales reported that day
are generally valued at the last daily bid quotation as reported by an
independent pricing service on the exchange on which such options are primarily
traded. Options not traded on an exchange are generally valued at a
broker-dealer bid quotation. Foreign currency options are generally valued
using an external pricing model that uses market data from an independent
source. Futures contracts are generally valued at last posted settlement price
as reported by an independent pricing service on the market on which they are
primarily traded. Futures contracts for which there were no trades that day for
a particular position are generally valued at the closing bid quotation as
reported by an independent pricing service on the market on which such futures
contracts are primarily traded. Forward foreign currency contracts are
generally valued at the mean of bid and asked prices for the time period
interpolated from rates reported by an independent pricing service for
proximate time periods. 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. Values obtained from pricing services can
utilize both dealer-supplied valuations and electronic data processing
techniques, which take into account factors such as institutional-size trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data. 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.
INFLATION-ADJUSTED DEBT SECURITIES - The fund invests in inflation-adjusted
debt securities issued by the U.S. Treasury. The fund may also invest in
inflation-adjusted debt securities issued by U.S. Government agencies and
instrumentalities other than the U.S. Treasury and by other entities such as
U.S. and foreign corporations and foreign governments. The principal value of
these debt securities is adjusted by references to changes in the Consumer
Price Index or another general price or wage index. These debt securities
typically pay a fixed rate of interest, but this fixed rate is applied to the
inflation-adjusted principal amount. The principal paid at maturity of the debt
security is typically equal to the inflation-adjusted principal amount, or the
security's original par value, whichever is greater. Other types of
inflation-adjusted securities may use other methods to adjust for other
measures of inflation.
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.
DERIVATIVE RISK - The fund may invest in derivatives for hedging or non-
hedging purposes. While hedging can reduce or eliminate losses, it can also
reduce or eliminate gains. When the fund uses derivatives as an investment to
gain market exposure, or for hedging purposes, gains and losses from derivative
instruments may be substantially greater than the derivative's original cost.
Derivative instruments include purchased options, futures contracts, and
forward foreign currency exchange contracts.
PURCHASED OPTIONS - The fund may purchase call or put options for a premium.
Purchasing call options may be a hedge against an anticipated increase in the
dollar cost of securities to be acquired or to increase the fund's exposure to
the underlying instrument. Purchasing put options may hedge against a decline
in the value of portfolio securities. The premium paid is included as an
investment in the Statement of Assets and Liabilities and is subsequently
adjusted to the current value of the option. Premiums paid for purchased
options which have expired are treated as realized losses on investments in the
Statement of Operations. Premiums paid for purchased options which are
exercised or closed are added to the amount paid or offset against the proceeds
on the underlying security or financial instrument to determine the realized
gain or loss. The risk of loss associated with purchased options is limited to
the premium paid.
FUTURES CONTRACTS - The fund may enter into futures contracts for the delayed
delivery of securities or currency, or contracts based on financial indices at
a fixed price on a future date. In entering such contracts, the fund is
required to deposit with the broker either in cash or securities an amount
equal to a certain percentage of the contract amount. Subsequent payments are
made or received by the fund each day, depending on the daily fluctuations in
the value of the contract, and are recorded for financial statement purposes as
unrealized gains or losses by the fund. Upon entering into such contracts, the
fund bears the risk of interest or exchange rates or securities prices moving
unexpectedly, in which case, the fund may not achieve the anticipated benefits
of the futures contracts and may realize a loss.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS - The fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties to
meet the terms of their contracts and from unanticipated movements in the value
of the contract. The fund may enter into forward foreign currency exchange
contracts for hedging purposes as well as for non-hedging purposes. For hedging
purposes, the fund may enter into contracts to deliver or receive foreign
currency it will receive from or require for its normal investment activities.
The fund may also use contracts in a manner intended to protect foreign
currency denominated securities from declines in value due to unfavorable
exchange rate movements. For non-hedging purposes, the fund may enter into
contracts with the intent of changing the relative exposure of the fund's
portfolio of securities to different currencies to take advantage of
anticipated changes. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains or
losses on foreign currency transactions.
SECURITY LOANS - State Street Bank and Trust Company ("State Street") and
JPMorgan Chase and Co. ("Chase"), as lending agents, may loan the securities of
the fund to certain qualified institutions (the "Borrowers") approved by the
fund. The loans are collateralized at all times by cash and/or U.S. Treasury
securities in an amount at least equal to the market value of the securities
loaned. Security lending activity through Chase is further collateralized by an
irrevocable standby letter of credit. State Street and Chase provide the fund
with indemnification against Borrower default. The fund bears the risk of loss
with respect to the investment of cash collateral. 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 agents. On loans collateralized by U.S. Treasury securities, a
fee is received from the Borrower, and is allocated between the fund and the
lending agents. 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.
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 year ended October 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 amortization and accretion of debt
securities, wash sale loss deferrals, straddle loss deferrals, foreign currency
transactions, derivative transactions, and treating a portion of the proceeds
from redemptions as a distribution for tax purposes.
The tax character of distributions declared to shareholders is as follows:
10/31/07 10/31/06
Ordinary income (including
any short-term capital gains) $15,510,355 $15,135,577
Long-term capital gain 40,024,726 34,399,947
--------------------------------------------------------------
Total distributions $55,535,081 $49,535,524
The federal tax cost and the tax basis components of distributable earnings
were as follows:
AS OF 10/31/07
Cost of investments $602,143,457
--------------------------------------------------------------
Gross appreciation $100,313,657
Gross depreciation (11,001,720)
--------------------------------------------------------------
Net unrealized appreciation (depreciation) $89,311,937
Undistributed ordinary income 12,441,103
Undistributed long-term capital gain 41,675,665
Capital loss carryforwards (2,115,465)
Other temporary differences (1,900,216)
As of October 31, 2007, the fund had capital loss carryforwards available to
offset future realized gains. Such losses expire as follows:
10/31/10 $(2,115,465)
The availability of a portion of the capital loss carryforwards, which were
acquired on August 25, 2003, in connection with the MFS Global Asset Allocation
Fund merger, may be limited in a given year.
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.
(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
0.84% of the fund's average daily net assets. The investment adviser has agreed
in writing to reduce its management fee to 0.75% in excess of $500 million of
average daily net assets and 0.70% of average daily net assets in excess of
$1.0 billion. This written agreement may be rescinded only upon consent of the
fund's Board of Trustees. This management fee reduction amounted to $146,211,
which is shown as a reduction of total expenses in the Statement of Operations.
The management fee incurred for the year ended October 31, 2007 was equivalent
to an annual effective rate of 0.82% of the fund's average daily net assets.
The investment adviser has agreed in writing to pay a portion of the fund's
operating expenses, exclusive of certain other fees and expenses, such that
total annual fund operating expenses do not exceed the following rates annually
of the fund's average daily net assets with respect to each class:
CLASS A CLASS B CLASS C CLASS I CLASS R CLASS R1 CLASS R2 CLASS R3 CLASS R4 CLASS R5
1.30% 1.95% 1.95% 0.95% 1.45% 2.05% 1.70% 1.60% 1.35% 1.05%
This written agreement may be rescinded only upon consent of the fund's Board
of Trustees. For the year ended October 31, 2007, this reduction amounted to
$889,820 and is reflected as a reduction of total expenses in the Statement of
Operations.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of
MFS, as distributor, received $106,302 for the year ended October 31, 2007, as
its portion of the initial sales charge on sales of Class A shares of the fund.
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 Plan Fee 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% 0.35% $1,500,838
Class B 0.75% 0.25% 1.00% 1.00% 1,057,785
Class C 0.75% 0.25% 1.00% 1.00% 1,168,655
Class R 0.25% 0.25% 0.50% 0.50% 7,188
Class R1 0.50% 0.25% 0.75% 0.75% 5,594
Class R2 0.25% 0.25% 0.50% 0.50% 520
Class R3 0.25% 0.25% 0.50% 0.50% 7,882
Class R4 -- 0.25% 0.25% 0.25% 6,766
- ---------------------------------------------------------------------------------------------------------------------
Total Distribution and Service Fees $3,755,228
(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 year ended October
31, 2007 based on each class' average daily net assets.
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 year ended October 31,
2007, were as follows:
AMOUNT
Class A $3,213
Class B 98,711
Class C 17,125
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 year ended October 31, 2007, the fee was $350,780, which
equated to 0.0529% 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 year ended October 31, 2007, these
out-of-pocket expenses, sub-accounting and other shareholder servicing costs
amounted to $558,070. 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 average daily net assets. The fund's annual fixed
amount is $17,500.
The administrative services fee incurred for the year ended October 31, 2007
was equivalent to an annual effective rate of 0.0183% 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 year ended October 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% $2,893
Class R2 0.40% 0.25% 0.25% 321
Class R3 0.25% 0.15% 0.15% 3,005
Class R4 0.15% 0.15% 0.15% 4,060
Class R5 0.10% 0.10% 0.10% 350
- --------------------------------------------------------------------------------
Total Retirement Plan Administration and Services Fees $10,629
(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 year ended October 31, 2007, the waiver amounted to $985 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 $1,461. The fund also has an
unfunded retirement benefit deferral plan for certain independent trustees
which resulted in an expense of $6,044. Both amounts are included in
independent trustees' compensation for the year ended October 31, 2007. The
liability for deferred retirement benefits payable to certain independent
trustees under both plans amounted to $66,377 at October 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 year ended October 31, 2007, the fee paid to Tarantino LLC
was $4,159. MFS has agreed to reimburse the fund for a portion of the payments
made by the funds to Tarantino LLC in the amount of $3,247, 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 purchased option transactions
and short-term obligations, were as follows:
PURCHASES SALES
U.S. government securities $76,713,784 $74,141,315
- --------------------------------------------------------------------------------
Investments (non-U.S. government securities) $321,943,321 $344,097,150
- --------------------------------------------------------------------------------
(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:
YEAR ENDED YEAR ENDED
10/31/07 10/31/06
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 7,833,479 $116,390,803 6,872,236 $98,398,262
Class B 1,336,786 20,150,396 1,847,929 26,911,822
Class C 2,654,308 39,762,705 2,074,023 30,045,833
Class I 321,952 4,877,548 93,995 1,351,358
Class R 36,928 546,766 38,205 540,251
Class R1 119,858 1,813,872 32,080 460,229
Class R2 7,534 113,293 6,340 91,115
Class R3 246,702 3,620,755 119,751 1,681,818
Class R4 267,941 3,948,580 87,324 1,264,079
Class R5 30,198 455,670 40,840 598,993
- ------------------------------------------------------------------------------------------------------
12,855,686 $191,680,388 11,212,723 $161,343,760
Shares issued to shareholders in
reinvestment of distributions
Class A 2,275,290 $33,079,888 2,178,230 $29,679,452
Class B 520,145 7,680,235 584,438 8,061,736
Class C 426,901 6,265,596 334,397 4,589,203
Class I 25,301 365,027 22,802 309,017
Class R 9,759 140,857 13,311 180,617
Class R1 4,598 67,301 596 8,239
Class R2 575 8,445 802 10,999
Class R3 7,458 108,056 1,539 21,151
Class R4 11,441 166,851 942 13,194
Class R5 581 8,480 363 4,958
- ------------------------------------------------------------------------------------------------------
3,282,049 $47,890,736 3,137,420 $42,878,566
Shares reacquired
Class A (8,184,011) $(121,934,495) (6,951,254) $(99,304,209)
Class B (3,397,406) (51,289,100) (3,455,601) (50,075,224)
Class C (1,230,583) (18,506,129) (1,164,802) (16,756,790)
Class I (386,324) (5,842,710) (63,103) (886,437)
Class R (130,402) (1,925,073) (37,228) (530,589)
Class R1 (82,187) (1,230,661) (12,358) (182,604)
Class R2 (5,519) (81,880) (4,474) (62,809)
Class R3 (185,200) (2,713,525) (53,312) (745,149)
Class R4 (113,228) (1,655,778) (5,058) (72,237)
Class R5 (47,392) (685,495) (810) (11,917)
- ------------------------------------------------------------------------------------------------------
(13,762,252) $(205,864,846) (11,748,000) $(168,627,965)
Net change
Class A 1,924,758 $27,536,196 2,099,212 $28,773,505
Class B (1,540,475) (23,458,469) (1,023,234) (15,101,666)
Class C 1,850,626 27,522,172 1,243,618 17,878,246
Class I (39,071) (600,135) 53,694 773,938
Class R (83,715) (1,237,450) 14,288 190,279
Class R1 42,269 650,512 20,318 285,864
Class R2 2,590 39,858 2,668 39,305
Class R3 68,960 1,015,286 67,978 957,820
Class R4 166,154 2,459,653 83,208 1,205,036
Class R5 (16,613) (221,345) 40,393 592,034
- ------------------------------------------------------------------------------------------------------
2,375,483 $33,706,278 2,602,143 $35,594,361
(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 year ended
October 31, 2007, the fund's commitment fee and interest expense were $3,406
and $0, respectively, and are included in miscellaneous expense on the
Statement of Operations.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees of MFS Series Trust VI and Shareholders of
MFS Global Total Return Fund:
We have audited the accompanying statement of assets and liabilities of MFS
Global Total Return Fund (the Fund), (one of the portfolios comprising MFS
Series Trust VI), including the portfolio of investments, as of October 31,
2007, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Fund's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of October 31, 2007, by correspondence with
the Fund's custodian and brokers or by other appropriate auditing procedures
where replies from brokers were not received. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of MFS
Global Total Return Fund at October 31, 2007, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and its financial highlights for each of the periods
indicated therein, in conformity with U.S. generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
December 14, 2007
TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND
The Trustees and officers of the Trust, as of December 1, 2007, are listed below, together with their
principal occupations during the past five years. (Their titles may have varied during that period.)
The address of each Trustee and officer is 500 Boylston Street, Boston, Massachusetts 02116.
PRINCIPAL OCCUPATIONS DURING
POSITION(S) HELD TRUSTEE/OFFICER THE PAST FIVE YEARS &
NAME, DATE OF BIRTH WITH FUND SINCE(h) OTHER DIRECTORSHIPS(j)
- ------------------- ---------------- --------------- ----------------------------------
INTERESTED TRUSTEES
Robert J. Manning(k) Trustee February 2004 Massachusetts Financial Services
(born 10/20/63) Company, Chief Executive Officer,
President, Chief Investment
Officer and Director
Robert C. Pozen(k) Trustee February 2004 Massachusetts Financial Services
(born 8/08/46) Company, Chairman (since February
2004); MIT Sloan School
(education), Senior Lecturer
(since 2006); Secretary of
Economic Affairs, The Commonwealth
of Massachusetts (January 2002 to
December 2002); Fidelity
Investments, Vice Chairman (June
2000 to December 2001); Fidelity
Management & Research Company
(investment adviser), President
(March 1997 to July 2001); Bell
Canada Enterprises
(telecommunications), Director;
Medtronic, Inc. (medical
technology), Director; Telesat
(satellite communications), Director
INDEPENDENT TRUSTEES
J. Atwood Ives Trustee and Chair February 1992 Private investor; Eastern
(born 5/01/36) of Trustees Enterprises (diversified services
company), Chairman, Trustee and
Chief Executive Officer (until
November 2000)
Robert E. Butler(n) Trustee January 2006 Consultant - regulatory and
(born 11/29/41) compliance matters (since July
2002); PricewaterhouseCoopers LLP
(professional services firm),
Partner (until 2002)
Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital,
(born 3/11/37) Chief of Cardiac Surgery (2005);
Harvard Medical School, Professor
of Cardiac Surgery; Physician
Director of Medical Device
Technology for Partners HealthCare
David H. Gunning Trustee January 2004 Retired; Cleveland-Cliffs Inc.
(born 5/30/42) (mining products and service
provider), Vice Chairman/Director
(until May 2007); Portman Limited
(mining), Director (since 2005);
Encinitos Ventures (private
investment company), Principal
(1997 to April 2001); Lincoln
Electric Holdings, Inc. (welding
equipment manufacturer), Director
William R. Gutow Trustee December 1993 Private investor and real estate
(born 9/27/41) consultant; Capitol Entertainment
Management Company (video
franchise), Vice Chairman;
Atlantic Coast Tan (tanning
salons), Vice Chairman (since
2002)
Michael Hegarty Trustee December 2004 Retired; AXA Financial (financial
(born 12/21/44) services and insurance), Vice
Chairman and Chief Operating
Officer (until May 2001); The
Equitable Life Assurance Society
(insurance), President and Chief
Operating Officer (until May 2001)
Lawrence T. Perera Trustee July 1981 Hemenway & Barnes (attorneys),
(born 6/23/35) Partner
J. Dale Sherratt Trustee August 1993 Insight Resources, Inc.
(born 9/23/38) (acquisition planning
specialists), President; Wellfleet
Investments (investor in health
care companies), Managing General
Partner (since 1993); Cambridge
Nutraceuticals (professional
nutritional products), Chief
Executive Officer (until May 2001)
Laurie J. Thomsen Trustee March 2005 New Profit, Inc. (venture
(born 8/05/57) philanthropy), Partner (since
2006); Private investor; Prism
Venture Partners (venture
capital), Co-founder and General
Partner (until June 2004); The
Travelers Companies (commercial
property liability insurance),
Director
Robert W. Uek Trustee January 2006 Retired (since 1999);
(born 5/18/41) PricewaterhouseCoopers LLP
(professional services firm),
Partner (until 1999); Consultant
to investment company industry
(since 2000); TT International
Funds (mutual fund complex),
Trustee (2000 until 2005);
Hillview Investment Trust II Funds
(mutual fund complex), Trustee
(2000 until 2005)
OFFICERS
Maria F. Dwyer(k) President November 2005 Massachusetts Financial Services
(born 12/01/58) Company, Executive Vice President
and Chief Regulatory Officer
(since March 2004) Chief
Compliance Officer (since December
2006); Fidelity Management &
Research Company, Vice President
(prior to March 2004); Fidelity
Group of Funds, President and
Treasurer (prior to March 2004)
Tracy Atkinson(k) Treasurer September 2005 Massachusetts Financial Services
(born 12/30/64) Company, Senior Vice President
(since September 2004);
PricewaterhouseCoopers LLP,
Partner (prior to September 2004)
Christopher R. Bohane(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 1/18/74) and Assistant Clerk Company, Vice President and Senior
Counsel (since April 2003);
Kirkpatrick & Lockhart LLP (law
firm), Associate (prior to April
2003)
Ethan D. Corey(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 11/21/63) and Assistant Clerk Company, Special Counsel (since
December 2004); Dechert LLP (law
firm), Counsel (prior to December
2004)
David L. DiLorenzo(k) Assistant Treasurer July 2005 Massachusetts Financial Services
(born 8/10/68) Company, Vice President (since
June 2005); JP Morgan Investor
Services, Vice President (prior to
June 2005)
Timothy M. Fagan(k) Assistant Secretary September 2005 Massachusetts Financial Services
(born 7/10/68) and Assistant Clerk Company, Vice President and Senior
Counsel (since September 2005);
John Hancock Advisers, LLC, Vice
President and Chief Compliance
Officer (September 2004 to August
2005), Senior Attorney (prior to
September 2004); John Hancock
Group of Funds, Vice President and
Chief Compliance Officer
(September 2004 to December 2004)
Mark D. Fischer(k) Assistant Treasurer July 2005 Massachusetts Financial Services
(born 10/27/70) Company, Vice President (since May
2005); JP Morgan Investment
Management Company, Vice President
(prior to May 2005)
Brian E. Langenfeld(k) Assistant Secretary June 2006 Massachusetts Financial Services
(born 3/07/73) and Assistant Clerk Company, Assistant Vice President
and Counsel (since May 2006); John
Hancock Advisers, LLC, Assistant
Vice President and Counsel (May
2005 to April 2006); John Hancock
Advisers, LLC, Attorney and
Assistant Secretary (prior to May
2005)
Ellen Moynihan(k) Assistant Treasurer April 1997 Massachusetts Financial Services
(born 11/13/57) Company, Senior Vice President
Susan S. Newton(k) Assistant Secretary May 2005 Massachusetts Financial Services
(born 3/07/50) and Assistant Clerk Company, Senior Vice President and
Associate General Counsel (since
April 2005); John Hancock
Advisers, LLC, Senior Vice
President, Secretary and Chief
Legal Officer (prior to April
2005); John Hancock Group of
Funds, Senior Vice President,
Secretary and Chief Legal Officer
(prior to April 2005)
Susan A. Pereira(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 11/05/70) and Assistant Clerk Company, Vice President and Senior
Counsel (since June 2004); Bingham
McCutchen LLP (law firm),
Associate (prior to June 2004)
Mark N. Polebaum(k) Secretary and Clerk January 2006 Massachusetts Financial Services
(born 5/01/52) Company, Executive Vice President,
General Counsel and Secretary
(since January 2006); Wilmer
Cutler Pickering Hale and Dorr LLP
(law firm), Partner (prior to
January 2006)
Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of
(born 3/07/44) Compliance Officer compliance services), Principal
(since June 2004); CRA Business
Strategies Group (consulting
services), Executive Vice
President (April 2003 to June
2004); David L. Babson & Co.
(investment adviser), Managing
Director, Chief Administrative
Officer and Director (prior to
March 2003)
James O. Yost(k) Assistant Treasurer September 1990 Massachusetts Financial Services
(born 6/12/60) Company, Senior Vice President
- ------------
(h) Date first appointed to serve as Trustee/officer of an MFS fund. Each Trustee has served
continuously since appointment unless indicated otherwise.
(j) Directorships or trusteeships of companies required to report to the Securities and Exchange
Commission (i.e., "public companies").
(k) "Interested person" of the Trust within the meaning of the Investment Company Act of 1940 (referred
to as the 1940 Act), which is the principal federal law governing investment companies like the
fund, as a result of position with MFS. The address of MFS is 500 Boylston Street, Boston,
Massachusetts 02116.
(n) In 2004 and 2005, Mr. Butler provided consulting services to the independent compliance consultant
retained by MFS pursuant to its settlement with the SEC concerning market timing and related
matters. The terms of that settlement required that compensation and expenses related to the
independent compliance consultant be borne exclusively by MFS and, therefore, MFS paid Mr. Butler
for the services he rendered to the independent compliance consultant. In 2004 and 2005, MFS paid
Mr. Butler a total of $351,119.29.
The Trust held a shareholders' meeting in 2005 to elect Trustees, and will hold a shareholders' meeting
at least once every five years thereafter, to elect Trustees.
Each Trustee (except Mr. Butler and Mr. Uek) has been elected by shareholders and each Trustee and
officer holds office until his or her successor is chosen and qualified or until his or her earlier
death, resignation, retirement or removal. Messrs. Butler, Gutow, Sherratt and Uek and Ms. Thomsen are
members of the Trust's Audit Committee.
Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which
MFS or a subsidiary is the investment adviser or distributor, and, in the case of the officers, with
certain affiliates of MFS. As of January 1, 2007, the Trustees served as board members of 97 funds
within the MFS Family of Funds.
The Statement of Additional Information contains further information about the Trustees and is
available without charge upon request by calling 1-800-225-2606.
- --------------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIAN
Massachusetts Financial Services Company State Street Bank and Trust Company
500 Boylston Street, Boston, MA 02116-3741 225 Franklin Street, Boston, MA 02110
Effective November 1, 2007, the custodian changed to:
DISTRIBUTOR JPMorgan Chase Bank
MFS Fund Distributors, Inc. One Chase Manhattan Plaza
500 Boylston Street, Boston, MA 02116-3741 New York, New York 10081
PORTFOLIO MANAGERS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Nevin Chitkara Ernst & Young LLP
Steven Gorham 200 Clarendon Street, Boston, MA 02116
Matthew Ryan
Erik Weisman
Barnaby Wiener
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT
The Investment Company Act of 1940 requires that both the full Board of
Trustees and a majority of the non-interested ("independent") Trustees, voting
separately, annually approve the continuation of the Fund's investment advisory
agreement with MFS. The Trustees consider matters bearing on the Fund and its
advisory arrangements at their meetings throughout the year, including a review
of performance data at each regular meeting. In addition, the independent
Trustees met several times over the course of three months beginning in May and
ending in July, 2007 ("contract review meetings") for the specific purpose of
considering whether to approve the continuation of the investment advisory
agreement for the Fund and the other investment companies that the Board
oversees (the "MFS Funds"). The independent Trustees were assisted in their
evaluation of the Fund's investment advisory agreement by independent legal
counsel, from whom they received separate legal advice and with whom they met
separately from MFS during various contract review meetings. The independent
Trustees were also assisted in this process by the MFS Funds' Independent Chief
Compliance Officer, a full-time senior officer appointed by and reporting to
the independent Trustees.
