-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KFULunocNPw17D6aKepaz6a8CsSPzxwD3lPlcmYI/im9e6QUYUqFLuP92V4wUk3d uafcuTn9TCLOzMKJ5PF1DA== 0000950156-06-000290.txt : 20060707 0000950156-06-000290.hdr.sgml : 20060707 20060707140850 ACCESSION NUMBER: 0000950156-06-000290 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060430 FILED AS OF DATE: 20060707 DATE AS OF CHANGE: 20060707 EFFECTIVENESS DATE: 20060707 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MFS Series Trust XII CENTRAL INDEX KEY: 0001330967 IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-21780 FILM NUMBER: 06950801 BUSINESS ADDRESS: STREET 1: 500 BOYLSTON STREET CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 617-954-5000 MAIL ADDRESS: STREET 1: 500 BOYLSTON STREET CITY: BOSTON STATE: MA ZIP: 02116 0001330967 S000002501 MFS Lifetime Retirement Income Fund C000006793 A MLLAX C000006794 B MLLBX C000006795 C MLLCX C000006796 I MLLIX C000006797 R1 MLLEX C000006798 R2 MLLFX C000006799 R3 MLLGX C000006800 R4 MLLHX C000006801 R5 MLLJX 0001330967 S000002502 MFS Lifetime 2010 Fund C000006802 A MFSAX C000006803 B MFSBX C000006804 C MFSDX C000006805 I MFSIX C000006806 R1 MFSEX C000006807 R2 MFSFX C000006808 R3 MFSNX C000006809 R4 MFSOX C000006810 R5 MFSPX 0001330967 S000002503 MFS Lifetime 2020 Fund C000006811 A MFLAX C000006812 B MFLBX C000006813 C MFLCX C000006814 I MFLIX C000006815 R1 MFLEX C000006816 R2 MFLFX C000006817 R3 MFLGX C000006818 R4 MFLHX C000006819 R5 MFLJX 0001330967 S000002504 MFS Lifetime 2030 Fund C000006820 A MLTAX C000006821 B MLTBX C000006822 C MLTCX C000006823 I MLTIX C000006824 R1 MLTEX C000006825 R2 MLTFX C000006826 R3 MLTGX C000006827 R4 MLTHX C000006828 R5 MLTJX 0001330967 S000002505 MFS Lifetime 2040 Fund C000006829 A MLFAX C000006830 B MLFBX C000006831 C MLFCX C000006832 I MLFIX C000006833 R1 MLFEX C000006834 R2 MLFFX C000006835 R3 MLFGX C000006836 R4 MLFHX C000006837 R5 MLFJX 0001330967 S000013498 MFS Sector Rotational Fund C000036524 Class A C000036525 Class B C000036526 Class C N-CSRS 1 d646551.txt MFS SERIES TRUST VI 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 - ------------------------------------------------------------------------------- MFS SERIES TRUST VI - ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 500 Boylston Street, Boston, Massachusetts 02116 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Susan S. Newton Massachusetts Financial Services Company 500 Boylston Street Boston, Massachusetts 02116 - ------------------------------------------------------------------------------- (Name and address of agents for service) Registrant's telephone number, including area code: (617) 954-5000 Date of fiscal year end: October 31 - ------------------------------------------------------------------------------- Date of reporting period: April 30, 2006 - ------------------------------------------------------------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. MFS(R) GLOBAL TOTAL RETURN FUND 4/30/06 SEMIANNUAL REPORT - ------------------------------------------------------------------------------- LETTER FROM THE CEO 1 - --------------------------------------------------- PORTFOLIO COMPOSITION 2 - --------------------------------------------------- EXPENSE TABLE 3 - --------------------------------------------------- PORTFOLIO OF INVESTMENTS 5 - --------------------------------------------------- FINANCIAL STATEMENTS 16 - --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 29 - --------------------------------------------------- BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 41 - --------------------------------------------------- PROXY VOTING POLICIES AND INFORMATION 41 - --------------------------------------------------- QUARTERLY PORTFOLIO DISCLOSURE 41 - --------------------------------------------------- CONTACT INFORMATION BACK COVER - --------------------------------------------------- THE REPORT IS PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS INTENDED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. M F S(SM) INVESTMENT MANAGEMENT(R) LETTER FROM THE CEO [Photo of Robert J. Manning] Dear Shareholders, It has been said that change is the only constant in life. As investors have seen, that theme is still accurate today as we recently have experienced shifting economic cycles because of natural disasters and political instability around the globe. Markets worldwide have fluctuated in the past year as devastating hurricanes had a dramatic effect on the international economy, particularly on oil prices. We witnessed political unrest in the Middle East, highlighted by instability in Iraq, and in Africa, the usually stable Nigeria also experienced violence. As a result, energy prices have bounced up and down, with crude oil prices at one point topping a record $70 per barrel. Such cycles are not uncommon and in fact have almost become the norm in our everyday lives. What does all of this mean to you as an investor? In times like these, it helps to know that you're working with a seasoned investment professional who has experience to guide you through difficult times. At MFS(R), we believe our investment management team has the knowledge and confidence to navigate through difficult cycles and at the same time see through adversity to find investment opportunities for our clients and shareholders. Our investment management process, honed over 80 years, combines a unique concept of teamwork with our unwavering focus on the long term. We firmly believe that the best way to realize long-term financial goals - be it a college education, a comfortable retirement, or a secure family legacy - is to follow a three-pronged approach that focuses on longer time horizons. Allocate holdings across the major asset classes - including stocks, bonds, and cash. Diversify within each class to take advantage of different market segments and investing styles. Rebalance assets regularly to maintain a desired asset allocation. Of course, these strategies cannot guarantee a profit or protect against a loss. This long-term approach requires 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) June 15, 2006 The opinions expressed in this letter are those of MFS, and no forecasts can be guaranteed. PORTFOLIO COMPOSITION PORTFOLIO STRUCTURE(i) Stocks 58.7% Bonds 31.3% Cash & Other Net Assets 9.4% Preferred 0.6% TOP TEN HOLDINGS (i) United Kingdom Treasury, 8%, 2015 1.8% ------------------------------------------------- United Kingdom Treasury, 5.75%, 2009 1.8% ------------------------------------------------- Network Rail MTN Finance PLC, 2.913%, 2007 1.5% ------------------------------------------------- Development Bank of Japan, 1.6%, 2014 1.5% ------------------------------------------------- Bank of America Corp. 1.4% ------------------------------------------------- Federal Republic of Germany, 6.25%, 2030 1.4% ------------------------------------------------- Nestle S.A. 1.2% ------------------------------------------------- Federal Republic of Germany, 6.25%, 2024 1.2% ------------------------------------------------- Vodaphone Group PLC 1.2% ------------------------------------------------- TOTAL S.A., ADR 1.2% ------------------------------------------------- EQUITY SECTORS Financial Services 15.0% ------------------------------------------------- Utilities & Communications 7.1% ------------------------------------------------- Energy 5.3% ------------------------------------------------- Consumer Staples 4.8% ------------------------------------------------- Health Care 4.6% ------------------------------------------------- Autos & Housing 4.5% ------------------------------------------------- Industrial Goods & Services 4.3% ------------------------------------------------- Basic Materials 3.2% ------------------------------------------------- Technology 2.9% ------------------------------------------------- Leisure 2.3% ------------------------------------------------- Retailing 1.9% ------------------------------------------------- Transportation 1.5% ------------------------------------------------- Special Products & Services 1.3% ------------------------------------------------- FIXED INCOME MARKET SECTORS (i) Non U.S. Government Bonds 22.7% ------------------------------------------------- U.S. Government Agencies 3.0% ------------------------------------------------- Commercial Mortgage-Backed Securities 2.4% ------------------------------------------------- Emerging Market Bonds 1.2% ------------------------------------------------- U.S. Treasury Securities 0.7% ------------------------------------------------- High Grade Corporates 0.7% ------------------------------------------------- Municipal Bonds 0.3% ------------------------------------------------- Mortgage-Backed Securities 0.3% ------------------------------------------------- COUNTRY WEIGHTINGS (i) United States 43.6% ------------------------------------------------- United Kingdom 12.9% ------------------------------------------------- Japan 11.0% ------------------------------------------------- Germany 8.3% ------------------------------------------------- France 7.1% ------------------------------------------------- Switzerland 3.0% ------------------------------------------------- Netherlands 1.8% ------------------------------------------------- New Zealand 1.7% ------------------------------------------------- Sweden 1.3% ------------------------------------------------- All Others 9.3% ------------------------------------------------- (i) For purposes of this graphical 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 4/30/06. The portfolio is actively managed, and current holdings may be different. EXPENSE TABLE FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, NOVEMBER 1, 2005 THROUGH APRIL 30, 2006. As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchase or redemption payments and redemption fees on certain exchanges and redemptions, and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period November 1, 2005 through April 30, 2006. ACTUAL EXPENSES The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period(p) Share Expense Account Value Account Value 11/01/05- Class Ratio 11/01/05 4/30/06 4/30/06 - ------------------------------------------------------------------------------- Actual 1.30% $1,000.00 $1,112.60 $6.81 A ----------------------------------------------------------------------- Hypothetical (h) 1.30% $1,000.00 $1,018.35 $6.51 - ------------------------------------------------------------------------------- Actual 1.95% $1,000.00 $1,109.50 $10.20 B ------------------------------------------------------------------------ Hypothetical (h) 1.95% $1,000.00 $1,015.12 $9.74 - ------------------------------------------------------------------------------- Actual 1.95% $1,000.00 $1,109.30 $10.20 C ----------------------------------------------------------------------- Hypothetical (h) 1.95% $1,000.00 $1,015.12 $9.74 - ------------------------------------------------------------------------------- Actual 0.95% $1,000.00 $1,114.80 $4.98 I ----------------------------------------------------------------------- Hypothetical (h) 0.95% $1,000.00 $1,020.08 $4.76 - ------------------------------------------------------------------------------- Actual 1.45% $1,000.00 $1,111.80 $7.59 R ----------------------------------------------------------------------- Hypothetical (h) 1.45% $1,000.00 $1,017.60 $7.25 - ------------------------------------------------------------------------------- Actual 2.05% $1,000.00 $1,108.20 $10.72 R1 ----------------------------------------------------------------------- Hypothetical (h) 2.05% $1,000.00 $1,014.63 $10.24 - ------------------------------------------------------------------------------- Actual 1.70% $1,000.00 $1,110.50 $8.90 R2 ----------------------------------------------------------------------- Hypothetical (h) 1.70% $1,000.00 $1,016.36 $8.50 - ------------------------------------------------------------------------------- Actual 1.60% $1,000.00 $1,110.40 $8.37 R3 ----------------------------------------------------------------------- Hypothetical (h) 1.60% $1,000.00 $1,016.86 $8.00 - ------------------------------------------------------------------------------- Actual 1.35% $1,000.00 $1,112.50 $7.07 R4 ----------------------------------------------------------------------- Hypothetical (h) 1.35% $1,000.00 $1,018.10 $6.76 - ------------------------------------------------------------------------------- Actual 1.05% $1,000.00 $1,114.10 $5.50 R5 ----------------------------------------------------------------------- Hypothetical (h) 1.05% $1,000.00 $1,019.59 $5.26 - ------------------------------------------------------------------------------- (h) 5% class return per year before expenses. (p) Expenses paid is equal to each class' annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads) or redemption fees. If these transaction costs had been included, your costs would have been higher. PORTFOLIO OF INVESTMENTS (unaudited) - 4/30/06 The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Common Stocks - 58.7% - -------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) - -------------------------------------------------------------------------------------------------- Advertising & Broadcasting - 1.5% - -------------------------------------------------------------------------------------------------- CBS Corp., "B" 30,293 $ 771,563 Nippon Television Network Corp. 8,330 1,259,403 PagesJaunes Groupe S.A. (l) 73,650 2,128,135 Viacom, Inc., "B" (n) 30,293 1,206,570 Vivendi Universal S.A. (l) 29,650 1,082,242 Walt Disney Co. 38,850 1,086,246 WPP Group PLC 81,010 999,061 ------------ $ 8,533,220 - -------------------------------------------------------------------------------------------------- Aerospace - 2.5% - -------------------------------------------------------------------------------------------------- Lockheed Martin Corp. 85,840 $ 6,515,256 Northrop Grumman Corp. 74,090 4,956,621 United Technologies Corp. 50,390 3,164,996 ------------ $ 14,636,873 - -------------------------------------------------------------------------------------------------- Alcoholic Beverages - 0.5% - -------------------------------------------------------------------------------------------------- Diageo PLC 191,600 $ 3,158,704 - -------------------------------------------------------------------------------------------------- Apparel Manufacturers - 0.2% - -------------------------------------------------------------------------------------------------- NIKE, Inc., "B" 15,920 $ 1,302,893 - -------------------------------------------------------------------------------------------------- Automotive - 2.6% - -------------------------------------------------------------------------------------------------- Autoliv, Inc. 30,080 $ 1,674,651 Bayerische Motoren Werke AG (l) 64,900 3,528,775 Compagnie Generale des Etablissements Michelin (l) 26,970 1,945,711 Hyundai Mobis 11,520 1,017,459 Johnson Controls, Inc. 9,430 769,017 Nissan Motor Co. Ltd. 173,000 2,276,456 PSA Peugeot Citroen S.A. (l) 32,760 2,152,697 Renault S.A. (l) 16,640 1,930,823 ------------ $ 15,295,589 - -------------------------------------------------------------------------------------------------- Banks & Credit Companies - 9.3% - -------------------------------------------------------------------------------------------------- Aiful Corp. (l) 52,350 $ 3,129,082 American Express Co. 31,130 1,675,105 Bank of America Corp. 168,096 8,391,352 BNP Paribas - Ordinary 25,940 2,450,491 BNP Paribas (n) 2,690 245,466 Citigroup, Inc. 107,036 5,346,448 Credit Agricole S.A. 83,840 3,377,439 DBS Group Holdings Ltd. 169,000 1,902,720 DNB Holding A.S.A. (l) 97,600 1,352,173 Fannie Mae 54,740 2,769,844 Freddie Mac 14,150 863,999 ING Groep N.V. 70,350 2,862,396 Irish Life & Permanent PLC 55,080 1,404,677 Nordea Bank AB 108,340 1,393,897 PNC Financial Services Group, Inc. 35,990 2,572,205 Royal Bank of Scotland Group PLC 95,675 3,121,468 Shinhan Financial Group Co. Ltd. 21,310 1,061,941 Shinsei Bank Ltd. 276,000 1,933,565 SunTrust Banks, Inc. 46,890 3,626,004 Svenska Handelsbanken AB, "A" (l) 43,700 1,255,031 Takefuji Corp. 49,730 3,234,756 Wells Fargo & Co. 10,680 733,609 ------------ $ 54,703,668 - -------------------------------------------------------------------------------------------------- Broadcast & Cable TV - 0.1% - -------------------------------------------------------------------------------------------------- Premiere AG (l)(n) 32,780 $ 537,469 - -------------------------------------------------------------------------------------------------- Brokerage & Asset Managers - 2.0% - -------------------------------------------------------------------------------------------------- Franklin Resources, Inc. 13,000 $ 1,210,560 Goldman Sachs Group, Inc. 37,300 5,978,817 Lehman Brothers Holdings, Inc. 10,040 1,517,546 Mellon Financial Corp. 43,410 1,633,518 Merrill Lynch & Co., Inc. 18,620 1,419,961 ------------ $ 11,760,402 - -------------------------------------------------------------------------------------------------- Business Services - 0.3% - -------------------------------------------------------------------------------------------------- Accenture Ltd., "A" 69,950 $ 2,033,447 - -------------------------------------------------------------------------------------------------- Chemicals - 1.6% - -------------------------------------------------------------------------------------------------- Dow Chemical Co. 32,130 $ 1,304,799 E.I. du Pont de Nemours & Co. 27,980 1,233,918 Nalco Holding Co. (n) 40,270 759,090 PPG Industries, Inc. 34,260 2,299,531 Syngenta AG 28,640 3,991,236 ------------ $ 9,588,574 - -------------------------------------------------------------------------------------------------- Computer Software - 0.3% - -------------------------------------------------------------------------------------------------- Oracle Corp. (n) 104,850 $ 1,529,762 - -------------------------------------------------------------------------------------------------- Computer Software - Systems - 0.1% - -------------------------------------------------------------------------------------------------- Dell, Inc. (n) 32,600 $ 854,120 - -------------------------------------------------------------------------------------------------- Construction- 1.9% - -------------------------------------------------------------------------------------------------- Fletcher Building Ltd. 193,182 $ 1,120,785 Geberit AG 2,340 2,727,550 Italcementi S.p.A. 110,580 1,988,829 Masco Corp. 146,360 4,668,884 Sherwin-Williams Co. 14,780 752,893 ------------ $ 11,258,941 - -------------------------------------------------------------------------------------------------- Consumer Goods & Services - 1.0% - -------------------------------------------------------------------------------------------------- Kao Corp. 72,000 $ 1,936,624 Uni-Charm Corp. (l) 69,900 4,012,192 ------------ $ 5,948,816 - -------------------------------------------------------------------------------------------------- Electrical Equipment - 0.5% - -------------------------------------------------------------------------------------------------- Cooper Industries Ltd., "A" 17,930 $ 1,639,699 Legrand S.A. (n) 3,610 105,632 W.W. Grainger, Inc. 13,340 1,026,113 ------------ $ 2,771,444 - -------------------------------------------------------------------------------------------------- Electronics - 2.2% - -------------------------------------------------------------------------------------------------- Canon, Inc. 18,600 $ 1,424,041 Intel Corp. 79,460 1,587,611 Konica Minolta Holdings, Inc. (n) 106,500 1,404,210 OMRON Corp. 54,100 1,512,223 Ricoh Co. Ltd. 72,000 1,430,317 Royal Philips Electronics N.V. 37,390 1,289,775 Samsung Electronics Co. Ltd. 4,260 2,908,806 Taiwan Semiconductor Manufacturing Co. Ltd., ADR 98,900 1,036,472 ------------ $ 12,593,455 - -------------------------------------------------------------------------------------------------- Energy - Independent - 1.4% - -------------------------------------------------------------------------------------------------- Apache Corp. 25,670 $ 1,823,597 CNOOC Ltd. 1,211,500 976,607 Devon Energy Corp. 23,500 1,412,585 EOG Resources, Inc. 24,240 1,702,375 Norsk Hydro A.S.A. 14,450 2,222,032 ------------ $ 8,137,196 - -------------------------------------------------------------------------------------------------- Energy - Integrated - 3.9% - -------------------------------------------------------------------------------------------------- Amerada Hess Corp. 15,260 $ 2,186,300 Chevron Corp. 19,531 1,191,782 ConocoPhillips 55,150 3,689,535 Exxon Mobil Corp. 55,040 3,471,923 LUKOIL, ADR 7,550 684,030 Royal Dutch Shell PLC 142,500 4,869,816 Total S.A., ADR (l) 50,020 6,903,760 ------------ $ 22,997,146 - -------------------------------------------------------------------------------------------------- Food & Drug Stores - 1.3% - -------------------------------------------------------------------------------------------------- Carrefour S.A. 68,960 $ 3,999,148 Lawson, Inc. 34,500 1,310,069 William Morrison Supermarkets PLC 631,220 2,141,617 ------------ $ 7,450,834 - -------------------------------------------------------------------------------------------------- Food & Non Alcoholic Beverages - 2.3% - -------------------------------------------------------------------------------------------------- Archer Daniels Midland Co. 32,640 $ 1,186,138 Kellogg Co. 39,400 1,824,614 Kirin Beverage Corp. (l) 51,700 1,376,970 Nestle S.A. (l) 23,469 7,150,918 Nong Shim Co. Ltd. 3,814 1,065,566 Sara Lee Corp. 44,040 786,995 ------------ $ 13,391,201 - -------------------------------------------------------------------------------------------------- Forest & Paper Products - 0.2% - -------------------------------------------------------------------------------------------------- International Paper Co. 37,660 $ 1,368,941 - -------------------------------------------------------------------------------------------------- Health Maintenance Organizations - 0.1% - -------------------------------------------------------------------------------------------------- CIGNA Corp. 7,270 $ 777,890 - -------------------------------------------------------------------------------------------------- Insurance- 3.7% - -------------------------------------------------------------------------------------------------- Allstate Corp. 117,820 $ 6,655,652 Aviva PLC 141,714 2,067,808 Benfield Group PLC 156,140 1,105,020 Chubb Corp. 18,800 968,952 Genworth Financial, Inc., "A" 19,270 639,764 Hartford Financial Services Group, Inc. 23,640 2,173,225 Jardine Lloyd Thompson Group PLC 182,540 1,270,241 MetLife, Inc. 99,780 5,198,538 Swiss Reinsurance Co. (l) 19,190 1,398,981 ------------ $ 21,478,181 - -------------------------------------------------------------------------------------------------- Leisure & Toys - 0.4% - -------------------------------------------------------------------------------------------------- Heiwa Corp. (l) 63,300 $ 965,928 Namco Bandai Holdings, Inc. 78,500 1,132,321 ------------ $ 2,098,249 - -------------------------------------------------------------------------------------------------- Machinery & Tools - 1.3% - -------------------------------------------------------------------------------------------------- ASSA ABLOY AB, "B" (l) 80,400 $ 1,555,728 Deere & Co. 51,620 4,531,204 Illinois Tool Works, Inc. 12,550 1,288,885 ------------ $ 7,375,817 - -------------------------------------------------------------------------------------------------- Metals & Mining - 0.5% - -------------------------------------------------------------------------------------------------- Anglo American PLC 66,610 $ 2,833,291 - -------------------------------------------------------------------------------------------------- Natural Gas - Distribution - 0.7% - -------------------------------------------------------------------------------------------------- Tokyo Gas Co. Ltd. (l) 897,000 $ 4,344,456 - -------------------------------------------------------------------------------------------------- Network & Telecom - 0.3% - -------------------------------------------------------------------------------------------------- Cisco Systems, Inc. (n) 55,040 $ 1,153,088 ZTE Corp. 128,800 440,228 ------------ $ 1,593,316 - -------------------------------------------------------------------------------------------------- Pharmaceuticals - 4.5% - -------------------------------------------------------------------------------------------------- Abbott Laboratories 24,030 $ 1,027,042 Astellas Pharma, Inc. 49,900 2,083,462 AstraZeneca PLC 26,180 1,445,031 Eli Lilly & Co. 18,480 977,962 GlaxoSmithKline PLC 108,280 3,069,182 Johnson & Johnson 82,380 4,828,292 Merck & Co., Inc. 89,930 3,095,391 Novartis AG 43,300 2,481,710 Sanofi-Aventis (l) 25,110 2,367,332 Schering AG (l) 13,310 1,428,930 Tanabe Seiyaku Co. Ltd. 106,000 1,250,402 Wyeth 45,010 2,190,637 ------------ $ 26,245,373 - -------------------------------------------------------------------------------------------------- Printing & Publishing - 0.3% - -------------------------------------------------------------------------------------------------- Reed Elsevier PLC 184,020 $ 1,826,949 - -------------------------------------------------------------------------------------------------- Railroad & Shipping - 0.7% - -------------------------------------------------------------------------------------------------- Burlington Northern Santa Fe Corp. 14,560 $ 1,157,957 Canadian National Railway Co. 59,700 2,681,127 ------------ $ 3,839,084 - -------------------------------------------------------------------------------------------------- Specialty Chemicals - 0.9% - -------------------------------------------------------------------------------------------------- Air Products & Chemicals, Inc. 12,910 $ 884,593 L'Air Liquide S.A. 12,776 2,763,505 L'Air Liquide S.A., Bearer Shares (l) 2,614 565,420 Praxair, Inc. 15,440 866,647 ------------ $ 5,080,165 - -------------------------------------------------------------------------------------------------- Specialty Stores - 0.4% - -------------------------------------------------------------------------------------------------- Gap, Inc. 85,020 $ 1,538,012 NEXT PLC 27,170 797,847 ------------ $ 2,335,859 - -------------------------------------------------------------------------------------------------- Telecommunications - Wireless - 