In connection with their deliberations regarding the continuation of the
investment advisory agreement, the Trustees, including the independent
Trustees, considered such information and factors as they believed, in light of
the legal advice furnished to them and their own business judgment, to be
relevant. The investment advisory agreement for the Fund was considered
separately, although the Trustees also took into account the common interests
of all MFS Funds in their review. As described below, the Trustees considered
the nature, quality, and extent of the various investment advisory,
administrative, and shareholder services performed by MFS under the existing
investment advisory agreement and other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and
relied upon materials that included, among other items: (i) information
provided by Lipper Inc. on the investment performance of the Fund for various
time periods ended December 31, 2006 and the investment performance of a group
of funds with substantially similar investment classifications/objectives (the
"Lipper performance universe"), as well as the investment performance of a
group of funds identified by objective criteria suggested by MFS ("MFS peer
funds"), (ii) information provided by Lipper Inc. on the Fund's advisory fees
and other expenses and the advisory fees and other expenses of comparable funds
identified by Lipper (the "Lipper expense group"), as well as the advisory fees
and other expenses of MFS peer funds, (iii) information provided by MFS on the
advisory fees of comparable portfolios of other clients of MFS, including
institutional separate accounts and other clients, (iv) information as to
whether and to what extent applicable expense waivers, reimbursements or fee
"breakpoints" are observed for the Fund, (v) information regarding MFS'
financial results and financial condition, including MFS' and certain of its
affiliates' estimated profitability from services performed for the Fund and
the MFS Funds as a whole, (vi) MFS' views regarding the outlook for the mutual
fund industry and the strategic business plans of MFS, (vii) descriptions of
various functions performed by MFS for the Funds, such as compliance monitoring
and portfolio trading practices, and (viii) information regarding the overall
organization of MFS, including information about MFS' senior management and
other personnel providing investment advisory, administrative and other
services to the Fund and the other MFS Funds. The comparative performance, fee
and expense information prepared and provided by Lipper Inc. was not
independently verified and the independent Trustees did not independently
verify any information provided to them by MFS.
The Trustees' conclusion as to the continuation of the investment advisory
agreement was based on a comprehensive consideration of all information
provided to the Trustees and not the result of any single factor. Some of the
factors that figured particularly in the Trustees' deliberations are described
below, although individual Trustees may have evaluated the information
presented differently from one another, giving different weights to various
factors. It is also important to recognize that the fee arrangements for the
Fund and other MFS Funds are the result of years of review and discussion
between the independent Trustees and MFS, that certain aspects of such
arrangements may receive greater scrutiny in some years than in others, and
that the Trustees' conclusions may be based, in part, on their consideration of
these same arrangements during the course of the year and in prior years.
Based on information provided by Lipper Inc. and MFS, the Trustees reviewed the
Fund's total return investment performance as well as the performance of peer
groups of funds over various time periods. The Trustees placed particular
emphasis on the total return performance of the Fund's Class A shares in
comparison to the performance of funds in its Lipper performance universe over
the three-year period ended December 31, 2006, which the Trustees believed was
a long enough period to reflect differing market conditions. The total return
performance of the Fund's Class A shares was in the 1st quintile relative to
the other funds in the universe for this three-year period (the 1st quintile
being the best performers and the 5th quintile being the worst performers). The
total return performance of the Fund's Class A shares was in the 1st quintile
for each of the one- and five-year periods ended December 31, 2006 relative to
the Lipper performance universe. Because of the passage of time, these
performance results may differ from the performance results for more recent
periods, including those shown elsewhere in this report.
In addition to considering the performance information provided in connection
with the contract review meetings, the independent Trustees noted that, in
light of the Fund's substandard relative performance at the time of their
contract review meetings in 2006, they had met at each of their regular
meetings through January 2007 with MFS' senior investment management personnel
to discuss the Fund's performance and MFS' efforts to improve the Fund's
performance, as well as met with portfolio management personnel at investment
review meetings conducted during the course of the year. The independent
Trustees further noted that the Fund's relative performance for the three-year
period ended December 31, 2006 had improved in comparison to the prior year.
Taking this information into account, the Trustees concluded, within the
context of their overall conclusions regarding the investment advisory
agreement, that they were satisfied with MFS' responses and efforts relating to
investment performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees
considered, among other information, the Fund's advisory fee and the total
expense ratio of the Fund's Class A shares as a percentage of average daily net
assets and the advisory fee and total expense ratios of peer groups of funds
based on information provided by Lipper Inc. and MFS. The Trustees considered
that MFS has agreed in writing to waive a portion of its advisory fee on
average daily net assets over $500 million and $1 billion, which may not be
changed without the Trustees' approval, and that MFS currently observes an
expense limitation for the Fund. The Trustees also considered that, according
to the Lipper data (which takes into account the breakpoint described above and
the expense limitation), the Fund's effective advisory fee rate was
approximately at the Lipper expense group median, and the Fund's total expense
ratio was higher than the Lipper expense group median.
The Trustees also considered the advisory fees charged by MFS to institutional
accounts. In comparing these fees, the Trustees considered information provided
by MFS as to the generally broader scope of services provided by MFS to the
Fund in comparison to institutional accounts, the higher demands placed on MFS'
investment personnel and trading infrastructure as a result of the daily cash
in-flows and out-flows of the Fund, and the impact on MFS and expenses
associated with the more extensive regulatory regime to which the Fund is
subject in comparison to institutional accounts.
The Trustees also considered whether the Fund is likely to benefit from any
economies of scale in the management of the Fund in the event of growth in
assets of the Fund. They noted that the Fund's advisory fee rate schedule is
currently subject to the breakpoints described above. The Trustees concluded
that the existing breakpoints were sufficient to allow the Fund to benefit from
economies of scale as its assets grow.
The Trustees also considered information prepared by MFS relating to MFS' costs
and profits with respect to the Fund, the MFS Funds considered as a group, and
other investment companies and accounts advised by MFS, as well as MFS'
methodologies used to determine and allocate its costs to the MFS Funds, the
Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreement, that the advisory fees charged to the Fund
represent reasonable compensation in light of the services being provided by
MFS to the Fund.
In addition, the Trustees considered MFS' resources and related efforts to
continue to retain, attract and motivate capable personnel to serve the Fund.
The Trustees also considered current and developing conditions in the financial
services industry, including the entry into the industry of large and
well-capitalized companies which are spending, and appear to be prepared to
continue to spend, substantial sums to engage personnel and to provide services
to competing investment companies. In this regard, the Trustees also considered
the financial resources of MFS and its ultimate parent, Sun Life Financial Inc.
The Trustees also considered the advantages and possible disadvantages to the
Fund of having an adviser that also serves other investment companies as well
as other accounts.
The Trustees also considered the nature, quality, cost, and extent of
administrative, transfer agency, and distribution services provided to the Fund
by MFS and its affiliates under agreements and plans other than the investment
advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund
Distributors, Inc., an affiliate of MFS. The Trustees also considered the
nature, extent and quality of certain other services MFS performs or arranges
for on the Fund's behalf, which may include securities lending programs,
directed expense payment programs, class action recovery programs, and MFS'
interaction with third-party service providers, principally custodians and
sub-custodians. The Trustees concluded that the various non-advisory services
provided by MFS and its affiliates on behalf of the Funds were satisfactory.
The Trustees also considered benefits to MFS from the use of the Fund's
portfolio brokerage commissions, if applicable, to pay for investment research
(excluding third-party research, for which MFS pays directly) and various other
factors. Additionally, the Trustees considered so-called "fall-out benefits" to
MFS such as reputational value derived from serving as investment manager to
the Fund.
Based on their evaluation of factors that they deemed to be material, including
those factors described above, the Board of Trustees, including a majority of
the independent Trustees, concluded that the Fund's investment advisory
agreement with MFS should be continued for an additional one-year period,
commencing August 1, 2007.
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 1-800-SEC-0330. 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.
FEDERAL TAX INFORMATION (unaudited)
The fund will notify shareholders of amounts for use in preparing 2007 income
tax forms in January 2008. The following information is provided pursuant to
provisions of the Internal Revenue Code.
The fund designates the maximum amount allowable as qualified dividend income
eligible for the 15% tax rate.
The fund designates $43,862,255 as capital gain dividends paid during the
fiscal year.
For corporate shareholders, 19.16% of the ordinary income dividends paid during
the fiscal year qualify for the corporate dividends received deduction.
MFS(R) PRIVACY NOTICE
Privacy is a concern for every investor today. At MFS Investment Management(R)
and the MFS funds, we take this concern very seriously. We want you to
understand our policies about the investment products and services that we
offer, and how we protect the nonpublic personal information of investors who
have a direct relationship with us and our wholly owned subsidiaries.
Throughout our business relationship, you provide us with personal information.
We maintain information and records about you, your investments, and the
services you use. Examples of the nonpublic personal information we maintain
include
o data from investment applications and other forms
o share balances and transactional history with us, our affiliates, or others
o facts from a consumer reporting agency
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. We may share nonpublic
personal information with third parties or certain of our affiliates in
connection with servicing your account or processing your transactions. We may
share information with companies or financial institutions that perform
marketing services on our behalf or with other financial institutions with
which we have joint marketing arrangements, subject to any legal requirements.
Authorization to access your nonpublic personal information is limited to
appropriate personnel who provide products, services, or information to you. We
maintain physical, electronic, and procedural safeguards to help protect the
personal information we collect about you.
If you have any questions about the MFS privacy policy, please call
1-800-225-2606 any business day between 8 a.m. and 8 p.m. Eastern time.
Note: If you own MFS products or receive MFS services in the name of a third
party such as a bank or broker-dealer, their privacy policy may apply to you
instead of ours.
CONTACT US
WEB SITE MAILING ADDRESS
mfs.com MFS Service Center, Inc.
P.O. Box 55824
MFS TALK Boston, MA 02205-5824
1-800-637-8255
24 hours a day OVERNIGHT MAIL
MFS Service Center, Inc.
ACCOUNT SERVICE AND 500 Boylston Street
LITERATURE Boston, MA 02116-3741
SHAREHOLDERS
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
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
Annual report
MFS(R) UTILITIES FUND
LETTER FROM THE CEO 1
- ------------------------------------------------------------
PORTFOLIO COMPOSITION 2
- ------------------------------------------------------------
MANAGEMENT REVIEW 3
- ------------------------------------------------------------
PERFORMANCE SUMMARY 6
- ------------------------------------------------------------
EXPENSE TABLE 9
- ------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 11
- ------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 17
- ------------------------------------------------------------
STATEMENT OF OPERATIONS 20
- ------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 22
- ------------------------------------------------------------
FINANCIAL HIGHLIGHTS 23
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 31
- ------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM 43
- ------------------------------------------------------------
TRUSTEES AND OFFICERS 44
- ------------------------------------------------------------
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 50
- ------------------------------------------------------------
PROXY VOTING POLICIES AND INFORMATION 54
- ------------------------------------------------------------
QUARTERLY PORTFOLIO DISCLOSURE 54
- ------------------------------------------------------------
FEDERAL TAX INFORMATION 54
- ------------------------------------------------------------
MFS(R) PRIVACY NOTICE 55
- ------------------------------------------------------------
CONTACT INFORMATION BACK COVER
- ------------------------------------------------------------
SIPC CONTACT INFORMATION:
You may obtain information about the Securities Investor Protection
Corporation ("SIPC"), including the SIPC Brochure, by contacting SIPC either
by telephone (202-371-8300) or by accessing SIPC's website address
(www.sipc.org).
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.
- ------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------
10/31/07
MMU-ANN
LETTER FROM THE CEO
[Photo of Robert J. Manning]
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% and was fairly stable.
This year we have seen a greater level of volatility than has been experienced
in recent years. The Dow hit several new highs but also experienced swift
drops as a global credit crisis swept through markets, spurred by defaults on
U.S. subprime loans and a liquidity crunch. Still, even with this volatility,
the Dow ended the first three quarters of 2007 with a return near 13%.
U.S. Treasury bonds gained ground, especially in the third quarter as
investors sought less risky asset classes. The spreads of many lower quality
debt investments widened.
In 2007 the U.S. dollar fell against the euro, oil prices have hit their
highest levels yet, and gold has spiked to its steepest price in 28 years.
Around the globe, stocks sold off as risk aversion mounted. As we have said
before, markets can be 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. In our view, investors who remain committed to a long-term plan are more
likely to achieve their financial goals.
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)
December 14, 2007
The opinions expressed in this letter are subject to change, may not be relied
upon for investment advice, and no forecasts can be guaranteed.
PORTFOLIO COMPOSITION
PORTFOLIO STRUCTURE (i)
Common Stocks 93.5%
Convertible Preferred Stocks 2.3%
Floating Rate Loans 0.7%
Convertible Bonds 0.5%
Bonds 0.5%
Equity Warrants 0.4%
Cash & Other Net Assets 2.1%
TOP TEN HOLDINGS (i)
NRG Energy, Inc. 3.9%
------------------------------------------------
Public Service Enterprise Group, Inc. 2.9%
------------------------------------------------
AT&T, Inc. 2.9%
------------------------------------------------
Equitable Resources, Inc. 2.8%
------------------------------------------------
Entergy Corp., "A", IEU 2.5%
------------------------------------------------
Williams Cos., Inc. 2.5%
------------------------------------------------
American Electric Power Co., Inc. 2.3%
------------------------------------------------
FPL Group, Inc. 2.3%
------------------------------------------------
E.ON AG 2.1%
------------------------------------------------
Telenor A.S.A. 1.9%
------------------------------------------------
TOP FIVE INDUSTRIES (i)
Utilities - Electric Power 49.9%
------------------------------------------------
Telephone Services 14.7%
------------------------------------------------
Telecommunications - Wireless 10.9%
------------------------------------------------
Natural Gas - Distribution 6.9%
------------------------------------------------
Natural Gas - Pipeline 5.9%
------------------------------------------------
COUNTRY WEIGHTINGS (i)
United States 63.6%
------------------------------------------------
Spain 6.0%
------------------------------------------------
Brazil 3.4%
------------------------------------------------
United Kingdom 3.3%
------------------------------------------------
Canada 2.7%
------------------------------------------------
France 2.3%
------------------------------------------------
Germany 2.3%
------------------------------------------------
Israel 2.1%
------------------------------------------------
Mexico 2.0%
------------------------------------------------
Other Countries 12.3%
------------------------------------------------
(i) For purposes of this presentation, the bond component includes both accrued
interest amounts and the equivalent exposure from any derivative holdings,
if applicable.
Percentages are based on net assets as of 10/31/07.
The portfolio is actively managed and current holdings may be different.
MANAGEMENT REVIEW
SUMMARY OF RESULTS
For the twelve months ended October 31, 2007, Class A shares of the MFS
Utilities Fund had a total return of 37.77%, at net asset value. This compares
with a return of 22.61% for the fund's benchmark, the Standard & Poor's 500
Utilities Index.
MARKET ENVIRONMENT
The U.S. economy continues to decouple from the rest of the world. Despite
seemingly robust growth rates during the second and third quarters of 2007,
underlying economic activity in the U.S. remains muted relative to other
major economies. Overall, global economies have seen moderate to strong growth
over the last twelve months as domestic demand improves and world trade
accelerates.
With the strong global growth, however, has come increased concern about
rising global inflation, especially as capacity becomes more constrained,
wages rise, and energy and food prices advance. During the reporting period,
global central banks tightened monetary conditions which in turn pushed global
bond yields to their highest levels during this economic expansion.
However, beginning in late July, heightened uncertainty and distress
concerning the subprime mortgage market caused several global credit markets
to seize up, forcing central banks to inject liquidity and to reassess their
tightening biases as sovereign bond yields declined and credit spreads
widened. While credit conditions improved somewhat by late October as the
Federal Reserve Board cut interest rates, the level of market turbulence
remains significant. Increased market volatility has also been exacerbated by
U.S. home foreclosures, falling housing prices, and a weakening trend in the
labor market. Despite increased volatility across all asset classes and the
widening in credit spreads, global equity markets remained elevated, generally
having erased losses incurred earlier in the summer.
CONTRIBUTORS TO PERFORMANCE
Strong stock selection in the electric power industry contributed to the fund's
performance relative to the Standard & Poor's 500 Utilities Index. Our
positions in power production companies NRG Energy(aa), E.ON(aa) (Germany),
CEZ(aa) (Czech Republic), Eletropaulo Metropolitana(aa) (Brazil), and Mirant
(aa) were among the top contributors. Shares of NRG gained on strong quarterly
results, increased earnings guidance, and an optimistic outlook on growth which
helped fuel the very healthy appreciation in the stock's price during the
reporting period. Additionally, not owning electric utility provider Southern
Power Company, and underweighting power and natural gas distributor Duke
Energy(g) and independent power producer AES Corp., aided relative performance
as the returns of all three stocks lagged overall benchmark returns.
Security selection and, to a lesser extent, our underweighted position in the
natural gas distribution industry helped relative returns. No individual
securities within this industry were among the fund's top relative
contributors.
The wireless communications and natural gas pipeline industries, which are not
represented in the benchmark, also aided relative performance. In the natural
gas pipeline industry, pipelines operator Williams(aa) was a top contributor.
Elsewhere, strong-performing telecommunications company Telefonica(aa) (Spain)
boosted relative performance.
During the reporting period, the fund's currency exposure was a contributor to
relative performance. All of MFS' investment decisions are driven by the
fundamentals of each individual opportunity and, as such, it is common for our
portfolios to have different currency exposure than the benchmark.
DETRACTORS FROM PERFORMANCE
During the reporting period, the cable TV industry, which is not represented
in the benchmark, detracted from the fund's relative performance. Two cable
companies, Time Warner Cable(aa) and Comcast(aa), were principal detractors
within this industry. Shares of both companies struggled due to light
subscriber growth, increased competition, and difficult economic conditions.
Although overall stock selection in the electric power industry contributed to
relative returns, our underweighted positions in several strong-performing
benchmark constituents detracted from relative results. These included
electricity distributors Excelon(g), PPL Corp.(g), Public Service Enterprise
Group, and Entergy.
Several holdings within the telephone services industry also hurt relative
performance. Communications companies TELUS(aa) (Canada) and Qwest(aa) were
among the fund's top detractors.
The portfolio's cash position was a detractor from relative performance. The
portfolio holds cash to buy new holdings and to provide liquidity. In a period
when equity markets rose, as measured by the portfolio's benchmark, holding
cash hurt performance versus the benchmark, which has no cash position.
During the reporting period, the portfolio did hedge certain currency
exposures, which had a negative impact on its relative return. As noted above,
this impact was more than offset by the positive impact of the portfolio's
overall currency exposure.
Respectfully,
Robert Persons Maura Shaughnessy
Portfolio Manager Portfolio Manager
(aa) Security is not a benchmark constituent.
(g) Security was not held in the portfolio at period end.
The views expressed in this report are those of the portfolio managers only
through the end of the period of the report as stated on the cover and do not
necessarily reflect the views of MFS or any other person in the MFS
organization. These views are subject to change at any time based on market or
other conditions, and MFS disclaims any responsibility to update such views.
These views may not be relied upon as investment advice or an indication of
trading intent on behalf of any MFS portfolio. References to specific securities
are not recommendations of such securities, and may not be representative of any
MFS portfolio's current or future investments.
PERFORMANCE SUMMARY THROUGH 10/31/07
The following chart illustrates a representative class of the fund's historical
performance in comparison to its benchmark. Performance results include the
deduction of the maximum applicable sales charge and reflect the percentage
change in net asset value, including reinvestment of dividends and capital gains
distributions. The performance of other share classes will be greater than or
less than that of the class depicted below. Benchmark comparisons are unmanaged;
do not reflect sales charges, commissions or expenses; and cannot be invested in
directly. (See Notes to Performance Summary.)
PERFORMANCE DATA SHOWN REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE FLUCTUATE SO YOUR
SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST; CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN QUOTED. THE PERFORMANCE SHOWN DOES NOT
REFLECT THE DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
MFS Utilities Standard & Poor's
Fund - Class A 500 Utilities Index
10/97 $ 9,425 $10,000
10/98 11,510 12,701
10/99 14,164 12,903
10/00 17,829 17,531
10/01 12,887 13,583
10/02 9,307 8,644
10/03 12,256 10,914
10/04 15,739 13,545
10/05 19,725 16,777
10/06 24,948 19,780
10/07 34,371 24,252
TOTAL RETURNS THROUGH 10/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- -------------------------------------------------------------------------------
A 2/14/92 37.77% 29.86% 13.81%
- -------------------------------------------------------------------------------
B 9/07/93 36.73% 28.89% 12.97%
- -------------------------------------------------------------------------------
C 1/03/94 36.64% 28.91% 12.97%
- -------------------------------------------------------------------------------
I 1/02/97 38.03% 30.18% 14.10%
- -------------------------------------------------------------------------------
R 12/31/02 37.36% 29.52% 13.66%
- -------------------------------------------------------------------------------
R1 4/01/05 36.62% 28.82% 12.94%
- -------------------------------------------------------------------------------
R2 4/01/05 37.01% 29.02% 13.03%
- -------------------------------------------------------------------------------
R3 10/31/03 37.17% 29.18% 13.10%
- -------------------------------------------------------------------------------
R4 4/01/05 37.55% 29.74% 13.76%
- -------------------------------------------------------------------------------
R5 4/01/05 37.89% 29.96% 13.86%
- -------------------------------------------------------------------------------
AVERAGE ANNUAL
Comparative benchmark
- -------------------------------------------------------------------------------
Standard & Poor's 500 Utilities Index (f) 22.61% 22.91% 9.26%
- -------------------------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- -------------------------------------------------------------------------------
A 29.85% 28.33% 13.14%
With Initial Sales Charge (5.75%)
- -------------------------------------------------------------------------------
B 32.73% 28.74% 12.97%
With CDSC (Declining over six years
from 4% to 0%) (x)
- -------------------------------------------------------------------------------
C 35.64% 28.91% 12.97%
With CDSC (1% for 12 months) (x)
- -------------------------------------------------------------------------------
Class I, R, R1, R2, R3, R4, and R5 shares do not have a sales charge.
CDSC - Contingent Deferred Sales Charge.
(f) Source: FactSet Research Systems Inc.
(x) Assuming redemption at the end of the applicable period.
INDEX DEFINITION
Standard & Poor's 500 Utilities Index - a market capitalization index designed
to measure the utilities sector, including those companies considered
electric, gas or water utilities, or companies that operate as independent
producers and/or distributors of power.
It is not possible to invest directly in an index.
NOTES TO PERFORMANCE SUMMARY
Performance for Classes R, R4, and R5 shares includes the performance of the
fund's Class A shares for periods prior to their offering. Performance for
Classes R1, R2, and R3 shares includes the performance of the fund's Class B
shares for periods prior to their offering. This blended class performance has
been adjusted to take into account differences in sales loads, if any,
applicable to these share classes, but has not been adjusted to take into
account differences in class specific operating expenses (such as Rule 12b-1
fees). Compared to performance these share classes would have experienced had
they been offered for the entire period, the use of blended performance
generally results in higher performance for share classes with higher
operating expenses than the share class to which it is blended, and lower
performance for share classes with lower operating expenses than the share
class to which it is blended.
Performance results reflect any applicable expense subsidies and waivers in
effect during the periods shown. Without such subsidies and waivers the fund's
performance results would be less favorable. Please see the prospectus and
financial statements for complete details.
From time to time the fund may receive proceeds from litigation settlements,
without which performance would be lower.
EXPENSE TABLE
Fund Expenses Borne by the Shareholders During the Period,
May 1, 2007 through October 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 (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 May 1, 2007 through October 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). 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 5/01/07-
Class Ratio 5/01/07 10/31/07 10/31/07
- --------------------------------------------------------------------------------
Actual 1.04% $1,000.00 $1,128.95 $5.58
A ---------------------------------------------------------------------------
Hypothetical (h) 1.04% $1,000.00 $1,019.96 $5.30
- --------------------------------------------------------------------------------
Actual 1.79% $1,000.00 $1,125.13 $9.59
B ---------------------------------------------------------------------------
Hypothetical (h) 1.79% $1,000.00 $1,016.18 $9.10
- --------------------------------------------------------------------------------
Actual 1.79% $1,000.00 $1,124.59 $9.59
C ---------------------------------------------------------------------------
Hypothetical (h) 1.79% $1,000.00 $1,016.18 $9.10
- --------------------------------------------------------------------------------
Actual 0.79% $1,000.00 $1,130.10 $4.24
I ---------------------------------------------------------------------------
Hypothetical (h) 0.79% $1,000.00 $1,021.22 $4.02
- --------------------------------------------------------------------------------
R Actual 1.29% $1,000.00 $1,127.46 $6.92
---------------------------------------------------------------------------
Hypothetical (h) 1.29% $1,000.00 $1,018.70 $6.56
- --------------------------------------------------------------------------------
Actual 1.89% $1,000.00 $1,124.63 $10.12
R1 ---------------------------------------------------------------------------
Hypothetical (h) 1.89% $1,000.00 $1,015.68 $9.60
- --------------------------------------------------------------------------------
Actual 1.54% $1,000.00 $1,125.90 $8.25
R2 ---------------------------------------------------------------------------
Hypothetical (h) 1.54% $1,000.00 $1,017.44 $7.83
- --------------------------------------------------------------------------------
Actual 1.44% $1,000.00 $1,126.51 $7.72
R3 ---------------------------------------------------------------------------
Hypothetical (h) 1.44% $1,000.00 $1,017.95 $7.32
- --------------------------------------------------------------------------------
Actual 1.19% $1,000.00 $1,128.33 $6.38
R4 ---------------------------------------------------------------------------
Hypothetical (h) 1.19% $1,000.00 $1,019.21 $6.06
- --------------------------------------------------------------------------------
Actual 0.89% $1,000.00 $1,129.79 $4.78
R5 ---------------------------------------------------------------------------
Hypothetical (h) 0.89% $1,000.00 $1,020.72 $4.53
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads).
If these transaction costs had been included, your costs would have been
higher.
PORTFOLIO OF INVESTMENTS
10/31/07
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Common Stocks - 93.5%
- ------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ------------------------------------------------------------------------------------------------------------
Broadcasting - 1.1%
- ------------------------------------------------------------------------------------------------------------
Citadel Broadcasting Corp. (l) 1,123,640 $ 4,944,016
Grupo Televisa S.A., ADR 1,072,400 26,649,140
News Corp., "A" 384,600 8,334,282
--------------
$ 39,927,438
- ------------------------------------------------------------------------------------------------------------
Cable TV - 3.0%
- ------------------------------------------------------------------------------------------------------------
Comcast Corp., "Special A" (a) 2,642,300 $ 55,144,801
Net Servicos de Comuicacao S.A., IPS 719,100 11,554,302
Time Warner Cable, Inc. (a) 1,526,800 43,651,212
--------------
$ 110,350,315
- ------------------------------------------------------------------------------------------------------------
Energy - Independent - 1.8%
- ------------------------------------------------------------------------------------------------------------
CONSOL Energy, Inc. 140,600 $ 7,943,900
Talisman Energy, Inc. 1,222,500 26,595,190
Ultra Petroleum Corp. (a) 298,200 21,130,452
XTO Energy, Inc. 118,000 7,832,840
--------------
$ 63,502,382
- ------------------------------------------------------------------------------------------------------------
Energy - Integrated - 1.1%
- ------------------------------------------------------------------------------------------------------------
OAO Gazprom, ADR 381,500 $ 18,998,700
TOTAL S.A. 270,900 21,863,367
--------------
$ 40,862,067
- ------------------------------------------------------------------------------------------------------------
Engineering - Construction - 0.3%
- ------------------------------------------------------------------------------------------------------------
Acciona S.A. 32,200 $ 9,946,685
- ------------------------------------------------------------------------------------------------------------
Internet - 0.7%
- ------------------------------------------------------------------------------------------------------------
Iliad S.A. (l) 228,159 $ 23,906,628
- ------------------------------------------------------------------------------------------------------------
Natural Gas - Distribution - 6.9%
- ------------------------------------------------------------------------------------------------------------
AGL Resources, Inc. 84,325 $ 3,333,367
Energen Corp. 50,771 3,249,344
Equitable Resources, Inc. 1,798,500 101,291,520
MDU Resources Group, Inc. 1,527,000 43,000,320
Questar Corp. 706,016 40,299,393
Sempra Energy 944,800 58,114,648
--------------
$ 249,288,592
- ------------------------------------------------------------------------------------------------------------
Natural Gas - Pipeline - 5.2%
- ------------------------------------------------------------------------------------------------------------
El Paso Corp. 2,685,400 $ 47,424,164
Enagas S.A. (l) 1,786,555 50,782,647
Williams Cos., Inc. 2,438,050 88,964,445
--------------
$ 187,171,256
- ------------------------------------------------------------------------------------------------------------
Network & Telecom - 0.1%
- ------------------------------------------------------------------------------------------------------------
Hrvatska Telekomunikacije dd, GDR (z) 48,860 $ 3,517,920
- ------------------------------------------------------------------------------------------------------------
Oil Services - 1.1%
- ------------------------------------------------------------------------------------------------------------
Halliburton Co. 787,000 $ 31,023,540
Noble Corp. 165,300 8,752,635
--------------
$ 39,776,175
- ------------------------------------------------------------------------------------------------------------
Telecommunications - Wireless - 10.9%
- ------------------------------------------------------------------------------------------------------------
America Movil S.A.B. de C.V., "L", ADR 695,400 $ 45,472,206
Cellcom Israel Ltd. (l) 2,339,580 62,069,057
Hutchison Telecommunications International Ltd. 12,828,000 18,307,563
Millicom International Cellular S.A. (l) 98,400 11,560,032
Mobile TeleSystems OJSC, ADR 381,100 31,631,300
MTN Group Ltd. 1,087,300 21,123,586
NII Holdings, Inc., "B" (a) 809,600 46,956,800
Orascom Telecom Holding (S.A.E.), GDR 270,344 19,356,630
Partner Communication Co. Ltd., ADR 779,261 14,954,019
Philippine Long Distance Telephone Co. 195,100 13,391,187
Philippine Long Distance Telephone Co., ADR 255,800 17,547,880
Rogers Communications, Inc., "B" 547,300 27,850,975
Tim Participacoes S.A., ADR (l) 752,200 34,902,080
Vodafone Group PLC 7,117,900 28,002,068
--------------
$ 393,125,383
- ------------------------------------------------------------------------------------------------------------
Telephone Services - 14.7%
- ------------------------------------------------------------------------------------------------------------
American Tower Corp., "A" (a) 374,500 $ 16,545,410
AT&T, Inc. 2,480,300 103,651,737
Bharti Airtel Ltd. 72,500 1,888,379
Citizens Communications Co. 221,506 2,915,019
Embarq Corp. 969,500 51,305,940
Qwest Communications International, Inc. (a) 7,038,900 50,539,302
Royal KPN N.V. 1,553,900 29,341,136
Singapore Telecommunications Ltd. 7,601,950 21,601,889
Tele Norte Leste Participacoes S.A. 141,700 5,389,235
Telecom Argentina S.A., ADR (a) 1,367,900 32,843,279
Telefonica S.A. (l) 1,919,000 63,425,248
Telenor A.S.A. 2,918,600 68,565,388
Teliasonera AB 587,300 5,781,377
TELUS Corp. 750,740 43,639,738
Windstream Corp. 2,535,876 34,107,532
--------------
$ 531,540,609
- ------------------------------------------------------------------------------------------------------------
Utilities - Electric Power - 46.6%
- ------------------------------------------------------------------------------------------------------------
AES Corp. 2,827,200 $ 60,530,352
AES Tiete S.A., IPS 714,383,500 24,972,978
Allegheny Energy, Inc. 94,600 5,738,436
Ameren Corp. 163,100 8,817,186
American Electric Power Co., Inc. 1,738,300 83,803,443
CEZ AS 808,200 58,452,235
CMS Energy Corp. 3,818,450 64,799,097
Consolidated Edison, Inc. 304,510 14,339,376
Constellation Energy Group, Inc. 705,203 66,782,724
Covanta Holding Corp. 782,380 21,210,322
Dominion Resources, Inc. 400,000 36,652,000
DPL, Inc. (l) 1,588,023 46,116,188
DTE Energy Co. (l) 708,000 35,116,800
Dynegy, Inc. 2,225,480 20,496,671
E.ON AG 393,707 77,024,335
Edison International 867,500 50,445,125
Eletropaulo Metropolitana S.A., IPS 596,720,000 45,877,747
Enel S.p.A 1,794,600 21,515,848
Enersis S.A., ADR 1,787,700 35,432,214
Entergy Corp. 118,800 14,240,556
Entergy Corp., "A", IEU 1,235,780 89,285,105
FirstEnergy Corp. 338,900 23,621,330
FPL Group, Inc. 1,197,200 81,912,424
Iberdrola S.A. 2,554,912 41,165,451
Integrys Energy Group, Inc. 224,589 12,085,134
International Power PLC 5,343,001 54,383,923
Mirant Corp. (a) 510,800 21,637,488
Northeast Utilities 1,092,250 33,674,068
NRG Energy, Inc. (a) 3,044,400 139,007,304
Pepco Holdings, Inc. 1,618,000 46,096,820
PG&E Corp. 1,353,100 66,207,183
Portland General Electric Co. 335,120 9,433,628
Public Service Enterprise Group, Inc. 1,106,000 105,733,600
Red Electrica de Espana (l) 893,324 50,202,296
Reliant Energy, Inc. 317,400 8,734,848
RWE AG 27,500 3,758,468
Scottish & Southern Energy PLC 1,158,700 37,528,138
SUEZ S.A. (l) 122,400 7,970,226
Veolia Environnement S.A. 322,293 28,815,544
Wisconsin Energy Corp. 118,800 5,688,144
Xcel Energy, Inc. 1,074,900 24,238,995
--------------
$1,683,543,750
- ------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $2,678,170,267) $3,376,459,200
- ------------------------------------------------------------------------------------------------------------
Bonds - 0.5%
- ------------------------------------------------------------------------------------------------------------
Asset Backed & Securitized - 0.0%
- ------------------------------------------------------------------------------------------------------------
Falcon Auto Dealership LLC, 3.095%, 2021 (i)(n) $ 3,464,849 $ 314,747
- ------------------------------------------------------------------------------------------------------------
Utilities - Electric Power - 0.5%
- ------------------------------------------------------------------------------------------------------------
AES Corp., 8%, 2017 (z) $ 16,375,000 $ 16,518,281
TXU Eastern Funding Co., 6.75%, 2009 (d) 793,000 48,571
--------------
$ 16,566,852
- ------------------------------------------------------------------------------------------------------------
TOTAL BONDS (IDENTIFIED COST, $17,324,634) $ 16,881,599
- ------------------------------------------------------------------------------------------------------------
Convertible Preferred Stocks - 2.3%
- ------------------------------------------------------------------------------------------------------------
Natural Gas - Pipeline - 0.7%
- ------------------------------------------------------------------------------------------------------------
El Paso Corp., 4.99% 16,500 $ 23,980,688
- ------------------------------------------------------------------------------------------------------------
Utilities - Electric Power - 1.6%
- ------------------------------------------------------------------------------------------------------------
NRG Energy, Inc., 5.75% 144,100 $ 57,099,625
- ------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(IDENTIFIED COST, $57,113,710) $ 81,080,313
- ------------------------------------------------------------------------------------------------------------
Warrants - 0.4%
- ------------------------------------------------------------------------------------------------------------
STRIKE FIRST
PRICE EXERCISE
- ------------------------------------------------------------------------------------------------------------
Utilities - Electric Power - 0.4%
- ------------------------------------------------------------------------------------------------------------
Merrill Lynch International & Co. (Covered
Call - RAO Unified Energy System) (Identified
Cost, $13,478,256) (a) $0.0001 7/14/17 10,560,000 $ 13,767,072
- ------------------------------------------------------------------------------------------------------------
Convertible Bonds - 0.5%
- ------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- ------------------------------------------------------------------------------------------------------------
Energy - Independent - 0.4%
- ------------------------------------------------------------------------------------------------------------
Peabody Energy Corp., 4.75%, 2041 $ 12,560,000 $ 14,632,400
- ------------------------------------------------------------------------------------------------------------
Utilities - Electric Power - 0.1%
- ------------------------------------------------------------------------------------------------------------
Covanta Holding Corp., 1%, 2027 $ 3,326,000 $ 3,666,915
- ------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS (IDENTIFIED COST, $16,975,640) $ 18,299,315
- ------------------------------------------------------------------------------------------------------------
Floating Rate Loans - 0.7% (g)(r)
- ------------------------------------------------------------------------------------------------------------
Utilities - Electric Power - 0.7%
- ------------------------------------------------------------------------------------------------------------
TXU Corp., Term Loan B, 2014 (Identified Cost, $26,781,949)(o) $ 26,849,072 $ 26,826,689
- ------------------------------------------------------------------------------------------------------------
Money Market Funds - 2.2% (v)
- ------------------------------------------------------------------------------------------------------------
MFS Institutional Money Market Portfolio, 5.3%,
at Cost and Net Asset Value 79,824,380 $ 79,824,380
- ------------------------------------------------------------------------------------------------------------
Collateral for Securities Loaned - 2.9%
- ------------------------------------------------------------------------------------------------------------
Citigroup Global Markets Repurchase Agreement, 4.83%, dated
10/31/07, due 11/01/07, total to be received $105,433,664
(secured by U.S. Treasury and Federal Agency obligations and
Mortgage Backed securities in an individually traded
account), at Cost $ 105,419,520 $ 105,419,520
- ------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $2,995,088,356) (k) $3,718,558,088
- ------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (3.0)% (108,787,695)
- ------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $3,609,770,393
- ------------------------------------------------------------------------------------------------------------
(a) Non-income producing security.
(d) Non-income producing security - in default.
(g) The rate shown represents a weighted average coupon rate on settled positions at period end.
(i) Interest only security for which the fund receives interest on notional principal (Par amount). Par
amount shown is the notional principal and does not reflect the cost of the security.
(k) As of October 31, 2007, the fund held securities fair valued in accordance with the policies adopted by
the Board of Trustees, aggregating $154,947,080 and 4.17% of market value. An independent pricing service
provided an evaluated bid for 3.80% of the market value.
(l) All or a portion of this security is on loan.
(n) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may
be sold in the ordinary course of business in transactions exempt from registration, normally to
qualified institutional buyers. At period end, the aggregate value of these securities was $314,747,
representing 0.0% of net assets.
(o) All or a portion of this position has not settled. Upon settlement date, interest rates will be
determined.
(r) Remaining maturities of floating rate loans may be less than stated maturities shown as a result of
contractual or optional prepayments by the borrower. Such prepayments cannot be predicted with certainty.
These loans may be subject to restrictions on resale. Floating rate loans generally have rates of
interest which are determined periodically by reference to a base lending rate plus a premium.
(v) Underlying fund that is available only to investment companies managed by MFS. The rate quoted is the
annualized seven-day yield of the fund at period end.
(z) Restricted securities are not registered under the Securities Act of 1933 and are subject to legal
restrictions on resale. These securities generally may be resold in transactions exempt from registration
or to the public if the securities are subsequently registered. Disposal of these securities may involve
time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the
following restricted securities:
ACQUISITION ACQUISITION CURRENT TOTAL % OF
RESTRICTED SECURITIES DATE COST MARKET VALUE NET ASSETS
- --------------------------------------------------------------------------------------------------------------
Hrvatska Telekomunikacije dd, GDR 10/02/07 $ 2,528,994 $ 3,517,920
AES Corp., 8%, 2017 10/09/07 16,375,000 16,518,281
- --------------------------------------------------------------------------------------------------------------
Total Restricted Securities $20,036,201 0.6%
- --------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS AT 10/31/07
NET
UNREALIZED
CONTRACTS TO SETTLEMENT IN EXCHANGE CONTRACTS APPRECIATION
TYPE CURRENCY DELIVER/RECEIVE DATE RANGE FOR AT VALUE (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------------------
APPRECIATION
- ----------------------------------------------------------------------------------------------------------------------
BUY EUR 10,571,102 12/14/07 $15,069,077 $15,339,832 $ 270,755
BUY GBP 10,187,008 12/14/07 20,787,377 21,175,936 388,559
------------
$ 659,314
============
DEPRECIATION
- ----------------------------------------------------------------------------------------------------------------------
SELL EUR 176,813,163 12/14/07 - 12/19/07 $246,310,434 $256,520,991 $(10,210,557)
SELL GBP 42,718,104 12/14/07 - 12/19/07 85,667,324 88,784,074 (3,116,750)
------------
$(13,327,307)
============
At October 31, 2007, the fund had sufficient cash and/or other liquid securities to cover any commitments under these
derivative contracts.
The following abbreviations are used in this report and are defined:
ADR American Depository Receipt
GDR Global Depository Receipt
IEU International Equity Unit
IPS International Preference Stock
Abbreviations indicate amounts shown in currencies other than the U.S. Dollar. All amounts are stated in U.S. dollars
unless otherwise indicated. A list of abbreviations is shown below.
EUR Euro
GBP British Pound
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 10/31/07
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
Investments in non-affiliated issuers at value
(identified cost, $2,915,263,976) $3,638,733,708
Investments in underlying funds at cost and value 79,824,380
- -------------------------------------------------------------------------------------------------------
Total Investments, at value, including $101,817,814 of
securities on loan (identified cost, $2,995,088,356) $3,718,558,088
Foreign currency, at value (identified cost, $567,223) 567,233
Receivable for forward foreign currency exchange contracts 659,314
Receivable for investments sold 61,983,506
Receivable for fund shares sold 11,923,199
Interest and dividends receivable 2,782,337
- -------------------------------------------------------------------------------------------------------
Total assets $3,796,473,677
- -------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------
Distributions payable $811,811
Payable for forward foreign currency exchange contracts 13,327,307
Payable for investments purchased 61,400,693
Payable for fund shares reacquired 4,107,517
Collateral for securities loaned, at value 105,419,520
Payable to affiliates
Management fee 117,687
Shareholder servicing costs 930,227
Distribution and service fees 90,407
Administrative services fee 2,801
Retirement plan administration and services fees 1,004
Payable for independent trustees' compensation 86,359
Accrued expenses and other liabilities 407,951
- -------------------------------------------------------------------------------------------------------
Total liabilities $186,703,284
- -------------------------------------------------------------------------------------------------------
Net assets $3,609,770,393
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
NET ASSETS CONSIST OF
- -------------------------------------------------------------------------------------------------------
Paid-in capital $2,691,089,855
Unrealized appreciation (depreciation) on investments and
translation of assets and liabilities in foreign currencies
(net of $9,474 deferred country tax) 710,870,684
Accumulated net realized gain (loss) on investments and
foreign currency transactions 201,413,656
Undistributed net investment income 6,396,198
- -------------------------------------------------------------------------------------------------------
Net assets $3,609,770,393
- -------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 174,488,505
- -------------------------------------------------------------------------------------------------------
Class A shares
- -------------------------------------------------------------------------------------------------------
Net assets $2,479,305,161
Shares outstanding 119,738,702
- -------------------------------------------------------------------------------------------------------
Net asset value per share $20.71
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/94.25Xnet asset value per share) $21.97
- -------------------------------------------------------------------------------------------------------
Class B shares
- -------------------------------------------------------------------------------------------------------
Net assets $593,215,168
Shares outstanding 28,746,055
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $20.64
- -------------------------------------------------------------------------------------------------------
Class C shares
- -------------------------------------------------------------------------------------------------------
Net assets $402,178,216
Shares outstanding 19,473,912
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $20.65
- -------------------------------------------------------------------------------------------------------
Class I shares
- -------------------------------------------------------------------------------------------------------
Net assets $19,229,896
Shares outstanding 927,003
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $20.74
- -------------------------------------------------------------------------------------------------------
Class R shares
- -------------------------------------------------------------------------------------------------------
Net assets $7,161,469
Shares outstanding 346,188
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $20.69
- -------------------------------------------------------------------------------------------------------
Class R1 shares
- -------------------------------------------------------------------------------------------------------
Net assets $9,016,859
Shares outstanding 437,107
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $20.63
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
Class R2 shares
- -------------------------------------------------------------------------------------------------------
Net assets $5,157,640
Shares outstanding 250,115
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $20.62
- -------------------------------------------------------------------------------------------------------
Class R3 shares
- -------------------------------------------------------------------------------------------------------
Net assets $50,205,173
Shares outstanding 2,428,558
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $20.67
- -------------------------------------------------------------------------------------------------------
Class R4 shares
- -------------------------------------------------------------------------------------------------------
Net assets $41,573,938
Shares outstanding 2,009,190
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $20.69
- -------------------------------------------------------------------------------------------------------
Class R5 shares
- -------------------------------------------------------------------------------------------------------
Net assets $2,726,873
Shares outstanding 131,675
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $20.71
- -------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced.
A contingent deferred sales charge may be imposed on redemptions of Class A, Class B, and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF OPERATIONS
Year ended 10/31/07
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 INCOME
- ------------------------------------------------------------------------------------------------------
Income
Dividends $80,819,596
Dividends from underlying funds 1,144,520
Interest 6,563,273
Foreign taxes withheld (2,339,234)
- ------------------------------------------------------------------------------------------------------
Total investment income $86,188,155
- ------------------------------------------------------------------------------------------------------
Expenses
Management fee $17,490,526
Distribution and service fees 14,329,998
Shareholder servicing costs 3,893,262
Administrative services fee 467,727
Retirement plan administration and services fees 112,211
Independent trustees' compensation 71,776
Custodian fee 811,242
Shareholder communications 98,588
Auditing fees 54,308
Legal fees 48,621
Miscellaneous 326,827
- ------------------------------------------------------------------------------------------------------
Total expenses $37,705,086
- ------------------------------------------------------------------------------------------------------
Fees paid indirectly (74,844)
Reduction of expenses by investment adviser (23,858)
- ------------------------------------------------------------------------------------------------------
Net expenses $37,606,384
- ------------------------------------------------------------------------------------------------------
Net investment income $48,581,771
- ------------------------------------------------------------------------------------------------------
Statement of Operations - continued
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis)
Investment transactions $500,097,498
Foreign currency transactions (16,843,522)
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions $483,253,976
- ------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
Investments (net of $9,474 increase in deferred country tax) $383,787,969
Translation of assets and liabilities in foreign currencies (10,198,526)
- ------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments and foreign
currency translation $373,589,443
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and
foreign currency $856,843,419
- ------------------------------------------------------------------------------------------------------
Change in net assets from operations $905,425,190
- ------------------------------------------------------------------------------------------------------
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.
YEARS ENDED 10/31
-----------------------------------------
2007 2006
CHANGE IN NET ASSETS
FROM OPERATIONS
- -------------------------------------------------------------------------------------------------------
Net investment income $48,581,771 $36,398,393
Net realized gain (loss) on investments and foreign
currency transactions 483,253,976 273,623,874
Net unrealized gain (loss) on investments and foreign
currency translation 373,589,443 142,169,409
- -------------------------------------------------------------------------------------------------------
Change in net assets from operations $905,425,190 $452,191,676
- -------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------
From net investment income
Class A $(37,353,097) $(18,685,709)
Class B (7,186,297) (5,803,139)
Class C (4,012,906) (2,315,006)
Class I (326,166) (146,800)
Class R (162,587) (124,773)
Class R1 (51,802) (13,376)
Class R2 (40,796) (10,526)
Class R3 (477,911) (109,291)
Class R4 (458,258) (75,443)
Class R5 (34,380) (4,795)
- -------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(50,104,200) $(27,288,858)
- -------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $527,686,643 $15,050,747
- -------------------------------------------------------------------------------------------------------
Total change in net assets $1,383,007,633 $439,953,565
- -------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------
At beginning of period 2,226,762,760 1,786,809,195
At end of period (including undistributed net investment
income of $6,396,198 and $7,371,178, respectively) $3,609,770,393 $2,226,762,760
- -------------------------------------------------------------------------------------------------------
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 past 5 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.