1.5% - -------------------------------------------------------------------------------------------------- KDDI Corp. 285 $ 1,758,625 Vodafone Group PLC 2,927,423 6,905,897 ------------ $ 8,664,522 - -------------------------------------------------------------------------------------------------- Telephone Services - 2.2% - -------------------------------------------------------------------------------------------------- Deutsche Telekom AG (l) 120,500 $ 2,176,363 France Telecom S.A. (l) 83,330 1,945,401 Sprint Nextel Corp. 195,630 4,851,624 Telecom Corp. of New Zealand Ltd. 324,150 1,184,173 Telenor A.S.A. 144,550 1,674,713 Verizon Communications, Inc. 38,890 1,284,537 ------------ $ 13,116,811 - -------------------------------------------------------------------------------------------------- Tobacco - 2.0% - -------------------------------------------------------------------------------------------------- Altria Group, Inc. 85,980 $ 6,290,297 British American Tobacco PLC 152,090 3,884,307 Swedish Match AB (l) 120,810 1,812,708 ------------ $ 11,987,312 - -------------------------------------------------------------------------------------------------- Trucking- 0.8% - -------------------------------------------------------------------------------------------------- TNT N.V. (l) 122,360 $ 4,404,481 - -------------------------------------------------------------------------------------------------- Utilities - Electric Power - 2.7% - -------------------------------------------------------------------------------------------------- Dominion Resources, Inc. 70,830 $ 5,303,042 E.ON AG 27,970 3,405,305 FPL Group, Inc. 52,030 2,060,388 Scottish Power PLC 86,700 885,237 Suez S.A. (l) 42,031 1,653,432 TXU Corp. 33,280 1,651,686 United Utilities PLC 80,070 978,717 ------------ $ 15,937,807 - -------------------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (IDENTIFIED COST, $267,715,781) $343,792,258 - -------------------------------------------------------------------------------------------------- Bonds - 29.9% - -------------------------------------------------------------------------------------------------- Asset Backed & Securitized - 2.4% - -------------------------------------------------------------------------------------------------- Commercial Mortgage Asset Trust, FRN, 1.128%, 2032 (a)(i) $ 17,831,764 $ 764,104 Commercial Mortgage Pass-Through Certificate, FRN, 5.0913%, 2017 (a) 1,400,000 1,399,803 Commercial Mortgage Pass-Through Certificates, FRN, 5.1013%, 2017 (a) 2,100,000 2,098,953 Deutsche Mortgage & Asset Receiving Corp., 6.538%, 2031 282,159 286,304 First Union National Bank Commercial Mortgage Trust, FRN, 1.194%, 2043 (a)(i) 26,019,610 979,173 IMPAC CMB Trust, FRN, 5.3094%, 2036 2,080,115 2,080,115 J.P. Morgan Chase Commercial Mortgage Securities Corp., FRN, 5.3819%, 2041 1,870,062 1,819,191 J.P. Morgan Chase Commercial Mortgage Securities Corp., FRN, 5.1013%, 2046 912,088 912,662 Lehman Brothers Floating Rate Commercial Mortgage Trust, FRN, 5.0613%, 2018 (a) 2,150,000 2,149,848 Wachovia Bank Commercial Mortgage Trust, FRN, 5.1413%, 2015 (a) 1,444,035 1,444,845 Wachovia Bank Commercial Mortgage Trust, FRN, 5.1913%, 2015 (a) 382,221 382,340 ------------ $ 14,317,338 - -------------------------------------------------------------------------------------------------- Banks & Credit Companies - 0.8% - -------------------------------------------------------------------------------------------------- Kazkommerts International B.V., 7%, 2009 $ 863,000 $ 865,158 Mizuho Capital Investment 1 Ltd., 6.686% to 2016, FRN to 2049 (a) 590,000 571,673 Ulster Bank Finance PLC, 2.789%, 2008 EUR 1,968,000 2,480,694 VTB Capital S.A., 7.5%, 2011 $ 823,000 862,093 ------------ $ 4,779,618 - -------------------------------------------------------------------------------------------------- Emerging Market Quasi-Sovereign - 0.4% - -------------------------------------------------------------------------------------------------- Gaz Capital S.A., 8.625%, 2034 $ 180,000 $ 217,242 Gazprom International S.A., 7.201%, 2020 334,000 346,993 Pemex Project Funding Master Trust, 8.625%, 2022 438,000 507,204 Petronas Capital Ltd., 7.875%, 2022 1,086,000 1,261,349 ------------ $ 2,332,788 - -------------------------------------------------------------------------------------------------- Emerging Market Sovereign - 0.5% - -------------------------------------------------------------------------------------------------- Aries Vermogensverwaltungs, 9.6%, 2014 (l) $ 750,000 $ 933,750 Republic of Bulgaria, 8.25%, 2015 541,000 623,394 United Mexican States, 5.625%, 2017 584,000 558,888 United Mexican States, 8.125%, 2019 700,000 808,500 ------------ $ 2,924,532 - -------------------------------------------------------------------------------------------------- International Market Quasi-Sovereign - 6.2% - -------------------------------------------------------------------------------------------------- Development Bank of Japan, 1.4%, 2012 JPY 114,000,000 $ 987,135 Development Bank of Japan, 1.6%, 2014 (l) JPY 990,000,000 8,536,373 Development Bank of Japan, 1.05%, 2023 (l) JPY 475,000,000 3,462,137 Japan Finance Corp. for Municipal Enterprises, 2%, 2016 JPY 350,000,000 3,084,209 KfW Bankengruppe, FRN, 2.563%, 2007 EUR 5,413,000 6,821,304 Landesbank Baden-Wurttemberg, FRN, 2.764%, 2007 EUR 1,939,000 2,445,122 Landesbank Baden-Wurttemberg, FRN, 2.704%, 2007 EUR 1,770,000 2,232,453 Network Rail MTN Finance PLC, FRN, 2.913%, 2007 EUR 6,885,000 8,683,379 ------------ $ 36,252,112 - -------------------------------------------------------------------------------------------------- International Market Sovereign - 14.4% - -------------------------------------------------------------------------------------------------- Bayerische Landesbank, 2.664%, 2006 EUR 284,000 $ 358,160 Federal Republic of Germany, 3.5%, 2008 EUR 1,075,000 1,356,302 Federal Republic of Germany, 5.25%, 2010 EUR 1,677,000 2,241,358 Federal Republic of Germany, 3.75%, 2015 EUR 2,681,000 3,332,618 Federal Republic of Germany, 6.25%, 2024 EUR 4,298,000 6,830,336 Federal Republic of Germany, 6.25%, 2030 EUR 4,864,000 7,989,211 Government of New Zealand, 6.5%, 2013 (l) NZD 7,912,000 5,238,265 Government of New Zealand, 6%, 2017 (l) NZD 3,309,000 2,139,465 Kingdom of Belgium, 3.75%, 2009 EUR 2,266,000 2,876,516 Kingdom of Belgium, 5%, 2012 EUR 931,000 1,249,845 Kingdom of Netherlands, 5%, 2012 EUR 1,496,855 2,008,492 Kingdom of Spain, 5.35%, 2011 EUR 2,376,000 3,220,886 Quebec Province, 1.6%, 2013 JPY 105,000,000 907,472 Republic of Austria, 5%, 2012 EUR 2,966,000 3,977,692 Republic of Finland, 3%, 2008 EUR 4,062,000 5,080,118 Republic of Finland, 5.375%, 2013 EUR 1,297,000 1,786,043 Republic of France, 4.75%, 2012 EUR 1,736,000 2,305,322 Republic of France, 6%, 2025 EUR 1,537,000 2,404,854 Republic of France, 4.75%, 2035 EUR 892,000 1,223,656 Republic of Ireland, 4.25%, 2007 EUR 1,502,000 1,919,643 Republic of Ireland, 4.6%, 2016 EUR 664,000 878,848 United Kingdom Treasury, 5.75%, 2009 GBP 5,355,000 10,098,307 United Kingdom Treasury, 5%, 2012 GBP 2,028,000 3,757,847 United Kingdom Treasury, 8%, 2015 GBP 4,477,000 10,274,828 United Kingdom Treasury, 4.25%, 2036 GBP 379,000 686,787 ------------ $ 84,142,871 - -------------------------------------------------------------------------------------------------- Mortgage Backed - 0.3% - -------------------------------------------------------------------------------------------------- Fannie Mae, 4.98%, 2015 $ 215,391 $ 205,811 Fannie Mae, 5.424%, 2016 352,000 348,989 Freddie Mac, 5%, 2024 1,111,057 1,104,356 ------------ $ 1,659,156 - -------------------------------------------------------------------------------------------------- Municipals - 0.3% - -------------------------------------------------------------------------------------------------- Honolulu, HI, City & County Rev., "A", MBIA, 5%, 2015 $ 1,625,000 $ 1,725,474 - -------------------------------------------------------------------------------------------------- Pharmaceuticals - 0.1% - -------------------------------------------------------------------------------------------------- Teva Pharmaceutical Finance LLC, 5.55%, 2016 $ 900,000 $ 859,556 - -------------------------------------------------------------------------------------------------- U.S. Government Agencies- 3.0% - -------------------------------------------------------------------------------------------------- Aid-Egypt, 4.45%, 2015 $ 1,113,000 $ 1,035,875 Fannie Mae, 4.25%, 2007 2,910,000 2,872,204 Freddie Mac, 4.2%, 2007 2,523,000 2,486,819 Small Business Administration, 4.76%, 2025 1,430,396 1,345,308 Small Business Administration, 5.09%, 2025 231,477 222,687 Small Business Administration, 5.36%, 2025 2,238,000 2,193,237 Small Business Administration, 5.21%, 2026 2,780,000 2,694,523 Small Business Administration, 5.35%, 2026 2,350,000 2,298,077 Small Business Administration, 5.57%, 2026 2,233,000 2,214,512 ------------ $ 17,363,242 - -------------------------------------------------------------------------------------------------- U.S. Treasury Obligations - 1.5% - -------------------------------------------------------------------------------------------------- U.S. Treasury Bonds, 8%, 2021 $ 1,529,000 $ 1,962,854 U.S. Treasury Notes, 3.125%, 2008 (f) 2,314,000 2,221,169 U.S. Treasury Notes, 4.25%, 2013 1,157,000 1,101,319 U.S. Treasury Notes, 4%, 2015 3,729,000 3,455,150 ------------ $ 8,740,492 - -------------------------------------------------------------------------------------------------- TOTAL BONDS (IDENTIFIED COST, $176,767,673) $175,097,179 - -------------------------------------------------------------------------------------------------- Preferred Stocks - 0.6% - -------------------------------------------------------------------------------------------------- Chemicals - 0.6% - -------------------------------------------------------------------------------------------------- Henkel KGaA (Identified Cost, $2,874,639) 29,730 $ 3,574,211 - -------------------------------------------------------------------------------------------------- Warrants - 0.0% - -------------------------------------------------------------------------------------------------- STRIKE FIRST PRICE EXERCISE - -------------------------------------------------------------------------------------------------- Chemicals - 0.0% - -------------------------------------------------------------------------------------------------- Syngenta AG (n) (Identified Cost, $11,857) CHF 234.00 5/23/06 28,880 $ 46,295 - -------------------------------------------------------------------------------------------------- Rights - 0.0% - -------------------------------------------------------------------------------------------------- Insurance - 0.0% - -------------------------------------------------------------------------------------------------- Swiss Reinsurance Co. CHF 92.25 4/28/06 19,190 $ 0 - -------------------------------------------------------------------------------------------------- Short-Term Obligations - 9.5% (y) - -------------------------------------------------------------------------------------------------- Edison Asset Securitization LLC, 4.82%, due 5/01/06 (t) $ 23,351,000 $ 23,351,000 General Electric Capital Corp., 4.82%, due 5/01/06 8,510,000 8,510,000 New Center Asset Trust, 4.82%, due 5/01/06 23,351,000 23,351,000 - -------------------------------------------------------------------------------------------------- TOTAL SHORT-TERM OBLIGATIONS, AT AMORTIZED COST AND VALUE $ 55,212,000 - -------------------------------------------------------------------------------------------------- Collateral for Securities Loaned - 9.8% - -------------------------------------------------------------------------------------------------- Morgan Stanley Repurchase Agreement, 4.895%, dated 4/28/06, due 05/01/06, total to be received $50,344,497 (secured by various U.S. Treasury and Federal Agency obligations in an individually traded account), at Cost 50,337,653 $ 50,337,653 Navigator Securities Lending Prime Portfolio, at Cost and Net Asset Value 7,052,820 7,052,820 - -------------------------------------------------------------------------------------------------- TOTAL COLLATERAL FOR SECURITIES LOANED $ 57,390,473 - -------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $559,972,423) (k) $635,112,416 - -------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (8.5)% (49,633,525) - -------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $585,478,891 - --------------------------------------------------------------------------------------------------
(a) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $9,790,739, representing 1.7% of net assets. (f) All or a portion of the security has been segregated as collateral for an open futures contract. (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 April 30, 2006, the fund held securities fair valued in accordance with the policies adopted by the Board of Trustees, aggregating $175,712,787 and 27.67% of market value, of which 27.23% of market value was provided by an independent pricing service using an evaluated bid. (l) All or a portion of this security is on loan. (n) Non-income producing security. (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. The following abbreviations are used in the Portfolio of Investments and are defined: ADR American Depository Receipt FRN Floating Rate Note. The interest rate is the rate in effect as of period end. Insurers - ------------------------------------------------------------------------------- MBIA MBIA Insurance Corp. Abbreviations have been used throughout this report to 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 CAD Canadian Dollar CHF Swiss Franc DKK Danish Krone EUR Euro GBP British Pound JPY Japanese Yen MXN Mexican Peso NOK Norwegian Krone NZD New Zealand Dollar SEK Swedish Krona TRY Turkish Lira Derivatives FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS Sales and Purchases in the table below are reported by currency.
NET UNREALIZED CONTRACTS TO CONTRACTS APPRECIATION DELIVER/RECEIVE SETTLEMENT DATE IN EXCHANGE FOR AT VALUE (DEPRECIATION) - ------------------------------------------------------------------------------------------ SALES - ----------------------------------------------------------------------------------------- AUD 1,517,025 6/07/06 $1,135,974 $1,151,907 $(15,933) CAD 465,864 5/15/06 400,000 416,444 (16,444) CHF 1,410,697 5/08/06 1,135,939 1,137,719 (1,780) DKK 13,478,719 5/10/06 2,193,695 2,280,412 (86,717) EUR 7,817,027 5/17/06 9,684,839 9,872,773 (187,934) GBP 8,835,378 6/05/06 15,463,743 16,103,257 (639,514) JPY 469,675,900 5/17/06 - 6/05/06 4,094,935 4,143,780 (48,845) NOK 12,172,521 5/10/06 - 6/08/06 1,888,791 1,974,758 (85,967) NZD 17,989,280 6/06/06 10,921,188 11,438,835 (517,647) SEK 14,576,527 5/08/06 - 5/10/06 1,866,082 1,981,371 (115,289) - ----------------------------------------------------------------------------------------- $48,785,186 $50,501,256 $(1,716,070) - ----------------------------------------------------------------------------------------- PURCHASES - ----------------------------------------------------------------------------------------- AUD 3,941,825 6/06/06 - 6/07/06 $2,865,279 $2,993,130 $127,851 CAD 6,333,485 5/15/06 5,460,788 5,661,607 200,819 CHF 2,226,020 5/08/06 1,721,871 1,795,271 73,400 DKK 13,478,719 5/10/06 2,163,518 2,280,411 116,893 EUR 16,518,294 5/17/06 - 6/13/06 20,194,431 20,874,958 680,527 GBP 2,386,147 6/05/06 4,238,682 4,348,964 110,282 JPY 5,112,906,227 5/17/06 43,849,758 45,064,874 1,215,116 MXN 6,611,340 5/09/06 600,000 597,381 (2,619) NOK 12,172,521 5/10/06 - 6/08/06 1,826,802 1,974,758 147,956 NZD 5,889,102 6/06/06 3,672,921 3,744,701 71,780 SEK 26,250,682 5/10/06 3,436,918 3,568,419 131,501 TRY 764,645 5/25/06 576,438 574,853 (1,585) - ----------------------------------------------------------------------------------------- $90,607,406 $93,479,327 $2,871,921 - -----------------------------------------------------------------------------------------
At April 30, 2006, forward foreign currency purchases and sales under master netting agreements excluded above amounted to a net receivable of $458,422 with Merrill Lynch International. FUTURES CONTRACTS OUTSTANDING AT APRIL 30, 2006:
UNREALIZED EXPIRATION APPRECIATION DESCRIPTION CONTRACTS VALUE DATE (DEPRECIATION) - --------------------------------------------------------------------------------------------- Japan Government Bond 10 yr (Long) 9 $10,490,045 Jun-06 $(183,185) U.S. Treasury Note 10 yr (Short) 46 $4,856,594 Jun-06 93,816 - --------------------------------------------------------------------------------------------- $(89,369) - ---------------------------------------------------------------------------------------------
At April 30, 2006, 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 (unaudited) This statement represents your fund's balance sheet, which details the assets and liabilities comprising the total value of the fund. AT 4/30/06 ASSETS - ------------------------------------------------------------------------------------------ Investments, at value, including $55,492,226 of securities on loan (identified cost, $559,972,423) $635,112,416 Cash 40,260 Foreign currency, at value (identified cost, $4,546,408) 4,586,770 Receivable for forward foreign currency exchange contracts 2,876,120 Receivable for forward foreign currency exchange contracts subject to master netting agreements 458,422 Receivable for daily variation margin on open futures contracts 41,224 Receivable for investments sold 9,121,362 Receivable for fund shares sold 1,107,622 Interest and dividends receivable 3,662,040 Receivable from investment adviser 404,133 - ------------------------------------------------------------------------------------------ Total assets $657,410,369 - ------------------------------------------------------------------------------------------ LIABILITIES - ------------------------------------------------------------------------------------------ Payable for forward foreign currency exchange contracts $1,720,269 Payable for investments purchased 10,960,030 Payable for fund shares reacquired 1,348,076 Collateral for securities loaned, at value (c) 57,390,473 Payable to affiliates Management fee 151,820 Shareholder servicing costs 96,171 Distribution and service fees 27,445 Administrative services fee 956 Retirement plan administration and services fees 38 Payable for independent trustees' compensation 63,077 Accrued expenses and other liabilities 173,123 - ------------------------------------------------------------------------------------------ Total liabilities $71,931,478 - ------------------------------------------------------------------------------------------ Net assets $585,478,891 - ------------------------------------------------------------------------------------------ NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------------------ Paid-in capital $487,022,567 Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies 76,746,944 Accumulated net realized gain (loss) on investments and foreign currency transactions 19,907,058 Undistributed net investment income 1,802,322 - ------------------------------------------------------------------------------------------ Net assets $585,478,891 - ------------------------------------------------------------------------------------------ Shares of beneficial interest outstanding 39,934,380 - ------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued Class A shares - ------------------------------------------------------------------------------------------ Net assets $376,362,402 Shares outstanding 25,781,663 - ------------------------------------------------------------------------------------------ Net asset value per share $14.60 - ------------------------------------------------------------------------------------------ Offering price per share (100/95.25Xnet asset value per share) $15.33 - ------------------------------------------------------------------------------------------ Class B shares - ------------------------------------------------------------------------------------------ Net assets $117,650,216 Shares outstanding 7,935,866 - ------------------------------------------------------------------------------------------ Net asset value and offering price per share $14.83 - ------------------------------------------------------------------------------------------ Class C shares - ------------------------------------------------------------------------------------------ Net assets $83,950,230 Shares outstanding 5,699,826 - ------------------------------------------------------------------------------------------ Net asset value and offering price per share $14.73 - ------------------------------------------------------------------------------------------ Class I shares - ------------------------------------------------------------------------------------------ Net assets $3,234,520 Shares outstanding 222,964 - ------------------------------------------------------------------------------------------ Net asset value, offering price, and redemption price per share $14.51 - ------------------------------------------------------------------------------------------ Class R shares - ------------------------------------------------------------------------------------------ Net assets $2,326,721 Shares outstanding 160,050 - ------------------------------------------------------------------------------------------ Net asset value, offering price, and redemption price per share $14.54 - ------------------------------------------------------------------------------------------ Class R1 shares - ------------------------------------------------------------------------------------------ Net assets $251,581 Shares outstanding 17,088 - ------------------------------------------------------------------------------------------ Net asset value, offering price, and redemption price per share $14.72 - ------------------------------------------------------------------------------------------ Class R2 shares - ------------------------------------------------------------------------------------------ Net assets $107,175 Shares outstanding 7,276 - ------------------------------------------------------------------------------------------ Net asset value, offering price, and redemption price per share $14.73 - ------------------------------------------------------------------------------------------ Class R3 shares - ------------------------------------------------------------------------------------------ Net assets $793,808 Shares outstanding 54,618 - ------------------------------------------------------------------------------------------ Net asset value, offering price, and redemption price per share $14.53 - ------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued Class R4 shares - ------------------------------------------------------------------------------------------ Net assets $745,618 Shares outstanding 51,146 - ------------------------------------------------------------------------------------------ Net asset value, offering price, and redemption price per share $14.58 - ------------------------------------------------------------------------------------------ Class R5 shares - ------------------------------------------------------------------------------------------ Net assets $56,620 Shares outstanding 3,883 - ------------------------------------------------------------------------------------------ Net asset value, offering price, and redemption price per share $14.58 - ------------------------------------------------------------------------------------------ (c) Non-cash collateral not included. On sales of $100,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed on redemptions of Class A, Class B, and Class C shares. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statement of Operations (unaudited) This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations. SIX MONTHS ENDED 4/30/06 NET INVESTMENT INCOME - ------------------------------------------------------------------------------------------- Income Interest $4,432,431 Dividends 3,918,312 Foreign taxes withheld (175,181) - ------------------------------------------------------------------------------------------- Total investment income $8,175,562 - ------------------------------------------------------------------------------------------- Expenses Management fee $2,358,925 Distribution and service fees 1,622,063 Shareholder servicing costs 519,842 Administrative services fee 34,611 Retirement plan administration and services fees 1,288 Independent trustees' compensation 9,122 Custodian fee 130,716 Shareholder communications 57,095 Auditing fees 25,621 Legal fees 6,519 Miscellaneous 128,607 - ------------------------------------------------------------------------------------------- Total expenses $4,894,409 - ------------------------------------------------------------------------------------------- Fees paid indirectly (39,700) Reduction of expenses by investment adviser (591,811) - ------------------------------------------------------------------------------------------- Net expenses $4,262,898 - ------------------------------------------------------------------------------------------- Net investment income $3,912,664 - ------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS - ------------------------------------------------------------------------------------------- Realized gain (loss) (identified cost basis) Investment transactions $34,734,630 Futures contracts (123,414) Foreign currency transactions (1,088,842) - ------------------------------------------------------------------------------------------- Net realized gain (loss) on investments and foreign currency transactions $33,522,374 - ------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) Investments $19,499,228 Futures contracts 62,541 Translation of assets and liabilities in foreign currencies 3,033,948 - ------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments and foreign currency translation $22,595,717 - ------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments and foreign currency $56,118,091 - ------------------------------------------------------------------------------------------- Change in net assets from operations $60,030,755 - ------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statements of Changes in Net Assets This statement describes the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.