CLASS A YEARS ENDED 10/31
----------------------------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $15.33 $12.33 $9.98 $7.89 $6.13
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.35 $0.30 $0.18 $0.16 $0.15
Net realized and unrealized gain (loss)
on investments and foreign currency 5.38 2.94 2.34 2.08 1.76
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $5.73 $3.24 $2.52 $2.24 $1.91
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.35) $(0.24) $(0.17) $(0.15) $(0.15)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.71 $15.33 $12.33 $9.98 $7.89
- -----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 37.77 26.48 25.33 28.41(b)(z) 31.69
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.05 1.11 1.13 1.15 1.19
Expenses after expense reductions (f) 1.05 1.11 1.13 1.15 N/A
Net investment income 1.92 2.24 1.60 1.83 2.11
Portfolio turnover 86 100 101 97 144
Net assets at end of period
(000 Omitted) $2,479,305 $1,319,703 $933,535 $586,730 $464,832
- -----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS B YEARS ENDED 10/31
-------------------------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $15.28 $12.29 $9.95 $7.87 $6.11
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.20 $0.20 $0.10 $0.10 $0.10
Net realized and unrealized gain (loss) on
investments and foreign currency 5.38 2.93 2.32 2.05 1.76
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $5.58 $3.13 $2.42 $2.15 $1.86
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.22) $(0.14) $(0.08) $(0.07) $(0.10)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.64 $15.28 $12.29 $9.95 $7.87
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 36.73 25.55 24.39 27.50(b)(z) 30.66
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.80 1.86 1.89 1.91 1.94
Expenses after expense reductions (f) 1.80 1.86 1.89 1.91 N/A
Net investment income 1.13 1.51 0.88 1.10 1.38
Portfolio turnover 86 100 101 97 144
Net assets at end of period (000 Omitted) $593,215 $597,964 $617,687 $575,642 $531,008
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS C YEARS ENDED 10/31
-------------------------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $15.30 $12.30 $9.96 $7.87 $6.11
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.21 $0.20 $0.10 $0.10 $0.10
Net realized and unrealized gain (loss) on
investments and foreign currency 5.36 2.94 2.32 2.06 1.76
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $5.57 $3.14 $2.42 $2.16 $1.86
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.22) $(0.14) $(0.08) $(0.07) $(0.10)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.65 $15.30 $12.30 $9.96 $7.87
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 36.64 25.61 24.37 27.63(b)(z) 30.66
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.80 1.86 1.88 1.90 1.94
Expenses after expense reductions (f) 1.80 1.86 1.88 1.90 N/A
Net investment income 1.15 1.51 0.87 1.10 1.38
Portfolio turnover 86 100 101 97 144
Net assets at end of period (000 Omitted) $402,178 $260,120 $218,335 $177,875 $159,113
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS I YEARS ENDED 10/31
--------------------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $15.36 $12.35 $10.00 $7.91 $6.14
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.40 $0.33 $0.21 $0.18 $0.17
Net realized and unrealized gain (loss) on
investments and foreign currency 5.38 2.95 2.34 2.08 1.77
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $5.78 $3.28 $2.55 $2.26 $1.94
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.40) $(0.27) $(0.20) $(0.17) $(0.17)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.74 $15.36 $12.35 $10.00 $7.91
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 38.03 26.83 25.59 28.84(b)(z) 31.96
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 0.80 0.86 0.88 0.90 0.94
Expenses after expense reductions (f) 0.80 0.86 0.88 0.90 N/A
Net investment income 2.17 2.45 1.81 2.07 2.36
Portfolio turnover 86 100 101 97 144
Net assets at end of period (000 Omitted) $19,230 $9,830 $6,630 $2,823 $1,744
- ------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R YEARS ENDED 10/31
---------------------------------------------------------------------------
2007 2006 2005 2004 2003(i)
Net asset value, beginning of period $15.32 $12.32 $9.97 $7.89 $6.40
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.30 $0.27 $0.15 $0.15 $0.11
Net realized and unrealized gain (loss) on
investments and foreign currency 5.37 2.93 2.34 2.05 1.47
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $5.67 $3.20 $2.49 $2.20 $1.58
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.30) $(0.20) $(0.14) $(0.12) $(0.09)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.69 $15.32 $12.32 $9.97 $7.89
- -----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 37.36 26.19 25.05 28.11(b)(z) 24.78(n)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.30 1.36 1.38 1.40 1.42(a)
Expenses after expense reductions (f) 1.30 1.36 1.38 1.40 N/A
Net investment income 1.67 2.01 1.33 1.64 1.47(a)
Portfolio turnover 86 100 101 97 144
Net assets at end of period (000 Omitted) $7,161 $10,123 $6,823 $2,169 $189
- -----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R1 YEARS ENDED 10/31
--------------------------------------------
2007 2006 2005(i)
Net asset value, beginning of period $15.28 $12.29 $11.04
- --------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.17 $0.19 $0.01
Net realized and unrealized gain (loss)
on investments and foreign currency 5.39 2.92 1.29
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations $5.56 $3.11 $1.30
- --------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------
From net investment income $(0.21) $(0.12) $(0.05)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.63 $15.28 $12.29
- --------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 36.62 25.42 11.77(n)
- --------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.92 2.06 2.08(a)
Expenses after expense reductions (f) 1.90 1.96 2.05(a)
Net investment income 0.92 1.40 0.12(a)
Portfolio turnover 86 100 101
Net assets at end of period (000 Omitted) $9,017 $1,902 $879
- --------------------------------------------------------------------------------------------------------------------
CLASS R2 YEARS ENDED 10/31
--------------------------------------------
2007 2006 2005(i)
Net asset value, beginning of period $15.28 $12.29 $11.04
- --------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.23 $0.23 $0.03
Net realized and unrealized gain (loss)
on investments and foreign currency 5.38 2.93 1.29
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations $5.61 $3.16 $1.32
- --------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------
From net investment income $(0.27) $(0.17) $(0.07)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.62 $15.28 $12.29
- --------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 37.01 25.86 11.96(n)
- --------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.58 1.76 1.77(a)
Expenses after expense reductions (f) 1.55 1.61 1.71(a)
Net investment income 1.26 1.74 0.37(a)
Portfolio turnover 86 100 101
Net assets at end of period (000 Omitted) $5,158 $1,285 $377
- --------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R3 YEARS ENDED 10/31
-----------------------------------------------------------------
2007 2006 2005 2004
Net asset value, beginning of period $15.31 $12.31 $9.97 $7.89
- --------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.27 $0.24 $0.11 $0.14
Net realized and unrealized gain (loss)
on investments and foreign currency 5.38 2.94 2.34 2.04
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations $5.65 $3.18 $2.45 $2.18
- --------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.29) $(0.18) $(0.11) $(0.10)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.67 $15.31 $12.31 $9.97
- --------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 37.17 26.02 24.66 27.77(b)(z)
- --------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.47 1.62 1.62 1.65
Expenses after expense reductions (f) 1.44 1.52 1.60 1.65
Net investment income 1.49 1.73 0.97 1.42
Portfolio turnover 86 100 101 97
Net assets at end of period (000 Omitted) $50,205 $14,413 $2,426 $122
- --------------------------------------------------------------------------------------------------------------------------
CLASS R4 YEARS ENDED 10/31
-----------------------------------------------
2007 2006 2005(i)
Net asset value, beginning of period $15.32 $12.33 $11.08
- --------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.33 $0.26 $0.10
Net realized and unrealized gain (loss)
on investments and foreign currency 5.37 2.95 1.25
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations $5.70 $3.21 $1.35
- --------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------
From net investment income $(0.33) $(0.22) $(0.10)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.69 $15.32 $12.33
- --------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 37.55 26.21 12.22(n)
- --------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.20 1.28 1.26(a)
Expenses after expense reductions (f) 1.20 1.28 1.26(a)
Net investment income 1.77 1.93 1.50(a)
Portfolio turnover 86 100 101
Net assets at end of period (000 Omitted) $41,574 $10,786 $62
- --------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R5 YEARS ENDED 10/31
-----------------------------------------------
2007 2006 2005(i)
Net asset value, beginning of period $15.34 $12.33 $11.08
- --------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.40 $0.28 $0.13
Net realized and unrealized gain (loss)
on investments and foreign currency 5.35 2.99 1.24
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations $5.75 $3.27 $1.37
- --------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------
From net investment income $(0.38) $(0.26) $(0.12)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.71 $15.34 $12.33
- --------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 37.89 26.75 12.41(n)
- --------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 0.90 0.96 0.96(a)
Expenses after expense reductions (f) 0.90 0.96 0.96(a)
Net investment income 2.12 1.98 1.83(a)
Portfolio turnover 86 100 101
Net assets at end of period (000 Omitted) $2,727 $637 $56
- --------------------------------------------------------------------------------------------------------------------
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 did not have a material impact on the net asset value per share based on the shares outstanding on
the day the proceeds were recorded.
(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), 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.
(t) Total returns do not include any applicable sales charges.
(z) The fund's total return calculation includes a net increase from gains realized on the disposal of investments in violation
of investment restrictions. The gains resulted in an increase in net asset value of $0.0007 per share based on shares
outstanding on the day the gains were realized. Excluding the effect of these gains from the fund's ending net asset value
per share, the total return for the year ended October 31, 2004 would have been approximately 28.40%, 27.49%, 27.62%,
28.83%, 28.10% and 27.76% for Class A, Class B, Class C, Class I, Class R and Class R3, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(1) BUSINESS AND ORGANIZATION
MFS Utilities Fund (the fund) is a series of MFS Series Trust VI (the trust).
The trust is organized as a Massachusetts business trust and is registered
under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with 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 invests primarily in securities of issuers in the Utility industry.
Issuers in a single industry can react similarly to market, economic,
political and regulatory conditions and developments. 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 markets 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. Debt instruments (other than short-term instruments),
including restricted debt instruments, are generally valued at an evaluated or
composite bid as reported by an independent pricing service. Short-term
instruments with a maturity at issuance of 60 days or less may be valued at
amortized cost, which approximates market value. Forward foreign currency
contracts are generally valued at the mean of bid and asked prices for the
time period interpolated from rates reported by an independent pricing service
for proximate time periods. 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. Values obtained from pricing
services can utilize both dealer-supplied valuations and electronic data
processing techniques, which take into account factors such as institutional-
size trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, trading characteristics, and other market data. 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.
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.
DERIVATIVE RISK - The fund may invest in derivatives for hedging or non-
hedging purposes. While hedging can reduce or eliminate losses, it can also
reduce or eliminate gains. When the fund uses derivatives as an investment to
gain market exposure, or for hedging purposes, gains and losses from
derivative instruments may be substantially greater than the derivative's
original cost. Derivative instruments include forward foreign currency
exchange contracts.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS - The fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties
to meet the terms of their contracts and from unanticipated movements in the
value of the contract. The fund may enter into forward foreign currency
exchange contracts for hedging purposes as well as for non-hedging purposes.
For hedging purposes, the fund may enter into contracts to deliver or receive
foreign currency it will receive from or require for its normal investment
activities. The fund may also use contracts in a manner intended to protect
foreign currency denominated securities from declines in value due to
unfavorable exchange rate movements. For non-hedging purposes, the fund may
enter into contracts with the intent of changing the relative exposure of the
fund's portfolio of securities to different currencies to take advantage of
anticipated changes. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains
or losses are recorded as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains
or losses on foreign currency transactions.
SECURITY LOANS - JPMorgan Chase and Co. ("Chase"), 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. Security lending activity through Chase is further
collateralized by an irrevocable standby letter of credit. Chase 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.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS - The fund may invest in loans and
loan participations or other receivables. These investments may include
standby financing commitments, including revolving credit facilities, which
obligate the fund to supply additional cash to the borrower on demand. Loan
participations involve a risk of insolvency of the lending bank or other
financial intermediary.
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. The fund earns certain fees in connection with its floating rate
loan purchasing activities. These fees are in addition to interest payments
earned and may include amendment fees, commitment fees, facility fees, consent
fees, and prepayment fees. These fees are recorded on an accrual basis as
income in the accompanying financial statements. 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 year ended October 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 wash sale loss deferrals, foreign
currency transactions, and treating a portion of the proceeds from redemptions
as a distribution for tax purposes.
The tax character of distributions declared to shareholders is as follows:
10/31/07 10/31/06
Ordinary income (including any
short-term capital gains) $50,104,200 $27,288,858
The federal tax cost and the tax basis components of distributable earnings
were as follows:
AS OF 10/31/07
Cost of investments $2,996,692,299
----------------------------------------------------------
Gross appreciation $778,439,731
Gross depreciation (56,573,942)
----------------------------------------------------------
Net unrealized appreciation (depreciation) $721,865,789
Undistributed ordinary income 13,049,192
Undistributed long-term capital gain 190,696,434
Other temporary differences (6,930,877)
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.
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The fund has an investment advisory agreement with
Massachusetts Financial Services Company (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 0.60%
of the fund's average daily net assets. The investment adviser has agreed in
writing to reduce its management fee to 0.55% of average daily net assets in
excess of $3.0 billion. This written agreement may be rescinded only upon
consent of the fund's Board of Trustees. For the year ended October 31, 2007,
the fund's average daily net assets did not exceed $3.0 billion and therefore,
the management fee was not reduced.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of
MFS, as distributor, received $938,505 for the year ended October 31, 2007, as
its portion of the initial sales charge on sales of Class A shares of the
fund.
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 Plan Fee 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% $4,751,115
Class B 0.75% 0.25% 1.00% 1.00% 6,007,142
Class C 0.75% 0.25% 1.00% 1.00% 3,272,083
Class R 0.25% 0.25% 0.50% 0.50% 49,812
Class R1 0.50% 0.25% 0.75% 0.75% 29,321
Class R2 0.25% 0.25% 0.50% 0.50% 12,308
Class R3 0.25% 0.25% 0.50% 0.50% 146,826
Class R4 -- 0.25% 0.25% 0.25% 61,391
- ---------------------------------------------------------------------------------------------------------------------
Total Distribution and Service Fees $14,329,998
(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 year ended October 31, 2007 based on each class'
average daily net assets. 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 year ended October 31,
2007, were as follows:
AMOUNT
Class A $12,993
Class B 278,375
Class C 83,946
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 year ended October 31, 2007, the fee was $1,501,440, which
equated to 0.0514% 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 year ended October 31, 2007, these
out-of-pocket expenses, sub-accounting and other shareholder servicing costs
amounted to $2,283,149. 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 average daily net assets. The fund's annual fixed
amount is $17,500. The administrative services fee incurred for the year ended
October 31, 2007 was equivalent to an annual effective rate of 0.0160% 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 year ended October 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% $14,654
Class R2 0.40% 0.25% 0.25% 7,058
Class R3 0.25% 0.15% 0.15% 52,056
Class R4 0.15% 0.15% 0.15% 36,835
Class R5 0.10% 0.10% 0.10% 1,608
- -----------------------------------------------------------------------------------------------------------------
Total Retirement Plan Administration and Services Fees $112,211
(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 year ended October 31, 2007, the waiver amounted to $9,877 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 $1,674. The fund also has an
unfunded retirement benefit deferral plan for certain independent trustees
which resulted in an expense of $18,125. Both amounts are included in
independent trustees' compensation for the year ended October 31, 2007. The
liability for deferred retirement benefits payable to certain independent
trustees under both plans amounted to $81,342 at October 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 year ended October 31, 2007, the fee paid to Tarantino LLC
was $17,388. MFS has agreed to reimburse the fund for a portion of the
payments made by the funds to Tarantino LLC in the amount of $13,981, 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.
The fund may invest in a money market fund managed by MFS which seeks
preservation of capital and current income. Income earned on this investment
is included in dividends from underlying funds on the Statement of Operations.
This money market fund does not pay a management fee to MFS.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$2,952,907,503 and $2,434,347,906, 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:
YEAR ENDED YEAR ENDED
10/31/07 10/31/06
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 61,356,275 $1,113,434,834 33,508,984 $458,480,658
Class B 4,279,040 76,645,233 4,742,777 63,866,481
Class C 6,018,205 110,043,000 2,945,245 39,895,981
Class I 1,458,843 28,472,297 306,670 4,242,384
Class R 380,262 6,888,822 321,836 4,305,463
Class R1 503,719 9,247,234 86,994 1,169,275
Class R2 277,082 5,045,047 57,226 778,779
Class R3 2,350,890 42,409,832 945,010 13,009,585
Class R4 2,340,247 41,638,662 803,432 11,169,808
Class R5 140,526 2,611,245 40,477 573,603
- ----------------------------------------------------------------------------------------------------------
79,105,089 $1,436,436,206 43,758,651 $597,492,017
Shares issued to shareholders in
reinvestment of distributions
Class A 1,588,457 $28,414,841 1,154,428 $16,017,930
Class B 312,574 5,434,921 346,869 4,817,355
Class C 141,710 2,499,661 113,999 1,591,737
Class I 15,729 282,504 10,392 144,309
Class R 6,604 114,146 7,535 104,556
Class R1 2,224 40,092 947 13,364
Class R2 1,822 33,018 746 10,526
Class R3 21,903 394,812 7,548 107,740
Class R4 21,118 383,251 5,217 75,443
Class R5 600 11,259 89 1,246
- ----------------------------------------------------------------------------------------------------------
2,112,741 $37,608,505 1,647,770 $22,884,206
Shares reacquired
Class A (29,273,164) $(535,900,376) (24,317,849) $(325,008,013)
Class B (14,974,359) (267,003,938) (16,226,099) (218,698,121)
Class C (3,690,833) (66,850,090) (3,804,487) (50,809,784)
Class I (1,187,635) (23,599,741) (213,937) (2,834,328)
Class R (701,558) (12,751,972) (222,508) (2,972,060)
Class R1 (193,262) (3,368,399) (35,033) (477,175)
Class R2 (112,910) (1,961,129) (4,497) (60,223)
Class R3 (885,461) (15,563,043) (208,328) (2,858,235)
Class R4 (1,056,034) (18,395,041) (109,783) (1,555,899)
Class R5 (50,970) (964,339) (3,606) (51,638)
- ----------------------------------------------------------------------------------------------------------
(52,126,186) $(946,358,068) (45,146,127) $(605,325,476)
Net change
Class A 33,671,568 $605,949,299 10,345,563 $149,490,575
Class B (10,382,745) (184,923,784) (11,136,453) (150,014,285)
Class C 2,469,082 45,692,571 (745,243) (9,322,066)
Class I 286,937 5,155,060 103,125 1,552,365
Class R (314,692) (5,749,004) 106,863 1,437,959
Class R1 312,681 5,918,927 52,908 705,464
Class R2 165,994 3,116,936 53,475 729,082
Class R3 1,487,332 27,241,601 744,230 10,259,090
Class R4 1,305,331 23,626,872 698,866 9,689,352
Class R5 90,156 1,658,165 36,960 523,211
- ----------------------------------------------------------------------------------------------------------
29,091,644 $527,686,643 260,294 $15,050,747
(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 year ended
October 31, 2007, the fund's commitment fee and interest expense were $14,692
and $0, respectively, and are included in miscellaneous expense on the
Statement of Operations.
(7) TRANSACTIONS IN UNDERLYING FUNDS - AFFILIATED ISSUERS
An affiliated issuer may be considered one in which the fund owns 5% or more
of the outstanding voting securities, or a company which is under common
control. For the purpose of this report, the fund assumes the following to be
affiliated issuers:
BEGINNING ACQUISITIONS DISPOSITIONS ENDING
SHARES/PAR SHARES/PAR SHARES/PAR SHARES/PAR
UNDERLYING FUNDS: AMOUNT AMOUNT AMOUNT AMOUNT
MFS Institutional Money Market Portfolio -- 406,846,647 327,022,267 79,824,380
REALIZED CAPITAL GAIN DIVIDEND ENDING
UNDERLYING FUNDS: GAIN (LOSS) DISTRIBUTIONS INCOME VALUE
MFS Institutional Money Market Portfolio $0 $0 $1,144,520 $79,824,380
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Trustees of MFS Series Trust VI and Shareholders of MFS Utilities Fund:
We have audited the accompanying statement of assets and liabilities of MFS
Utilities Fund (the Fund), (one of the portfolios comprising MFS Series Trust
VI), including the portfolio of investments, as of October 31, 2007, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Fund's internal
control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Fund's internal control
over financial reporting. Accordingly, we express no such opinion. An audit
also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. Our procedures
included confirmation of securities owned as of October 31, 2007, by
correspondence with the Fund's custodian and brokers or by other appropriate
auditing procedures where replies from brokers were not received. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of MFS
Utilities Fund at October 31, 2007, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and its financial highlights for each of the periods
indicated therein, in conformity with U.S. generally accepted accounting
principles.
ERNST & YOUNG LLP
Boston, Massachusetts
December 14, 2007
TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND
The Trustees and officers of the Trust, as of December 1, 2007, are listed below, together with their
principal occupations during the past five years. (Their titles may have varied during that period.) The
address of each Trustee and officer is 500 Boylston Street, Boston, Massachusetts 02116.
PRINCIPAL OCCUPATIONS DURING
POSITION(S) HELD TRUSTEE/OFFICER THE PAST FIVE YEARS &
NAME, DATE OF BIRTH WITH FUND SINCE(h) OTHER DIRECTORSHIPS(j)
- ------------------- ---------------- --------------- ----------------------------
INTERESTED TRUSTEES
Robert J. Manning(k) Trustee February 2004 Massachusetts Financial Services
(born 10/20/63) Company, Chief Executive Officer,
President, Chief Investment
Officer and Director
Robert C. Pozen(k) Trustee February 2004 Massachusetts Financial Services
(born 8/08/46) Company, Chairman (since February
2004); MIT Sloan School
(education), Senior Lecturer
(since 2006); Secretary of
Economic Affairs, The Commonwealth
of Massachusetts (January 2002 to
December 2002); Fidelity
Investments, Vice Chairman (June
2000 to December 2001); Fidelity
Management & Research Company
(investment adviser), President
(March 1997 to July 2001); Bell
Canada Enterprises
(telecommunications), Director;
Medtronic, Inc. (medical
technology), Director; Telesat
(satellite communications),
Director
INDEPENDENT TRUSTEES
J. Atwood Ives Trustee and Chair February 1992 Private investor; Eastern
(born 5/01/36) of Trustees Enterprises (diversified services
company), Chairman, Trustee and
Chief Executive Officer (until
November 2000)
Robert E. Butler(n) Trustee January 2006 Consultant - regulatory and
(born 11/29/41) compliance matters (since July
2002); PricewaterhouseCoopers LLP
(professional services firm),
Partner (until 2002)
Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital,
(born 3/11/37) Chief of Cardiac Surgery (2005);
Harvard Medical School, Professor
of Cardiac Surgery; Physician
Director of Medical Device
Technology for Partners HealthCare
David H. Gunning Trustee January 2004 Retired; Cleveland-Cliffs Inc.
(born 5/30/42) (mining products and service
provider), Vice Chairman/Director
(until May 2007); Portman Limited
(mining), Director (since 2005);
Encinitos Ventures (private
investment company), Principal
(1997 to April 2001); Lincoln
Electric Holdings, Inc. (welding
equipment manufacturer), Director
William R. Gutow Trustee December 1993 Private investor and real estate
(born 9/27/41) consultant; Capitol Entertainment
Management Company (video
franchise), Vice Chairman;
Atlantic Coast Tan (tanning
salons), Vice Chairman (since
2002)
Michael Hegarty Trustee December 2004 Retired; AXA Financial (financial
(born 12/21/44) services and insurance), Vice
Chairman and Chief Operating
Officer (until May 2001); The
Equitable Life Assurance Society
(insurance), President and Chief
Operating Officer (until May 2001)
Lawrence T. Perera Trustee July 1981 Hemenway & Barnes (attorneys),
(born 6/23/35) Partner
J. Dale Sherratt Trustee August 1993 Insight Resources, Inc.
(born 9/23/38) (acquisition planning
specialists), President; Wellfleet
Investments (investor in health
care companies), Managing General
Partner (since 1993); Cambridge
Nutraceuticals (professional
nutritional products), Chief
Executive Officer (until May 2001)
Laurie J. Thomsen Trustee March 2005 New Profit, Inc. (venture
(born 8/05/57) philanthropy), Partner (since
2006); Private investor; Prism
Venture Partners (venture
capital), Co-founder and General
Partner (until June 2004); The
Travelers Companies (commercial
property liability insurance),
Director
Robert W. Uek Trustee January 2006 Retired (since 1999);
(born 5/18/41) PricewaterhouseCoopers LLP
(professional services firm),
Partner (until 1999); Consultant
to investment company industry
(since 2000); TT International
Funds (mutual fund complex),
Trustee (2000 until 2005);
Hillview Investment Trust II Funds
(mutual fund complex), Trustee
(2000 until 2005)
OFFICERS
Maria F. Dwyer(k) President November 2005 Massachusetts Financial Services
(born 12/01/58) Company, Executive Vice President
and Chief Regulatory Officer
(since March 2004) Chief
Compliance Officer (since December
2006); Fidelity Management &
Research Company, Vice President
(prior to March 2004); Fidelity
Group of Funds, President and
Treasurer (prior to March 2004)
Tracy Atkinson(k) Treasurer September 2005 Massachusetts Financial Services
(born 12/30/64) Company, Senior Vice President
(since September 2004);
PricewaterhouseCoopers LLP,
Partner (prior to September 2004)
Christopher R. Bohane(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 1/18/74) and Assistant Clerk Company, Vice President and Senior
Counsel (since April 2003);
Kirkpatrick & Lockhart LLP (law
firm), Associate (prior to April
2003)
Ethan D. Corey(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 11/21/63) and Assistant Clerk Company, Special Counsel (since
December 2004); Dechert LLP (law
firm), Counsel (prior to December
2004)
David L. DiLorenzo(k) Assistant Treasurer July 2005 Massachusetts Financial Services
(born 8/10/68) Company, Vice President (since
June 2005); JP Morgan Investor
Services, Vice President (prior to
June 2005)
Timothy M. Fagan(k) Assistant Secretary September 2005 Massachusetts Financial Services
(born 7/10/68) and Assistant Clerk Company, Vice President and Senior
Counsel (since September 2005);
John Hancock Advisers, LLC, Vice
President and Chief Compliance
Officer (September 2004 to August
2005), Senior Attorney (prior to
September 2004); John Hancock
Group of Funds, Vice President and
Chief Compliance Officer
(September 2004 to December 2004)
Mark D. Fischer(k) Assistant Treasurer July 2005 Massachusetts Financial Services
(born 10/27/70) Company, Vice President (since May
2005); JP Morgan Investment
Management Company, Vice President
(prior to May 2005)
Brian E. Langenfeld(k) Assistant Secretary June 2006 Massachusetts Financial Services
(born 3/07/73) and Assistant Clerk Company, Assistant Vice President
and Counsel (since May 2006); John
Hancock Advisers, LLC, Assistant
Vice President and Counsel (May
2005 to April 2006); John Hancock
Advisers, LLC, Attorney and
Assistant Secretary (prior to May
2005)
Ellen Moynihan(k) Assistant Treasurer April 1997 Massachusetts Financial Services
(born 11/13/57) Company, Senior Vice President
Susan S. Newton(k) Assistant Secretary May 2005 Massachusetts Financial Services
(born 3/07/50) and Assistant Clerk Company, Senior Vice President and
Associate General Counsel (since
April 2005); John Hancock
Advisers, LLC, Senior Vice
President, Secretary and Chief
Legal Officer (prior to April
2005); John Hancock Group of
Funds, Senior Vice President,
Secretary and Chief Legal Officer
(prior to April 2005)
Susan A. Pereira(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 11/05/70) and Assistant Clerk Company, Vice President and Senior
Counsel (since June 2004); Bingham
McCutchen LLP (law firm),
Associate (prior to June 2004)
Mark N. Polebaum(k) Secretary and Clerk January 2006 Massachusetts Financial Services
(born 5/01/52) Company, Executive Vice President,
General Counsel and Secretary
(since January 2006); Wilmer
Cutler Pickering Hale and Dorr LLP
(law firm), Partner (prior to
January 2006)
Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of
(born 3/07/44) Compliance Officer compliance services), Principal
(since June 2004); CRA Business
Strategies Group (consulting
services), Executive Vice
President (April 2003 to June
2004); David L. Babson & Co.
(investment adviser), Managing
Director, Chief Administrative
Officer and Director (prior to
March 2003)
James O. Yost(k) Assistant Treasurer September 1990 Massachusetts Financial Services
(born 6/12/60) Company, Senior Vice President
- ------------
(h) Date first appointed to serve as Trustee/officer of an MFS fund. Each Trustee has served continuously
since appointment unless indicated otherwise.
(j) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission
(i.e., "public companies").
(k) "Interested person" of the Trust within the meaning of the Investment Company Act of 1940 (referred to as
the 1940 Act), which is the principal federal law governing investment companies like the fund, as a
result of position with MFS. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116.
(n) In 2004 and 2005, Mr. Butler provided consulting services to the independent compliance consultant
retained by MFS pursuant to its settlement with the SEC concerning market timing and related matters. The
terms of that settlement required that compensation and expenses related to the independent compliance
consultant be borne exclusively by MFS and, therefore, MFS paid Mr. Butler for the services he rendered to
the independent compliance consultant. In 2004 and 2005, MFS paid Mr. Butler a total of $351,119.29.
The Trust held a shareholders' meeting in 2005 to elect Trustees, and will hold a shareholders' meeting at
least once every five years thereafter, to elect Trustees.
Each Trustee (except Mr. Butler and Mr. Uek) has been elected by shareholders and each Trustee and officer
holds office until his or her successor is chosen and qualified or until his or her earlier death,
resignation, retirement or removal. Messrs. Butler, Gutow, Sherratt and Uek and Ms. Thomsen are members of the
Trust's Audit Committee.
Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or
a subsidiary is the investment adviser or distributor, and, in the case of the officers, with certain
affiliates of MFS. As of January 1, 2007, the Trustees served as board members of 97 funds within the MFS
Family of Funds.
The Statement of Additional Information contains further information about the Trustees and is available
without charge upon request by calling 1-800-225-2606.
- -------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIAN
Massachusetts Financial Services Company JPMorgan Chase Bank
500 Boylston Street, Boston, MA 02116-3741 One Chase Manhattan Plaza
New York, NY 10081
DISTRIBUTOR
MFS Fund Distributors, Inc. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
500 Boylston Street, Boston, MA 02116-3741 Ernst & Young LLP
200 Clarendon Street, Boston, MA 02116
PORTFOLIO MANAGERS
Maura A. Shaughnessy
Robert D. Persons
BOARD REVIEW OF INVESTMENT
ADVISORY AGREEMENT
The Investment Company Act of 1940 requires that both the full Board of
Trustees and a majority of the non-interested ("independent") Trustees, voting
separately, annually approve the continuation of the Fund's investment
advisory agreement with MFS. The Trustees consider matters bearing on the Fund
and its advisory arrangements at their meetings throughout the year, including
a review of performance data at each regular meeting. In addition, the
independent Trustees met several times over the course of three months
beginning in May and ending in July, 2007 ("contract review meetings") for the
specific purpose of considering whether to approve the continuation of the
investment advisory agreement for the Fund and the other investment companies
that the Board oversees (the "MFS Funds"). The independent Trustees were
assisted in their evaluation of the Fund's investment advisory agreement by
independent legal counsel, from whom they received separate legal advice and
with whom they met separately from MFS during various contract review
meetings. The independent Trustees were also assisted in this process by the
MFS Funds' Independent Chief Compliance Officer, a full-time senior officer
appointed by and reporting to the independent Trustees.
In connection with their deliberations regarding the continuation of the
investment advisory agreement, the Trustees, including the independent
Trustees, considered such information and factors as they believed, in light
of the legal advice furnished to them and their own business judgment, to be
relevant. The investment advisory agreement for the Fund was considered
separately, although the Trustees also took into account the common interests
of all MFS Funds in their review. As described below, the Trustees considered
the nature, quality, and extent of the various investment advisory,
administrative, and shareholder services performed by MFS under the existing
investment advisory agreement and other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and
relied upon materials that included, among other items: (i) information
provided by Lipper Inc. on the investment performance of the Fund for various
time periods ended December 31, 2006 and the investment performance of a group
of funds with substantially similar investment classifications/objectives (the
"Lipper performance universe"), as well as the investment performance of a
group of funds identified by objective criteria suggested by MFS ("MFS peer
funds"), (ii) information provided by Lipper Inc. on the Fund's advisory fees
and other expenses and the advisory fees and other expenses of comparable
funds identified by Lipper (the "Lipper expense group"), as well as the
advisory fees and other expenses of MFS peer funds, (iii) information provided
by MFS on the advisory fees of comparable portfolios of other clients of MFS,
including institutional separate accounts and other clients, (iv) information
as to whether and to what extent applicable expense waivers, reimbursements or
fee "breakpoints" are observed for the Fund, (v) information regarding MFS'
financial results and financial condition, including MFS' and certain of its
affiliates' estimated profitability from services performed for the Fund and
the MFS Funds as a whole, (vi) MFS' views regarding the outlook for the mutual
fund industry and the strategic business plans of MFS, (vii) descriptions of
various functions performed by MFS for the Funds, such as compliance
monitoring and portfolio trading practices, and (viii) information regarding
the overall organization of MFS, including information about MFS' senior
management and other personnel providing investment advisory, administrative
and other services to the Fund and the other MFS Funds. The comparative
performance, fee and expense information prepared and provided by Lipper Inc.
was not independently verified and the independent Trustees did not
independently verify any information provided to them by MFS.
The Trustees' conclusion as to the continuation of the investment advisory
agreement was based on a comprehensive consideration of all information
provided to the Trustees and not the result of any single factor. Some of the
factors that figured particularly in the Trustees' deliberations are described
below, although individual Trustees may have evaluated the information
presented differently from one another, giving different weights to various
factors. It is also important to recognize that the fee arrangements for the
Fund and other MFS Funds are the result of years of review and discussion
between the independent Trustees and MFS, that certain aspects of such
arrangements may receive greater scrutiny in some years than in others, and
that the Trustees' conclusions may be based, in part, on their consideration
of these same arrangements during the course of the year and in prior years.
Based on information provided by Lipper Inc. and MFS, the Trustees reviewed the
Fund's total return investment performance as well as the performance of peer
groups of funds over various time periods. The Trustees placed particular
emphasis on the total return performance of the Fund's Class A shares in
comparison to the performance of funds in its Lipper performance universe over
the three-year period ended December 31, 2006, which the Trustees believed was
a long enough period to reflect differing market conditions. The total return
performance of the Fund's Class A shares was in the 1st quintile relative to
the other funds in the universe for this three-year period (the 1st quintile
being the best performers and the 5th quintile being the worst performers). The
total return performance of the Fund's Class A shares was in the 1st quintile
for each of the one- and five-year periods ended December 31, 2006 relative to
the Lipper performance universe. Because of the passage of time, these
performance results may differ from the performance results for more recent
periods, including those shown elsewhere in this report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings,
as well as during investment review meetings conducted with portfolio
management personnel during the course of the year regarding the Fund's
performance. After reviewing these and related factors, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreement, that they were satisfied with MFS' responses
and efforts relating to investment performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees
considered, among other information, the Fund's advisory fee and the total
expense ratio of the Fund's Class A shares as a percentage of average daily
net assets and the advisory fee and total expense ratios of peer groups of
funds based on information provided by Lipper Inc. and MFS. The Trustees
considered that MFS has agreed in writing to waive a portion of its advisory
fee on average daily net assets over $3.0 billion, which may not be changed
without the Trustees' approval. The Trustees also considered that, according
to the Lipper data (which takes into account the advisory fee waiver), the
Fund's effective advisory fee rate and total expense ratio were each
approximately at the Lipper expense group median.
The Trustees also considered the advisory fees charged by MFS to institutional
accounts. In comparing these fees, the Trustees considered information
provided by MFS as to the generally broader scope of services provided by MFS
to the Fund in comparison to institutional accounts, the higher demands placed
on MFS' investment personnel and trading infrastructure as a result of the
daily cash in-flows and out-flows of the Fund, and the impact on MFS and
expenses associated with the more extensive regulatory regime to which the
Fund is subject in comparison to institutional accounts.
The Trustees also considered whether the Fund is likely to benefit from any
economies of scale in the management of the Fund in the event of growth in
assets of the Fund. They noted that the Fund's advisory fee rate schedule is
currently subject to the breakpoint described above. The Trustees concluded
that the existing breakpoint was sufficient to allow the Fund to benefit from
economies of scale as its assets grow.
The Trustees also considered information prepared by MFS relating to MFS'
costs and profits with respect to the Fund, the MFS Funds considered as a
group, and other investment companies and accounts advised by MFS, as
well as MFS' methodologies used to determine and allocate its costs to the MFS
Funds, the Fund and other accounts and products for purposes of estimating
profitability.
After reviewing these and other factors described herein, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreement, that the advisory fees charged to the Fund
represent reasonable compensation in light of the services being provided by
MFS to the Fund.
In addition, the Trustees considered MFS' resources and related efforts to
continue to retain, attract and motivate capable personnel to serve the Fund.
The Trustees also considered current and developing conditions in the
financial services industry, including the entry into the industry of large
and well-capitalized companies which are spending, and appear to be prepared
to continue to spend, substantial sums to engage personnel and to provide
services to competing investment companies. In this regard, the Trustees also
considered the financial resources of MFS and its ultimate parent, Sun Life
Financial Inc. The Trustees also considered the advantages and possible
disadvantages to the Fund of having an adviser that also serves other
investment companies as well as other accounts.
The Trustees also considered the nature, quality, cost, and extent of
administrative, transfer agency, and distribution services provided to the Fund
by MFS and its affiliates under agreements and plans other than the investment
advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund
Distributors, Inc., an affiliate of MFS. The Trustees also considered the
nature, extent and quality of certain other services MFS performs or arranges
for on the Fund's behalf, which may include securities lending programs,
directed expense payment programs, class action recovery programs, and MFS'
interaction with third-party service providers, principally custodians and
sub-custodians. The Trustees concluded that the various non- advisory services
provided by MFS and its affiliates on behalf of the Funds were satisfactory.
The Trustees also considered benefits to MFS from the use of the Fund's
portfolio brokerage commissions, if applicable, to pay for investment research
(excluding third-party research, for which MFS pays directly), and various
other factors. Additionally, the Trustees considered so-called "fall-out
benefits" to MFS such as reputational value derived from serving as investment
manager to the Fund.
Based on their evaluation of factors that they deemed to be material,
including those factors described above, the Board of Trustees, including a
majority of the independent Trustees, concluded that the Fund's investment
advisory agreement with MFS should be continued for an additional one-year
period, commencing August 1, 2007.
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 1-800-SEC-0330. 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.
FEDERAL TAX INFORMATION (unaudited)
The fund will notify shareholders of amounts for use in preparing 2007 income
tax forms in January 2008. The following information is provided pursuant to
provisions of the Internal Revenue Code.
The fund designates the maximum amount allowable as qualified dividend income
eligible for the 15% tax rate.
The fund designates $12,679,278 as capital gain dividends paid during the
fiscal year.
For corporate shareholders, 78.17% of the ordinary income dividends paid
during the fiscal year qualify for the corporate dividends received deduction.
MFS(R) PRIVACY NOTICE
Privacy is a concern for every investor today. At MFS Investment Management(R)
and the MFS funds, we take this concern very seriously. We want you to
understand our policies about the investment products and services that we
offer, and how we protect the nonpublic personal information of investors who
have a direct relationship with us and our wholly owned subsidiaries.
Throughout our business relationship, you provide us with personal
information. We maintain information and records about you, your investments,
and the services you use. Examples of the nonpublic personal information we
maintain include
o data from investment applications and other forms
o share balances and transactional history with us, our affiliates, or others
o facts from a consumer reporting agency
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. We may share nonpublic
personal information with third parties or certain of our affiliates in
connection with servicing your account or processing your transactions. We may
share information with companies or financial institutions that perform
marketing services on our behalf or with other financial institutions with
which we have joint marketing arrangements, subject to any legal requirements.
Authorization to access your nonpublic personal information is limited to
appropriate personnel who provide products, services, or information to you.
We maintain physical, electronic, and procedural safeguards to help protect
the personal information we collect about you.
If you have any questions about the MFS privacy policy, please call
1-800-225-2606 any business day between 8 a.m. and 8 p.m. Eastern time.
Note: If you own MFS products or receive MFS services in the name of a third
party such as a bank or broker-dealer, their privacy policy may apply to you
instead of ours.
CONTACT US
WEB SITE MAILING ADDRESS
mfs.com MFS Service Center, Inc.
P.O. Box 55824
MFS TALK Boston, MA 02205-5824
1-800-637-8255
24 hours a day OVERNIGHT MAIL
MFS Service Center, Inc.
ACCOUNT SERVICE AND 500 Boylston Street
LITERATURE Boston, MA 02116-3741
SHAREHOLDERS
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
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
Annual report
MFS(R) GLOBAL EQUITY FUND
LETTER FROM THE CEO 1
- --------------------------------------------------------------
PORTFOLIO COMPOSITION 2
- --------------------------------------------------------------
MANAGEMENT REVIEW 3
- --------------------------------------------------------------
PERFORMANCE SUMMARY 6
- --------------------------------------------------------------
EXPENSE TABLE 9
- --------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 11
- --------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 16
- --------------------------------------------------------------
STATEMENT OF OPERATIONS 19
- --------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 21
- --------------------------------------------------------------
FINANCIAL HIGHLIGHTS 23
- --------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 34
- --------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 45
- --------------------------------------------------------------
TRUSTEES AND OFFICERS 46
- --------------------------------------------------------------
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 52
- --------------------------------------------------------------
PROXY VOTING POLICIES AND INFORMATION 56
- --------------------------------------------------------------
QUARTERLY PORTFOLIO DISCLOSURE 56
- --------------------------------------------------------------
FEDERAL TAX INFORMATION 56
- --------------------------------------------------------------
MFS(R) PRIVACY NOTICE 57
- --------------------------------------------------------------
CONTACT INFORMATION BACK COVER
- --------------------------------------------------------------
SIPC CONTACT INFORMATION:
You may obtain information about the Securities Investor Protection Corporation
("SIPC"), including the SIPC Brochure, by contacting SIPC either by telephone
(202-371-8300) or by accessing SIPC's website address (www.sipc.org).
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.
- -------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------
10/31/07
LGE-ANN
LETTER FROM THE CEO
[Photo of Robert J. Manning]
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% and was fairly stable.
This year we have seen a greater level of volatility than has been experienced
in recent years. The Dow hit several new highs but also experienced swift drops
as a global credit crisis swept through markets, spurred by defaults on U.S.
subprime loans and a liquidity crunch. Still, even with this volatility, the
Dow ended the first three quarters of 2007 with a return near 13%.
U.S. Treasury bonds gained ground, especially in the third quarter as investors
sought less risky asset classes. The spreads of many lower quality debt
investments widened.
In 2007 the U.S. dollar fell against the euro, oil prices have hit their
highest levels yet, and gold has spiked to its steepest price in 28 years.
Around the globe, stocks sold off as risk aversion mounted. As we have said
before, markets can be 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. In our view, investors who remain committed to a long-term plan are more
likely to achieve their financial goals.
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)
December 14, 2007
The opinions expressed in this letter are subject to change, may not be relied
upon for investment advice, and no forecasts can be guaranteed.
PORTFOLIO COMPOSITION
PORTFOLIO STRUCTURE
Common Stocks 98.7%
Cash & Other Net Assets 1.3%
TOP TEN HOLDINGS
Nestle S.A. 3.8%
------------------------------------------------
Johnson & Johnson 2.6%
------------------------------------------------
LVMH Moet Hennessy Louis Vuitton S.A. 2.3%
------------------------------------------------
Bank of New York Mellon Corp. 2.2%
------------------------------------------------
Roche Holding AG 2.2%
------------------------------------------------
American Express Co. 2.1%
------------------------------------------------
Reckitt Benckiser Group PLC 2.1%
------------------------------------------------
Kao Corp. 2.0%
------------------------------------------------
NIKE, Inc. 2.0%
------------------------------------------------
Diageo PLC 1.9%
------------------------------------------------
EQUITY SECTORS
Financial Services 18.3%
------------------------------------------------
Consumer Staples 17.3%
------------------------------------------------
Health Care 12.1%
------------------------------------------------
Basic Materials 7.9%
------------------------------------------------
Retailing 6.3%
------------------------------------------------
Technology 6.1%
------------------------------------------------
Energy 6.1%
------------------------------------------------
Leisure 5.8%
------------------------------------------------
Industrial Goods & Services 4.9%
------------------------------------------------
Utilities & Communications 4.3%
------------------------------------------------
Autos & Housing 3.9%
------------------------------------------------
Transportation 3.3%
------------------------------------------------
Special Products & Services 2.4%
------------------------------------------------
COUNTRY WEIGHTINGS
United States 34.0%
------------------------------------------------
France 13.8%
------------------------------------------------
Switzerland 12.1%
------------------------------------------------
United Kingdom 10.9%
------------------------------------------------
Japan 9.5%
------------------------------------------------
Germany 8.1%
------------------------------------------------
Netherlands 4.0%
------------------------------------------------
South Korea 1.2%
------------------------------------------------
Italy 1.2%
------------------------------------------------
Other Countries 5.2%
------------------------------------------------
Percentages are based on net assets as of 10/31/07.
The portfolio is actively managed and current holdings may be different.
MANAGEMENT REVIEW
SUMMARY OF RESULTS
For the twelve months ended October 31, 2007, Class A shares of the MFS Global
Equity Fund provided a total return of 17.41%, at net asset value. This
compares with a return of 20.97% for the fund's benchmark, the MSCI World
Index.
MARKET ENVIRONMENT
The U.S. economy continues to decouple from the rest of the world. Despite
seemingly robust growth rates during the second and third quarters of 2007,
underlying economic activity in the U.S. remains muted relative to other major
economies. Overall, global economies have seen moderate to strong growth over
the last twelve months as domestic demand improves and world trade accelerates.
With the strong global growth, however, has come increased concern about rising
global inflation, especially as capacity becomes more constrained, wages rise,
and energy and food prices advance. During the reporting period, global central
banks tightened monetary conditions, which in turn pushed global bond yields to
their highest levels during this economic expansion.
However, beginning in late July, heightened uncertainty and distress concerning
the subprime mortgage market caused several global credit markets to seize up,
forcing central banks to inject liquidity and to reassess their tightening
biases as sovereign bond yields declined and credit spreads widened. While
credit conditions improved somewhat by late October as the Federal Reserve
Board cut interest rates, the level of market turbulence remains significant.
Increased market volatility has also been exacerbated by U.S. home
foreclosures, falling housing prices, and a weakening trend in the labor
market. Despite increased volatility across all asset classes and the widening
in credit spreads, global equity markets remained elevated, generally having
erased losses incurred earlier in the summer.
DETRACTORS FROM PERFORMANCE
For the MFS Global Equity Fund, security selection in the technology sector was
the primary detractor from performance relative to fund's benchmark over the
reporting period. In particular, the fund's position in electronics
manufacturer Samsung Electronics(aa) (South Korea) hurt results. Shares of
Samsung declined due, in part, to pricing pressure on liquid crystal display
(LCD) and memory components. Holdings of Canon (Japan), a manufacturer of
printers and computer peripherals, also weighed on results. Not owning strong-
performing benchmark constituent Apple also detracted from relative
performance.
In the autos and housing sector, security selection was a key negative led by
the fund's holdings of motorcycle maker Harley-Davidson. The company's
profitability suffered from lower demand in the United States and residual
effects of a first quarter 2007 strike.
Security selection in the basic materials sector also dampened results. Not
owning mining giant BHP Billiton (U.K.) hurt performance as the firm posted
significant returns over the reporting period.
Overweighting the health care sector held back relative performance. Within
this sector, shares of pharmaceutical and diagnostic company Roche
(Switzerland) declined as the company reported third quarter 2007 sales that
failed to meet consensus expectations on lower pandemic Tamiflu sales. The
fund's positions in health care product maker Johnson & Johnson and
biotechnology firm Amgen(g) also held back performance.
Security selection and an underweighting in the energy sector also weighed on
performance over the reporting period, although no holdings in this sector were
among the fund's top detractors.
Elsewhere, holdings in investment management and banking firm UBS (Switzerland)
hindered performance as problems relating to mortgage-backed securities hurt
the stock's price. Overweighting investment company Genworth Financial also
held back results. The stock was under pressure near the end of the reporting
period as concerns mounted about default rates on home mortgages.
CONTRIBUTORS TO PERFORMANCE
Stock selection, and to a lesser extent, underweighting the financial services
sector benefited relative performance. The fund derived solid gains from its
investments in Swiss wealth management firm Julius Baer(aa) and Bank of New
York Mellon, a global provider of financial services for individuals and
institutions. Shares of both firms outperformed the benchmark over the
reporting period. Not owning benchmark constituent Citigroup also aided
performance as concerns regarding the firm's exposure to the subprime market
rose.
In the retailing sector, where security selection was a strong positive factor,
athletic shoes and apparel manufacturer Nike contributed to relative returns.
Nike delivered strong growth in revenues, profits, and earnings over the
reporting period. The company benefited from its continued sales growth in the
brand's three core footwear lines which enjoyed powerful marketing support
through their participation in key sporting events.
Overweighting the consumer staples sector was another positive. UK-based
household products manufacturer Reckitt-Benckiser was a strong performer in
this sector as shares rose on better-than-anticipated top line growth. The
fund's positioning in food company Nestle (Switzerland) also contributed to
relative results.
Individual stocks in other sectors that contributed to relative performance
included healthcare products maker Bayer and industrial gas producer Praxair.
The fund also benefited from its investments in German power and gas company
E.ON and communications company Singapore Telecommunications.
During the reporting period, our currency exposure was a contributor to the
fund's relative performance. All of MFS' investment decisions are driven by the
fundamentals of each individual opportunity and, as such, it is common for our
portfolios to have different currency exposure than the benchmark.
Respectfully,
David Mannheim Simon Todd
Portfolio Manager Portfolio Manager
(aa) Security is not a benchmark constituent.
(g) Security was not held in the portfolio at period end.
The views expressed in this report are those of the portfolio managers only
through the end of the period of the report as stated on the cover and do not
necessarily reflect the views of MFS or any other person in the MFS
organization. These views are subject to change at any time based on market or
other conditions, and MFS disclaims any responsibility to update such views.
These views may not be relied upon as investment advice or an indication of
trading intent on behalf of any MFS portfolio. References to specific
securities are not recommendations of such securities, and may not be
representative of any MFS portfolio's current or future investments.
PERFORMANCE SUMMARY THROUGH 10/31/07
The following chart illustrates a representative class of the fund's historical
performance in comparison to its benchmark. Performance results include the
deduction of the maximum applicable sales charge and reflect the percentage
change in net asset value, including reinvestment of dividends and capital
gains distributions. The performance of other share classes will be greater
than or less than that of the class depicted below. Benchmark comparisons are
unmanaged; do not reflect sales charges, commissions or expenses; and cannot be
invested in directly. (See Notes to Performance Summary.)