SIX MONTHS ENDED YEAR ENDED 4/30/06 10/31/05 (UNAUDITED) CHANGE IN NET ASSETS - ---------------------------------------------------------------------------------------- FROM OPERATIONS - ---------------------------------------------------------------------------------------- Net investment income $3,912,664 $7,590,844 Net realized gain (loss) on investments and foreign currency transactions 33,522,374 56,533,830 Net unrealized gain (loss) on investments and foreign currency translation 22,595,717 (24,553,918) - ---------------------------------------------------------------------------------------- Change in net assets from operations $60,030,755 $39,570,756 - ---------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS -------------------------------------------------------------------------------- From net investment income Class A $(2,575,096) $(11,999,109) Class B (209,531) (3,414,168) Class C (178,204) (1,726,657) Class I (31,761) (108,523) Class R (13,346) (60,209) Class R1 (219) (556) Class R2 (676) (591) Class R3 (1,898) (4,662) Class R4 (378) (656) Class R5 (481) (690) From net realized gain on investments and foreign currency transactions Class A (27,058,316) (21,507,585) Class B (9,148,385) (9,135,951) Class C (5,867,929) (4,107,200) Class I (248,822) (174,939) Class R (161,515) (95,337) Class R1 (6,293) -- Class R2 (9,823) -- Class R3 (12,793) (9,689) Class R4 (4,033) -- Class R5 (3,950) -- - ---------------------------------------------------------------------------------------- Total distributions declared to shareholders $(45,533,449) $(52,346,522) - ---------------------------------------------------------------------------------------- Change in net assets from fund share transactions $11,674,764 $83,530,915 - ---------------------------------------------------------------------------------------- Redemption fees $-- $3,682 - ---------------------------------------------------------------------------------------- Total change in net assets $26,172,070 $70,758,831 - ---------------------------------------------------------------------------------------- NET ASSETS - ---------------------------------------------------------------------------------------- At beginning of period $559,306,821 $488,547,990 At end of period (including undistributed net investment income of $1,802,322 and $901,248, respectively) $585,478,891 $559,306,821 - ---------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Financial Highlights The financial highlights table is intended to help you understand the fund's financial performance for the semiannual period and the past 5 fiscal years (or life of a particular share class, if shorter). Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 10/31 ENDED -------------------------------------------------------------- CLASS A 4/30/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $14.30 $14.73 $12.98 $11.41 $11.64 $13.76 - ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ----------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.11 $0.24 $0.19 $0.18 $0.21 $0.22 Net realized and unrealized gain (loss) on investments and foreign currency 1.40 0.94 1.97 1.63 (0.33) (1.02) - ----------------------------------------------------------------------------------------------------------------------- Total from investment operations $1.51 $1.18 $2.16 $1.81 $(0.12) $(0.80) - ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ----------------------------------------------------------------------------------------------------------------------- From net investment income $(0.10) $(0.56) $(0.41) $(0.24) $(0.11) $(0.48) From net realized gain on investments and foreign currency transactions (1.11) (1.05) -- -- -- (0.82) From paid-in capital -- -- -- -- -- (0.02) - ----------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.21) $(1.61) $(0.41) $(0.24) $(0.11) $(1.32) - ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $14.60 $14.30 $14.73 $12.98 $11.41 $11.64 - ----------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 11.26(n) 8.26 16.94 16.09 (1.02) (6.38) - ----------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.51(a) 1.55(m) 1.54 1.54 1.53 1.47 Expenses after expense reductions (f) 1.30(a) 1.48 1.54 1.54 1.53 1.47 Net investment income 1.62(a) 1.64 1.37 1.53 1.79 1.80 Portfolio turnover 39 82 76 105 72 69 Net assets at end of period (000 Omitted) $376,362 $353,745 $298,826 $261,042 $213,983 $197,374 - ----------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31 ENDED -------------------------------------------------------------- CLASS B 4/30/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $14.47 $14.82 $13.03 $11.43 $11.65 $13.72 - ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ----------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.07 $0.14 $0.10 $0.11 $0.13 $0.14 Net realized and unrealized gain (loss) on investments and foreign currency 1.43 0.95 1.99 1.62 (0.31) (1.03) - ----------------------------------------------------------------------------------------------------------------------- Total from investment operations $1.50 $1.09 $2.09 $1.73 $(0.18) $(0.89) - ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ----------------------------------------------------------------------------------------------------------------------- From net investment income $(0.03) $(0.39) $(0.30) $(0.13) $(0.04) $(0.34) From net realized gain on investments and foreign currency transactions (1.11) (1.05) -- -- -- (0.82) From paid-in capital -- -- -- -- -- (0.02) - ----------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.14) $(1.44) $(0.30) $(0.13) $(0.04) $(1.18) - ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $14.83 $14.47 $14.82 $13.03 $11.43 $11.65 - ----------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 10.95(n) 7.56 16.14 15.33 (1.58) (7.05) - ----------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.16(a) 2.20(m) 2.20 2.20 2.18 2.12 Expenses after expense reductions (f) 1.95(a) 2.13 2.20 2.20 2.18 2.12 Net investment income 0.96(a) 0.98 0.72 0.88 1.12 1.14 Portfolio turnover 39 82 76 105 72 69 Net assets at end of period (000 Omitted) $117,650 $124,013 $129,141 $129,378 $84,729 $104,442 - ----------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31 ENDED -------------------------------------------------------------- CLASS C 4/30/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $14.39 $14.76 $12.99 $11.40 $11.62 $13.68 - ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ----------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.07 $0.15 $0.10 $0.11 $0.13 $0.14 Net realized and unrealized gain (loss) on investments and foreign currency 1.41 0.94 1.97 1.62 (0.31) (1.02) - ----------------------------------------------------------------------------------------------------------------------- Total from investment operations $1.48 $1.09 $2.07 $1.73 $(0.18) $(0.88) - ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ----------------------------------------------------------------------------------------------------------------------- From net investment income $(0.03) $(0.41) $(0.30) $(0.14) $(0.04) $(0.34) From net realized gain on investments and foreign currency transactions (1.11) (1.05) -- -- -- (0.82) From paid-in capital -- -- -- -- -- (0.02) - ----------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.14) $(1.46) $(0.30) $(0.14) $(0.04) $(1.18) - ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $14.73 $14.39 $14.76 $12.99 $11.40 $11.62 - ----------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 10.93(n) 7.59 16.12 15.27 (1.56) (7.03) - ----------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.16(a) 2.19(m) 2.20 2.20 2.18 2.12 Expenses after expense reductions (f) 1.95(a) 2.12 2.20 2.20 2.18 2.12 Net investment income 0.98(a) 1.00 0.72 0.89 1.13 1.14 Portfolio turnover 39 82 76 105 72 69 Net assets at end of period (000 Omitted) $83,950 $75,974 $57,119 $54,438 $35,660 $38,230 - ----------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31 ENDED -------------------------------------------------------------- CLASS I 4/30/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $14.23 $14.69 $12.96 $11.42 $11.65 $13.80 - ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ----------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.14 $0.29 $0.24 $0.25 $0.25 $0.27 Net realized and unrealized gain (loss) on investments and foreign currency 1.39 0.93 1.96 1.60 (0.32) (1.03) - ----------------------------------------------------------------------------------------------------------------------- Total from investment operations $1.53 $1.22 $2.20 $1.85 $(0.07) $(0.76) - ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ----------------------------------------------------------------------------------------------------------------------- From net investment income $(0.14) $(0.63) $(0.47) $(0.31) $(0.16) $(0.55) From net realized gain on investments and foreign currency transactions (1.11) (1.05) -- -- -- (0.82) From paid-in capital -- -- -- -- -- (0.02) - ----------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.25) $(1.68) $(0.47) $(0.31) $(0.16) $(1.39) - ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $14.51 $14.23 $14.69 $12.96 $11.42 $11.65 - ----------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 11.48(n) 8.65 17.31 16.49 (0.65) (6.06) - ----------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.16(a) 1.19(m) 1.16 1.20 1.18 1.12 Expenses after expense reductions (f) 0.95(a) 1.12 1.16 1.20 1.18 1.12 Net investment income 1.96(a) 1.99 1.59 1.93 2.14 2.14 Portfolio turnover 39 82 76 105 72 69 Net assets at end of period (000 Omitted) $3,235 $3,170 $2,286 $56,010 $1,540 $1,307 - ----------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31 ENDED --------------------------------- CLASS R 4/30/06 2005 2004 2003(i) (UNAUDITED) Net asset value, beginning of period $14.24 $14.71 $12.97 $11.54 - ------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ------------------------------------------------------------------------------------------------------- Net investment income (d) $0.10 $0.22 $0.21 $0.14 Net realized and unrealized gain (loss) on investments and foreign currency 1.40 0.93 1.94 1.40(g) - ------------------------------------------------------------------------------------------------------- Total from investment operations $1.50 $1.15 $2.15 $1.54 - ------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------- From net investment income $(0.09) $(0.57) $(0.41) $(0.11) From net realized gain on investments and foreign currency transactions (1.11) (1.05) -- -- - ------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.20) $(1.62) $(0.41) $(0.11) - ------------------------------------------------------------------------------------------------------- Net asset value, end of period $14.54 $14.24 $14.71 $12.97 - ------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 11.18(n) 8.08 16.89 13.41(n) - ------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.66(a) 1.68(m) 1.71 1.68(a) Expenses after expense reductions (f) 1.45(a) 1.61 1.71 1.68(a) Net investment income 1.48(a) 1.52 1.24 1.34(a) Portfolio turnover 39 82 76 105 Net assets at end of period (000 Omitted) $2,327 $2,043 $1,043 $12 - ------------------------------------------------------------------------------------------------------- SIX MONTHS YEAR ENDED CLASS R1 ENDED 4/30/06 10/31/05(i) (UNAUDITED) Net asset value, beginning of period $14.40 $14.42 - --------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - --------------------------------------------------------------------------------------------------------- Net investment income (d) $0.07 $0.08 Net realized and unrealized gain (loss) on investments and foreign currency 1.40 0.06(g) - --------------------------------------------------------------------------------------------------------- Total from investment operations $1.47 $0.14 - --------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - --------------------------------------------------------------------------------------------------------- From net investment income $(0.04) $(0.16) From net realized gain on investments and foreign currency transactions (1.11) -- - --------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.15) $(0.16) - --------------------------------------------------------------------------------------------------------- Net asset value, end of period $14.72 $14.40 - --------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 10.82(n) 0.99(n) - --------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - --------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.36(a) 2.37(a)(m) Expenses after expense reductions (f) 2.05(a) 2.28(a) Net investment income 0.94(a) 0.91(a) Portfolio turnover 39 82 Net assets at end of period (000 Omitted) $252 $52 - --------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEAR ENDED CLASS R2 ENDED 4/30/06 10/31/05(i) (UNAUDITED) Net asset value, beginning of period $14.42 $14.42 - --------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - --------------------------------------------------------------------------------------------------------- Net investment income (d) $0.09 $0.10 Net realized and unrealized gain (loss) on investments and foreign currency 1.41 0.07(g) - --------------------------------------------------------------------------------------------------------- Total from investment operations $1.50 $0.17 - --------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - --------------------------------------------------------------------------------------------------------- From net investment income $(0.08) $(0.17) From net realized gain on investments and foreign currency transactions (1.11) -- - --------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.19) $(0.17) - --------------------------------------------------------------------------------------------------------- Net asset value, end of period $14.73 $14.42 - --------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 11.05(n) 1.20(n) - --------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - --------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.06(a) 2.06(a)(m) Expenses after expense reductions (f) 1.70(a) 1.97(a) Net investment income 1.21(a) 1.23(a) Portfolio turnover 39 82 Net assets at end of period (000 Omitted) $107 $51 - --------------------------------------------------------------------------------------------------------- YEARS ENDED 10/31 SIX MONTHS ------------------- CLASS R3 ENDED 4/30/06 2005 2004 (UNAUDITED) Net asset value, beginning of period $14.24 $14.67 $12.97 - -------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - -------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.10 $0.18 $0.12 Net realized and unrealized gain (loss) on investments and foreign currency 1.38 0.94 1.99 - -------------------------------------------------------------------------------------------------------------------- Total from investment operations $1.48 $1.12 $2.11 - -------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - -------------------------------------------------------------------------------------------------------------------- From net investment income $(0.08) $(0.50) $(0.41) From net realized gain on investments and foreign currency transactions (1.11) (1.05) -- - -------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.19) $(1.55) $(0.41) - -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $14.53 $14.24 $14.67 - -------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 11.04(n) 7.87 16.52 - -------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - -------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.91(a) 1.95(m) 1.95 Expenses after expense reductions (f) 1.60(a) 1.87 1.95 Net investment income 1.57(a) 1.24 0.91 Portfolio turnover 39 82 76 Net assets at end of period (000 Omitted) $794 $159 $133 - -------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEAR ENDED CLASS R4 ENDED 4/30/06 10/31/05(i) (UNAUDITED) Net asset value, beginning of period $14.28 $14.26 - ----------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ----------------------------------------------------------------------------------------------------- Net investment income (d) $0.14 $0.14 Net realized and unrealized gain (loss) on investments and foreign currency 1.37 0.07(g) - ----------------------------------------------------------------------------------------------------- Total from investment operations $1.51 $0.21 - ----------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ----------------------------------------------------------------------------------------------------- From net investment income $(0.10) $(0.19) From net realized gain on investments and foreign currency transactions (1.11) -- - ----------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.21) $(0.19) - ----------------------------------------------------------------------------------------------------- Net asset value, end of period $14.58 $14.28 - ----------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 11.25(n) 1.48(n) - ----------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.56(a) 1.57(a)(m) Expenses after expense reductions (f) 1.35(a) 1.50(a) Net investment income 2.16(a) 1.70(a) Portfolio turnover 39 82 Net assets at end of period (000 Omitted) $746 $51 - ----------------------------------------------------------------------------------------------------- SIX MONTHS YEAR ENDED CLASS R5 ENDED 4/30/06 10/31/05(i) (UNAUDITED) Net asset value, beginning of period $14.29 $14.26 - ----------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ----------------------------------------------------------------------------------------------------- Net investment income (d) $0.13 $0.17 Net realized and unrealized gain (loss) on investments and foreign currency 1.40 0.06(g) - ----------------------------------------------------------------------------------------------------- Total from investment operations $1.53 $0.23 - ----------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ----------------------------------------------------------------------------------------------------- From net investment income $(0.13) $(0.20) From net realized gain on investments and foreign currency transactions (1.11) -- - ----------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.24) $(0.20) - ----------------------------------------------------------------------------------------------------- Net asset value, end of period $14.58 $14.29 - ----------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 11.41(n) 1.62(n) - ----------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.26(a) 1.27(a)(m) Expenses after expense reductions (f) 1.05(a) 1.20(a) Net investment income 1.88(a) 2.00(a) Portfolio turnover 39 82 Net assets at end of period (000 Omitted) $57 $51 - ----------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued 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 amount of per share 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. (m) Due to a revision, the ratio of expenses before expense reductions for the year ended October 31, 2005 has been changed from what was previously reported. There was no impact to net assets or the expenses charged to the shareholder. (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. NOTES TO FINANCIAL STATEMENTS (unaudited) (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. 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. Values of debt instruments 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. Short- term instruments with a maturity at issuance of 397 days or less are generally valued at amortized cost, which approximates market value. 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 they 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. 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 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. These investments are generally valued at fair value based on information from independent pricing services. These valuations can be based on 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 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 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. REPURCHASE AGREEMENTS - The fund may enter into repurchase agreements with institutions that the fund's investment adviser has determined are creditworthy. Each repurchase agreement is recorded at cost. The fund requires that the securities collateral in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. The fund monitors, on a daily basis, the value of the collateral to ensure that its value, including accrued interest, is greater than amounts owed to the fund under each such repurchase agreement. The fund, along with other affiliated entities of Massachusetts Financial Services Company (MFS), may utilize a joint trading account for the purpose of entering into one or more repurchase agreements. FOREIGN CURRENCY TRANSLATION - 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, forward foreign currency exchange contracts, and futures 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 J.P. Morgan 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. 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. Income from securities lending is included in interest income on the Statement of Operations. The dividend and interest income earned on the securities loaned is accounted for in the same manner as other dividend and interest income. At April 30, 2006, the value of securities loaned was $55,492,226. These loans were collateralized by cash of $57,390,473 and non-cash U.S. Treasury obligations of $258,502. SHORT TERM FEES - For purchases made on or after July 1, 2004 and before April 1, 2005, the fund charged a 2% redemption fee on proceeds from Class A, Class B, Class C, and Class I shares redeemed or exchanged within 5 business days following their acquisition. Due to systems limitations associated with the transition from applying a 30 calendar day redemption fee to a 5 business day redemption fee, the fund did not impose redemption fees with respect to purchases made in June 2004 followed by redemptions made in July 2004. Effective April 1, 2005, the fund no longer charges a redemption fee. See the fund's prospectus for details. Any redemption fees charged are accounted for as an addition to paid-in capital. 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 involving its portfolio holdings. Any proceeds received are reflected in realized gain/loss in the Statement of Operations, or in unrealized gain/loss if the security is still held by the fund. FEES PAID INDIRECTLY - The fund's custody fee is reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. During the six months ended April 30, 2006, the fund's custodian fees were reduced by $38,190 under this arrangement. The fund has entered into a commission recapture agreement, under which certain brokers will credit the fund a portion of the commissions generated, to offset certain expenses of the fund. For the six months ended April 30, 2006, the fund's custodian expenses were reduced by $1,510 under this agreement. These amounts are shown as a reduction of total expenses on the Statement of Operations. Effective January 1, 2006, the commission recapture agreement was terminated. TAX MATTERS AND DISTRIBUTIONS - The fund intends to continue 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 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 made during the current period will be determined at fiscal year end. The tax character of distributions declared to shareholders is as follows: OCTOBER 31, 2005 OCTOBER 31, 2004 Ordinary income (including any short-term capital gains) $28,636,769 $13,643,641 Long-term capital gain 23,709,753 -- -------------------------------------------------------------------- Total distributions $52,346,522 $13,643,641 The federal tax cost and the tax basis components of distributable earnings were as follows: AS OF APRIL 30, 2006 Cost of investments $561,444,758 ---------------------------------------------------------- Gross appreciation $82,804,722 Gross depreciation (9,137,064) ---------------------------------------------------------- Net unrealized appreciation (depreciation) $73,667,658 AS OF OCTOBER 31, 2005 Undistributed ordinary income $8,978,891 Undistributed long-term capital gain 34,398,678 Capital loss carryforwards (11,833,939) Other temporary differences (1,451,829) Net unrealized appreciation (depreciation) 53,867,217 The aggregate cost above includes prior fiscal year end tax adjustments. As of October 31, 2006, the fund had available capital loss carryforwards to offset future realized gains. Such losses expire as follows: October 31, 2009 $(795,169) October 31, 2010 (11,038,770) ---------------------------------------------------------- $(11,833,939) 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. MULTIPLE CLASSES OF SHARES OF BENEFICIAL INTEREST - The fund offers multiple classes of shares, which differ in their respective distribution and service fees. All shareholders bear the common expenses of the fund based on daily net assets of each class, without distinction between share classes. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B shares will convert to Class A shares approximately eight years after purchase. (3) TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISER - The fund has an investment advisory agreement with MFS to provide overall investment advisory and administrative services, and general office facilities. The management fee is computed daily and paid monthly at an annual rate of 0.84% of the fund's average daily net assets. The investment adviser has contractually agreed 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 billion. This management fee reduction amounted to $29,591 which was shown as a reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended April 30, 2006 was equivalent to an annual effective rate of 0.83% of the fund's average daily net assets. The investment adviser has contractually agreed to bear the fund's expenses, exclusive of taxes, brokerage and transaction costs, currency conversion costs, extraordinary expenses and expenses associated with the fund's investment activities, such that total annual fund operating expenses do not exceed the following rates annually, of the fund's average daily net assets:
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS A B C I R R1 R2 R3 R4 R5 1.30% 1.95% 1.95% 0.95% 1.45% 2.05% 1.70% 1.60% 1.35% 1.05%
For the year ended October 31, 2005, this reduction amounted to $559,918 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 $37,765 for the six months ended April 30, 2006, 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 Fee Plan Table: TOTAL ANNUAL DISTRIBUTION DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE FEE RATE FEE RATE PLAN(1) RATE(2) FEE Class A 0.10% 0.25% 0.35% 0.35% $625,967 Class B 0.75% 0.25% 1.00% 1.00% 595,283 Class C 0.75% 0.25% 1.00% 1.00% 393,134 Class R 0.25% 0.25% 0.50% 0.50% 5,492 Class R1 0.50% 0.25% 0.75% 0.75% 700 Class R2 0.25% 0.25% 0.50% 0.50% 272 Class R3 0.25% 0.25% 0.50% 0.50% 1,041 Class R4 -- 0.25% 0.25% 0.25% 174 - ------------------------------------------------------------------------------- Total Distribution and Service Fees $1,622,063 (1) 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. (2) The annual effective rates represent actual fees incurred under the distribution plan for the six months ended April 30, 2006 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 six months ended April 30, 2006, were as follows: AMOUNT Class A $3,863 Class B 62,248 Class C 3,697 SHAREHOLDER SERVICING AGENT - The fund pays a portion of shareholder servicing costs to MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS. MFSC receives a fee from the fund, for its services as shareholder servicing agent, set periodically under the supervision of the fund's Board of Trustees. For the six months ended April 30, 2006, the fee was $268,112, which equated to 0.0955% annually of the fund's average daily net assets. MFSC also receives payment from the fund for out-of-pocket and sub-accounting expenses paid by MFSC on behalf of the fund. For the six months ended April 30, 2006, these costs amounted to $169,706. ADMINISTRATOR - MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to certain funds for which MFS acts as investment adviser. Under an administrative services agreement, the funds may partially reimburse MFS the costs incurred to provide these services, subject to review and approval by the Board of Trustees. Each fund is charged a fixed amount plus a fee based on calendar year average net assets. From July 1, 2005 through March 31, 2006, the fund's annual fixed amount was $10,000. Effective April 1, 2006, the fund's annual fixed amount is $17,500. The administrative services fee incurred for the six months ended April 30, 2006 was equivalent to an annual effective rate of 0.0123% of the fund's average daily net assets. In addition to the administrative services provided by MFS to the fund as described above, MFS is responsible for providing certain retirement plan administration and services with respect to certain shares. These services include various administrative, recordkeeping, and communication/educational services with respect to the retirement plans which invest in these shares, and may be provided directly by MFS or by a third party. MFS may subsequently pay all, or a portion, of the retirement plan administration and services fee to affiliated or unaffiliated third parties. For the six months ended April 30, 2006, 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: ANNUAL EFFECTIVE TOTAL FEE RATE RATE(1) AMOUNT Class R1 0.45% 0.35% $420 Class R2 0.40% 0.25% 216 Class R3 0.25% 0.15% 521 Class R4 0.15% 0.15% 104 Class R5 0.10% 0.10% 27 - ------------------------------------------------------------------------------- Total Retirement Plan Administration and Services Fees $1,288 (1) Effective October 1, 2005, MFS has contractually agreed to waive a portion of the retirement plan administration and services fee equal to 0.10% for Class R1 shares, 0.15% for Class R2 shares, and 0.10% for Class R3 shares. This agreement will continue until at least September 30, 2007. For the six months ended April 30, 2006, this waiver amounted to $383 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 who are officers of the investment adviser, or to officers of the fund, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC. The fund has an unfunded, defined benefit plan for retired Independent Trustees which resulted in a pension expense of $1,261. The fund also has an unfunded retirement benefit deferral plan for certain current Independent Trustees which resulted in a net decrease of $1,045. Both amounts are included in Independent trustees' compensation for the six months ended April 30, 2006. The deferred liability for retirement benefits payable to retired Trustees and certain current Trustees amounted to $21,273 and $39,694, respectively, at April 30, 2006, and is included in payable for independent trustees' compensation. OTHER - This fund and certain other MFS funds (the funds) have entered into a services agreement (the Agreement) which provides for payment of fees by the funds to Tarantino LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the Agreement with Tarantino LLC at any time under the terms of the Agreement. For the six months ended April 30, 2006, the fee paid to Tarantino LLC was $2,338. MFS has agreed to reimburse the fund for a portion of the payments made by the funds to Tarantino LLC in the amount of $1,919, 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 $29,637,821 24,341,623 - ------------------------------------------------------------------------------ Investments (non-U.S. government securities) $171,118,456 $222,839,605 - ------------------------------------------------------------------------------ (5) SHARES OF BENEFICIAL INTEREST The fund's Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
SIX MONTHS ENDED 4/30/06 YEAR ENDED 10/30/05 (i) SHARES AMOUNT SHARES AMOUNT Shares sold Class A 2,854,865 $ 40,202,849 7,599,432 $109,093,900 Class B 728,965 10,366,167 2,454,459 35,678,534 Class C 780,603 11,019,306 1,931,145 27,862,218 Class I 19,020 263,888 74,348 1,063,076 Class R 21,410 298,317 108,426 1,565,792 Class R1 15,243 211,952 3,573 51,532 Class R2 5,987 85,937 3,467 50,000 Class R3 83,459 1,156,228 2,703 38,967 Class R4 47,267 672,553 3,506 50,000 Class R5 -- -- 3,507 50,000 - ----------------------------------------------------------------------------------------------- 4,556,819 $64,277,197 12,184,566 $175,504,019 SIX MONTHS ENDED 4/30/06 YEAR ENDED 10/31/05 (i) SHARES AMOUNT SHARES AMOUNT Shares issued to shareholders in reinvestment of distributions Class A 1,987,788 $ 26,963,222 2,162,149 $ 30,502,929 Class B 556,344 7,656,646 721,314 10,310,591 Class C 314,522 4,303,738 300,328 4,273,731 Class I 20,492 276,208 20,206 283,423 Class R 12,207 164,957 9,289 130,623 Class R1 476 6,512 39 556 Class R2 768 10,498 42 591 Class R3 1,085 14,691 1,021 14,350 Class R4 326 4,411 47 656 Class R5 327 4,431 49 690 - ----------------------------------------------------------------------------------------------- 2,894,335 $ 39,405,314 3,214,484 $ 45,518,140 Shares reacquired Class A (3,802,324) $(53,564,522) (5,311,172) $(76,336,187) Class B (1,919,060) (27,451,214) (3,319,546) (48,215,675) Class C (674,642) (9,571,102) (820,864) (11,876,702) Class I (39,288) (540,900) (27,382) (392,542) Class J -- -- (45,164) (646,669) Class R (17,032) (238,988) -- -- Class R1 (2,243) (31,964) -- -- Class R2 (2,988) (41,615) -- -- Class R3 (41,072) (567,442) (1,653) (23,469) - ----------------------------------------------------------------------------------------------- (6,498,649) $(92,007,747) (9,525,781) $(137,491,244) Net change Class A 1,040,329 $ 13,601,549 4,450,409 $ 63,260,642 Class B (633,751) (9,428,401) (143,773) (2,226,550) Class C 420,483 5,751,942 1,410,609 20,259,247 Class I 224 (804) 67,172 953,957 Class R 16,585 224,286 72,551 1,049,746 Class R1 13,476 186,500 3,612 52,088 Class R2 3,767 54,820 3,509 50,591 Class R3 43,472 603,477 2,071 29,848 Class R4 47,593 676,964 3,553 50,656 Class R5 327 4,431 3,556 50,690 - ----------------------------------------------------------------------------------------------- 952,505 $ 11,674,764 5,873,269 $ 83,530,915 (i) For the period from the class' inception, April 1, 2005 (Classes R1, R2, R4, and R5) through the stated period end.
(6) LINE OF CREDIT The fund and other affiliated funds participate in a $1 billion unsecured line of credit provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus 0.35%. In addition, a commitment fee, based on the average daily, unused portion of the line of credit, is allocated among the participating funds at the end of each calendar quarter. The commitment fee allocated to the fund for the six months ended April 30, 2006 was $1,970, and is included in miscellaneous expense on the Statement of Operations. The fund had no significant borrowings during the six months ended April 30, 2006. BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT A discussion regarding the Board's most recent review and renewal of the Fund's investment advisory agreement is available by clicking on the fund's name under "Select a fund" on the MFS Web site (mfs.com). PROXY VOTING POLICIES AND INFORMATION A general description of the MFS funds' proxy voting policies and procedures is available without charge, upon request, by calling 1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The trust 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 trust's Form N-Q may be reviewed and copied at the: Public Reference Room Securities and Exchange Commission 100 F Street, NE, Room 1580 Washington, D.C. 20549 Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-202-551-5850. The trust's Form N-Q is available on the EDGAR database on the Commission's Internet Web site at http://www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section at the above address. A shareholder can also obtain the quarterly portfolio holdings report at mfs.com. CONTACT INFORMATION INVESTOR SERVICE Write to us at: MFS Service Center, Inc. P.O. Box 55824 Boston, MA 02205-5824 Type of Information Phone number Hours, Eastern Time - ------------------------------------------------------------------------------- General information 1-800-225-2606 8 a.m. to 8 p.m., any business day - ------------------------------------------------------------------------------- Speech- or hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m., any business day - ------------------------------------------------------------------------------- Shares prices, account 1-800-MFS-TALK balances exchanges (1-800-637-8255) 24 hours a day, 365 days a or stock and bond outlooks touch-tone required year - ------------------------------------------------------------------------------- M F S(SM) INVESTMENT MANAGEMENT(R) MFS Investment Management(R) MFS(R) investment products are offered through MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116. MWT-SEM-6/06 34M MFS(R) UTILITIES FUND 4/30/06 SEMIANNUAL REPORT - ------------------------------------------------------------------------------- LETTER FROM THE CEO 1 - --------------------------------------------------- PORTFOLIO COMPOSITION 2 - --------------------------------------------------- EXPENSE TABLE 3 - --------------------------------------------------- PORTFOLIO OF INVESTMENTS 5 - --------------------------------------------------- FINANCIAL STATEMENTS 10 - --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 22 - --------------------------------------------------- BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 32 - --------------------------------------------------- PROXY VOTING POLICIES AND INFORMATION 32 - --------------------------------------------------- QUARTERLY PORTFOLIO DISCLOSURE 32 - --------------------------------------------------- CONTACT INFORMATION BACK COVER - --------------------------------------------------- THE REPORT IS PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS INTENDED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. M F S(SM) INVESTMENT MANAGEMENT(R) LETTER FROM THE CEO [Photo of Robert J. Manning] Dear Shareholders, It has been said that change is the only constant in life. As investors have seen, that theme is still accurate today as we recently have experienced shifting economic cycles because of natural disasters and political instability around the globe. Markets worldwide have fluctuated in the past year as devastating hurricanes had a dramatic effect on the international economy, particularly on oil prices. We witnessed political unrest in the Middle East, highlighted by instability in Iraq, and in Africa, the usually stable Nigeria also experienced violence. As a result, energy prices have bounced up and down, with crude oil prices at one point topping a record $70 per barrel. Such cycles are not uncommon and in fact have almost become the norm in our everyday lives. What does all of this mean to you as an investor? In times like these, it helps to know that you're working with a seasoned investment professional who has experience to guide you through difficult times. At MFS(R), we believe our investment management team has the knowledge and confidence to navigate through difficult cycles and at the same time see through adversity to find investment opportunities for our clients and shareholders. Our investment management process, honed over 80 years, combines a unique concept of teamwork with our unwavering focus on the long term. We firmly believe that the best way to realize long-term financial goals - be it a college education, a comfortable retirement, or a secure family legacy - is to follow a three-pronged approach that focuses on longer time horizons. Allocate holdings across the major asset classes - including stocks, bonds, and cash. Diversify within each class to take advantage of different market segments and investing styles. Rebalance assets regularly to maintain a desired asset allocation. Of course, these strategies cannot guarantee a profit or protect against a loss. This long-term approach requires 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) June 15, 2006 The opinions expressed in this letter are those of MFS, and no forecasts can be guaranteed. PORTFOLIO COMPOSITION PORTFOLIO STRUCTURE (i) Stocks 90.1% Bonds 4.0% Convertible Preferred Stocks 3.8% Cash & Other Net Assets 2.1% TOP TEN HOLDINGS TXU Corp. 4.9% ------------------------------------------------ NRG Energy, Inc. 4.5% ------------------------------------------------ Exelon Corp. 4.3% ------------------------------------------------ Constellation Energy Group, Inc. 3.6% ------------------------------------------------ FPL Group, Inc. 3.5% ------------------------------------------------ FirstEnergy Corp. 3.3% ------------------------------------------------ Williams Cos., Inc. 3.0% ------------------------------------------------ Sprint Nextel Corp. 2.5% ------------------------------------------------ E.ON AG 2.5% ------------------------------------------------ Entergy Corp. 2.2% ------------------------------------------------ TOP FIVE EQUITY INDUSTRIES Utilities - Electric Power 50.6% ------------------------------------------------ Telephone Services 13.8% ------------------------------------------------ Natural Gas - Pipeline 6.3% ------------------------------------------------ Natural Gas - Distribution 4.8% ------------------------------------------------ Broadcasting 3.2% ------------------------------------------------ COUNTRY WEIGHTINGS (i) United States 71.3% ------------------------------------------------ Germany 4.3% ------------------------------------------------ France 3.5% ------------------------------------------------ United Kingdom 3.3% ------------------------------------------------ Canada 3.0% ------------------------------------------------ Spain 2.7% ------------------------------------------------ Brazil 2.5% ------------------------------------------------ Mexico 2.5% ------------------------------------------------ Italy 1.6% ------------------------------------------------ Other Countries 5.3% ------------------------------------------------ (i) For purposes of this graphical 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 4/30/06. The portfolio is actively managed, and current holdings may be different. EXPENSE TABLE FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, NOVEMBER 1, 2005 THROUGH APRIL 30, 2006. As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchase or redemption payments and redemption fees on certain exchanges and redemptions, and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period November 1, 2005 through April 30, 2006. ACTUAL EXPENSES The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period(p) Share Expense Account Value Account Value 11/01/05- Class Ratio 11/01/05 4/30/06 4/30/06 - -------------------------------------------------------------------------------- Actual 1.12% $1,000.00 $1,095.30 $5.82 A ------------------------------------------------------------------------ Hypothetical (h) 1.12% $1,000.00 $1,019.24 $5.61 - -------------------------------------------------------------------------------- Actual 1.87% $1,000.00 $1,090.70 $9.69 B ------------------------------------------------------------------------- Hypothetical (h) 1.87% $1,000.00 $1,015.52 $9.35 - -------------------------------------------------------------------------------- Actual 1.87% $1,000.00 $1,091.50 $9.70 C ------------------------------------------------------------------------ Hypothetical (h) 1.87% $1,000.00 $1,015.52 $9.35 - -------------------------------------------------------------------------------- Actual 0.87% $1,000.00 $1,096.50 $4.52 I ------------------------------------------------------------------------ Hypothetical (h) 0.87% $1,000.00 $1,020.48 $4.36 - -------------------------------------------------------------------------------- Actual 1.38% $1,000.00 $1,093.20 $7.16 R ------------------------------------------------------------------------ Hypothetical (h) 1.38% $1,000.00 $1,017.95 $6.90 - -------------------------------------------------------------------------------- Actual 1.98% $1,000.00 $1,091.00 $10.27 R1 ------------------------------------------------------------------------ Hypothetical (h) 1.98% $1,000.00 $1,014.98 $9.89 - -------------------------------------------------------------------------------- Actual 1.64% $1,000.00 $1,092.10 $8.51 R2 ------------------------------------------------------------------------ Hypothetical (h) 1.64% $1,000.00 $1,016.66 $8.20 - -------------------------------------------------------------------------------- Actual 1.52% $1,000.00 $1,093.30 $7.89 R3 ------------------------------------------------------------------------ Hypothetical (h) 1.52% $1,000.00 $1,017.26 $7.60 - -------------------------------------------------------------------------------- Actual 1.27% $1,000.00 $1,094.50 $6.60 R4 ------------------------------------------------------------------------ Hypothetical (h) 1.27% $1,000.00 $1,018.50 $6.36 - -------------------------------------------------------------------------------- Actual 0.97% $1,000.00 $1,096.10 $5.04 R5 ------------------------------------------------------------------------ Hypothetical (h) 0.97% $1,000.00 $1,019.98 $4.86 - -------------------------------------------------------------------------------- (h) 5% class return per year before expenses. (p) Expenses paid is equal to each class' annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads) or redemption fees. If these transaction costs had been included, your costs would have been higher. PORTFOLIO OF INVESTMENTS (unaudited) - 4/30/06 The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Common Stocks - 90.1% - -------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) - -------------------------------------------------------------------------------------------------- Advertising & Broadcasting - 3.2% - -------------------------------------------------------------------------------------------------- Citadel Broadcasting Corp. (l) 647,140 $ 6,089,584 Grupo Televisa S.A., ADR 1,469,900 31,161,880 TV Azteca S.A. de C.V 6,715,400 4,178,336 Viacom, Inc., "B" (n) 443,450 17,662,614 -------------- $ 59,092,414 - -------------------------------------------------------------------------------------------------- Broadcast & Cable TV - 2.4% - -------------------------------------------------------------------------------------------------- Comcast Corp., "Special A" (l)(n) 1,010,800 $ 31,162,964 News Corp., "A" (l) 733,300 12,583,428 -------------- $ 43,746,392 - -------------------------------------------------------------------------------------------------- Energy - Independent - 0.7% - -------------------------------------------------------------------------------------------------- Occidental Petroleum Corp. 89,800 $ 9,226,052 Rosetta Resources, Inc. (a)(n) 166,910 3,359,898 -------------- $ 12,585,950 - -------------------------------------------------------------------------------------------------- Energy - Integrated - 2.4% - -------------------------------------------------------------------------------------------------- Amerada Hess Corp. 58,600 $ 8,395,622 Chevron Corp. 150,700 9,195,714 Exxon Mobil Corp. 240,300 15,158,124 TOTAL S.A. (l) 44,700 12,358,034 -------------- $ 45,107,494 - -------------------------------------------------------------------------------------------------- Natural Gas - Distribution - 4.8% - -------------------------------------------------------------------------------------------------- AGL Resources, Inc. 540,625 $ 19,127,313 Energen Corp. 485,200 17,113,004 Equitable Resources, Inc. 797,400 28,315,674 Questar Corp. 292,700 23,430,635 -------------- $ 87,986,626 - -------------------------------------------------------------------------------------------------- Natural Gas - Pipeline - 6.3% - -------------------------------------------------------------------------------------------------- El Paso Corp. (l) 881,300 $ 11,377,583 Enagas S.A. (l) 1,543,055 33,941,356 Kinder Morgan, Inc. (l) 172,200 15,157,044 Williams Cos., Inc. 2,537,350 55,644,086 -------------- $ 116,120,069 - -------------------------------------------------------------------------------------------------- Oil Services - 3.2% - -------------------------------------------------------------------------------------------------- ENSCO International, Inc. 166,300 $ 8,895,387 GlobalSantaFe Corp. 451,600 27,642,436 Noble Corp. 106,500 8,407,110 Smith International, Inc. 224,300 9,472,189 Transocean, Inc. (n) 55,500 4,499,385 -------------- $ 58,916,507 - -------------------------------------------------------------------------------------------------- Telecommunications - Wireless - 2.7% - -------------------------------------------------------------------------------------------------- America Movil S.A. de C.V., "L", ADR 289,400 $ 10,681,754 Hutchison Telecommunications International Ltd. (n) 5,230,000 9,241,415 Mobile TeleSystems OJSC, ADR (l) 25,600 836,096 Rogers Communications, Inc., "B" 132,000 5,589,242 Tim Participacoes S.A., ADR (l) 123,600 4,752,420 Vimpel-Communications, ADR (l)(n) 80,000 3,724,000 Vivo Participacoes S.A., ADR (l) 425,200 1,756,076 Vodafone Group PLC 5,297,151 12,496,171 -------------- $ 49,077,174 - -------------------------------------------------------------------------------------------------- Telephone Services - 13.8% - -------------------------------------------------------------------------------------------------- Alltel Corp. 225,900 $ 14,541,183 AT&T, Inc. 588,200 15,416,722 Citizens Communications Co. 1,532,700 20,354,256 FastWeb S.p.A. (l)(n) 211,329 10,600,247 France Telecom S.A. (l) 1,159,210 27,062,620 KT Freetel Co. Ltd. 214,430 7,127,584 NTL, Inc. 292,150 8,028,282 Philippine Long Distance Telephone Co. 69,200 2,736,421 Singapore Telecommunications Ltd. 5,685,000 9,852,562 Sprint Nextel Corp. 1,875,000 46,500,000 Telecom Argentina S.A., ADR (l)(n) 656,700 8,504,265 Telecom Corp. of New Zealand Ltd. (l) 2,387,427 8,721,659 Telefonica S.A 383,400 6,141,255 Telekomunikacja Polska S.A., GDR 363,350 2,706,958 Telenor A.S.A. (l) 2,082,800 24,130,700 TELUS Corp. (non-voting shares) 982,640 40,562,873 -------------- $ 252,987,587 - -------------------------------------------------------------------------------------------------- Utilities - Electric Power - 50.6% - -------------------------------------------------------------------------------------------------- AES Corp. (n) 2,411,100 $ 40,916,367 AES Tiete S.A., IPS 579,757,500 16,316,528 Allegheny Energy, Inc. (l)(n) 77,800 2,772,014 Ameren Corp. (l) 282,700 14,239,599 CEZ 49,200 1,691,032 CMS Energy Corp. (l)(n) 2,885,900 38,440,188 Constellation Energy Group, Inc. 1,202,300 66,030,316 CPFL Energia S.A., ADR (l)(n) 411,860 17,450,508 Dominion Resources, Inc. 259,600 19,436,252 Duke Energy Holding Corp. (l) 607,200 17,681,664 E.ON AG (l) 378,307 46,058,309 Edison International 828,500 33,479,685 Endesa S.A. (l) 266,101 8,833,518 Enel S.p.A 2,132,740 18,425,946 Enersis S.A., ADR (l) 675,400 8,246,634 Entergy Corp. 177,700 12,428,338 Equatorial Energia S.A. (n) 210,900 1,565,964 Exelon Corp. 1,479,500 79,893,000 FirstEnergy Corp. 1,192,500 60,471,675 FPL Group, Inc. 1,603,700 63,506,520 International Power PLC 6,237,301 33,830,881 Mirant Corp. (l)(n) 1,001,700 24,601,752 NRG Energy, Inc. (l)(n) 1,747,800 83,177,802 PPL Corp. 1,004,200 29,161,968 RWE AG (l) 380,400 32,970,456 SCANA Corp. 175,800 6,880,812 Scottish & Southern Energy PLC 346,600 7,103,067 Scottish Power PLC 790,500 8,071,278 Suez S.A. (l) 456,722 17,966,712 Tractebel Energia S.A 412,960 3,404,571 TXU Corp. 1,830,000 90,822,900 Veolia Environment (l) 103,450 6,179,360 Xcel Energy, Inc. (l) 896,800 16,895,712 -------------- $ 928,951,328 - -------------------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (IDENTIFIED COST, $1,483,300,878) $1,654,571,541 - -------------------------------------------------------------------------------------------------- Bonds - 4.0% - -------------------------------------------------------------------------------------------------- Asset Backed & Securitized - 0.0% - -------------------------------------------------------------------------------------------------- Falcon Franchise Loan LLC, FRN, 3.0551%, 2023 (a)(i) $ 4,038,801 $ 454,769 - -------------------------------------------------------------------------------------------------- Network & Telecom - 0.4% - -------------------------------------------------------------------------------------------------- Qwest Corp., 8.875%, 2012 $ 7,520,000 $ 8,234,400 - -------------------------------------------------------------------------------------------------- Telecommunications - Wireless - 0.5% - -------------------------------------------------------------------------------------------------- Rogers Wireless, Inc., 8%, 2012 $ 8,390,000 $ 8,809,500 - -------------------------------------------------------------------------------------------------- Utilities - Electric Power - 3.1% - -------------------------------------------------------------------------------------------------- Allegheny Energy Supply Co. LLC, 8.25%, 2012 (a) $ 6,790,000 $ 7,384,125 Beaver Valley Funding Corp., 9%, 2017 3,147,000 3,515,073 Empresa Nacional de Electricidad S.A., 8.35%, 2013 3,010,000 3,291,065 Enersis S.A., 7.375%, 2014 6,840,000 7,063,901 NRG Energy, Inc., 7.25%, 2014 10,275,000 10,326,375 PSEG Energy Holdings LLC, 8.625%, 2008 7,271,000 7,543,663 TXU Eastern Funding Co., 6.75%, 2009 (d) 793,000 51,545 TXU Energy Co., 7%, 2013 16,425,000 17,010,945 -------------- $ 56,186,692 - -------------------------------------------------------------------------------------------------- TOTAL BONDS (IDENTIFIED COST, $75,327,002) $ 73,685,361 - -------------------------------------------------------------------------------------------------- Convertible Preferred Stocks - 3.8% - -------------------------------------------------------------------------------------------------- Natural Gas - Pipeline - 1.1% - -------------------------------------------------------------------------------------------------- El Paso Corp., 4.99% (a) 18,000 $ 20,657,250 - -------------------------------------------------------------------------------------------------- Utilities - Electric Power - 2.7% - -------------------------------------------------------------------------------------------------- Entergy Corp., 7.625% 826,980 $ 41,307,651 NRG Energy, Inc., 5.75% (l) 32,700 8,089,163 -------------- $ 49,396,814 - -------------------------------------------------------------------------------------------------- TOTAL CONVERTIBLE PREFERRED STOCKS (IDENTIFIED COST, $67,527,548) $ 70,054,064 - -------------------------------------------------------------------------------------------------- Short-Term Obligations - 1.9% - -------------------------------------------------------------------------------------------------- General Electric Capital Corp., 4.82%, due 5/01/06, at Amortized Cost and Value (y) $ 35,132,000 $ 35,132,000 - -------------------------------------------------------------------------------------------------- Collateral for Securities Loaned - 8.0% - -------------------------------------------------------------------------------------------------- Morgan Stanley, 4.895%, dated 4/28/06, due 5/01/06, total to be received $72,556,845 (secured by various U.S. Treasury and Federal Agency obligations in a jointly traded account) $ 72,527,260 $ 72,527,260 - -------------------------------------------------------------------------------------------------- Navigator Securities Lending Prime Portfolio, at Net Asset Value 75,291,467 75,291,467 - -------------------------------------------------------------------------------------------------- TOTAL COLLATERAL FOR SECURITIES LOANED $147,818,727 - -------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $1,809,106,155) (k) $1,981,261,693 - -------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (7.8)% (144,113,532) - -------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $1,837,148,161 - -------------------------------------------------------------------------------------------------- (a) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $31,856,042, representing 1.7% of net assets. (d) Non-income producing security - in default. (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 April 30, 2006, the fund had 12 securities that were fair valued, aggregating $97,247,740 and 4.91% 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. (n) Non-income producing security. (y) The rate shown represents an annualized yield at time of purchase.