PERFORMANCE DATA SHOWN REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE FLUCTUATE SO YOUR SHARES,
WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST; CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN QUOTED. THE PERFORMANCE SHOWN DOES NOT
REFLECT THE DEDUCTION OF TAXES, IF ANY, THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
MFS Global
Equity Fund- MSCI
Class A World Index
10/97 $ 9,425 $10,000
10/98 10,125 11,568
10/99 11,731 14,499
10/00 12,949 14,701
10/01 10,661 10,990
10/02 10,036 9,396
10/03 11,868 11,682
10/04 13,899 13,290
10/05 15,640 15,126
10/06 19,507 18,441
10/07 22,902 22,308
TOTAL RETURNS THROUGH 10/31/07
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
- ----------------------------------------------------------------------------
A 9/07/93 17.41% 17.94% 9.28%
- ----------------------------------------------------------------------------
B 12/29/86 16.51% 17.04% 8.47%
- ----------------------------------------------------------------------------
C 1/03/94 16.51% 17.04% 8.46%
- ----------------------------------------------------------------------------
I 1/02/97 17.66% 18.22% 9.55%
- ----------------------------------------------------------------------------
J 7/09/99 16.57% 17.11% 8.54%
- ----------------------------------------------------------------------------
R 12/31/02 17.09% 17.64% 9.15%
- ----------------------------------------------------------------------------
R1 4/01/05 16.38% 16.97% 8.44%
- ----------------------------------------------------------------------------
R2 4/01/05 16.79% 17.17% 8.53%
- ----------------------------------------------------------------------------
R3 10/31/03 16.94% 17.33% 8.61%
- ----------------------------------------------------------------------------
R4 4/01/05 17.22% 17.85% 9.24%
- ----------------------------------------------------------------------------
R5 4/01/05 17.58% 18.03% 9.33%
- ----------------------------------------------------------------------------
AVERAGE ANNUAL
Comparative benchmark
- ----------------------------------------------------------------------------
MSCI World Index (f) 20.97% 18.88% 8.35%
- ----------------------------------------------------------------------------
AVERAGE ANNUAL WITH SALES CHARGE
Share class
- ----------------------------------------------------------------------------
A 10.66% 16.55% 8.64%
With Initial Sales Charge (5.75%)
- ----------------------------------------------------------------------------
B 12.51% 16.83% 8.47%
With CDSC (Declining over six years
from 4% to 0%) (x)
- ----------------------------------------------------------------------------
C 15.51% 17.04% 8.46%
With CDSC (1% for 12 months) (x)
- ----------------------------------------------------------------------------
J 13.07% 16.40% 8.21%
With Initial Sales Charge (3.00%)
- ----------------------------------------------------------------------------
Class I, R, R1, R2, R3, R4, and R5 shares do not have a sales charge. Please
see Notes to Performance Summary for more details.
CDSC - Contingent Deferred Sales Charge.
(f) Source: FactSet Research Systems Inc.
(x) Assuming redemption at the end of the applicable period.
INDEX DEFINITION
Morgan Stanley Capital International (MSCI) World Index - a market
capitalization index that is designed to measure equity market performance in
the global developed markets.
It is not possible to invest directly in an index.
NOTES TO PERFORMANCE SUMMARY
Performance for R, R4, and R5 shares includes the performance of the fund's
Class A shares prior to their offering. Performance for J, R1, R2, and R3
includes the performance of the fund's Class B shares prior to their offering.
For reporting periods ending prior to March 31, 2004, when quoting performance
for the fund's Class R shares, the performance of the share class included the
performance of the fund's Class B shares, rather than Class A shares. The
blending methodology changed for reporting periods ending on or after March 31,
2004, because Class A shares now have a 10 year performance history, and share
class performance is being blended to Class A shares based upon the similarity
of share class operating expenses. This change in blending methodology results
in better performance for Class R shares than it had under the prior blending
methodology. For a transitional period lasting until December 31, 2007,
performance for Class R shares under the prior methodology is available at
mfs.com.
This blended class performance has been adjusted to take into account
differences in sales loads, if any, applicable to these share classes, but has
not been adjusted to take into account differences in class specific operating
expenses (such as Rule 12b-1 fees). Compared to performance these share classes
would have experienced had they been offered for the entire period, the use of
blended performance generally results in higher performance for share classes
with higher operating expenses than the share class to which it is blended, and
lower performance for share classes with lower operating expenses than the
share class to which it is blended.
Performance results reflect any applicable expense subsidies and waivers in
effect during the periods shown. Without such subsidies and waivers the fund's
performance results would be less favorable. Please see the prospectus and
financial statements for complete details.
From time to time the fund may receive proceeds from litigation settlements,
without which performance would be lower.
EXPENSE TABLE
Fund Expenses Borne by the Shareholders During the Period,
May 1, 2007 through October 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 (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 May 1, 2007 through October 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). 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 5/01/07-
Class Ratio 5/01/07 10/31/07 10/31/07
- --------------------------------------------------------------------------------
Actual 1.45% $1,000.00 $1,058.76 $7.52
A ------------------------------------------------------------------------
Hypothetical (h) 1.45% $1,000.00 $1,017.90 $7.38
- --------------------------------------------------------------------------------
Actual 2.20% $1,000.00 $1,054.89 $11.39
B ------------------------------------------------------------------------
Hypothetical (h) 2.20% $1,000.00 $1,014.12 $11.17
- --------------------------------------------------------------------------------
Actual 2.19% $1,000.00 $1,055.09 $11.34
C ------------------------------------------------------------------------
Hypothetical (h) 2.19% $1,000.00 $1,014.17 $11.12
- --------------------------------------------------------------------------------
Actual 1.20% $1,000.00 $1,060.00 $6.23
I ------------------------------------------------------------------------
Hypothetical (h) 1.20% $1,000.00 $1,019.16 $6.11
- --------------------------------------------------------------------------------
Actual 2.15% $1,000.00 $1,055.22 $11.14
J ------------------------------------------------------------------------
Hypothetical (h) 2.15% $1,000.00 $1,014.37 $10.92
- --------------------------------------------------------------------------------
Actual 1.70% $1,000.00 $1,057.73 $8.82
R ------------------------------------------------------------------------
Hypothetical (h) 1.70% $1,000.00 $1,016.64 $8.64
- --------------------------------------------------------------------------------
Actual 2.29% $1,000.00 $1,054.13 $11.86
R1 ------------------------------------------------------------------------
Hypothetical (h) 2.29% $1,000.00 $1,013.66 $11.62
- --------------------------------------------------------------------------------
Actual 1.94% $1,000.00 $1,055.90 $10.05
R2 ------------------------------------------------------------------------
Hypothetical (h) 1.94% $1,000.00 $1,015.43 $9.86
- --------------------------------------------------------------------------------
Actual 1.84% $1,000.00 $1,056.78 $9.54
R3 ------------------------------------------------------------------------
Hypothetical (h) 1.84% $1,000.00 $1,015.93 $9.35
- --------------------------------------------------------------------------------
Actual 1.59% $1,000.00 $1,058.00 $8.25
R4 ------------------------------------------------------------------------
Hypothetical (h) 1.59% $1,000.00 $1,017.19 $8.08
- --------------------------------------------------------------------------------
Actual 1.31% $1,000.00 $1,060.00 $6.80
R5 ------------------------------------------------------------------------
Hypothetical (h) 1.31% $1,000.00 $1,018.60 $6.67
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads). If
these transaction costs had been included, your costs would have been
higher.
PORTFOLIO OF INVESTMENTS
10/31/07
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Common Stocks - 98.7%
- -----------------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- -----------------------------------------------------------------------------------------------------------------
Alcoholic Beverages - 4.1%
- -----------------------------------------------------------------------------------------------------------------
Diageo PLC 641,297 $ 14,683,457
Heineken N.V. 126,010 8,826,632
Pernod Ricard S.A. 34,926 8,078,903
------------
$ 31,588,992
- -----------------------------------------------------------------------------------------------------------------
Apparel Manufacturers - 4.3%
- -----------------------------------------------------------------------------------------------------------------
LVMH Moet Hennessy Louis Vuitton S.A. 138,220 $ 17,816,312
NIKE, Inc., "B" 233,410 15,465,747
------------
$ 33,282,059
- -----------------------------------------------------------------------------------------------------------------
Automotive - 3.9%
- -----------------------------------------------------------------------------------------------------------------
Bayerische Motoren Werke AG 148,950 $ 9,986,361
Bridgestone Corp. 196,200 4,339,796
Harley-Davidson, Inc. 163,670 8,429,005
Toyota Motor Corp. 130,600 7,464,407
------------
$ 30,219,569
- -----------------------------------------------------------------------------------------------------------------
Biotechnology - 0.2%
- -----------------------------------------------------------------------------------------------------------------
Actelion Ltd. (a) 34,220 $ 1,702,937
- -----------------------------------------------------------------------------------------------------------------
Broadcasting - 4.0%
- -----------------------------------------------------------------------------------------------------------------
Viacom, Inc., "B" (a) 138,025 $ 5,699,052
Vivendi S.A. (l) 142,300 6,413,997
Walt Disney Co. 249,520 8,640,878
WPP Group PLC 752,460 10,282,402
------------
$ 31,036,329
- -----------------------------------------------------------------------------------------------------------------
Brokerage & Asset Managers - 2.5%
- -----------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. 22,740 $ 5,637,701
Julius Baer Holding Ltd. 81,144 7,030,679
Nomura Holdings, Inc. 353,600 6,302,999
------------
$ 18,971,379
- -----------------------------------------------------------------------------------------------------------------
Business Services - 1.1%
- -----------------------------------------------------------------------------------------------------------------
Accenture Ltd., "A" 112,000 $ 4,373,600
DST Systems, Inc. (a) 45,240 3,832,280
------------
$ 8,205,880
- -----------------------------------------------------------------------------------------------------------------
Chemicals - 2.8%
- -----------------------------------------------------------------------------------------------------------------
3M Co. 131,800 $ 11,382,248
Givaudan S.A. 10,340 10,175,036
------------
$ 21,557,284
- -----------------------------------------------------------------------------------------------------------------
Computer Software - 1.3%
- -----------------------------------------------------------------------------------------------------------------
Oracle Corp. (a) 442,430 $ 9,808,673
- -----------------------------------------------------------------------------------------------------------------
Conglomerates - 1.3%
- -----------------------------------------------------------------------------------------------------------------
Smiths Group PLC 424,834 $ 9,974,813
- -----------------------------------------------------------------------------------------------------------------
Consumer Goods & Services - 7.1%
- -----------------------------------------------------------------------------------------------------------------
Alberto-Culver Co. 143,350 $ 3,725,667
Henkel KGaA, IPS (l) 189,130 9,663,088
Kao Corp. 540,000 15,496,848
Procter & Gamble Co. 139,914 9,726,821
Reckitt Benckiser Group PLC 273,660 15,886,794
------------
$ 54,499,218
- -----------------------------------------------------------------------------------------------------------------
Electrical Equipment - 4.1%
- -----------------------------------------------------------------------------------------------------------------
Legrand S.A. 219,070 $ 8,098,333
OMRON Corp. 146,900 3,598,135
Rockwell Automation, Inc. 114,130 7,861,274
Schneider Electric S.A. (l) 89,846 12,384,935
------------
$ 31,942,677
- -----------------------------------------------------------------------------------------------------------------
Electronics - 4.8%
- -----------------------------------------------------------------------------------------------------------------
Canon, Inc. 259,500 $ 13,118,265
Hirose Electric Co. Ltd. (l) 22,300 2,667,795
Intel Corp. 322,000 8,661,800
Ricoh Co. Ltd. 165,000 3,254,422
Samsung Electronics Co. Ltd. 15,525 9,638,976
------------
$ 37,341,258
- -----------------------------------------------------------------------------------------------------------------
Energy - Independent - 0.7%
- -----------------------------------------------------------------------------------------------------------------
INPEX Holdings, Inc. 471 $ 5,105,257
- -----------------------------------------------------------------------------------------------------------------
Energy - Integrated - 5.4%
- -----------------------------------------------------------------------------------------------------------------
Chevron Corp. 78,630 $ 7,195,431
Exxon Mobil Corp. 115,730 10,646,003
Royal Dutch Shell PLC 253,040 11,089,871
TOTAL S.A. (l) 162,200 13,090,580
------------
$ 42,021,885
- -----------------------------------------------------------------------------------------------------------------
Food & Beverages - 6.1%
- -----------------------------------------------------------------------------------------------------------------
General Mills, Inc. 131,080 $ 7,567,248
Nestle S.A. 62,957 29,098,116
PepsiCo, Inc. 146,520 10,801,454
------------
$ 47,466,818
- -----------------------------------------------------------------------------------------------------------------
Food & Drug Stores - 1.5%
- -----------------------------------------------------------------------------------------------------------------
Sally Beauty Holdings, Inc. (a) 149,380 $ 1,381,765
Tesco PLC 603,396 6,129,128
Walgreen Co. 96,800 3,838,120
------------
$ 11,349,013
- -----------------------------------------------------------------------------------------------------------------
Gaming & Lodging - 1.8%
- -----------------------------------------------------------------------------------------------------------------
Ladbrokes PLC 647,650 $ 5,550,734
William Hill PLC 640,040 8,246,586
------------
$ 13,797,320
- -----------------------------------------------------------------------------------------------------------------
General Merchandise - 0.5%
- -----------------------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 81,660 $ 3,691,849
- -----------------------------------------------------------------------------------------------------------------
Insurance - 4.1%
- -----------------------------------------------------------------------------------------------------------------
Assicurazioni Generali S.p.A 107,662 $ 5,119,726
AXA (l) 242,960 10,873,606
Genworth Financial, Inc., "A" 169,570 4,629,261
QBE Insurance Group Ltd. 54,700 1,672,537
Swiss Reinsurance Co. 96,508 9,071,226
------------
$ 31,366,356
- -----------------------------------------------------------------------------------------------------------------
Machinery & Tools - 0.8%
- -----------------------------------------------------------------------------------------------------------------
Fanuc Ltd. 36,100 $ 3,953,172
Pitney Bowes, Inc. 56,280 2,253,451
------------
$ 6,206,623
- -----------------------------------------------------------------------------------------------------------------
Major Banks - 6.6%
- -----------------------------------------------------------------------------------------------------------------
Bank of New York Mellon Corp. 350,103 $ 17,102,532
Credit Agricole S.A. 187,450 7,418,769
Erste Bank der oesterreichischen Sparkassen AG 95,470 7,753,501
Intesa Sanpaolo S.p.A 552,370 4,371,464
State Street Corp. 180,610 14,407,260
------------
$ 51,053,526
- -----------------------------------------------------------------------------------------------------------------
Medical Equipment - 2.9%
- -----------------------------------------------------------------------------------------------------------------
Medtronic, Inc. 177,450 $ 8,418,228
Synthes, Inc. 51,500 6,439,448
Thermo Fisher Scientific, Inc. (a) 128,760 7,572,376
------------
$ 22,430,052
- -----------------------------------------------------------------------------------------------------------------
Natural Gas - Distribution - 0.9%
- -----------------------------------------------------------------------------------------------------------------
Gaz de France 81,020 $ 4,605,971
Tokyo Gas Co. Ltd. 605,000 2,705,338
------------
$ 7,311,309
- -----------------------------------------------------------------------------------------------------------------
Other Banks & Diversified Financials - 5.1%
- -----------------------------------------------------------------------------------------------------------------
Aeon Credit Service Co. Ltd. 150,000 $ 2,306,992
American Express Co. 262,540 16,001,807
Bangkok Bank Public Co. Ltd. 761,200 2,873,920
Komercni Banka A.S. 13,221 3,040,046
PT Bank Central Asia Tbk. 2,003,500 1,623,251
UBS AG 248,435 13,308,442
------------
$ 39,154,458
- -----------------------------------------------------------------------------------------------------------------
Pharmaceuticals - 9.0%
- -----------------------------------------------------------------------------------------------------------------
Bayer AG 126,870 $ 10,586,970
GlaxoSmithKline PLC 533,630 13,751,096
Johnson & Johnson 305,130 19,885,322
Merck KGaA 70,000 8,766,036
Roche Holding AG 98,770 16,876,607
------------
$ 69,866,031
- -----------------------------------------------------------------------------------------------------------------
Railroad & Shipping - 0.5%
- -----------------------------------------------------------------------------------------------------------------
Canadian National Railway Co. 75,226 $ 4,211,904
- -----------------------------------------------------------------------------------------------------------------
Specialty Chemicals - 5.1%
- -----------------------------------------------------------------------------------------------------------------
Asahi Glass Co. Ltd. 241,000 $ 3,314,024
L'Air Liquide S.A. (l) 72,966 10,051,741
Linde AG 94,650 11,988,827
Praxair, Inc. 109,820 9,387,414
Sigma-Aldrich Corp. 85,730 4,429,669
------------
$ 39,171,675
- -----------------------------------------------------------------------------------------------------------------
Telephone Services - 0.8%
- -----------------------------------------------------------------------------------------------------------------
Singapore Telecommunications Ltd. 2,197,975 $ 6,245,820
- -----------------------------------------------------------------------------------------------------------------
Trucking - 2.8%
- -----------------------------------------------------------------------------------------------------------------
TNT N.V. 269,100 $ 11,021,007
United Parcel Service, Inc., "B" 137,750 10,345,025
------------
$ 21,366,032
- -----------------------------------------------------------------------------------------------------------------
Utilities - Electric Power - 2.6%
- -----------------------------------------------------------------------------------------------------------------
E.ON AG 61,560 $ 12,043,520
SUEZ S.A. 121,260 7,895,993
------------
$ 19,939,513
- -----------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $549,093,852) $761,886,509
- -----------------------------------------------------------------------------------------------------------------
Money Market Funds - 1.5% (v)
- -----------------------------------------------------------------------------------------------------------------
MFS Institutional Money Market Portfolio, 5.16%,
at Cost and Net Asset Value 11,536,277 $ 11,536,277
- -----------------------------------------------------------------------------------------------------------------
Collateral for Securities Loaned - 1.8%
- -----------------------------------------------------------------------------------------------------------------
Citigroup Global Markets, Inc. Repurchase Agreement, 4.83%, dated 10/31/07,
due 11/01/07, total to be received $13,885,886 (secured by U.S. Treasury and
Federal Agency obligations and Mortgage Backed securities in an individually
traded account), at Cost $13,884,023 $ 13,884,023
- -----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $574,514,152)(k) $787,306,809
- -----------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (2.0)% (15,138,611)
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $772,168,198
- -----------------------------------------------------------------------------------------------------------------
(a) Non-income producing security.
(k) As of October 31, 2007, the fund had 19 securities that were fair valued, aggregating $98,722,000 and 12.54%
of market value, in accordance with the policies adopted by the Board of Trustees.
(l) All or a portion of this security is on loan.
(v) Underlying fund that is available only to investment companies managed by MFS. The rate quoted is the
annualized seven-day yield of the fund at period end.
The following abbreviations are used in this report and are defined:
IPS International Preference Stock
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 10/31/07
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
Investments in non-affiliated issuers at value
(identified cost, $562,977,875) $775,770,532
Investments in underlying funds at cost and value 11,536,277
- -------------------------------------------------------------------------------------------------------
Investments, at value, including $13,319,333 of securities
on loan (identified cost, $574,514,152) $787,306,809
Foreign currency, at value (identified cost, $98,304) 98,304
Receivable for fund shares sold 387,680
Interest and dividends receivable 1,695,124
- -------------------------------------------------------------------------------------------------------
Total assets $789,487,917
- -------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------
Payable for investments purchased $397,168
Payable for fund shares reacquired 2,219,616
Collateral for securities loaned, at value 13,884,023
Payable to affiliates
Management fee 37,792
Shareholder servicing costs 359,461
Distribution and service fees 16,644
Administrative services fee 704
Retirement plan administration and services fees 411
Payable for independent trustees' compensation 61,616
Accrued expenses and other liabilities 342,284
- -------------------------------------------------------------------------------------------------------
Total liabilities $17,319,719
- -------------------------------------------------------------------------------------------------------
Net assets $772,168,198
- -------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- -------------------------------------------------------------------------------------------------------
Paid-in capital $479,013,845
Unrealized appreciation (depreciation) on investments and
translation of assets and liabilities in foreign currencies
(net of $31,669 deferred country tax) 212,797,588
Accumulated net realized gain (loss) on investments and
foreign currency transactions 76,699,291
Undistributed net investment income 3,657,474
- -------------------------------------------------------------------------------------------------------
Net assets $772,168,198
- -------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 24,717,687
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
Class A shares
- -------------------------------------------------------------------------------------------------------
Net assets $474,901,158
Shares outstanding 14,976,534
- -------------------------------------------------------------------------------------------------------
Net asset value per share $31.71
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/94.25Xnet asset value per share) $33.64
- -------------------------------------------------------------------------------------------------------
Class B shares
- -------------------------------------------------------------------------------------------------------
Net assets $102,295,966
Shares outstanding 3,433,386
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $29.79
- -------------------------------------------------------------------------------------------------------
Class C shares
- -------------------------------------------------------------------------------------------------------
Net assets $50,903,395
Shares outstanding 1,748,714
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $29.11
- -------------------------------------------------------------------------------------------------------
Class I shares
- -------------------------------------------------------------------------------------------------------
Net assets $77,688,740
Shares outstanding 2,402,794
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $32.33
- -------------------------------------------------------------------------------------------------------
Class J shares
- -------------------------------------------------------------------------------------------------------
Net assets $13,863,721
Shares outstanding 471,110
- -------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share $29.43
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/97.00Xnet asset value per share) $30.34
- -------------------------------------------------------------------------------------------------------
Class R shares
- -------------------------------------------------------------------------------------------------------
Net assets $6,495,461
Shares outstanding 207,317
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $31.33
- -------------------------------------------------------------------------------------------------------
Class R1 shares
- -------------------------------------------------------------------------------------------------------
Net assets $4,208,343
Shares outstanding 142,158
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $29.60
- -------------------------------------------------------------------------------------------------------
Class R2 shares
- -------------------------------------------------------------------------------------------------------
Net assets $856,715
Shares outstanding 28,731
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $29.82
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
Class R3 shares
- -------------------------------------------------------------------------------------------------------
Net assets $21,363,872
Shares outstanding 687,454
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $31.08
- -------------------------------------------------------------------------------------------------------
Class R4 shares
- -------------------------------------------------------------------------------------------------------
Net assets $14,293,330
Shares outstanding 452,879
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $31.56
- -------------------------------------------------------------------------------------------------------
Class R5 shares
- -------------------------------------------------------------------------------------------------------
Net assets $5,297,497
Shares outstanding 166,610
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $31.80
- -------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred
sales charge may be imposed on redemptions of Class A, Class B, and Class C shares.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF OPERATIONS
Year ended 10/31/07
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 INCOME
- ----------------------------------------------------------------------------------------------------
Income
Dividends $20,530,321
Dividends from underlying funds 83,601
Interest 600,526
Other 21,700
Foreign taxes withheld (1,195,506)
- ----------------------------------------------------------------------------------------------------
Total investment income $20,040,642
- ----------------------------------------------------------------------------------------------------
Expenses
Management fee $7,061,293
Distribution and service fees 3,257,317
Shareholder servicing costs 1,483,013
Administrative services fee 142,292
Retirement plan administration and services fees 49,216
Independent trustees' compensation 28,432
Custodian fee 394,035
Shareholder communications 118,355
Auditing fees 58,431
Legal fees 18,441
Miscellaneous 181,800
- ----------------------------------------------------------------------------------------------------
Total expenses $12,792,625
- ----------------------------------------------------------------------------------------------------
Fees paid indirectly (19,649)
Reduction of expenses by investment adviser (8,025)
- ----------------------------------------------------------------------------------------------------
Net expenses $12,764,951
- ----------------------------------------------------------------------------------------------------
Net investment income $7,275,691
- ----------------------------------------------------------------------------------------------------
Statement of Operations - continued
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis)
Investment transactions:
Non-affiliated issuers (net of $56 country tax) $94,844,567
Foreign currency transactions (61,305)
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions $94,783,262
- ----------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
Investments (net of $31,669 deferred country tax) $21,350,130
Translation of assets and liabilities in foreign currencies 28,930
- ----------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments and foreign
currency translation $21,379,060
- ----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and
foreign currency $116,162,322
- ----------------------------------------------------------------------------------------------------
Change in net assets from operations $123,438,013
- ----------------------------------------------------------------------------------------------------
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.
YEARS ENDED 10/31
-----------------------------
2007 2006
CHANGE IN NET ASSETS
FROM OPERATIONS
- -------------------------------------------------------------------------------------------
Net investment income $7,275,691 $10,780,892
Net realized gain (loss) on investments and foreign
currency transactions 94,783,262 96,401,241
Net unrealized gain (loss) on investments and
foreign currency translation 21,379,060 47,921,907
- -------------------------------------------------------------------------------------------
Change in net assets from operations $123,438,013 $155,104,040
- -------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------
From net investment income
Class A $(9,448,780) $--
Class B (1,851,723) --
Class C (633,188) --
Class I (1,459,047) --
Class J (257,963) --
Class R (252,787) --
Class R1 (23,168) --
Class R2 (12,087) --
Class R3 (117,690) --
Class R4 (181,581) --
Class R5 (1,407) --
From net realized gain on investments
Class A (49,984,260) (18,099,702)
Class B (15,617,271) (6,962,364)
Class C (4,798,630) (1,607,519)
Class I (6,908,588) (1,898,929)
Class J (2,165,492) (882,139)
Class R (1,519,317) (585,544)
Class R1 (163,635) (31,501)
Class R2 (74,843) (8,875)
Class R3 (719,759) (159,137)
Class R4 (939,438) (4,035)
Class R5 (6,949) (2,344)
- -------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(97,137,603) $(30,242,089)
- -------------------------------------------------------------------------------------------
Statements of Changes in Net Assets - continued
YEARS ENDED 10/31
-----------------------------
2007 2006
Change in net assets from fund share transactions $(16,178,426) $(25,725,538)
- -------------------------------------------------------------------------------------------
Total change in net assets $10,121,984 $99,136,413
- -------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------
At beginning of period 762,046,214 662,909,801
At end of period (including undistributed net investment
income of $3,657,474 and $10,682,565, respectively) $772,168,198 $762,046,214
- -------------------------------------------------------------------------------------------
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
past 5 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.