Portfolio of Investments (unaudited) - continued FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS Sales and Purchases in the table below are reported by currency.
NET UNREALIZED CONTRACTS TO CONTRACTS APPRECIATION DELIVER/RECEIVE SETTLEMENT DATE IN EXCHANGE FOR AT VALUE (DEPRECIATION) - ------------------------------------------------------------------------------------------------------------ SALES EUR 117,921,986 5/17/06 - 6/13/06 $143,690,309 $149,164,367 $(5,474,058) GBP 23,643,989 6/05/06 41,634,551 43,093,259 (1,458,708) ------------ ------------ ----------- $185,324,860 $192,257,626 $(6,932,766) ------------ ------------ ----------- PURCHASES EUR 13,583,838 5/17/06 - 6/13/06 $ 16,761,337 $ 17,167,077 $ 405,740 GBP 3,187,820 5/17/06 - 6/05/06 5,596,285 5,809,765 213,480 ------------ ------------ ----------- $ 22,357,622 $ 22,976,842 $ 619,220 ------------ ------------ ----------- At April 30, 2006, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts. The following abbreviations are used in the Portfolio of Investments and are defined: ADR American Depository Receipt FRN Floating Rate Note. The interest rate is the rate in effect as of period end. GDR Global Depository Receipt 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 (unaudited) This statement represents your fund's balance sheet, which details the assets and liabilities comprising the total value of the fund. AT 4/30/06 ASSETS - ------------------------------------------------------------------------------------------------------- Investments, at value, including $142,886,973 of securities on loan (identified cost, $1,809,106,155) $1,981,261,693 Cash 152,028 Foreign currency, at value (identified cost, $3,182) 3,227 Receivable for forward foreign currency exchange contracts 622,125 Receivable for investments sold 30,358,219 Receivable for fund shares sold 1,849,716 Interest and dividends receivable 4,112,060 - ------------------------------------------------------------------------------------------------------- Total assets $2,018,359,068 - ------------------------------------------------------------------------------------------------------- LIABILITIES - ------------------------------------------------------------------------------------------------------- Distributions payable $181,616 Payable for forward foreign currency exchange contracts 6,935,671 Payable for investments purchased 20,181,973 Payable for fund shares reacquired 5,228,692 Collateral for securities loaned, at value 147,818,727 Payable to affiliates Management fee 89,221 Shareholder servicing costs 302,940 Distribution and service fees 88,621 Administrative services fee 9,432 Retirement plan administration and services fees 131 Payable for independent trustees' compensation 65,212 Accrued expenses and other liabilities 308,671 - ------------------------------------------------------------------------------------------------------- Total liabilities $181,210,907 - ------------------------------------------------------------------------------------------------------- Net assets $1,837,148,161 - ------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------------------------------- Paid-in capital $2,031,821,691 Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies 165,876,188 Accumulated net realized gain (loss) on investments and foreign currency transactions (361,622,441) Undistributed net investment income 1,072,723 - ------------------------------------------------------------------------------------------------------- Net assets $1,837,148,161 - ------------------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding 137,123,288 - -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued Class A shares - ------------------------------------------------------------------------------------------------------- Net assets $988,777,783 Shares outstanding 73,702,486 - ------------------------------------------------------------------------------------------------------- Net asset value per share $13.42 - ------------------------------------------------------------------------------------------------------- Offering price per share (100/95.25Xnet asset value per share) $14.09 - ------------------------------------------------------------------------------------------------------- Class B shares - ------------------------------------------------------------------------------------------------------- Net assets $598,695,833 Shares outstanding 44,771,393 - ------------------------------------------------------------------------------------------------------- Net asset value and offering price per share $13.37 - ------------------------------------------------------------------------------------------------------- Class C shares - ------------------------------------------------------------------------------------------------------- Net assets $226,486,756 Shares outstanding 16,920,385 - ------------------------------------------------------------------------------------------------------- Net asset value and offering price per share $13.39 - ------------------------------------------------------------------------------------------------------- Class I shares - ------------------------------------------------------------------------------------------------------- Net assets $6,489,154 Shares outstanding 482,935 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $13.44 - ------------------------------------------------------------------------------------------------------- Class R shares - ------------------------------------------------------------------------------------------------------- Net assets $7,951,866 Shares outstanding 593,319 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $13.40 - ------------------------------------------------------------------------------------------------------- Class R1 shares - ------------------------------------------------------------------------------------------------------- Net assets $1,155,440 Shares outstanding 86,387 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $13.38 - ------------------------------------------------------------------------------------------------------- Class R2 shares - ------------------------------------------------------------------------------------------------------- Net assets $606,044 Shares outstanding 45,331 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $13.37 - ------------------------------------------------------------------------------------------------------- Class R3 shares - ------------------------------------------------------------------------------------------------------- Net assets $4,651,634 Shares outstanding 347,096 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $13.40 - ------------------------------------------------------------------------------------------------------- Class R4 shares - ------------------------------------------------------------------------------------------------------- Net assets $2,272,053 Shares outstanding 169,365 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $13.42 - ------------------------------------------------------------------------------------------------------- Class R5 shares - ------------------------------------------------------------------------------------------------------- Net assets $61,598 Shares outstanding 4,591 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $13.42 - ------------------------------------------------------------------------------------------------------- On sales of $100,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed on redemptions of Class A, Class B and Class C shares. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statement of Operations (unaudited) This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations. SIX MONTHS ENDED 4/30/06 NET INVESTMENT INCOME - ------------------------------------------------------------------------------------------------------ Income Dividends $21,062,052 Interest 3,667,814 Foreign taxes withheld (632,367) - ------------------------------------------------------------------------------------------------------ Total investment income $24,097,499 - ------------------------------------------------------------------------------------------------------ Expenses Management fee $5,448,745 Distribution and service fees 5,411,317 Shareholder servicing costs 1,631,137 Administrative services fee 99,543 Retirement plan administration and services fees 8,362 Independent trustees' compensation 18,790 Custodian fee 284,265 Shareholder communications 182,566 Auditing fees 21,842 Legal fees 50,942 Miscellaneous 183,844 - ------------------------------------------------------------------------------------------------------ Total expenses $13,341,353 - ------------------------------------------------------------------------------------------------------ Fees paid indirectly (83,458) Reduction of expenses by investment adviser (8,703) - ------------------------------------------------------------------------------------------------------ Net expenses $13,249,192 - ------------------------------------------------------------------------------------------------------ Net investment income $10,848,307 - ------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS - ------------------------------------------------------------------------------------------------------ Realized gain (loss) (identified cost basis) Investment transactions $178,463,957 Foreign currency transactions 2,573,077 - ------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments and foreign currency transactions $181,037,034 - ------------------------------------------------------------------------------------------------------ Change in unrealized appreciation (depreciation) Investments $(20,908,567) Translation of assets and liabilities in foreign currencies (8,327,077) - ------------------------------------------------------------------------------------------------------ Net unrealized gain (loss) on investments and foreign currency translation $(29,235,644) - ------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments and foreign currency $151,801,390 - ------------------------------------------------------------------------------------------------------ Change in net assets from operations $162,649,697 - ------------------------------------------------------------------------------------------------------ SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statements of Changes in Net Assets This statement describes the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.
SIX MONTHS ENDED YEAR ENDED 4/30/06 10/31/05 (UNAUDITED) CHANGE IN NET ASSETS - -------------------------------------------------------------------------------------------- FROM OPERATIONS - ------------------------------------------------------------------------------------------------------- Net investment income $10,848,307 $19,525,494 Net realized gain (loss) on investments and foreign currency transactions 181,037,034 279,974,644 Net unrealized gain (loss) on investments and foreign currency translation (29,235,644) 38,155,542 - ------------------------------------------------------------------------------------------------------- Change in net assets from operations $162,649,697 $337,655,680 - ------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------- From net investment income Class A $(6,141,581) $(11,228,838) Class B (1,617,979) (4,389,574) Class C (584,675) (1,462,469) Class I (50,869) (77,745) Class R (38,988) (58,110) Class R1 (2,125) (1,404) Class R2 (1,902) (691) Class R3 (14,986) (10,336) Class R4 (5,711) (471) Class R5 (419) (554) - ------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(8,459,235) $(17,230,192) - ------------------------------------------------------------------------------------------------------- Change in net assets from fund share transactions $(103,851,496) $121,017,931 - ------------------------------------------------------------------------------------------------------- Redemption fees $-- $4,318 - ------------------------------------------------------------------------------------------------------- Total change in net assets $50,338,966 $441,447,737 - ------------------------------------------------------------------------------------------------------- NET ASSETS - ------------------------------------------------------------------------------------------------------- At beginning of period 1,786,809,195 1,345,361,458 At end of period (including undistributed net investment income of $1,072,723 and accumulated distributions in excess of net investment income of $1,316,349) $1,837,148,161 $1,786,809,195 - ------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Financial Highlights The financial highlights table is intended to help you understand the fund's financial performance for the semiannual period and the past 5 fiscal years (or life of a particular share class, if shorter). Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 10/31 ENDED ------------------------------------------------------------------------- CLASS A 4/30/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $12.33 $9.98 $7.89 $6.13 $8.68 $13.66 - ------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS (x) - ------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.10 $0.18 $0.16 $0.15 $0.16 $0.21 Net realized and unrealized gain (loss) on investments and foreign currency 1.07 2.34 2.08 1.76 (2.55) (3.70) - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $1.17 $2.52 $2.24 $1.91 $(2.39) $(3.49) - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.08) $(0.17) $(0.15) $(0.15) $(0.16) $(0.27) From net realized gain on investments and foreign currency transactions -- -- -- -- -- (1.22) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.08) $(0.17) $(0.15) $(0.15) $(0.16) $(1.49) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.42 $12.33 $9.98 $7.89 $6.13 $8.68 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 9.53(n) 25.33 28.41(b)(z) 31.69 (27.78) (27.72) - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.12(a) 1.13 1.15 1.19 1.15 1.06 Expenses after expense reductions (f) 1.12(a) 1.13 1.15 1.19 1.11 1.03 Net investment income (x) 1.54(a) 1.60 1.83 2.11 2.10 1.95 Portfolio turnover 47 101 97 144 80 110 Net assets at end of period (000 Omitted) $988,778 $933,535 $586,730 $464,832 $382,712 $733,848 - ------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31 ENDED ------------------------------------------------------------------------- CLASS B 4/30/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $12.29 $9.95 $7.87 $6.11 $8.65 $13.62 - ------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS (x) - ------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.05 $0.10 $0.10 $0.10 $0.10 $0.13 Net realized and unrealized gain (loss) on investments and foreign currency 1.06 2.32 2.05 1.76 (2.53) (3.69) - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $1.11 $2.42 $2.15 $1.86 $(2.43) $(3.56) - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.03) $(0.08) $(0.07) $(0.10) $(0.11) $(0.19) From net realized gain on investments and foreign currency transactions -- -- -- -- -- (1.22) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.03) $(0.08) $(0.07) $(0.10) $(0.11) $(1.41) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.37 $12.29 $9.95 $7.87 $6.11 $8.65 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 9.07(n) 24.39 27.50(b)(z) 30.66 (28.30) (28.28) - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.87(a) 1.89 1.91 1.94 1.90 1.81 Expenses after expense reductions (f) 1.87(a) 1.89 1.91 1.94 1.86 1.78 Net investment income (x) 0.79(a) 0.88 1.10 1.38 1.35 1.20 Portfolio turnover 47 101 97 144 80 110 Net assets at end of period (000 Omitted) $598,696 $617,687 $575,642 $531,008 $481,361 $984,740 - ------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31 ENDED ------------------------------------------------------------------------- CLASS C 4/30/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $12.30 $9.96 $7.87 $6.11 $8.66 $13.63 - ------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS (x) - ------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.05 $0.10 $0.10 $0.10 $0.10 $0.13 Net realized and unrealized gain (loss) on investments and foreign currency 1.07 2.32 2.06 1.76 (2.54) (3.69) - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $1.12 $2.42 $2.16 $1.86 $(2.44) $(3.56) - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.03) $(0.08) $(0.07) $(0.10) $(0.11) $(0.19) From net realized gain on investments and foreign currency transactions -- -- -- -- -- (1.22) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.03) $(0.08) $(0.07) $(0.10) $(0.11) $(1.41) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.39 $12.30 $9.96 $7.87 $6.11 $8.66 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 9.15(n) 24.37 27.63(b)(z) 30.66 (28.38) (28.26) - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.87(a) 1.88 1.90 1.94 1.90 1.81 Expenses after expense reductions (f) 1.87(a) 1.88 1.90 1.94 1.86 1.78 Net investment income (x) 0.79(a) 0.87 1.10 1.38 1.35 1.20 Portfolio turnover 47 101 97 144 80 110 Net assets at end of period (000 Omitted) $226,487 $218,335 $177,875 $159,113 $144,861 $327,715 - ------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31 ENDED -------------------------------------------------------------------- CLASS I 4/30/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $12.35 $10.00 $7.91 $6.14 $8.69 $13.68 - ------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS (x) - ------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.12 $0.21 $0.18 $0.17 $0.18 $0.24 Net realized and unrealized gain (loss) on investments and foreign currency 1.07 2.34 2.08 1.77 (2.55) (3.71) - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $1.19 $2.55 $2.26 $1.94 $(2.37) $(3.47) - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.10) $(0.20) $(0.17) $(0.17) $(0.18) $(0.30) From net realized gain on investments and foreign currency transactions -- -- -- -- -- (1.22) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(0.10) $(0.20) $(0.17) $(0.17) $(0.18) $(1.52) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.44 $12.35 $10.00 $7.91 $6.14 $8.69 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 9.65(n) 25.59 28.84(b)(z) 31.96 (27.56) (27.58) - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 0.87(a) 0.88 0.90 0.94 0.90 0.81 Expenses after expense reductions (f) 0.87(a) 0.88 0.90 0.94 0.86 0.78 Net investment income (x) 1.79(a) 1.81 2.07 2.36 2.33 2.19 Portfolio turnover 47 101 97 144 80 110 Net assets at end of period (000 Omitted) $6,489 $6,630 $2,823 $1,744 $1,306 $2,604 - ------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31 ENDED ---------------------------------------------------- CLASS R 4/30/06 2005 2004 2003(i) (UNAUDITED) Net asset value, beginning of period $12.32 $9.97 $7.89 $6.40 - ---------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ---------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.08 $0.15 $0.15 $0.11 Net realized and unrealized gain (loss) on investments and foreign currency 1.07 2.34 2.05 1.47 - ---------------------------------------------------------------------------------------------------------------------------- Total from investment operations $1.15 $2.49 $2.20 $1.58 - ---------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ---------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.07) $(0.14) $(0.12) $(0.09) - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.40 $12.32 $9.97 $7.89 - ---------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 9.32(n) 25.05 28.11(b)(z) 24.78(n) - ---------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ---------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.38(a) 1.38 1.40 1.42(a) Expenses after expense reductions (f) 1.38(a) 1.38 1.40 1.42(a) Net investment income 1.29(a) 1.33 1.64 1.47(a) Portfolio turnover 47 101 97 144 Net assets at end of period (000 Omitted) $7,952 $6,823 $2,169 $189 - ---------------------------------------------------------------------------------------------------------------------------- SIX MONTHS YEAR ENDED CLASS R1 ENDED 4/30/06 10/31/05(i) (UNAUDITED) Net asset value, beginning of period $12.29 $11.04 - ----------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ----------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.04 $0.01 Net realized and unrealized gain (loss) on investments and foreign currency 1.08 1.29 - ----------------------------------------------------------------------------------------------------------------------------- Total from investment operations $1.12 $1.30 - ----------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ----------------------------------------------------------------------------------------------------------------------------- From net investment income $(0.03) $(0.05) - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.38 $12.29 - ----------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 9.10(n) 11.77(n) - ----------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.08(a) 2.08(a) Expenses after expense reductions (f) 1.98(a) 2.05(a) Net investment income 0.68(a) 0.12(a) Portfolio turnover 47 101 Net assets at end of period (000 Omitted) $1,155 $879 - ----------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEAR ENDED CLASS R2 ENDED 4/30/06 10/31/05(i) (UNAUDITED) Net asset value, beginning of period $12.29 $11.04 - ------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS - ------------------------------------------------------------------------------------------------------------------------ Net investment income (d) $0.07 $0.03 Net realized and unrealized gain (loss) on investments and foreign currency 1.06 1.29 - ------------------------------------------------------------------------------------------------------------------------ Total from investment operations $1.13 $1.32 - ------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------------ From net investment income $(0.05) $(0.07) - ------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $13.37 $12.29 - ------------------------------------------------------------------------------------------------------------------------ Total return (%) (r)(s) 9.21(n) 11.96(n) - ------------------------------------------------------------------------------------------------------------------------ RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------------------------ Expenses before expense reductions (f) 1.79(a) 1.77(a) Expenses after expense reductions (f) 1.64(a) 1.71(a) Net investment income 1.06(a) 0.37(a) Portfolio turnover 47 101 Net assets at end of period (000 Omitted) $606 $377 - ------------------------------------------------------------------------------------------------------------------------ YEARS ENDED 10/31 SIX MONTHS ------------------------------- CLASS R3 ENDED 4/30/06 2005 2004 (UNAUDITED) Net asset value, beginning of period $12.31 $9.97 $7.89 - ------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS - ------------------------------------------------------------------------------------------------------------------------ Net investment income (d) $0.07 $0.11 $0.14 Net realized and unrealized gain (loss) on investments and foreign currency 1.08 2.34 2.04 - ------------------------------------------------------------------------------------------------------------------------ Total from investment operations $1.15 $2.45 $2.18 - ------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------------ From net investment income $(0.06) $(0.11) $(0.10) - ------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $13.40 $12.31 $9.97 - ------------------------------------------------------------------------------------------------------------------------ Total return (%) (r)(s) 9.33(n) 24.66 27.77(b)(z) - ------------------------------------------------------------------------------------------------------------------------ RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------------------------ Expenses before expense reductions (f) 1.62(a) 1.62 1.65 Expenses after expense reductions (f) 1.52(a) 1.60 1.65 Net investment income 1.16(a) 0.97 1.42 Portfolio turnover 47 101 97 Net assets at end of period (000 Omitted) $4,652 $2,426 $122 - ------------------------------------------------------------------------------------------------------------------------ SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEAR ENDED CLASS R4 ENDED 4/30/06 10/31/05(i) (UNAUDITED) Net asset value, beginning of period $12.33 $11.08 - ----------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ----------------------------------------------------------------------------------------------------------- Net investment income (d) $0.08 $0.10 Net realized and unrealized gain (loss) on investments and foreign currency 1.08 1.25 - ----------------------------------------------------------------------------------------------------------- Total from investment operations $1.16 $1.35 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ----------------------------------------------------------------------------------------------------------- From net investment income $(0.07) $(0.10) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.42 $12.33 - ----------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 9.45(n) 12.22(n) - ----------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.27(a) 1.26(a) Expenses after expense reductions (f) 1.27(a) 1.26(a) Net investment income 1.40(a) 1.50(a) Portfolio turnover 47 101 Net assets at end of period (000 Omitted) $2,272 $62 - ----------------------------------------------------------------------------------------------------------- SIX MONTHS YEAR ENDED CLASS R5 ENDED 4/30/06 10/31/05(i) (UNAUDITED) Net asset value, beginning of period $12.33 $11.08 - ----------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ----------------------------------------------------------------------------------------------------------- Net investment income (d) $0.10 $0.13 Net realized and unrealized gain (loss) on investments and foreign currency 1.08 1.24 - ----------------------------------------------------------------------------------------------------------- Total from investment operations $1.18 $1.37 - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ----------------------------------------------------------------------------------------------------------- From net investment income $(0.09) $(0.12) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.42 $12.33 - ----------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 9.61(n) 12.41(n) - ----------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 0.97(a) 0.96(a) Expenses after expense reductions (f) 0.97(a) 0.96(a) Net investment income 1.70(a) 1.83(a) Portfolio turnover 47 101 Net assets at end of period (000 Omitted) $62 $56 - ----------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued 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. (x) Effective November 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing and accreting all premiums and discounts on debt securities. Per share data and ratios for periods prior to November 1, 2001 have not been restated to reflect this change. (z) The fund's total return calculation includes a net increase from gains realized on the disposal of investments in violation of 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 offset 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 (unaudited) (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 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. 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. Values of debt instruments 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. Short- term instruments with a maturity at issuance of 397 days or less are generally 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. 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. These investments are generally valued at fair value based on information from independent pricing services. These valuations can be based on 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 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 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. REPURCHASE AGREEMENTS - The fund may enter into repurchase agreements with institutions that the fund's investment adviser has determined are creditworthy. Each repurchase agreement is recorded at cost. The fund requires that the securities collateral in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. The fund monitors, on a daily basis, the value of the collateral to ensure that its value, including accrued interest, is greater than amounts owed to the fund under each such repurchase agreement. The fund, along with other affiliated entities of Massachusetts Financial Services Company (MFS), may utilize a joint trading account for the purpose of entering into one or more repurchase agreements. FOREIGN CURRENCY TRANSLATION - 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 - State Street Bank and Trust Company ("State Street") and J.P. Morgan 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. 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. 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. SHORT TERM FEES - For purchases made on or after July 1, 2004 and before April 1, 2005, the fund charged a 2% redemption fee (which was retained by the fund) on proceeds from Class A, Class B, Class C, and Class I shares redeemed or exchanged within 5 business days following their acquisition (either by purchase or exchange). Effective April 1, 2005, the fund no longer charges a redemption fee. See the fund's prospectus for details. Any redemption fees charged are accounted for as an addition to paid-in capital. 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 involving its portfolio holdings. Any proceeds received are reflected in realized gain/loss in the Statement of Operations, or in unrealized gain/loss if the security is still held by the fund. FEES PAID INDIRECTLY - The fund's custody fee is reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. During the six months ended April 30, 2006, the fund's custodian fees were reduced by $64,503 under this arrangement. The fund has entered into a commission recapture agreement, under which certain brokers will credit the fund a portion of the commissions generated, to offset certain expenses of the fund. For the six months ended April 30, 2006, the fund's custodian expenses were reduced by $18,955 under this agreement. These amounts are shown as a reduction of total expenses on the Statement of Operations. Effective January 1, 2006, the commission recapture agreement was terminated. TAX MATTERS AND DISTRIBUTIONS - The fund intends to continue 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 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 foreign currency transactions, defaulted bonds, amortization and accretion of debt securities, wash sales, and foreign taxes. The tax character of distributions made during the current period will be determined at fiscal year end. The tax character of distributions declared to shareholders is as follows: 10/31/05 10/31/04 Ordinary income (including any short-term capital gains)(1) $17,230,192 $14,730,338 (1) Included in the fund's distributions from ordinary income for the year ended October 31, 2004 is $496,972 in excess of investment company taxable income, which in accordance with applicable U.S. tax law, is taxable to shareholders as ordinary income distributions. The federal tax cost and the tax basis components of distributable earnings were as follows: AS OF APRIL 30, 2006 Cost of investments $1,809,695,674 ---------------------------------------------------------- Gross appreciation $202,175,147 Gross depreciation (30,609,128) ---------------------------------------------------------- Net unrealized appreciation (depreciation) $171,566,019 AS OF OCTOBER 31, 2005 Undistributed ordinary income $912,423 Capital loss carryforwards (540,181,622) Other temporary differences (2,217,723) Net unrealized appreciation (depreciation) 192,622,930 The aggregate cost above includes prior fiscal year end tax adjustments. As of October 31, 2005, the fund had available capital loss carryforwards to offset future realized gains. Such losses expire as follows: October 31, 2010 $540,181,622 MULTIPLE CLASSES OF SHARES OF BENEFICIAL INTEREST - The fund offers multiple classes of shares, which differ in their respective distribution and service fees. All shareholders bear the common expenses of the fund based on daily net assets of each class, without distinction between share classes. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B shares will convert to Class A shares approximately eight years after purchase. (3) TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISER - The fund has an investment advisory agreement with Massachusetts Financial Services Company (MFS) to provide overall investment advisory and administrative services, and general office facilities. The management fee is computed daily and paid monthly at an annual rate of 0.60% of the fund's average daily net assets. The investment adviser has contractually agreed to reduce its management fee to 0.55% of average daily net assets in excess of $3 billion. For the six months ended April 30, 2006, the fund's average daily net assets did not exceed $3 billion and therefore, the management fee was not reduced. The management fee incurred for the six months ended April 30, 2006 was equivalent to an annual effective rate of 0.60% of the fund's average daily net assets. DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly owned subsidiary of MFS, as distributor, received $130,938 for the six months ended April 30, 2006, 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 Fee Plan Table:
TOTAL ANNUAL DISTRIBUTION DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE FEE RATE FEE RATE PLAN(1) RATE(2) FEE Class A 0.10% 0.25% 0.35% 0.25% $1,200,732 Class B 0.75% 0.25% 1.00% 1.00% 3,065,202 Class C 0.75% 0.25% 1.00% 1.00% 1,111,407 Class R 0.25% 0.25% 0.50% 0.50% 19,062 Class R1 0.50% 0.25% 0.75% 0.75% 3,755 Class R2 0.25% 0.25% 0.50% 0.50% 1,218 Class R3 0.25% 0.25% 0.50% 0.50% 8,752 Class R4 -- 0.25% 0.25% 0.25% 1,189 - --------------------------------------------------------------------------------------------------------------------- Total Distribution and Service Fees$5,411,317 (1) 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. (2) The annual effective rates represent actual fees incurred under the distribution plan for the six months ended April 30, 2006 based on each class' average daily net assets. Payment of the 0.10% annual Class A distribution fee is not yet implemented and will commence on such date as the fund's Board of Trustees may determine.
Certain Class A and Class C shares are subject to a contingent deferred sales charge in the event of a shareholder redemption within 12 months of purchase. Class B shares are subject to a contingent deferred sales charge in the event of a shareholder redemption within six years of purchase. All contingent deferred sales charges are paid to MFD and during the six months ended April 30, 2006, were as follows: AMOUNT Class A $8,255 Class B 302,646 Class C 14,056 SHAREHOLDER SERVICING AGENT - The fund pays a portion of shareholder servicing costs to MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS. MFSC receives a fee from the fund, for its services as shareholder servicing agent, set periodically under the supervision of the fund's Board of Trustees. For the six months ended April 30, 2006, the fee was $867,611, which equated to 0.0956% annually of the fund's average daily net assets. MFSC also receives payment from the fund for out-of-pocket and sub-accounting expenses paid by MFSC on behalf of the fund. For the six months ended April 30, 2006, these costs amounted to $608,892. ADMINISTRATOR - MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to certain funds for which MFS acts as investment adviser. Under an administrative services agreement, the funds may partially reimburse MFS the costs incurred to provide these services, subject to review and approval by the Board of Trustees. Each fund is charged a fixed amount plus a fee based on calendar year average net assets. From July 1, 2005 through March 31, 2006, the fund's annual fixed amount was $10,000. Effective April 1, 2006, the fund's annual fixed amount is $17,500. The administrative services fee incurred for the six months ended April 30, 2006 was equivalent to an annual effective rate of 0.0110% of the fund's average daily net assets. In addition to the administrative services provided by MFS to the fund as described above, MFS is responsible for providing certain retirement plan administration and services with respect to certain shares. These services include various administrative, recordkeeping, and communication/educational services with respect to the retirement plans which invest in these shares, and may be provided directly by MFS or by a third party. MFS may subsequently pay all, or a portion, of the retirement plan administration and services fee to affiliated or unaffiliated third parties. For the six months ended April 30, 2006, 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: ANNUAL EFFECTIVE TOTAL FEE RATE RATE(1) AMOUNT Class R1 0.45% 0.35% $2,253 Class R2 0.40% 0.25% 974 Class R3 0.25% 0.15% 4,376 Class R4 0.15% 0.15% 730 Class R5 0.10% 0.10% 29 - ------------------------------------------------------------------------------- Total Retirement Plan Administration and Services Fees $8,362 (1) Effective October 1, 2005, MFS has contractually agreed to waive a portion of the retirement plan administration and services fee equal to 0.10% for Class R1 shares, 0.15% for Class R2 shares, and 0.10% for Class R3 shares. This agreement will continue until at least September 30, 2007. For the six months ended April 30, 2006, this waiver amounted to $2,617 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 retired Independent Trustees which resulted in a pension expense of $1,193. The fund also has an unfunded retirement benefit deferral plan for certain current Independent Trustees which resulted in an expense of $490. Both amounts are included in Independent trustees' compensation for the six months ended April 30, 2006. The deferred liability for retirement benefits payable to retired Trustees and certain current Trustees amounted to $20,778 and $39,917, respectively, at April 30, 2006, and is included in payable for independent trustees' compensation. OTHER - This fund and certain other MFS funds (the funds) have entered into a services agreement (the Agreement) which provides for payment of fees by the funds to Tarantino LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the Agreement with Tarantino LLC at any time under the terms of the Agreement. For the six months ended April 30, 2006, the fee paid to Tarantino LLC was $7,333. MFS has agreed to reimburse the fund for a portion of the payments made by the funds to Tarantino LLC in the amount of $6,086, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO. (4) PORTFOLIO SECURITIES Purchases and sales of investments, other than U.S. government securities, purchased option transactions, and short-term obligations, aggregated $837,807,861 and $937,310,550, respectively. (5) SHARES OF BENEFICIAL INTEREST The fund's Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
SIX MONTHS ENDED YEAR ENDED 4/30/06 10/31/05 (i) SHARES AMOUNT SHARES AMOUNT Shares sold Class A 12,417,529 $161,289,734 33,012,111 $380,967,466 Class B 2,315,647 29,784,144 6,155,311 70,346,774 Class C 1,400,342 18,145,188 3,474,179 39,724,548 Class I 104,738 1,355,818 320,468 3,769,390 Class R 158,051 2,028,956 442,895 5,029,875 Class R1 33,258 426,928 75,150 902,415 Class R2 15,347 197,594 34,360 435,607 Class R3 234,592 3,058,945 229,235 2,753,147 Class R4 176,041 2,304,918 4,954 55,651 Class R5 -- -- 4,513 50,000 - ------------------------------------------------------------------------------------------------------- 16,855,545 $218,592,225 43,753,176 $504,034,873 Shares issued to shareholders in reinvestment of distributions Class A 408,380 $5,278,048 820,461 $9,602,010 Class B 103,927 1,328,055 306,385 3,572,910 Class C 31,215 399,488 86,295 1,009,289 Class I 3,845 49,778 6,391 75,359 Class R 2,572 33,168 4,585 54,099 Class R1 166 2,116 113 1,397 Class R2 148 1,902 55 673 Class R3 1,127 14,591 843 10,212 Class R4 437 5,711 39 471 Class R5 32 419 46 554 - ------------------------------------------------------------------------------------------------------- 551,849 $7,113,276 1,225,213 $14,326,974 Shares reacquired Class A (14,844,994) $(192,342,815) (16,877,017) $(193,480,346) Class B (7,913,434) (102,657,056) (14,033,040) (159,448,969) Class C (2,261,245) (29,309,714) (3,664,643) (41,656,935) Class I (162,589) (2,120,419) (72,276) (840,827) Class R (121,321) (1,589,777) (111,046) (1,265,328) Class R1 (18,555) (241,825) (3,745) (46,778) Class R2 (810) (10,573) (3,769) (45,979) Class R3 (85,619) (1,123,530) (45,303) (558,754) Class R4 (12,106) (161,288) -- -- - ------------------------------------------------------------------------------------------------------- (25,420,673) $(329,556,997) (34,810,839) $(397,343,916) Net change Class A (2,019,085) $(25,775,033) 16,955,555 $197,089,130 Class B (5,493,860) (71,544,857) (7,571,344) (85,529,285) Class C (829,688) (10,765,038) (104,169) (923,098) Class I (54,006) (714,823) 254,583 3,003,922 Class R 39,302 472,347 336,434 3,818,646 Class R1 14,869 187,219 71,518 857,034 Class R2 14,685 188,923 30,646 390,301 Class R3 150,100 1,950,006 184,775 2,204,605 Class R4 164,372 2,149,341 4,993 56,122 Class R5 32 419 4,559 50,554 - ------------------------------------------------------------------------------------------------------- (8,013,279) $(103,851,496) 10,167,550 $121,017,931 (i) For the period from the class' inception, April 1, 2005 (Classes R1, R2, R4, and R5) through the stated period end.
(6) LINE OF CREDIT The fund and other affiliated funds participate in a $1 billion unsecured line of credit provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus 0.35%. In addition, a commitment fee, based on the average daily, unused portion of the line of credit, is allocated among the participating funds at the end of each calendar quarter. The commitment fee allocated to the fund for the six months ended April 30, 2006 was $6,273, and is included in miscellaneous expense on the Statement of Operations. The fund had no significant borrowings during the six months ended April 30, 2006. BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT A discussion regarding the Board's most recent review and renewal of the Fund's investment advisory agreement is available by clicking on the fund's name under "Select a fund" on the MFS Web site (mfs.com). PROXY VOTING POLICIES AND INFORMATION A general description of the MFS funds' proxy voting policies and procedures is available without charge, upon request, by calling 1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The trust 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 trust's Form N-Q may be reviewed and copied at the: Public Reference Room Securities and Exchange Commission 100 F Street, NE, Room 1580 Washington, D.C. 20549 Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-202-551-5850. The trust's Form N-Q is available on the EDGAR database on the Commission's Internet Web site at http://www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section at the above address. A shareholder can also obtain the quarterly portfolio holdings report at mfs.com. CONTACT INFORMATION INVESTOR SERVICE Write to us at: MFS Service Center, Inc. P.O. Box 55824 Boston, MA 02205-5824 Type of Information Phone number Hours, Eastern Time - -------------------------------------------------------------------------------- General information 1-800-225-2606 8 a.m. to 8 p.m., any business day - -------------------------------------------------------------------------------- Speech- or hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m., any business day - -------------------------------------------------------------------------------- Share prices, account 1-800-MFS-TALK balances exchanges (1-800-637-8255) 24 hours a day, 365 days a or stock and bond outlooks touch-tone required year - -------------------------------------------------------------------------------- M F S(SM) INVESTMENT MANAGEMENT(R) MFS Investment Management(R) MFS(R) investment products are offered through MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116. MMU-SEM-06/06 112M MFS(R) GLOBAL EQUITY FUND 4/30/06 SEMIANNUAL REPORT - ------------------------------------------------------------------------------- LETTER FROM THE CEO 1 - --------------------------------------------------- PORTFOLIO COMPOSITION 2 - --------------------------------------------------- EXPENSE TABLE 3 - --------------------------------------------------- PORTFOLIO OF INVESTMENTS 5 - --------------------------------------------------- FINANCIAL STATEMENTS 10 - --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 24 - --------------------------------------------------- BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 34 - --------------------------------------------------- PROXY VOTING POLICIES AND INFORMATION 34 - --------------------------------------------------- QUARTERLY PORTFOLIO DISCLOSURE 34 - --------------------------------------------------- CONTACT INFORMATION BACK COVER - --------------------------------------------------- THE REPORT IS PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS INTENDED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. [logo] M F S(SM) INVESTMENT MANAGEMENT(R) LETTER FROM THE CEO [Photo of Robert J. Manning] Dear Shareholders, It has been said that change is the only constant in life. As investors have seen, that theme is still accurate today as we recently have experienced shifting economic cycles because of natural disasters and political instability around the globe. Markets worldwide have fluctuated in the past year as devastating hurricanes had a dramatic effect on the international economy, particularly on oil prices. We witnessed political unrest in the Middle East, highlighted by instability in Iraq, and in Africa, the usually stable Nigeria also experienced violence. As a result, energy prices have bounced up and down, with crude oil prices at one point topping a record $70 per barrel. Such cycles are not uncommon and in fact have almost become the norm in our everyday lives. What does all of this mean to you as an investor? In times like these, it helps to know that you're working with a seasoned investment professional who has experience to guide you through difficult times. At MFS(R), we believe our investment management team has the knowledge and confidence to navigate through difficult cycles and at the same time see through adversity to find investment opportunities for our clients and shareholders. Our investment management process, honed over 80 years, combines a unique concept of teamwork with our unwavering focus on the long term. We firmly believe that the best way to realize long-term financial goals - be it a college education, a comfortable retirement, or a secure family legacy - is to follow a three-pronged approach that focuses on longer time horizons. Allocate holdings across the major asset classes - including stocks, bonds, and cash. Diversify within each class to take advantage of different market segments and investing styles. Rebalance assets regularly to maintain a desired asset allocation. Of course, these strategies cannot guarantee a profit or protect against a loss. This long-term approach requires 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) June 15, 2006 The opinions expressed in this letter are those of MFS, and no forecasts can be guaranteed. PORTFOLIO COMPOSITION PORTFOLIO STRUCTURE Stocks 98.4% Cash & Other Net Assets 1.6% TOP TEN HOLDINGS Reckitt Benckiser PLC 3.2% ------------------------------------------------ Johnson & Johnson 3.0% ------------------------------------------------ Nestle S.A. 3.0% ------------------------------------------------ American Express Co. 2.1% ------------------------------------------------ Schneider Electric S.A. 2.0% ------------------------------------------------ Roche Holding AG 2.0% ------------------------------------------------ Samsung Electronic Co., Ltd. 2.0% ------------------------------------------------ UBS AG 2.0% ------------------------------------------------ L'Air Liquide S.A. 2.0% ------------------------------------------------ Sanofi-Aventis 1.9% ------------------------------------------------ EQUITY SECTORS Financial Services 20.1% ------------------------------------------------ Health Care 17.7% ------------------------------------------------ Consumer Staples 14.7% ------------------------------------------------ Technology 9.6% ------------------------------------------------ Retailing 7.2% ------------------------------------------------ Basic Materials 5.9% ------------------------------------------------ Leisure 5.6% ------------------------------------------------ Energy 4.9% ------------------------------------------------ Autos & Housing 4.1% ------------------------------------------------ Utilities & Communications 3.4% ------------------------------------------------ Industrial Goods & Services 3.1% ------------------------------------------------ Special Products & Services 1.5% ------------------------------------------------ Transportation 0.6% ------------------------------------------------ COUNTRY WEIGHTINGS United States 38.6% ------------------------------------------------ France 14.2% ------------------------------------------------ United Kingdom 12.7% ------------------------------------------------ Japan 9.2% ------------------------------------------------ Switzerland 9.1% ------------------------------------------------ Germany 3.2% ------------------------------------------------ Italy 2.3% ------------------------------------------------ South Korea 2.1% ------------------------------------------------ Sweden 2.1% ------------------------------------------------ All Others 6.5% ------------------------------------------------ Percentages are based on net assets as of 4/30/06. The portfolio is actively managed, and current holdings may be different. EXPENSE TABLE FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, NOVEMBER 1, 2005 THROUGH APRIL 30, 2006. As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchase or redemption payments and redemption fees on certain exchanges and redemptions, and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period November 1, 2005 through April 30, 2006. ACTUAL EXPENSES The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period(p) Share Expense Account Value Account Value 11/01/05- Class Ratio 11/01/05 4/30/06 4/30/06 - -------------------------------------------------------------------------------- Actual 1.46% $1,000.00 $1,160.50 $7.82 A ------------------------------------------------------------------------ Hypothetical (h) 1.46% $1,000.00 $1,017.55 $7.30 - -------------------------------------------------------------------------------- Actual 2.21% $1,000.00 $1,156.10 $11.81 B ------------------------------------------------------------------------- Hypothetical (h) 2.21% $1,000.00 $1,013.84 $11.04 - -------------------------------------------------------------------------------- Actual 2.21% $1,000.00 $1,156.50 $11.82 C ------------------------------------------------------------------------ Hypothetical (h) 2.21% $1,000.00 $1,013.84 $11.04 - -------------------------------------------------------------------------------- Actual 1.21% $1,000.00 $1,162.20 $6.49 I ------------------------------------------------------------------------ Hypothetical (h) 1.21% $1,000.00 $1,018.79 $6.06 - -------------------------------------------------------------------------------- Actual 2.16% $1,000.00 $1,156.70 $11.55 J ------------------------------------------------------------------------ Hypothetical (h) 2.16% $1,000.00 $1,014.08 $10.79 - -------------------------------------------------------------------------------- Actual 1.71% $1,000.00 $1,159.00 $9.15 R ------------------------------------------------------------------------ Hypothetical (h) 1.71% $1,000.00 $1,016.31 $8.55 - -------------------------------------------------------------------------------- Actual 2.31% $1,000.00 $1,155.50 $12.35 R1 ------------------------------------------------------------------------ Hypothetical (h) 2.31% $1,000.00 $1,013.34 $11.53 - -------------------------------------------------------------------------------- Actual 1.96% $1,000.00 $1,157.70 $10.49 R2 ------------------------------------------------------------------------ Hypothetical (h) 1.96% $1,000.00 $1,015.08 $9.79 - -------------------------------------------------------------------------------- Actual 1.86% $1,000.00 $1,158.10 $9.95 R3 ------------------------------------------------------------------------ Hypothetical (h) 1.86% $1,000.00 $1,015.57 $9.30 - -------------------------------------------------------------------------------- Actual 1.62% $1,000.00 $1,159.90 $8.68 R4 ------------------------------------------------------------------------ Hypothetical (h) 1.62% $1,000.00 $1,016.76 $8.10 - -------------------------------------------------------------------------------- Actual 1.31% $1,000.00 $1,161.60 $7.02 R5 ------------------------------------------------------------------------ Hypothetical (h) 1.31% $1,000.00 $1,018.30 $6.56 - -------------------------------------------------------------------------------- (h) 5% class return per year before expenses. (p) Expenses paid is equal to each class' annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads) or redemption fees. If these transaction costs had been included, your costs would have been higher. PORTFOLIO OF INVESTMENTS (unaudited) - 4/30/06 The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Common Stocks - 98.4% - -------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) - -------------------------------------------------------------------------------------------------- Advertising & Broadcasting - 3.6% - -------------------------------------------------------------------------------------------------- CBS Corp., "B" 154,805 $ 3,942,883 Viacom, Inc., "B" (n) 155,105 6,177,832 Walt Disney Co. 466,690 13,048,652 WPP Group PLC 241,800 2,982,015 ------------ $26,151,382 - -------------------------------------------------------------------------------------------------- Alcoholic Beverages - 2.5% - -------------------------------------------------------------------------------------------------- Diageo PLC 752,287 $ 12,402,150 Pernod Ricard S.A 30,600 5,931,938 ------------ $ 18,334,088 - -------------------------------------------------------------------------------------------------- Apparel Manufacturers - 2.8% - -------------------------------------------------------------------------------------------------- LVMH Moet Hennessy Louis Vuitton S.A 111,170 $ 11,700,792 NIKE, Inc., "B" 109,600 8,969,664 ------------ $ 20,670,456 - -------------------------------------------------------------------------------------------------- Automotive - 4.1% - -------------------------------------------------------------------------------------------------- Bayerische Motoren Werke AG 88,300 $ 4,801,092 Bridgestone Corp. 297,000 7,244,539 Harley-Davidson, Inc. (l) 158,060 8,035,770 Toyota Motor Corp. 169,700 9,934,532 ------------ $ 30,015,933 - -------------------------------------------------------------------------------------------------- Banks & Credit Companies - 11.4% - -------------------------------------------------------------------------------------------------- American Express Co. 280,180 $ 15,076,486 Banco Bilbao Vizcaya Argentaria S.A 388,760 8,585,568 Bangkok Bank Public Co. Ltd. 1,185,600 3,760,299 Bank of New York Co., Inc. 220,700 7,757,605 Credit Agricole S.A. (l) 200,400 8,072,981 Erste Bank der Oesterreichischen Sparkassen AG (l) 60,320 3,659,382 Powszechna Kasa Oszczednosci Bank Polski S.A. 104,510 1,314,377 PT Bank Central Asia 5,827,000 2,901,562 Shinsei Bank Ltd. 813,000 5,695,609 Svenska Handelsbanken AB, "A" (l) 109,200 3,136,141 UBS AG (l) 121,661 14,406,450 UniCredito Italiano S.p.A 1,127,920 8,492,859 ------------ $ 82,859,319 - -------------------------------------------------------------------------------------------------- Biotechnology - 1.0% - -------------------------------------------------------------------------------------------------- Amgen, Inc. (n) 108,600 $ 7,352,220 - -------------------------------------------------------------------------------------------------- Brokerage & Asset Managers - 2.6% - -------------------------------------------------------------------------------------------------- Goldman Sachs Group, Inc. 78,210 $ 12,536,281 Julius Baer Holding Ltd. (l) 69,314 6,638,823 ------------ $ 19,175,104 - -------------------------------------------------------------------------------------------------- Business Services - 1.4% - -------------------------------------------------------------------------------------------------- Accenture Ltd., "A" 211,930 $ 6,160,805 DST Systems, Inc. (l)(n) 71,000 4,367,920 ------------ $ 10,528,725 - -------------------------------------------------------------------------------------------------- Chemicals - 1.6% - -------------------------------------------------------------------------------------------------- 3M Co. 139,370 $ 11,906,379 - -------------------------------------------------------------------------------------------------- Computer Software - 1.0% - -------------------------------------------------------------------------------------------------- Oracle Corp. (n) 520,100 $ 7,588,259 - -------------------------------------------------------------------------------------------------- Computer Software - Systems - 0.9% - -------------------------------------------------------------------------------------------------- Dell, Inc. (n) 235,280 $ 6,164,336 - -------------------------------------------------------------------------------------------------- Consumer Goods & Services - 8.1% - -------------------------------------------------------------------------------------------------- Alberto-Culver Co. 118,600 $ 5,333,442 Colgate-Palmolive Co. 62,000 3,665,440 Estee Lauder Cos., Inc., "A" 212,600 7,891,712 Kao Corp. 201,000 5,406,408 L'Oreal S.A. (l) 68,170 6,319,489 Procter & Gamble Co. 118,094 6,874,252 Reckitt Benckiser PLC 639,600 23,290,890 ------------ $ 58,781,633 - -------------------------------------------------------------------------------------------------- Electrical Equipment - 2.3% - -------------------------------------------------------------------------------------------------- Legrand S.A. (n) 51,150 $ 1,496,701 Schneider Electric S.A. (l) 132,306 14,976,671 ------------ $ 16,473,372 - -------------------------------------------------------------------------------------------------- Electronics - 6.9% - -------------------------------------------------------------------------------------------------- Canon, Inc. 120,000 $ 9,187,360 Intel Corp. 559,400 11,176,812 Nintendo Co. Ltd. 43,300 6,470,356 OMRON Corp. 102,800 2,873,502 Ricoh Co. Ltd. 301,000 5,979,519 Samsung Electronics, Co. Ltd. 21,850 14,919,578 ------------ $ 50,607,127 - -------------------------------------------------------------------------------------------------- Energy - Integrated - 4.9% - -------------------------------------------------------------------------------------------------- BP PLC 590,180 $ 7,273,059 Chevron Corp. 143,500 8,756,370 Exxon Mobil Corp. 124,700 7,866,076 TOTAL S.A 42,820 11,838,277 ------------ $ 35,733,782 - -------------------------------------------------------------------------------------------------- Food & Drug Stores - 1.3% - -------------------------------------------------------------------------------------------------- Tesco PLC 1,566,580 $ 9,117,762 - -------------------------------------------------------------------------------------------------- Food & Non Alcoholic Beverages - 4.2% - -------------------------------------------------------------------------------------------------- General Mills, Inc. (l) 69,000 $ 3,404,460 Nestle S.A 71,494 21,783,958 PepsiCo, Inc. 90,120 5,248,589 ------------ $ 30,437,007 - -------------------------------------------------------------------------------------------------- Gaming & Lodging - 2.0% - -------------------------------------------------------------------------------------------------- Ladbrokes PLC 759,360 $ 5,802,892 William Hill Organization Ltd. 750,680 8,676,635 ------------ $ 14,479,527 - -------------------------------------------------------------------------------------------------- General Merchandise - 1.1% - -------------------------------------------------------------------------------------------------- Wal-Mart Stores, Inc. 184,720 $ 8,317,942 - -------------------------------------------------------------------------------------------------- Insurance - 6.1% - -------------------------------------------------------------------------------------------------- Assicurazioni Generali S.p.A 221,600 $ 8,303,739 AXA 357,200 13,105,587 Genworth Financial, Inc., "A" 159,860 5,307,352 Lincoln National Corp. 92,100 5,349,168 QBE Insurance Group Ltd. 313,041 5,323,402 Swiss Reinsurance Co. (l) 99,100 7,224,545 ------------ $ 44,613,793 - -------------------------------------------------------------------------------------------------- Machinery & Tools - 0.8% - -------------------------------------------------------------------------------------------------- Atlas Copco AB, "A" (l) 94,360 $ 2,786,826 Sandvik AB (l) 45,220 2,941,228 ------------ $ 5,728,054 - -------------------------------------------------------------------------------------------------- Medical Equipment - 5.1% - -------------------------------------------------------------------------------------------------- DENTSPLY International, Inc. 94,760 $ 5,654,329 Fisher Scientific International, Inc. (l)(n) 149,180 10,524,649 Medtronic, Inc. 183,280 9,185,994 Smith & Nephew PLC 484,200 4,000,064 Waters Corp. (n) 175,650 7,960,458 ------------ $ 37,325,494 - -------------------------------------------------------------------------------------------------- Natural