CLASS A YEARS ENDED 10/31
------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $30.78 $25.79 $22.92 $19.57 $16.55
- -------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.33 $0.48 $0.06 $0.07 $0.03
Net realized and unrealized gain (loss)
on investments and foreign currency 4.54 5.68 2.81 3.28 2.99
- -------------------------------------------------------------------------------------------------------------
Total from investment operations $4.87 $6.16 $2.87 $3.35 $3.02
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------
From net investment income $(0.63) $-- $-- $-- $--
From net realized gain on investments (3.31) (1.17) -- -- --
- -------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3.94) $(1.17) $-- $-- $--
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $31.71 $30.78 $25.79 $22.92 $19.57
- -------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 17.41 24.73 12.52 17.12(b) 18.25
- -------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.46 1.45 1.55 1.52 1.65
Expenses after expense reductions (f) 1.46 1.45 1.55 1.52 N/A
Net investment income (loss) 1.10 1.72 0.22 0.30 0.19
Portfolio turnover 27 39 39 41 52
Net assets at end of period (000 Omitted) $474,901 $465,394 $402,985 $368,514 $345,783
- -------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS B YEARS ENDED 10/31
------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $29.12 $24.64 $22.06 $18.97 $16.18
- -------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.12 $0.27 $(0.13) $(0.10) $(0.09)
Net realized and unrealized gain (loss)
on investments and foreign currency 4.25 5.38 2.71 3.19 2.88
- -------------------------------------------------------------------------------------------------------------
Total from investment operations $4.37 $5.65 $2.58 $3.09 $2.79
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------
From net investment income $(0.39) $-- $-- $-- $--
From net realized gain on investments (3.31) (1.17) -- -- --
- -------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3.70) $(1.17) $-- $-- $--
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $29.79 $29.12 $24.64 $22.06 $18.97
- -------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 16.51 23.77 11.70 16.29(b) 17.24
- -------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.21 2.20 2.30 2.27 2.40
Expenses after expense reductions (f) 2.21 2.20 2.30 2.27 N/A
Net investment income (loss) 0.41 1.02 (0.53) (0.45) (0.56)
Portfolio turnover 27 39 39 41 52
Net assets at end of period (000 Omitted) $102,296 $139,656 $148,434 $170,783 $177,713
- -------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS C YEARS ENDED 10/31
------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $28.58 $24.19 $21.66 $18.63 $15.89
- --------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.08 $0.25 $(0.12) $(0.09) $(0.09)
Net realized and unrealized gain (loss)
on investments and foreign currency 4.20 5.31 2.65 3.12 2.83
- --------------------------------------------------------------------------------------------------------------
Total from investment operations $4.28 $5.56 $2.53 $3.03 $2.74
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------
From net investment income $(0.44) $-- $-- $-- $--
From net realized gain on investments (3.31) (1.17) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3.75) $(1.17) $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $29.11 $28.58 $24.19 $21.66 $18.63
- --------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 16.51 23.84 11.68 16.26(b) 17.24
- --------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.21 2.20 2.30 2.27 2.40
Expenses after expense reductions (f) 2.21 2.20 2.30 2.27 N/A
Net investment income (loss) 0.29 0.96 (0.53) (0.45) (0.56)
Portfolio turnover 27 39 39 41 52
Net assets at end of period (000 Omitted) $50,903 $41,351 $33,975 $32,785 $33,253
- --------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS I YEARS ENDED 10/31
------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $31.32 $26.15 $23.23 $19.78 $16.70
- --------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.40 $0.56 $0.12 $0.12 $0.09
Net realized and unrealized gain (loss)
on investments and foreign currency 4.62 5.78 2.85 3.33 2.99
- --------------------------------------------------------------------------------------------------------------
Total from investment operations $5.02 $6.34 $2.97 $3.45 $3.08
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------
From net investment income $(0.70) $-- $(0.05) $-- $--
From net realized gain on investments (3.31) (1.17) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(4.01) $(1.17) $(0.05) $-- $--
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $32.33 $31.32 $26.15 $23.23 $19.78
- --------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 17.66 25.09 12.79 17.44(b) 18.44
- --------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.21 1.20 1.30 1.26 1.40
Expenses after expense reductions (f) 1.21 1.20 1.30 1.26 N/A
Net investment income 1.31 1.95 0.47 0.53 0.54
Portfolio turnover 27 39 39 41 52
Net assets at end of period (000 Omitted) $77,689 $63,714 $41,493 $37,781 $22,467
- --------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS J YEARS ENDED 10/31
------------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $28.80 $24.36 $21.80 $18.74 $15.97
- --------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.15 $0.24 $(0.11) $(0.08) $(0.09)
Net realized and unrealized gain (loss)
on investments and foreign currency 4.18 5.37 2.67 3.14 2.86
- --------------------------------------------------------------------------------------------------------------
Total from investment operations $4.33 $5.61 $2.56 $3.06 $2.77
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------
From net investment income $(0.39) $-- $-- $-- $--
From net realized gain on investments (3.31) (1.17) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3.70) $(1.17) $-- $-- $--
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $29.43 $28.80 $24.36 $21.80 $18.74
- --------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 16.57 23.88 11.74 16.33(b) 17.35
- --------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 2.16 2.15 2.25 2.22 2.34
Expenses after expense reductions (f) 2.16 2.15 2.25 2.22 N/A
Net investment income (loss) 0.53 0.93 (0.47) (0.39) (0.53)
Portfolio turnover 27 39 39 41 52
Net assets at end of period (000 Omitted) $13,864 $20,832 $19,136 $23,188 $24,701
- --------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R YEARS ENDED 10/31
-----------------------------------------------------------
2007 2006 2005 2004 2003(i)
Net asset value, beginning of period $30.46 $25.59 $22.80 $19.51 $16.57
- --------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.30 $0.40 $(0.01) $0.01 $(0.05)
Net realized and unrealized gain (loss)
on investments and foreign currency 4.43 5.64 2.81 3.28 2.99
- --------------------------------------------------------------------------------------------------------------
Total from investment operations $4.73 $6.04 $2.80 $3.29 $2.94
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------
From net investment income $(0.55) $-- $(0.01) $-- $--
From net realized gain on investments (3.31) (1.17) -- -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3.86) $(1.17) $(0.01) $-- $--
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $31.33 $30.46 $25.59 $22.80 $19.51
- --------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 17.09 24.44 12.26 16.86(b) 17.74(n)
- --------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.71 1.70 1.81 1.76 1.83(a)
Expenses after expense reductions (f) 1.71 1.70 1.81 1.76 N/A
Net investment income (loss) 1.00 1.45 (0.03) 0.06 (0.29)(a)
Portfolio turnover 27 39 39 41 52
Net assets at end of period (000 Omitted) $6,495 $13,909 $12,862 $5,994 $1,265
- --------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R1 YEARS ENDED 10/31
---------------------------
2007 2006 2005(i)
Net asset value, beginning of period $29.06 $24.61 $23.89
- ---------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------
Net investment income (loss) (d) $0.03 $0.21 $(0.15)
Net realized and unrealized gain (loss)
on investments and foreign currency 29 5.41 0.87(g)
- ---------------------------------------------------------------------------
Total from investment operations $4.32 $5.62 $0.72
- ---------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------
From net investment income $(0.47) $-- $--
From net realized gain on investments (3.31) (1.17) --
- ---------------------------------------------------------------------------
Total distributions declared to shareholders $(3.78) $(1.17) $--
- ---------------------------------------------------------------------------
Net asset value, end of period $29.60 $29.06 $24.61
- ---------------------------------------------------------------------------
Total return (%) (r)(s) 16.38 23.68 3.01(n)
- ---------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------
Expenses before expense reductions (f) 2.33 2.40 2.50(a)
Expenses after expense reductions (f) 2.30 2.30 2.47(a)
Net investment income (loss) 0.12 0.78 (1.06)(a)
Portfolio turnover 27 39 39
Net assets at end of period (000 Omitted) $4,208 $1,348 $672
- ---------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R2 YEARS ENDED 10/31
---------------------------
2007 2006 2005(i)
Net asset value, beginning of period $29.22 $24.65 $23.89
- ---------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------
Net investment income (loss) (d) $0.17 $0.33 $(0.07)
Net realized and unrealized gain (loss)
on investments and foreign currency 4.27 5.41 0.83(g)
- ---------------------------------------------------------------------------
Total from investment operations $4.44 $5.74 $0.76
- ---------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------
From net investment income $(0.53) $-- $--
From net realized gain on investments (3.31) (1.17) --
- ---------------------------------------------------------------------------
Total distributions declared to shareholders $(3.84) $(1.17) $--
- ---------------------------------------------------------------------------
Net asset value, end of period $29.82 $29.22 $24.65
- ---------------------------------------------------------------------------
Total return (%) (r)(s) 16.79 24.14 3.18(n)
- ---------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------
Expenses before expense reductions (f) 2.02 2.09 2.21(a)
Expenses after expense reductions (f) 1.96 1.94 2.17(a)
Net investment income (loss) 0.60 1.20 (0.56)(a)
Portfolio turnover 27 39 39
Net assets at end of period (000 Omitted) $857 $575 $185
- ---------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R3 YEARS ENDED 10/31
----------------------------------------------
2007 2006 2005 2004
Net asset value, beginning of period $30.27 $25.48 $22.76 $19.51
- ------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.14 $0.39 $(0.06) $(0.03)
Net realized and unrealized gain (loss)
on investments and foreign currency 4.52 5.57 2.78 3.28
- ------------------------------------------------------------------------------------------------
Total from investment operations $4.66 $5.96 $2.72 $3.25
- ------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------
From net investment income $(0.54) $-- $-- $--
From net realized gain on investments (3.31) (1.17) -- --
- ------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(3.85) $(1.17) $-- $--
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $31.08 $30.27 $25.48 $22.76
- ------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 16.94 24.22 11.95 16.66(b)
- ------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.88 1.94 2.06 2.00
Expenses after expense reductions (f) 1.85 1.84 2.05 2.00
Net investment income (loss) 0.48 1.42 (0.25) (0.15)
Portfolio turnover 27 39 39 41
Net assets at end of period (000 Omitted) $21,364 $6,501 $3,032 $530
- ------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R4 YEARS ENDED 10/31
----------------------------
2007 2006 2005(i)
Net asset value, beginning of period $30.71 $25.77 $24.90
- ---------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------
Net investment income (d) $0.24 $0.04 $0.02
Net realized and unrealized gain (loss)
on investments and foreign currency 4.56 6.07 0.85(g)
- ---------------------------------------------------------------------------
Total from investment operations $4.80 $6.11 $0.87
- ---------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------
From net investment income $(0.64) $-- $--
From net realized gain on investments (3.31) (1.17) --
- ---------------------------------------------------------------------------
Total distributions declared to shareholders $(3.95) $(1.17) $--
- ---------------------------------------------------------------------------
Net asset value, end of period $31.56 $30.71 $25.77
- ---------------------------------------------------------------------------
Total return (%) (r)(s) 17.22 24.54 3.49(n)
- ---------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------
Expenses before expense reductions (f) 1.61 1.63 1.73(a)
Expenses after expense reductions (f) 1.61 1.63 1.73(a)
Net investment income 0.81 0.14 0.13(a)
Portfolio turnover 27 39 39
Net assets at end of period (000 Omitted) $14,293 $8,703 $84
- ---------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R5 YEARS ENDED 10/31
---------------------------
2007 2006 2005(i)
Net asset value, beginning of period $30.86 $25.81 $24.90
- ---------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------
Net investment income (d) $0.05 $0.53 $0.08
Net realized and unrealized gain (loss)
on investments and foreign currency 4.87 5.69 0.83(g)
- ---------------------------------------------------------------------------
Total from investment operations $4.92 $6.22 $0.91
- ---------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------
From net investment income $(0.67) $-- $--
From net realized gain on investments (3.31) (1.17) --
- ---------------------------------------------------------------------------
Total distributions declared to shareholders $(3.98) $(1.17) $--
- ---------------------------------------------------------------------------
Net asset value, end of period $31.80 $30.86 $25.81
- ---------------------------------------------------------------------------
Total return (%) (r)(s) 17.58 24.95 3.65(n)
- ---------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------
Expenses before expense reductions (f) 1.31 1.29 1.44(a)
Expenses after expense reductions (f) 1.31 1.29 1.44(a)
Net investment income 0.23 1.88 0.54(a)
Portfolio turnover 27 39 39
Net assets at end of period (000 Omitted) $5,297 $65 $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 did not have a material impact on the
net asset value per share based on the shares outstanding on the day the
proceeds were recorded.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(g) The per share amount is not in accordance with the net realized and
unrealized gain/loss for the period because of the timing of sales of fund
shares and the per share amount of realized and unrealized gains and losses
at such time.
(i) For the period from the class' inception, December 31, 2002 (Class R) 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.
(t) Total returns do not include any applicable sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(1) BUSINESS AND ORGANIZATION
MFS Global Equity Fund (the fund) is a series of MFS Series Trust VI (the
trust). The trust is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-
end management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with 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 markets 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.
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 - JPMorgan Chase and Co. ("Chase"), 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. Security lending activity through Chase is further
collateralized by an irrevocable standby letter of credit. Chase 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.
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 year ended October 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 wash sale loss deferrals, treating a
portion of the proceeds from redemptions as a distribution for tax purposes,
and foreign taxes.
The tax character of distributions declared to shareholders is as follows:
10/31/07 10/31/06
Ordinary income (including
any short-term capital gains) $24,331,408 $--
Long-term capital gain 72,806,195 30,242,089
--------------------------------------------------------------
Total distributions $97,137,603 $30,242,089
The federal tax cost and the tax basis components of distributable earnings
were as follows:
AS OF 10/31/07
Cost of investments $574,883,980
--------------------------------------------------------------
Gross appreciation $222,915,135
Gross depreciation (10,492,306)
--------------------------------------------------------------
Net unrealized appreciation (depreciation) $212,422,829
Undistributed ordinary income 6,796,144
Undistributed long-term capital gain 74,137,093
Other temporary differences (201,713)
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.
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The fund has an investment advisory agreement with
Massachusetts Financial Services Company (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 the following annual
rates:
First $1 billion of average daily net assets 0.90%
Next $1 billion of average daily net assets 0.75%
Average daily net assets in excess of $2 billion 0.65%
The management fee incurred for the year ended October 31, 2007 was equivalent
to an annual effective rate of 0.90% of the fund's average daily net assets.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of
MFS, as distributor, received $56,550 for the year ended October 31, 2007, as
its portion of the initial sales charge on sales of Class A shares of the fund.
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 Plan Fee 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% $1,212,014
Class B 0.75% 0.25% 1.00% 1.00% 1,253,667
Class C 0.75% 0.25% 1.00% 1.00% 463,494
Class J (f) 0.70% 0.25% 0.95% 0.95% 160,200
Class R 0.25% 0.25% 0.50% 0.50% 60,610
Class R1 0.50% 0.25% 0.75% 0.75% 15,984
Class R2 0.25% 0.25% 0.50% 0.50% 3,308
Class R3 0.25% 0.25% 0.50% 0.50% 59,044
Class R4 -- 0.25% 0.25% 0.25% 28,996
- ---------------------------------------------------------------------------------------------------------------------
Total Distribution and Service Fees $3,257,317
(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 year ended October
31, 2007 based on each class' average daily net assets. 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.
(f) Includes fees that MFD pays to financial intermediaries and for services rendered as the fund's agent company in
Japan.
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 year ended October 31,
2007, were as follows:
AMOUNT
Class A $25,391
Class B 86,532
Class C 3,852
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 year ended October 31, 2007, the fee was $417,531, which
equated to 0.0532% 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 year ended October 31, 2007, these
out-of-pocket expenses, sub-accounting and other shareholder servicing costs
amounted to $1,015,261. 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 average daily net assets. The fund's annual fixed
amount is $17,500. The administrative services fee incurred for the year ended
October 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 year ended October 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% $8,101
Class R2 0.40% 0.25% 0.25% 2,066
Class R3 0.25% 0.15% 0.15% 20,826
Class R4 0.15% 0.15% 0.15% 17,398
Class R5 0.10% 0.10% 0.10% 825
- --------------------------------------------------------------------------------
Total Retirement Plan Administration and Services Fees $49,216
(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 year
ended October 31, 2007, the waiver amounted to $4,166 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 $3,140. The fund also has an
unfunded retirement benefit deferral plan for certain independent trustees
which resulted in an expense of $5,022. Both amounts are included in
independent trustees' compensation for the year ended October 31, 2007. The
liability for deferred retirement benefits payable to certain independent
trustees under both plans amounted to $59,416 at October 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 year ended October 31, 2007, the fee paid to Tarantino LLC
was $4,958. MFS has agreed to reimburse the fund for a portion of the payments
made by the funds to Tarantino LLC in the amount of $3,859, 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.
The fund may invest in a money market fund managed by MFS which seeks
preservation of capital and current income. Income earned on these investments
is included in dividends from underlying funds on the Statement of Operations.
This money market fund does not pay a management fee to MFS.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$212,821,986 and $317,484,969, 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:
YEAR ENDED YEAR ENDED
10/31/07 10/31/06
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 5,900,973 $176,183,231 4,014,938 $112,614,919
Class B 677,507 18,985,639 1,117,767 29,668,548
Class C 515,901 14,204,128 334,540 8,801,328
Class I 2,910,442 89,489,888 740,812 21,189,033
Class J 103,103 2,737,728 406,812 10,632,135
Class R 107,418 3,155,031 130,060 3,590,592
Class R1 169,658 4,723,308 24,270 651,059
Class R2 49,169 1,372,161 14,979 394,125
Class R3 829,854 24,183,937 194,822 5,377,457
Class R4 632,877 18,608,644 334,485 9,358,083
Class R5 165,209 4,969,637 3 75
- -----------------------------------------------------------------------------------------------------
12,062,111 $358,613,332 7,313,488 $202,277,354
Shares issued to shareholders in
reinvestment of distributions
Class A 1,989,079 $56,092,016 665,004 $17,230,263
Class B 602,942 16,080,479 259,668 6,406,014
Class C 186,638 4,863,794 59,990 1,452,354
Class I 291,576 8,365,321 72,189 1,898,578
Class J 318 8,366 104 2,514
Class R 61,699 1,722,626 22,642 581,662
Class R1 7,044 186,803 1,278 31,501
Class R2 3,263 86,930 359 8,875
Class R3 30,200 837,442 6,224 159,128
Class R4 39,817 1,118,849 154 4,035
Class R5 296 8,356 90 2,344
- -----------------------------------------------------------------------------------------------------
3,212,872 $89,370,982 1,087,702 $27,777,268
Shares reacquired
Class A (8,031,087) $(240,337,804) (5,186,638) $(144,690,837)
Class B (2,642,389) (74,013,843) (2,607,195) (69,055,673)
Class C (400,816) (10,974,899) (351,895) (9,109,603)
Class I (2,833,772) (87,042,982) (364,947) (10,359,697)
Class J (355,680) (9,976,628) (469,057) (12,408,367)
Class R (418,476) (12,450,507) (198,638) (5,485,858)
Class R1 (80,932) (2,225,760) (6,472) (168,490)
Class R2 (43,371) (1,199,260) (3,184) (88,631)
Class R3 (387,342) (11,126,514) (105,297) (2,850,074)
Class R4 (503,165) (14,783,712) (54,566) (1,562,853)
Class R5 (993) (30,831) (3) (77)
- -----------------------------------------------------------------------------------------------------
(15,698,023) $(464,162,740) (9,347,892) $(255,780,160)
Net change
Class A (141,035) $(8,062,557) (506,696) $(14,845,655)
Class B (1,361,940) (38,947,725) (1,229,760) (32,981,111)
Class C 301,723 8,093,023 42,635 1,144,079
Class I 368,246 10,812,227 448,054 12,727,914
Class J (252,259) (7,230,534) (62,141) (1,773,718)
Class R (249,359) (7,572,850) (45,936) (1,313,604)
Class R1 95,770 2,684,351 19,076 514,070
Class R2 9,061 259,831 12,154 314,369
Class R3 472,712 13,894,865 95,749 2,686,511
Class R4 169,529 4,943,781 280,073 7,799,265
Class R5 164,512 4,947,162 90 2,342
- -----------------------------------------------------------------------------------------------------
(423,040) $(16,178,426) (946,702) $(25,725,538)
(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 year ended
October 31, 2007, the fund's commitment fee and interest expense were $4,065
and $3,098, respectively, and are included in miscellaneous expense on the
Statement of Operations.
(7) TRANSACTIONS IN UNDERLYING FUNDS -- AFFILIATED ISSUERS
An affiliated issuer may be considered one in which the fund owns 5% or more of
the outstanding voting securities, or a company which is under common control.
For the purpose of this report, the fund assumes the following to be affiliated
issuers:
BEGINNING ACQUISITIONS DISPOSITIONS ENDING
SHARES/PAR SHARES/PAR SHARES/PAR SHARES/PAR
UNDERLYING FUNDS AMOUNT AMOUNT AMOUNT AMOUNT
MFS Institutional Money Market Portfolio -- 69,871,048 58,334,771 11,536,277
REALIZED CAPITAL GAIN DIVIDEND ENDING
UNDERLYING FUNDS GAIN (LOSS) DISTRIBUTIONS INCOME VALUE
MFS Institutional Money Market Portfolio $-- $-- $83,601 $11,536,277
- ------------------------------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees of MFS Series Trust VI and Shareholders of
MFS Global Equity Fund:
We have audited the accompanying statement of assets and liabilities of MFS
Global Equity Fund (the Fund), (one of the portfolios comprising MFS Series
Trust VI), including the portfolio of investments, as of October 31, 2007, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Fund's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of October 31, 2007, by correspondence with
the Fund's custodian and brokers or by other appropriate auditing procedures
where replies from brokers were not received. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of MFS
Global Equity Fund at October 31, 2007, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and its financial highlights for each of the periods
indicated therein, in conformity with U.S. generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
December 14, 2007
TRUSTEES AND OFFICERS -- IDENTIFICATION AND BACKGROUND
The Trustees and officers of the Trust, as of December 1, 2007, are listed below, together with their
principal occupations during the past five years. (Their titles may have varied during that period.) The
address of each Trustee and officer is 500 Boylston Street, Boston, Massachusetts 02116.
PRINCIPAL OCCUPATIONS DURING
POSITION(S) HELD TRUSTEE/OFFICER THE PAST FIVE YEARS &
NAME, DATE OF BIRTH WITH FUND SINCE(h) OTHER DIRECTORSHIPS(j)
- ------------------- ---------------- --------------- ----------------------------------
INTERESTED TRUSTEES
Robert J. Manning(k) Trustee February 2004 Massachusetts Financial Services
(born 10/20/63) Company, Chief Executive Officer,
President, Chief Investment
Officer and Director
Robert C. Pozen(k) Trustee February 2004 Massachusetts Financial Services
(born 8/08/46) Company, Chairman (since February
2004); MIT Sloan School
(education), Senior Lecturer
(since 2006); Secretary of
Economic Affairs, The Commonwealth
of Massachusetts (January 2002 to
December 2002); Fidelity
Investments, Vice Chairman (June
2000 to December 2001); Fidelity
Management & Research Company
(investment adviser), President
(March 1997 to July 2001); Bell
Canada Enterprises
(telecommunications), Director;
Medtronic, Inc. (medical
technology), Director; Telesat
(satellite communications),
Director
INDEPENDENT TRUSTEES
J. Atwood Ives Trustee and Chair February 1992 Private investor; Eastern
(born 5/01/36) of Trustees Enterprises (diversified services
company), Chairman, Trustee and
Chief Executive Officer (until
November 2000)
Robert E. Butler(n) Trustee January 2006 Consultant - regulatory and
(born 11/29/41) compliance matters (since July
2002); PricewaterhouseCoopers LLP
(professional services firm),
Partner (until 2002)
Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital,
(born 3/11/37) Chief of Cardiac Surgery (2005);
Harvard Medical School, Professor
of Cardiac Surgery; Physician
Director of Medical Device
Technology for Partners HealthCare
David H. Gunning Trustee January 2004 Retired; Cleveland-Cliffs Inc.