Gas - Distribution - 0.5% - -------------------------------------------------------------------------------------------------- Tokyo Gas Co. Ltd. (l) 815,000 $ 3,947,304 - -------------------------------------------------------------------------------------------------- Network & Telecom - 0.8% - -------------------------------------------------------------------------------------------------- Ericsson, Inc., "B" 1,661,030 $ 5,909,373 - -------------------------------------------------------------------------------------------------- Pharmaceuticals - 11.6% - -------------------------------------------------------------------------------------------------- Eli Lilly & Co. 220,670 $ 11,677,856 GlaxoSmithKline PLC 409,800 11,615,727 Johnson & Johnson 379,280 22,229,601 Roche Holding AG 97,300 14,946,923 Sanofi-Aventis (l) 148,540 14,004,123 Schering AG (l) 93,730 10,062,631 ------------ $ 84,536,861 - -------------------------------------------------------------------------------------------------- Railroad & Shipping - 0.6% - -------------------------------------------------------------------------------------------------- Canadian National Railway Co. 88,886 $ 3,991,870 - -------------------------------------------------------------------------------------------------- Specialty Chemicals - 4.3% - -------------------------------------------------------------------------------------------------- Asahi Glass Co. Ltd. 493,000 $ 6,968,259 Kaneka Corp. 229,000 2,584,591 L'Air Liquide S.A., Bearer Shares (l) 66,310 14,343,147 Praxair, Inc. 133,220 7,477,639 ------------ $ 31,373,636 - -------------------------------------------------------------------------------------------------- Specialty Stores - 2.0% - -------------------------------------------------------------------------------------------------- Esprit Holdings Ltd. 489,000 $ 3,916,667 Home Depot, Inc. 115,120 4,596,742 NEXT PLC 204,080 5,992,807 ------------ $ 14,506,216 - -------------------------------------------------------------------------------------------------- Telecommunications - Wireless - 0.6% - -------------------------------------------------------------------------------------------------- Hutchison Telecommunications International Ltd. (n) 2,509,000 $ 4,433,405 - -------------------------------------------------------------------------------------------------- Telephone Services - 0.7% - -------------------------------------------------------------------------------------------------- Singapore Telecommunications Ltd. 3,012,500 $ 5,220,904 - -------------------------------------------------------------------------------------------------- Utilities - Electric Power - 1.6% - -------------------------------------------------------------------------------------------------- E.ON AG (l) 69,300 $ 8,437,171 Iberdrola S.A 107,270 3,493,299 ------------ $ 11,930,470 - -------------------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (IDENTIFIED COST, $542,458,451) $718,211,733 - -------------------------------------------------------------------------------------------------- Rights - 0.0% - -------------------------------------------------------------------------------------------------- STRIKE FIRST PRICE EXERCISE - -------------------------------------------------------------------------------------------------- Insurance - 0.0% - -------------------------------------------------------------------------------------------------- Swiss Reinsurance Co. CHF 92.25 4/28/06 99,100 $0 - -------------------------------------------------------------------------------------------------- Short-Term Obligations - 1.4% - -------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) - -------------------------------------------------------------------------------------------------- General Electric Capital Corp., 4.82%, due 5/01/06, at Amortized Cost (y) $ 10,371,000 $ 10,371,000 - -------------------------------------------------------------------------------------------------- Collateral for Securities Loaned - 11.2 - -------------------------------------------------------------------------------------------------- Morgan Stanley Repurchase Agreement, 4.895%, dated 4/28/06, due 5/01/06, total to be received $72,855,870 (secured by various U.S. Treasury and Federal Agency obligations in an individually traded account), at Cost $ 72,845,965 $ 72,845,965 Navigator Securities Lending Prime Portfolio, at Cost and Net Asset Value 9,117,550 9,117,550 - -------------------------------------------------------------------------------------------------- TOTAL COLLATERAL FOR SECURITIES LOANED $ 81,963,515 - -------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $634,792,966) (k) $810,546,248 - -------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (11.0)% (80,451,649) - -------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $730,094,599 - -------------------------------------------------------------------------------------------------- (k) As of April 30, 2006, the fund had one security that was fair valued, aggregating $0 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. (n) Non-income producing security. (y) The rate shown represents an annualized yield at time of purchase. Abbreviations have been used throughout this report to 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: CHF Swiss Franc SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statement of Assets and Liabilities (unaudited) This statement represents your fund's balance sheet, which details the assets and liabilities comprising the total value of the fund. AT 4/30/06 ASSETS - ------------------------------------------------------------------------------------------------------- Investments, at value, including $78,706,800 of securities on loan (identified cost, $561,947,001) $737,700,283 Repurchase agreements, at value 72,845,965 - ------------------------------------------------------------------------------------------------------- Total investments, at value (identified cost, $634,792,966) $810,546,248 - ------------------------------------------------------------------------------------------------------- Foreign currency, at value (identified cost, $27,675) 27,854 Receivable for investments sold 3,399,109 Receivable for fund shares sold 747,924 Interest and dividends receivable 1,425,521 Other assets 273 - ------------------------------------------------------------------------------------------------------- Total assets $816,146,929 - ------------------------------------------------------------------------------------------------------- LIABILITIES - ------------------------------------------------------------------------------------------------------- Payable to custodian $25,874 Payable for investments purchased 1,176,152 Payable for fund shares reacquired 2,361,653 Collateral for securities loaned, at value 81,963,515 Payable to affiliates Management fee 53,153 Shareholder servicing costs 126,765 Distribution and service fees 27,660 Administrative services fee 1,233 Retirement plan administration and services fees 163 Payable for independent trustees' compensation 57,863 Accrued expenses and other liabilities 258,299 - ------------------------------------------------------------------------------------------------------- Total liabilities $86,052,330 - ------------------------------------------------------------------------------------------------------- Net assets $730,094,599 - ------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------------------------------- Paid-in capital $483,592,809 Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies (net of $1,722 deferred country tax) 175,781,916 Accumulated net realized gain (loss) on investments and foreign currency transactions 61,768,396 Undistributed net investment income 8,951,478 - ------------------------------------------------------------------------------------------------------- Net assets $730,094,599 - ------------------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding 25,893,606 - -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued Class A shares - ------------------------------------------------------------------------------------------------------- Net assets $445,252,349 Shares outstanding 15,544,589 - ------------------------------------------------------------------------------------------------------- Net asset value per share $28.64 - ------------------------------------------------------------------------------------------------------- Offering price per share (100/94.25Xnet asset value per share) $30.39 - ------------------------------------------------------------------------------------------------------- Class B shares - ------------------------------------------------------------------------------------------------------- Net assets $151,838,139 Shares outstanding 5,582,390 - ------------------------------------------------------------------------------------------------------- Net asset value and offering price per share $27.20 - ------------------------------------------------------------------------------------------------------- Class C shares - ------------------------------------------------------------------------------------------------------- Net assets $37,518,610 Shares outstanding 1,405,815 - ------------------------------------------------------------------------------------------------------- Net asset value and offering price per share $26.69 - ------------------------------------------------------------------------------------------------------- Class I shares - ------------------------------------------------------------------------------------------------------- Net assets $53,843,421 Shares outstanding 1,850,294 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $29.10 - ------------------------------------------------------------------------------------------------------- Class J shares - ------------------------------------------------------------------------------------------------------- Net assets $20,627,392 Shares outstanding 767,142 - ------------------------------------------------------------------------------------------------------- Net asset value and redemption price per share $26.89 - ------------------------------------------------------------------------------------------------------- Offering price per share (100/97.00Xnet asset value per share) $27.72 - ------------------------------------------------------------------------------------------------------- Class R shares - ------------------------------------------------------------------------------------------------------- Net assets $13,570,211 Shares outstanding 478,264 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $28.37 - ------------------------------------------------------------------------------------------------------- Class R1 shares - ------------------------------------------------------------------------------------------------------- Net assets $893,878 Shares outstanding 32,919 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $27.15 - ------------------------------------------------------------------------------------------------------- Class R2 shares - ------------------------------------------------------------------------------------------------------- Net assets $419,187 Shares outstanding 15,381 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $27.25 - ------------------------------------------------------------------------------------------------------- Class R3 shares - ------------------------------------------------------------------------------------------------------- Net assets $5,195,723 Shares outstanding 184,098 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $28.22 - -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued Class R4 shares - ------------------------------------------------------------------------------------------------------- Net assets $875,490 Shares outstanding 30,616 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $28.60 - ------------------------------------------------------------------------------------------------------- Class R5 shares - ------------------------------------------------------------------------------------------------------- Net assets $60,199 Shares outstanding 2,098 - ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $28.69 - ------------------------------------------------------------------------------------------------------- On sales of $50,000 or more, the offering price of Class A shares is reduced. A contingent deferred sales charge may be imposed on redemptions of Class A, Class B and Class C shares. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statement of Operations (unaudited) This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations. SIX MONTHS ENDED 4/30/06 NET INVESTMENT INCOME - ------------------------------------------------------------------------------------------------------ Income Dividends $14,878,002 Interest 306,566 Foreign taxes withheld (393,687) - ------------------------------------------------------------------------------------------------------ Total investment income $14,790,881 - ------------------------------------------------------------------------------------------------------ Expenses Management fee $3,123,708 Distribution and service fees 1,601,112 Shareholder servicing costs 689,569 Administrative services fee 41,800 Retirement plan administration and services fees 7,369 Independent trustees' compensation 13,573 Custodian fee 141,666 Shareholder communications 21,229 Auditing fees 24,996 Legal fees 6,985 Registration fees 112,416 Miscellaneous 19,550 - ------------------------------------------------------------------------------------------------------ Total expenses $5,803,973 - ------------------------------------------------------------------------------------------------------ Fees paid indirectly (27,373) Reduction of expenses by investment adviser (4,894) - ------------------------------------------------------------------------------------------------------ Net expenses $5,771,706 - ------------------------------------------------------------------------------------------------------ Net investment income $9,019,175 - ------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS - ------------------------------------------------------------------------------------------------------ Realized gain (loss) (identified cost basis) Investment transactions (net of $931 country tax) $61,787,533 Foreign currency transactions 28,995 - ------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments and foreign currency transactions $61,816,528 - ------------------------------------------------------------------------------------------------------ Change in unrealized appreciation (depreciation) Investments (net of $1,722 deferred country tax) $32,237,783 Translation of assets and liabilities in foreign currencies 47,512 - ------------------------------------------------------------------------------------------------------ Net unrealized gain (loss) on investments and foreign currency translation $32,285,295 - ------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments and foreign currency $94,101,823 - ------------------------------------------------------------------------------------------------------ Change in net assets from operations $103,120,998 - ------------------------------------------------------------------------------------------------------ SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statements of Changes in Net Assets This statement describes the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.
SIX MONTHS ENDED YEAR ENDED 4/30/06 10/31/05 (UNAUDITED) CHANGE IN NET ASSETS - ------------------------------------------------------------------------------------------------------ FROM OPERATIONS - ------------------------------------------------------------------------------------------------------ Net investment income (loss) $9,019,175 $(105,392) Net realized gain (loss) on investments and foreign currency transactions 61,816,528 79,054,536 Net unrealized gain (loss) on investments and foreign currency translation 32,285,295 (1,606,833) - ------------------------------------------------------------------------------------------------------ Change in net assets from operations $103,120,998 $77,342,311 - ------------------------------------------------------------------------------------------------------ DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------ From net investment income Class I $-- $(82,625) Class R -- (1,632) - ------------------------------------------------------------------------------------------------------ From net realized gain on investments and foreign currency transactions Class A (18,099,702) -- Class B (6,962,364) -- Class C (1,607,519) -- Class I (1,898,929) -- Class J (882,139) -- Class R (585,544) -- Class R1 (31,501) -- Class R2 (8,875) -- Class R3 (159,137) -- Class R4 (4,035) -- Class R5 (2,344) -- - ------------------------------------------------------------------------------------------------------ Total distributions declared to shareholders $(30,242,089) $(84,257) - ------------------------------------------------------------------------------------------------------ Change in net assets from fund share transactions $(5,694,111) $(53,926,243) - ------------------------------------------------------------------------------------------------------ Redemption fees $-- $3,282 - ------------------------------------------------------------------------------------------------------ Total change in net assets $67,184,798 $23,335,093 - ------------------------------------------------------------------------------------------------------ NET ASSETS - ------------------------------------------------------------------------------------------------------ At beginning of period 662,909,801 639,574,708 At end of period (including undistributed net investment income of $8,951,478 and accumulated distributions in excess of net investment income of $67,697) $730,094,599 $662,909,801 - ------------------------------------------------------------------------------------------------------ SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Financial Highlights The financial highlights table is intended to help you understand the fund's financial performance for the semiannual period and the past 5 fiscal years (or life of a particular share class, if shorter). Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 10/31 ENDED ---------------------------------------------------------------------- CLASS A 4/30/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $25.79 $22.92 $19.57 $16.55 $17.58 $22.88 - ------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (d) $0.38 $0.06 $0.07 $0.03 $(0.00)(w) $(0.01) Net realized and unrealized gain (loss) on investments and foreign currency 3.64 2.81 3.28 2.99 (1.03) (3.81) - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $4.02 $2.87 $3.35 $3.02 $(1.03) $(3.82) - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments and foreign currency transactions $(1.17) $-- $-- $-- $-- $(1.48) From paid-in capital -- -- -- -- -- (0.00)(w) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.17) $-- $-- $-- $-- $(1.48) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $28.64 $25.79 $22.92 $19.57 $16.55 $17.58 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 16.05(n) 12.52 17.12(b) 18.25 (5.86) (17.67) - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.46(a) 1.55 1.52 1.65 1.62 1.59 Expenses after expense reductions (f) 1.46(a) 1.55 1.52 1.65 1.62 1.59 Net investment income (loss) 2.81(a) 0.22 0.30 0.19 (0.02) (0.06) Portfolio turnover 23 39 41 52 52 72 Net assets at end of period (000 Omitted) $445,252 $402,985 $368,514 $345,783 $322,006 $348,129 - ------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31 ENDED ---------------------------------------------------------------------- CLASS B 4/30/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $24.64 $22.06 $18.97 $16.18 $17.31 $22.52 - ------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (d) $0.25 $(0.13) $(0.10) $(0.09) $(0.14) $(0.16) Net realized and unrealized gain (loss) on investments and foreign currency 3.48 2.71 3.19 2.88 (0.99) (3.75) - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $3.73 $2.58 $3.09 $2.79 $(1.13) $(3.91) - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments and foreign currency transactions $(1.17) $-- $-- $-- $-- $(1.30) From paid-in capital -- -- -- -- -- (0.00)(w) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.17) $-- $-- $-- $-- $(1.30) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $27.20 $24.64 $22.06 $18.97 $16.18 $17.31 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 15.61(n) 11.70 16.29(b) 17.24 (6.53) (18.28) - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.21(a) 2.30 2.27 2.40 2.37 2.34 Expenses after expense reductions (f) 2.21(a) 2.30 2.27 2.40 2.37 2.34 Net investment income (loss) 1.98(a) (0.53) (0.45) (0.56) (0.79) (0.81) Portfolio turnover 23 39 41 52 52 72 Net assets at end of period (000 Omitted) $151,838 $148,434 $170,783 $177,713 $172,094 $220,855 - ------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31 ENDED ---------------------------------------------------------------------- CLASS C 4/30/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $24.19 $21.66 $18.63 $15.89 $17.00 $22.16 - ------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (d) $0.26 $(0.12) $(0.09) $(0.09) $(0.14) $(0.16) Net realized and unrealized gain (loss) on investments and foreign currency 3.41 2.65 3.12 2.83 (0.97) (3.68) - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $3.67 $2.53 $3.03 $2.74 $(1.11) $(3.84) - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments and foreign currency transactions $(1.17) $-- $-- $-- $-- $(1.32) From paid-in capital -- -- -- -- -- (0.00)(w) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.17) $-- $-- $-- $-- $(1.32) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $26.69 $24.19 $21.66 $18.63 $15.89 $17.00 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 15.65(n) 11.68 16.26(b) 17.24 (6.53) (18.30) - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.21(a) 2.30 2.27 2.40 2.37 2.34 Expenses after expense reductions (f) 2.21(a) 2.30 2.27 2.40 2.37 2.34 Net investment income (loss) 2.10(a) (0.53) (0.45) (0.56) (0.78) (0.82) Portfolio turnover 23 39 41 52 52 72 Net assets at end of period (000 Omitted) $37,519 $33,975 $32,785 $33,253 $31,594 $40,789 - ------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31 ENDED ---------------------------------------------------------------------- CLASS I 4/30/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $26.15 $23.23 $19.78 $16.70 $17.69 $23.04 - ------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ------------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.44 $0.12 $0.12 $0.09 $0.04 $0.02 Net realized and unrealized gain (loss) on investments and foreign currency 3.68 2.85 3.33 2.99 (1.03) (3.83) - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $4.12 $2.97 $3.45 $3.08 $(0.99) $(3.81) - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------------------- From net investment income $-- $(0.05) $-- $-- $-- $-- From net realized gain on investments and foreign currency transactions (1.17) -- -- -- -- (1.54) From paid-in capital -- -- -- -- -- (0.00)(w) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.17) $(0.05) $-- $-- $-- $(1.54) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $29.10 $26.15 $23.23 $19.78 $16.70 $17.69 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 16.22(n) 12.79 17.44(b) 18.44 (5.60) (17.54) - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.21(a) 1.30 1.26 1.40 1.37 1.34 Expenses after expense reductions (f) 1.21(a) 1.30 1.26 1.40 1.37 1.34 Net investment income 3.26(a) 0.47 0.53 0.54 0.23 0.10 Portfolio turnover 23 39 41 52 52 72 Net assets at end of period (000 Omitted) $53,843 $41,493 $37,781 $22,467 $2,325 $2,274 - ------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31 ENDED ---------------------------------------------------------------------- CLASS J 4/30/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $24.36 $21.80 $18.74 $15.97 $17.08 $22.36 - ------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (d) $0.26 $(0.11) $(0.08) $(0.09) $(0.13) $(0.15) Net realized and unrealized gain (loss) on investments and foreign currency 3.44 2.67 3.14 2.86 (0.98) (3.71) - ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations $3.70 $2.56 $3.06 $2.77 $(1.11) $(3.86) - ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments and foreign currency transactions $(1.17) $-- $-- $-- $-- $(1.42) From paid-in capital -- -- -- -- -- (0.00)(w) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.17) $-- $-- $-- $-- $(1.42) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $26.89 $24.36 $21.80 $18.74 $15.97 $17.08 - ------------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) 15.67(n) 11.74 16.33(b) 17.35 (6.50) (18.29) - ------------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.16(a) 2.25 2.22 2.34 2.32 2.29 Expenses after expense reductions (f) 2.16(a) 2.25 2.22 2.34 2.32 2.29 Net investment income (loss) 2.07(a) (0.47) (0.39) (0.53) (0.73) (0.78) Portfolio turnover 23 39 41 52 52 72 Net assets at end of period (000 Omitted) $20,627 $19,136 $23,188 $24,701 $17,215 $15,446 - ------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31 ENDED -------------------------------------- CLASS R 4/30/06 2005 2004 2003(i) (UNAUDITED) Net asset value, beginning of period $25.59 $22.80 $19.51 $16.57 - ---------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ---------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (d) $0.33 $(0.01) $0.01 $(0.05) Net realized and unrealized gain (loss) on investments and foreign currency 3.62 2.81 3.28 2.99 - ---------------------------------------------------------------------------------------------------------------------- Total from investment operations $3.95 $2.80 $3.29 $2.94 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ---------------------------------------------------------------------------------------------------------------------- From net investment income $-- $(0.01) $-- $-- From net realized gain on investments and foreign currency transactions (1.17) -- -- -- - ---------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $(1.17) $(0.01) $-- $-- - ---------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $28.37 $25.59 $22.80 $19.51 - ---------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 15.90(n) 12.26 16.86(b) 17.74(n) - ---------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ---------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.71(a) 1.81 1.76 1.83(a) Expenses after expense reductions (f) 1.71(a) 1.81 1.76 1.83(a) Net investment income (loss) 2.48(a) (0.03) 0.06 (0.29)(a) Portfolio turnover 23 39 41 52 Net assets at end of period (000 Omitted) $13,570 $12,862 $5,994 $1,265 - ---------------------------------------------------------------------------------------------------------------------- SIX MONTHS YEAR ENDED CLASS R1 ENDED 4/30/06 10/31/05(i) (UNAUDITED) Net asset value, beginning of period $24.61 $23.89 - ---------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ---------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (d) $0.28 $(0.15) Net realized and unrealized gain (loss) on investments and foreign currency 3.43 0.87(g) - ---------------------------------------------------------------------------------------------------------------------- Total from investment operations $3.71 $0.72 