(born 5/30/42) (mining products and service
provider), Vice Chairman/Director
(until May 2007); Portman Limited
(mining), Director (since 2005);
Encinitos Ventures (private
investment company), Principal
(1997 to April 2001); Lincoln
Electric Holdings, Inc. (welding
equipment manufacturer), Director
William R. Gutow Trustee December 1993 Private investor and real estate
(born 9/27/41) consultant; Capitol Entertainment
Management Company (video
franchise), Vice Chairman;
Atlantic Coast Tan (tanning
salons), Vice Chairman (since
2002)
Michael Hegarty Trustee December 2004 Retired; AXA Financial (financial
(born 12/21/44) services and insurance), Vice
Chairman and Chief Operating
Officer (until May 2001); The
Equitable Life Assurance Society
(insurance), President and Chief
Operating Officer (until May 2001)
Lawrence T. Perera Trustee July 1981 Hemenway & Barnes (attorneys),
(born 6/23/35) Partner
J. Dale Sherratt Trustee August 1993 Insight Resources, Inc.
(born 9/23/38) (acquisition planning
specialists), President; Wellfleet
Investments (investor in health
care companies), Managing General
Partner (since 1993); Cambridge
Nutraceuticals (professional
nutritional products), Chief
Executive Officer (until May 2001)
Laurie J. Thomsen Trustee March 2005 New Profit, Inc. (venture
(born 8/05/57) philanthropy), Partner (since
2006); Private investor; Prism
Venture Partners (venture
capital), Co-founder and General
Partner (until June 2004); The
Travelers Companies (commercial
property liability insurance),
Director
Robert W. Uek Trustee January 2006 Retired (since 1999);
(born 5/18/41) PricewaterhouseCoopers LLP
(professional services firm),
Partner (until 1999); Consultant
to investment company industry
(since 2000); TT International
Funds (mutual fund complex),
Trustee (2000 until 2005);
Hillview Investment Trust II Funds
(mutual fund complex), Trustee
(2000 until 2005)
OFFICERS
Maria F. Dwyer(k) President November 2005 Massachusetts Financial Services
(born 12/01/58) Company, Executive Vice President
and Chief Regulatory Officer
(since March 2004) Chief
Compliance Officer (since December
2006); Fidelity Management &
Research Company, Vice President
(prior to March 2004); Fidelity
Group of Funds, President and
Treasurer (prior to March 2004)
Tracy Atkinson(k) Treasurer September 2005 Massachusetts Financial Services
(born 12/30/64) Company, Senior Vice President
(since September 2004);
PricewaterhouseCoopers LLP,
Partner (prior to September 2004)
Christopher R. Bohane(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 1/18/74) and Assistant Clerk Company, Vice President and Senior
Counsel (since April 2003);
Kirkpatrick & Lockhart LLP (law
firm), Associate (prior to April
2003)
Ethan D. Corey(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 11/21/63) and Assistant Clerk Company, Special Counsel (since
December 2004); Dechert LLP (law
firm), Counsel (prior to December
2004)
David L. DiLorenzo(k) Assistant Treasurer July 2005 Massachusetts Financial Services
(born 8/10/68) Company, Vice President (since
June 2005); JP Morgan Investor
Services, Vice President (prior to
June 2005)
Timothy M. Fagan(k) Assistant Secretary September 2005 Massachusetts Financial Services
(born 7/10/68) and Assistant Clerk Company, Vice President and Senior
Counsel (since September 2005);
John Hancock Advisers, LLC, Vice
President and Chief Compliance
Officer (September 2004 to August
2005), Senior Attorney (prior to
September 2004); John Hancock
Group of Funds, Vice President and
Chief Compliance Officer
(September 2004 to December 2004)
Mark D. Fischer(k) Assistant Treasurer July 2005 Massachusetts Financial Services
(born 10/27/70) Company, Vice President (since May
2005); JP Morgan Investment
Management Company, Vice President
(prior to May 2005)
Brian E. Langenfeld(k) Assistant Secretary June 2006 Massachusetts Financial Services
(born 3/07/73) and Assistant Clerk Company, Assistant Vice President
and Counsel (since May 2006); John
Hancock Advisers, LLC, Assistant
Vice President and Counsel (May
2005 to April 2006); John Hancock
Advisers, LLC, Attorney and
Assistant Secretary (prior to May
2005)
Ellen Moynihan(k) Assistant Treasurer April 1997 Massachusetts Financial Services
(born 11/13/57) Company, Senior Vice President
Susan S. Newton(k) Assistant Secretary May 2005 Massachusetts Financial Services
(born 3/07/50) and Assistant Clerk Company, Senior Vice President and
Associate General Counsel (since
April 2005); John Hancock
Advisers, LLC, Senior Vice
President, Secretary and Chief
Legal Officer (prior to April
2005); John Hancock Group of
Funds, Senior Vice President,
Secretary and Chief Legal Officer
(prior to April 2005)
Susan A. Pereira(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 11/05/70) and Assistant Clerk Company, Vice President and Senior
Counsel (since June 2004); Bingham
McCutchen LLP (law firm),
Associate (prior to June 2004)
Mark N. Polebaum(k) Secretary and Clerk January 2006 Massachusetts Financial Services
(born 5/01/52) Company, Executive Vice President,
General Counsel and Secretary
(since January 2006); Wilmer
Cutler Pickering Hale and Dorr LLP
(law firm), Partner (prior to
January 2006)
Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of
(born 3/07/44) Compliance Officer compliance services), Principal
(since June 2004); CRA Business
Strategies Group (consulting
services), Executive Vice
President (April 2003 to June
2004); David L. Babson & Co.
(investment adviser), Managing
Director, Chief Administrative
Officer and Director (prior to
March 2003)
James O. Yost(k) Assistant Treasurer September 1990 Massachusetts Financial Services
(born 6/12/60) Company, Senior Vice President
- ------------
(h) Date first appointed to serve as Trustee/officer of an MFS fund. Each Trustee has served
continuously since appointment unless indicated otherwise.
(j) Directorships or trusteeships of companies required to report to the Securities and Exchange
Commission (i.e., "public companies").
(k) "Interested person" of the Trust within the meaning of the Investment Company Act of 1940 (referred
to as the 1940 Act), which is the principal federal law governing investment companies like the
fund, as a result of position with MFS. The address of MFS is 500 Boylston Street, Boston,
Massachusetts 02116.
(n) In 2004 and 2005, Mr. Butler provided consulting services to the independent compliance consultant
retained by MFS pursuant to its settlement with the SEC concerning market timing and related
matters. The terms of that settlement required that compensation and expenses related to the
independent compliance consultant be borne exclusively by MFS and, therefore, MFS paid Mr. Butler
for the services he rendered to the independent compliance consultant. In 2004 and 2005, MFS paid
Mr. Butler a total of $351,119.29.
The Trust held a shareholders' meeting in 2005 to elect Trustees, and will hold a shareholders' meeting
at least once every five years thereafter, to elect Trustees.
Each Trustee (except Mr. Butler and Mr. Uek) has been elected by shareholders and each Trustee and
officer holds office until his or her successor is chosen and qualified or until his or her earlier
death, resignation, retirement or removal. Messrs. Butler, Gutow, Sherratt and Uek and Ms. Thomsen are
members of the Trust's Audit Committee.
Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which
MFS or a subsidiary is the investment adviser or distributor, and, in the case of the officers, with
certain affiliates of MFS. As of January 1, 2007, the Trustees served as board members of 97 funds
within the MFS Family of Funds.
The Statement of Additional Information contains further information about the Trustees and is
available without charge upon request by calling 1-800-225-2606.
- --------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIAN
Massachusetts Financial Services Company JPMorgan Chase Bank
500 Boylston Street, Boston, MA 02116-3741 One Chase Manhattan Plaza
New York, New York 10081
DISTRIBUTOR
MFS Fund Distributors, Inc. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
500 Boylston Street, Boston, MA 02116-3741 Ernst & Young LLP
200 Clarendon Street, Boston, MA 02116
PORTFOLIO MANAGERS
David Mannheim
Simon Todd
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT
The Investment Company Act of 1940 requires that both the full Board of
Trustees and a majority of the non-interested ("independent") Trustees, voting
separately, annually approve the continuation of the Fund's investment advisory
agreement with MFS. The Trustees consider matters bearing on the Fund and its
advisory arrangements at their meetings throughout the year, including a review
of performance data at each regular meeting. In addition, the independent
Trustees met several times over the course of three months beginning in May and
ending in July, 2007 ("contract review meetings") for the specific purpose of
considering whether to approve the continuation of the investment advisory
agreement for the Fund and the other investment companies that the Board
oversees (the "MFS Funds"). The independent Trustees were assisted in their
evaluation of the Fund's investment advisory agreement by independent legal
counsel, from whom they received separate legal advice and with whom they met
separately from MFS during various contract review meetings. The independent
Trustees were also assisted in this process by the MFS Funds' Independent Chief
Compliance Officer, a full-time senior officer appointed by and reporting to
the independent Trustees.
In connection with their deliberations regarding the continuation of the
investment advisory agreement, the Trustees, including the independent
Trustees, considered such information and factors as they believed, in light of
the legal advice furnished to them and their own business judgment, to be
relevant. The investment advisory agreement for the Fund was considered
separately, although the Trustees also took into account the common interests
of all MFS Funds in their review. As described below, the Trustees considered
the nature, quality, and extent of the various investment advisory,
administrative, and shareholder services performed by MFS under the existing
investment advisory agreement and other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and
relied upon materials that included, among other items: (i) information
provided by Lipper Inc. on the investment performance of the Fund for various
time periods ended December 31, 2006 and the investment performance of a group
of funds with substantially similar investment classifications/objectives (the
"Lipper performance universe"), as well as the investment performance of a
group of funds identified by objective criteria suggested by MFS ("MFS peer
funds"), (ii) information provided by Lipper Inc. on the Fund's advisory fees
and other expenses and the advisory fees and other expenses of comparable funds
identified by Lipper (the "Lipper expense group"), as well as the advisory fees
and other expenses of MFS peer funds, (iii) information provided by MFS on the
advisory fees of comparable portfolios of other clients of MFS, including
institutional separate accounts and other clients, (iv) information as to
whether and to what extent applicable expense waivers, reimbursements or fee
"breakpoints" are observed for the Fund, (v) information regarding MFS'
financial results and financial condition, including MFS' and certain of its
affiliates' estimated profitability from services performed for the Fund and
the MFS Funds as a whole, (vi) MFS' views regarding the outlook for the mutual
fund industry and the strategic business plans of MFS, (vii) descriptions of
various functions performed by MFS for the Funds, such as compliance monitoring
and portfolio trading practices, and (viii) information regarding the overall
organization of MFS, including information about MFS' senior management and
other personnel providing investment advisory, administrative and other
services to the Fund and the other MFS Funds. The comparative performance, fee
and expense information prepared and provided by Lipper Inc. was not
independently verified and the independent Trustees did not independently
verify any information provided to them by MFS.
The Trustees' conclusion as to the continuation of the investment advisory
agreement was based on a comprehensive consideration of all information
provided to the Trustees and not the result of any single factor. Some of the
factors that figured particularly in the Trustees' deliberations are described
below, although individual Trustees may have evaluated the information
presented differently from one another, giving different weights to various
factors. It is also important to recognize that the fee arrangements for the
Fund and other MFS Funds are the result of years of review and discussion
between the independent Trustees and MFS, that certain aspects of such
arrangements may receive greater scrutiny in some years than in others, and
that the Trustees' conclusions may be based, in part, on their consideration of
these same arrangements during the course of the year and in prior years.
Based on information provided by Lipper Inc. and MFS, the Trustees reviewed the
Fund's total return investment performance as well as the performance of peer
groups of funds over various time periods. The Trustees placed particular
emphasis on the total return performance of the Fund's Class A shares in
comparison to the performance of funds in its Lipper performance universe over
the three-year period ended December 31, 2006, which the Trustees believed was
a long enough period to reflect differing market conditions. The total return
performance of the Fund's Class A shares was in the 1st quintile relative to
the other funds in the universe for this three-year period (the 1st quintile
being the best performers and the 5th quintile being the worst performers). The
total return performance of the Fund's Class A shares was in the 1st quintile
for the one-year period and the 2nd quintile for the five-year period ended
December 31, 2006 relative to the Lipper performance universe. Because of the
passage of time, these performance results may differ from the performance
results for more recent periods, including those shown elsewhere in this
report.
In the course of their deliberations, the Trustees took into account
information provided by MFS in connection with the contract review meetings, as
well as during investment review meetings conducted with portfolio management
personnel during the course of the year regarding the Fund's performance. After
reviewing these and related factors, the Trustees concluded, within the context
of their overall conclusions regarding the investment advisory agreement, that
they were satisfied with MFS' responses and efforts relating to investment
performance.
In assessing the reasonableness of the Fund's advisory fee, the Trustees
considered, among other information, the Fund's advisory fee and the total
expense ratio of the Fund's Class A shares as a percentage of average daily net
assets and the advisory fee and total expense ratios of peer groups of funds
based on information provided by Lipper Inc. and MFS. The Trustees considered
that, according to the Lipper data, the Fund's effective advisory fee rate was
higher than the Lipper expense group median, and the Fund's total expense ratio
was lower than the Lipper expense group median.
The Trustees also considered the advisory fees charged by MFS to institutional
accounts. In comparing these fees, the Trustees considered information provided
by MFS as to the generally broader scope of services provided by MFS to the
Fund in comparison to institutional accounts, the higher demands placed on MFS'
investment personnel and trading infrastructure as a result of the daily cash
in-flows and out-flows of the Fund, and the impact on MFS and expenses
associated with the more extensive regulatory regime to which the Fund is
subject in comparison to institutional accounts.
The Trustees also considered whether the Fund is likely to benefit from any
economies of scale in the management of the Fund in the event of growth in
assets of the Fund. They noted that the Fund's advisory fee rate schedule is
currently subject to breakpoints that reduce the Fund's advisory fee rate on
average daily net assets over $1 billion and $2 billion. The Trustees concluded
that the existing breakpoints were sufficient to allow the Fund to benefit from
economies of scale as its assets grow.
The Trustees also considered information prepared by MFS relating to MFS' costs
and profits with respect to the Fund, the MFS Funds considered as a group, and
other investment companies and accounts advised by MFS, as well as MFS'
methodologies used to determine and allocate its costs to the MFS Funds, the
Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreement, that the advisory fees charged to the Fund
represent reasonable compensation in light of the services being provided by
MFS to the Fund.
In addition, the Trustees considered MFS' resources and related efforts to
continue to retain, attract and motivate capable personnel to serve the Fund.
The Trustees also considered current and developing conditions in the financial
services industry, including the entry into the industry of large and
well-capitalized companies which are spending, and appear to be prepared to
continue to spend, substantial sums to engage personnel and to provide services
to competing investment companies. In this regard, the Trustees also considered
the financial resources of MFS and its ultimate parent, Sun Life Financial Inc.
The Trustees also considered the advantages and possible disadvantages to the
Fund of having an adviser that also serves other investment companies as well
as other accounts.
The Trustees also considered the nature, quality, cost, and extent of
administrative, transfer agency, and distribution services provided to the Fund
by MFS and its affiliates under agreements and plans other than the investment
advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund
Distributors, Inc., an affiliate of MFS. The Trustees also considered the
nature, extent and quality of certain other services MFS performs or arranges
for on the Fund's behalf, which may include securities lending programs,
directed expense payment programs, class action recovery programs, and MFS'
interaction with third-party service providers, principally custodians and
sub-custodians. The Trustees concluded that the various non-advisory services
provided by MFS and its affiliates on behalf of the Funds were satisfactory.
The Trustees also considered benefits to MFS from the use of the Fund's
portfolio brokerage commissions, if applicable, to pay for investment research
(excluding third-party research, for which MFS pays directly) and various other
factors. Additionally, the Trustees considered so-called "fall-out benefits" to
MFS such as reputational value derived from serving as investment manager to
the Fund.
Based on their evaluation of factors that they deemed to be material, including
those factors described above, the Board of Trustees, including a majority of
the independent Trustees, concluded that the Fund's investment advisory
agreement with MFS should be continued for an additional one-year period,
commencing August 1, 2007.
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 1-800-SEC-0330. 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.
FEDERAL TAX INFORMATION (unaudited)
The fund will notify shareholders of amounts for use in preparing 2007 income
tax forms in January 2008. The following information is provided pursuant to
provisions of the Internal Revenue Code.
The fund designates the maximum amount allowable as qualified dividend income
eligible for the 15% tax rate.
For corporate shareholders, 25.36% of the ordinary income dividends paid during
the fiscal year qualify for the corporate dividends received deduction.
The fund designates $90,684,955 as capital gain dividends paid during the
fiscal year.
Income derived from foreign sources was $8,253,455. The fund intends to pass
through foreign tax credits of $629,489 for the fiscal year.
MFS(R) PRIVACY NOTICE
Privacy is a concern for every investor today. At MFS Investment Management(R)
and the MFS funds, we take this concern very seriously. We want you to
understand our policies about the investment products and services that we
offer, and how we protect the nonpublic personal information of investors who
have a direct relationship with us and our wholly owned subsidiaries.
Throughout our business relationship, you provide us with personal information.
We maintain information and records about you, your investments, and the
services you use. Examples of the nonpublic personal information we maintain
include
o data from investment applications and other forms
o share balances and transactional history with us, our affiliates, or others
o facts from a consumer reporting agency
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. We may share nonpublic
personal information with third parties or certain of our affiliates in
connection with servicing your account or processing your transactions. We may
share information with companies or financial institutions that perform
marketing services on our behalf or with other financial institutions with
which we have joint marketing arrangements, subject to any legal requirements.
Authorization to access your nonpublic personal information is limited to
appropriate personnel who provide products, services, or information to you. We
maintain physical, electronic, and procedural safeguards to help protect the
personal information we collect about you.
If you have any questions about the MFS privacy policy, please call
1-800-225-2606 any business day between 8 a.m. and 8 p.m. Eastern time.
Note: If you own MFS products or receive MFS services in the name of a third
party such as a bank or broker-dealer, their privacy policy may apply to you
instead of ours.
CONTACT US
WEB SITE MAILING ADDRESS
mfs.com MFS Service Center, Inc.
P.O. Box 55824
MFS TALK Boston, MA 02205-5824
1-800-637-8255
24 hours a day OVERNIGHT MAIL
MFS Service Center, Inc.
ACCOUNT SERVICE AND 500 Boylston Street
LITERATURE Boston, MA 02116-3741
SHAREHOLDERS
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 adopted a Code of Ethics pursuant to Section 406 of the
Sarbanes-Oxley Act and as defined in Form N-CSR that applies to the
Registrant's principal executive officer and principal financial and accounting
officer. The Registrant has not amended any provision in its Code of Ethics
(the "Code") that relates to an element of the Code's definitions enumerated in
paragraph (b) of Item 2 of this Form N-CSR.
A copy of the Code of Ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Messrs. Robert E. Butler and Robert W. Uek and Ms. Laurie J. Thomsen, members
of the Audit Committee, have been determined by the Board of Trustees in their
reasonable business judgment to meet the definition of "audit committee
financial expert" as such term is defined in Form N-CSR. In addition, Messrs.
Butler and Uek and Ms. Thomsen are "independent" members of the Audit Committee
(as such term has been defined by the Securities and Exchange Commission in
regulations implementing Section 407 of the Sarbanes-Oxley Act of 2002). The
Securities and Exchange Commission has stated that the designation of a person
as an audit committee financial expert pursuant to this Item 3 on the Form
N-CSR does not impose on such a person any duties, obligations or liability
that are greater than the duties, obligations or liability imposed on such
person as a member of the Audit Committee and the Board of Trustees in the
absence of such designation or identification.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
ITEMS 4(a) THROUGH 4(d) AND 4(g):
The Board of Trustees has appointed Ernst & Young LLP ("E&Y") to serve as
independent accountants to the series of the Registrant (the series referred to
collectively as the "Funds" and singularly as a "Fund"). The tables below set
forth the audit fees billed to the Funds as well as fees for non-audit services
provided to the Funds and/or to the Funds' investment adviser, Massachusetts
Financial Services Company ("MFS"), and to various entities either controlling,
controlled by, or under common control with MFS that provide ongoing services
to the Fund ("MFS Related Entities").
For the fiscal years ended October 31, 2007 and 2006, audit fees billed to the
Funds by E&Y were as follows:
AUDIT FEES
FEES BILLED BY E&Y: 2007 2006
---- ----
MFS Global Equity Fund 42,140 38,825
MFS Global Total Return Fund 47,880 44,160
MFS Utilities Fund 38,645 33,580
------ ------
TOTAL 128,665 116,565
For the fiscal years ended October 31, 2007 and 2006, fees billed by E&Y for
audit-related, tax and other services provided to the Funds and for
audit-related, tax and other services provided to MFS and MFS Related Entities
were as follows:
Audit-Related Fees(1) Tax Fees(2) All Other Fees(3)
FEES BILLED BY E&Y: 2007 2006 2007 2006 2007 2006
---- ---- ---- ---- ---- ----
To MFS Global Equity 0 0 8,568 8,642 0 144
Fund
To MFS Global Total 0 0 9,674 9,632 0 144
Return Fund
To MFS Utilities Fund 0 0 7,940 8,092 0 144
--- --- ----- ----- --- ---
TOTAL FEES BILLED BY E&Y 0 0 26,182 26,366 0 432
TO ABOVE FUNDS
To MFS and MFS Related 0 0 0 15,500 0 0
Entities of MFS Global
Equity Fund*
To MFS and MFS Related 0 0 0 15,500 0 0
Entities of MFS Global
Total Return Fund*
To MFS and MFS Related 0 0 0 15,500 0 0
Entities of MFS Utilities
Fund*
AGGREGATE FEES FOR NON-AUDIT
SERVICES:
2007 2006
---- ----
To MFS Global Equity 209,584 98,655
Fund, MFS and MFS
Related Entities#
To MFS Global Total Fund, 210,690 99,645
MFS and MFS Related
Entities#
To MFS Utilities Fund, 208,956 98,105
MFS and MFS Related
Entities#
* This amount reflects the fees billed to MFS and MFS Related Entities for non-audit services relating directly to
the operations and financial reporting of the Funds (portions of which services also related to the operations and
financial reporting of other funds within the MFS Funds complex).
# This amount reflects the aggregate fees billed by E&Y for non-audit services rendered to the Funds and for
non-audit services rendered to MFS and the MFS Related Entities.
(1) The fees included under "Audit-Related Fees" are fees related to assurance and related services that are
reasonably related to the performance of the audit or review of financial statements, but not reported under
"Audit Fees," including accounting consultations, agreed-upon procedure reports, attestation reports, comfort
letters and internal control reviews.
(2) The fees included under "Tax Fees" are fees associated with tax compliance, tax advice and tax planning, including
services relating to the filing or amendment of federal, state or local income tax returns, regulated investment
company qualification reviews and tax distribution and analysis.
(3) The fees included under "All Other Fees" are fees for products and services provided by E&Y other than those
reported under "Audit Fees," "Audit-Related Fees" and "Tax Fees," including fees for the subscription to tax
treatise and for services related to analysis of fund administrative expenses, compliance program and records
management projects.
ITEM 4(e)(1):
Set forth below are the policies and procedures established by the Audit
Committee of the Board of Trustees relating to the pre-approval of audit and
non-audit related services: To the extent required by applicable law,
pre-approval by the Audit Committee of the Board is needed for all audit and
permissible non-audit services rendered to the Funds and all permissible
non-audit services rendered to MFS or MFS Related Entities if the services
relate directly to the operations and financial reporting of the Registrant.
Pre-approval is currently on an engagement-by-engagement basis. In the event
pre-approval of such services is necessary between regular meetings of the
Audit Committee and it is not practical to wait to seek pre-approval at the
next regular meeting of the Audit Committee, pre-approval of such services may
be referred to the Chair of the Audit Committee for approval; provided that the
Chair may not pre-approve any individual engagement for such services exceeding
$50,000 or multiple engagements for such services in the aggregate exceeding
$100,000 in each period between regular meetings of the Audit Committee. Any
engagement pre-approved by the Chair between regular meetings of the Audit
Committee shall be presented for ratification by the entire Audit Committee at
its next regularly scheduled meeting.
ITEM 4(e)(2):
None, or 0%, of the services relating to the Audit-Related Fees, Tax Fees and
All Other Fees paid by the Fund and MFS and MFS Related Entities relating
directly to the operations and financial reporting of the Registrant disclosed
above were approved by the audit committee pursuant to paragraphs (c)(7)(i)(C)
of Rule 2-01 of Regulation S-X (which permits audit committee approval after
the start of the engagement with respect to services other than audit, review
or attest services, if certain conditions are satisfied).
ITEM 4(f): Not applicable.
ITEM 4(h): The Registrant's Audit Committee has considered whether the
provision by a Registrant's independent registered public accounting firm of
non-audit services to MFS and MFS Related Entities that were not pre-approved
by the Committee (because such services did not relate directly to the
operations and financial reporting of the Registrant) was compatible with
maintaining the independence of the independent registered public accounting
firm as the Registrant's principal auditors.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the Registrant.
ITEM 6. SCHEDULE OF INVESTMENTS
A schedule of investments 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: Code of Ethics attached hereto.
(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, as amended, 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 VI
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By (Signature and Title)* MARIA F. DWYER
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Maria F. Dwyer, President
Date: December 14, 2007
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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
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Maria F. Dwyer, President (Principal Executive
Officer)
Date: December 14, 2007
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By (Signature and Title)* TRACY ATKINSON
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Tracy Atkinson, Treasurer (Principal Financial Officer
and Accounting Officer)
Date: December 14, 2007
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* Print name and title of each signing officer under his or her signature.