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ---------------------------------------------------------------------------------------------------------------------- From net realized gain on investments and foreign currency transactions $(1.17) $-- - ---------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $27.15 $24.61 - ---------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 15.55(n) 3.01(n) - ---------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ---------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.41(a) 2.50(a) Expenses after expense reductions (f) 2.31(a) 2.47(a) Net investment income (loss) 2.22(a) (1.06)(a) Portfolio turnover 23 39 Net assets at end of period (000 Omitted) $894 $672 - ---------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEAR ENDED CLASS R2 ENDED 4/30/06 10/31/05(i) (UNAUDITED) Net asset value, beginning of period $24.65 $23.89 - ---------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ---------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (d) $0.42 $(0.07) Net realized and unrealized gain (loss) on investments and foreign currency 3.35 0.83(g) - ---------------------------------------------------------------------------------------------------------------------- Total from investment operations $3.77 $0.76 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ---------------------------------------------------------------------------------------------------------------------- From net realized gain on investments and foreign currency transactions $(1.17) $-- - ---------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $27.25 $24.65 - ---------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 15.77(n) 3.18(n) - ---------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ---------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 2.11(a) 2.21(a) Expenses after expense reductions (f) 1.96(a) 2.17(a) Net investment income (loss) 3.27(a) (0.56)(a) Portfolio turnover 23 39 Net assets at end of period (000 Omitted) $419 $185 - ---------------------------------------------------------------------------------------------------------------------- YEARS ENDED 10/31 SIX MONTHS ------------------------------ CLASS R3 ENDED 4/30/06 2005 2004 (UNAUDITED) Net asset value, beginning of period $25.48 $22.76 $19.51 - ---------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ---------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (d) $0.42 $(0.06) $(0.03) Net realized and unrealized gain (loss) on investments and foreign currency 3.49 2.78 3.28 - ---------------------------------------------------------------------------------------------------------------------------- Total from investment operations $3.91 $2.72 $3.25 - ---------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ---------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments and foreign currency transactions $(1.17) $-- $-- - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $28.22 $25.48 $22.76 - ---------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 15.81(n) 11.95 16.66(b) - ---------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ---------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.96(a) 2.06 2.00 Expenses after expense reductions (f) 1.86(a) 2.05 2.00 Net investment income (loss) 3.18(a) (0.25) (0.15) Portfolio turnover 23 39 41 Net assets at end of period (000 Omitted) $5,196 $3,032 $530 - ---------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEAR ENDED CLASS R4 ENDED 4/30/06 10/31/05(i) (UNAUDITED) Net asset value, beginning of period $25.77 $24.90 - ---------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ---------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.97 $0.02 Net realized and unrealized gain (loss) on investments and foreign currency 3.03 0.85(g) - ---------------------------------------------------------------------------------------------------------------------- Total from investment operations $4.00 $0.87 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ---------------------------------------------------------------------------------------------------------------------- From net realized gain on investments and foreign currency transactions $(1.17) $-- - ---------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $28.60 $25.77 - ---------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 15.99(n) 3.49(n) - ---------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ---------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.62(a) 1.73(a) Expenses after expense reductions (f) 1.62(a) 1.73(a) Net investment income 7.58(a) 0.13(a) Portfolio turnover 23 39 Net assets at end of period (000 Omitted) $875 $84 - ---------------------------------------------------------------------------------------------------------------------- SIX MONTHS YEAR ENDED CLASS R5 ENDED 4/30/06 10/31/05(i) (UNAUDITED) Net asset value, beginning of period $25.81 $24.90 - ---------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS - ---------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.41 $0.08 Net realized and unrealized gain (loss) on investments and foreign currency 3.64 0.83(g) - ---------------------------------------------------------------------------------------------------------------------- Total from investment operations $4.05 $0.91 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS - ---------------------------------------------------------------------------------------------------------------------- From net realized gain on investments and foreign currency transactions $(1.17) $-- - ---------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $28.69 $25.81 - ---------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) 16.16(n) 3.65(n) - ---------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: - ---------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.31(a) 1.44(a) Expenses after expense reductions (f) 1.31(a) 1.44(a) Net investment income 3.04(a) 0.54(a) Portfolio turnover 23 39 Net assets at end of period (000 Omitted) $60 $52 - ---------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued 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 amount of per share 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. (w) Per share amount was less than $0.01. SEE NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS (unaudited) (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. Short-term instruments with a maturity at issuance of 397 days or less are generally 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 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. These investments are generally valued at fair value based on information from independent pricing services. These valuations can be based on 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 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 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. REPURCHASE AGREEMENTS - The fund may enter into repurchase agreements with institutions that the fund's investment adviser has determined are creditworthy. Each repurchase agreement is recorded at cost. The fund requires that the securities collateral in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. The fund monitors, on a daily basis, the value of the collateral to ensure that its value, including accrued interest, is greater than amounts owed to the fund under each such repurchase agreement. The fund, along with other affiliated entities of Massachusetts Financial Services Company (MFS), may utilize a joint trading account for the purpose of entering into one or more repurchase agreements. FOREIGN CURRENCY TRANSLATION - Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign exchange rate movements on income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed. SECURITY LOANS - State Street Bank and Trust Company ("State Street") and J.P. Morgan Chase 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. 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. 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. SHORT TERM FEES - For purchases made on or after July 1, 2004 and before April 1, 2005, the fund charged a 2% redemption fee on proceeds from Class A, Class B, Class C, and Class I shares redeemed or exchanged within 5 business days following their acquisition. Due to systems limitations associated with the transition from applying a 30 calendar day redemption fee to a 5 business day redemption fee, the fund did not impose redemption fees with respect to purchases made in June 2004 followed by redemptions made in July 2004. Effective April 1, 2005, the fund no longer charges a redemption fee. See the fund's prospectus for details. Any redemption fees charged are accounted for as an addition to paid-in capital. 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 involving its portfolio holdings. Any proceeds received are reflected in realized gain/loss in the Statement of Operations, or in unrealized gain/loss if the security is still held by the fund. FEES PAID INDIRECTLY - The fund's custody fee is reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. During the six months ended April 30, 2006, the fund's custodian fees were reduced by $25,903 under this arrangement. The fund has entered into a commission recapture agreement, under which certain brokers will credit the fund a portion of the commissions generated, to offset certain expenses of the fund. For the six months ended April 30, 2006, the fund's custodian expenses were reduced by $1,470 under this agreement. These amounts are shown as a reduction of total expenses on the Statement of Operations. Effective January 1, 2006, the commission recapture agreement was terminated. TAX MATTERS AND DISTRIBUTIONS - The fund intends to continue 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 generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes. Book/tax differences primarily relate to net operating losses, wash sale loss deferrals, foreign currency transactions, treating a portion of the proceeds from redemptions as a distribution for tax purposes, and foreign taxes. The tax character of distributions made during the current period will be determined at fiscal year end. The tax character of distributions declared to shareholders is as follows: OCTOBER 31, 2005 Ordinary income (including any short-term capital gains) $84,257 ------------------------------------------------------------ The fund declared no distributions for the year ended October 31, 2004. The federal tax cost and the tax basis components of distributable earnings were as follows: AS OF APRIL 30, 2006 Cost of investments $634,837,054 --------------------------------------------------------------- Gross appreciation 194,033,577 Gross depreciation (18,324,383) --------------------------------------------------------------- Net unrealized appreciation (depreciation) $175,709,194 AS OF OCTOBER 31, 2005 Undistributed long-term capital gain $30,238,045 Other temporary differences (84,853) Net unrealized appreciation (depreciation) 143,469,689 The aggregate cost above includes prior fiscal year end tax adjustments. MULTIPLE CLASSES OF SHARES OF BENEFICIAL INTEREST - The fund offers multiple classes of shares, which differ in their respective distribution and service fees. All shareholders bear the common expenses of the fund based on daily net assets of each class, without distinction between share classes. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B shares will convert to Class A shares approximately eight years after purchase. (3) TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISER - The fund has an investment advisory agreement with Massachusetts Financial Services Company (MFS) to provide overall investment advisory and administrative services, and general office facilities. The management fee is computed daily and paid monthly at the following annual rates: First $1 billion of average 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 six months ended April 30, 2006 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 $23,502 for the six months ended April 30, 2006, 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 Fee Plan Table: TOTAL ANNUAL DISTRIBUTION DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE FEE RATE FEE RATE PLAN(1) RATE(2) FEE Class A 0.10% 0.25% 0.35% 0.25% $528,916 Class B 0.75% 0.25% 1.00% 1.00% 756,973 Class C 0.75% 0.25% 1.00% 1.00% 176,417 Class J(3) 0.70% 0.25% 0.95% 0.95% 91,734 Class R 0.25% 0.25% 0.50% 0.50% 33,490 Class R1 0.50% 0.25% 0.75% 0.75% 2,921 Class R2 0.25% 0.25% 0.50% 0.50% 753 Class R3 0.25% 0.25% 0.50% 0.50% 9,593 Class R4 -- 0.25% 0.25% 0.25% 315 - ------------------------------------------------------------------------------- Total Distribution and Service Fees $1,601,112 (1) 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. (2) The annual effective rates represent actual fees incurred under the distribution plan for the six months ended April 30, 2006 based on each class' average daily net assets. Payment of the 0.10% annual Class A distribution fee is not yet implemented and will commence on such date as the fund's Board of Trustees may determine. (3) 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 six months ended April 30, 2006, were as follows: AMOUNT Class A $18,349 Class B $60,670 Class C $809 SHAREHOLDER SERVICING AGENT - The fund pays a portion of shareholder servicing costs to MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS. MFSC receives a fee from the fund, for its services as shareholder servicing agent, set periodically under the supervision of the fund's Board of Trustees. For the six months ended April 30, 2006, the fee was $331,777 which equated to 0.0956% annually of the fund's average daily net assets. MFSC also receives payment from the fund for out-of-pocket and sub-accounting expenses paid by MFSC on behalf of the fund. For the six months ended April 30, 2006, these costs amounted to $186,521. ADMINISTRATOR - MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to certain funds for which MFS acts as investment adviser. Under an administrative services agreement, the funds may partially reimburse MFS the costs incurred to provide these services, subject to review and approval by the Board of Trustees. Each fund is charged a fixed amount plus a fee based on calendar year average net assets. From July 1, 2005 through March 31, 2006, the fund's annual fixed amount was $10,000. Effective April 1, 2006, the fund's annual fixed amount is $17,500. The administrative services fee incurred for the six months ended April 30, 2006 was equivalent to an annual effective rate of 0.0120% of the fund's average daily net assets. In addition to the administrative services provided by MFS to the fund as described above, MFS is responsible for providing certain retirement plan administration and services with respect to certain shares. These services include various administrative, recordkeeping, and communication/educational services with respect to the retirement plans which invest in these shares, and may be provided directly by MFS or by a third party. MFS may subsequently pay all, or a portion, of the retirement plan administration and services fee to affiliated or unaffiliated third parties. For the six months ended April 30, 2006, 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: ANNUAL EFFECTIVE TOTAL FEE RATE RATE(1) AMOUNT Class R1 0.45% 0.35% $1,753 Class R2 0.40% 0.25% 602 Class R3 0.25% 0.15% 4,797 Class R4 0.15% 0.15% 189 Class R5 0.10% 0.10% 28 - ------------------------------------------------------------------------------- Total Retirement Plan Administration and Services Fees $7,369 (1) Effective October 1, 2005, MFS has contractually agreed to waive a portion of the retirement plan administration and services fee equal to 0.10% for Class R1 shares, 0.15% for Class R2 shares, and 0.10% for Class R3 shares. This agreement will continue until at least September 30, 2007. For the six months ended April 30, 2006, this waiver amounted to $2,534 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 retired Independent Trustees which resulted in a pension expense of $3,174. The fund also has an unfunded retirement benefit deferral plan for certain current Independent Trustees which resulted in an expense of $1,418. Both amounts are included in Independent trustees' compensation for the six months ended April 30, 2006. The deferred liability for retirement benefits payable to retired Trustees and certain current Trustees amounted to $29,827 and $25,903, respectively, at April 30, 2006, and is included in payable for independent trustees' compensation. OTHER - This fund and certain other MFS funds (the funds) have entered into a services agreement (the Agreement) which provides for payment of fees by the funds to Tarantino LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the Agreement with Tarantino LLC at any time under the terms of the Agreement. For the six months ended April 30, 2006, the fee paid to Tarantino LLC was $2,855. MFS has agreed to reimburse the fund for a portion of the payments made by the funds to Tarantino LLC in the amount of $2,360, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO. (4) PORTFOLIO SECURITIES Purchases and sales of investments, other than U.S. government securities, purchased option transactions, and short-term obligations, aggregated $158,129,692 and $192,849,531, respectively. (5) SHARES OF BENEFICIAL INTEREST The fund's Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:
SIX MONTHS ENDED 4/30/06 YEAR ENDED 10/31/05(i) SHARES AMOUNT SHARES AMOUNT Shares sold Class A 1,908,011 $51,638,331 4,169,984 $104,075,188 Class B 594,185 15,263,475 1,261,711 30,176,056 Class C 132,232 3,348,245 291,873 6,844,927 Class I 357,505 9,915,250 610,393 15,444,916 Class J 172,737 4,399,078 214,359 5,101,163 Class R 59,274 1,593,210 418,220 10,252,746 Class R1 9,193 232,726 28,959 704,849 Class R2 7,742 198,165 8,005 193,992 Class R3 99,396 2,674,516 126,604 3,177,335 Class R4 37,328 1,031,961 3,277 83,356 Class R5 -- -- 2,008 50,000 - ---------------------------------------------------------------------------------------------------- 3,377,603 $90,294,957 7,135,393 $176,104,528 Shares issued to shareholders in reinvestment of distributions Class A 664,995 $17,230,036 -- $-- Class B 259,672 6,406,116 -- -- Class C 59,990 1,452,354 -- -- Class I 72,189 1,898,580 3,322 82,567 Class J 103 2,514 -- -- Class R 22,642 581,662 67 1,642 Class R1 1,279 31,501 -- -- Class R2 359 8,875 -- -- Class R3 6,224 159,128 -- -- Class R4 156 4,035 -- -- Class R5 90 2,344 -- -- - ---------------------------------------------------------------------------------------------------- 1,087,699 $27,777,145 3,389 $84,209 Shares reacquired Class A (2,652,682) $(71,760,783) (4,622,434) $(115,713,383) Class B (1,296,553) (33,436,464) (2,978,747) (71,428,594) Class C (190,763) (4,804,507) (400,975) (9,447,612) Class I (165,894) (4,570,181) (653,604) (16,583,343) Class J (191,208) (4,850,848) (492,373) (11,644,337) Class R (106,264) (2,869,775) (178,523) (4,464,506) Class R1 (4,865) (124,563) (1,647) (40,727) Class R2 (236) (6,257) (489) (12,251) Class R3 (40,515) (1,064,526) (30,917) (780,227) Class R4 (10,145) (278,309) -- -- - ---------------------------------------------------------------------------------------------------- (4,659,125) $(123,766,213) (9,359,709) $(230,114,980) Net change Class A (79,676) $(2,892,416) (452,450) $(11,638,195) Class B (442,696) (11,766,873) (1,717,036) (41,252,538) Class C 1,459 (3,908) (109,102) (2,602,685) Class I 263,800 7,243,649 (39,889) (1,055,860) Class J (18,368) (449,256) (278,014) (6,543,174) Class R (24,348) (694,903) 239,764 5,789,882 Class R1 5,607 139,664 27,312 664,122 Class R2 7,865 200,783 7,516 181,741 Class R3 65,105 1,769,118 95,687 2,397,108 Class R4 27,339 757,687 3,277 83,356 Class R5 90 2,344 2,008 50,000 - ---------------------------------------------------------------------------------------------------- (193,823) $(5,694,111) (2,220,927) $(53,926,243) (i) For the period from the class' inception, April 1, 2005 (Classes R1, R2, R4, and R5) through the stated period end.
(6) LINE OF CREDIT The fund and other affiliated funds participate in a $1 billion unsecured line of credit provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus 0.35%. In addition, a commitment fee, based on the average daily, unused portion of the line of credit, is allocated among the participating funds at the end of each calendar quarter. The commitment fee allocated to the fund for the six months ended April 30, 2006 was $2,361, and is included in miscellaneous expense on the Statement of Operations. The fund had no significant borrowings during the six months ended April 30, 2006. BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT A discussion regarding the Board's most recent review and renewal of the Fund's investment advisory agreement is available by clicking on the fund's name under "Select a fund" on the MFS Web site (mfs.com). PROXY VOTING POLICIES AND INFORMATION A general description of the MFS funds' proxy voting policies and procedures is available without charge, upon request, by calling 1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC's Web site at http://www.sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The trust 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 trust's Form N-Q may be reviewed and copied at the: Public Reference Room Securities and Exchange Commission 100 F Street, NE, Room 1580 Washington, D.C. 20549 Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-202-551-5850. The trust's Form N-Q is available on the EDGAR database on the Commission's Internet Web site at http://www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Section at the above address. A shareholder can also obtain the quarterly portfolio holdings report at mfs.com. CONTACT INFORMATION INVESTOR SERVICE Write to us at: MFS Service Center, Inc. P.O. Box 55824 Boston, MA 02205-5824 Type of Information Phone number Hours, Eastern Time - ------------------------------------------------------------------------------- General information 1-800-225-2606 8 a.m. to 8 p.m., any business day - ------------------------------------------------------------------------------- Speech- or hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m., any business day - ------------------------------------------------------------------------------- Shares prices, account 1-800-MFS-TALK balances exchanges (1-800-637-8255) 24 hours a day, 365 days a or stock and bond outlooks touch-tone required year - ------------------------------------------------------------------------------- M F S(SM) INVESTMENT MANAGEMENT(R) MFS Investment Management(R) MFS(R) investment products are offered through MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116. LGE-SEM-6/06 31M ITEM 2. CODE OF ETHICS. The Registrant has not amended any provision in its Code of Ethics (the "Code") that relates to any element of the Code's definition enumerated in paragraph (b) of Item 2 of this Form N-CSR. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semi-annual reports. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semi-annual reports. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the Registrant. ITEM 6. SCHEDULE OF INVESTMENTS A schedule of investments for each series of the Registrant is included as part of the report to shareholders of such series under Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the Registrant. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the Registrant. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to the Registrant. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There were no material changes to the procedures by which shareholders may send recommendations to the Board for nominees to the Registrant's Board since the Registrant last provided disclosure as to such procedures in response to the requirements of Item 7(d)(2)(ii)(G) 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 Form N-CSR, the registrant's principal financial officer and principal executive officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no changes in the registrant's internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by the report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. (2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2): Attached hereto. (b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference: Attached hereto. NOTICE A copy of the Amended and Restated Declaration of Trust of the Registrant is on file with the Secretary of State of the Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually, but are binding only upon the assets and property of the respective constituent series of the Registrant. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) MFS SERIES TRUST VI ------------------------------------------------------------------ By (Signature and Title)* MARIA F. DWYER ----------------------------------------------------- Maria F. Dwyer, President Date: June 23, 2006 ------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* MARIA F. DWYER ----------------------------------------------------- Maria F. Dwyer, President (Principal Executive Officer) Date: June 23, 2006 ------------- By (Signature and Title)* TRACY ATKINSON ----------------------------------------------------- Tracy Atkinson, Treasurer (Principal Financial Officer and Accounting Officer) Date: June 23, 2006 ------------- * Print name and title of each signing officer under his or her signature. EX-99.CERT 2 ex99cert.txt CERTIFICATION EX-99.CERT MFS SERIES TRUST VI CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Tracy Atkinson, certify that: 1. I have reviewed this report on Form N-CSR of MFS Series Trust VI; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; and d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 23, 2006 TRACY ATKINSON ------------- ---------------------------------------- Tracy Atkinson Treasurer (Principal Financial Officer and Accounting Officer) EX-99.CERT MFS SERIES TRUST VI CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Maria F. Dwyer, certify that: 1. I have reviewed this report on Form N-CSR of MFS Series Trust VI; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; and d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 23, 2006 MARIA F. DWYER ------------- ---------------------------------------- Maria F. Dwyer President (Principal Executive Officer) EX-99.906CERT MFS SERIES TRUST VI CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT I, Tracy Atkinson, certify that, to my knowledge: 1. The Form N-CSR (the "Report") of MFS Series Trust VI (the "Registrant") fully complies for the period covered by the Report with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: June 23, 2006 TRACY ATKINSON ------------- ---------------------------------------- Tracy Atkinson Treasurer (Principal Financial Officer and Accounting Officer) A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO THE REGISTRANT AND WILL BE RETAINED BY THE REGISTRANT AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. EX-99.906CERT MFS SERIES TRUST VI CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT I, Maria F. Dwyer, certify that, to my knowledge: 1. The Form N-CSR (the "Report") of MFS Series Trust VI (the "Registrant") fully complies for the period covered by the Report with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: June 23, 2006 MARIA F. DWYER ------------- ---------------------------------------- Maria F. Dwyer President (Principal Executive Officer) A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO THE REGISTRANT AND WILL BE RETAINED BY THE REGISTRANT AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. -----END PRIVACY-ENHANCED MESSAGE-----