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[Logo] MFS
THE FIRST NAME IN MUTUAL FUNDS
SEMIANNUAL REPORT
MARCH 31, 1995
MFS(R) TOTAL RETURN FUND
Silhouette of two men in front of a large window
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<TABLE>
<S> <C>
MFS(R) TOTAL RETURN FUND
TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and President Investors Bank & Trust Company
Richard B. Bailey* - Private Investor; AUDITORS
Former Chairman and Director (until 1991), Deloitte & Touche LLP
Massachusetts Financial Services Company
INVESTOR INFORMATION
Peter G. Harwood - Former Financial Vice For MFS stock and bond market outlooks,
President, Treasurer and Director (until 1988), call toll free: 1-800-637-4458 anytime from
Loomis, Sayles & Co., Inc. a touch-tone telephone.
J. Atwood Ives - Chairman and Chief Executive For information on MFS mutual funds,
Officer, Eastern Enterprises call your financial adviser or, for an
information kit, call toll free:
Lawrence T. Perera - Partner, Hemenway & Barnes 1-800-637-2929 any business day from
9 a.m. to 5 p.m. Eastern time (or leave
William J. Poorvu - Adjunct Professor, Harvard a message anytime).
University Graduate School of Business
Administration INVESTOR SERVICE
MFS Service Center, Inc.
Charles W. Schmidt - Private Investor; P.O. Box 2281
Former Senior Vice President and Group Executive Boston, MA 02107-9906
(until 1990), Raytheon Company
For current account service, call toll free:
Arnold D. Scott* - Senior Executive Vice President 1-800-225-2606 any business day from
and Secretary, Massachusetts Financial Services Company 8 a.m. to 8 p.m. Eastern time.
Jeffrey L. Shames* - President and Chief Equity For service to speech- or hearing-impaired,
Officer, Massachusetts Financial Services Company call toll free: 1-800-637-6576 any business
day from 9 a.m. to 5 p.m. Eastern time. (To use this
Elaine R. Smith - Independent Consultant service, your phone must be equipped with a
Telecommunications Device for the Deaf.)
David B. Stone - Chairman, North American
Management Corp. (Investment Advisers) For share prices, account balances and
exchanges, call toll free: 1-800-MFS-TALK
INVESTMENT ADVISER (1-800-637-8255) anytime from a touch-tone
Massachusetts Financial Services Company telephone.
500 Boylston Street
Boston, Massachusetts 02116-3741
PORTFOLIO MANAGER TOP-RATED SERVICE
Richard E. Dahlberg* [Logo] MFS was rated first when securities firms
evaluated the quality of service they receive
TREASURER from 40 mutual fund companies. MFS got high
W. Thomas London* marks for answering calls quickly, processing
transactions accurately and sending statements
ASSISTANT TREASURER out on time.
James O. Yost* (Source: 1994 DALBAR Survey)
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
As we have communicated in the past several reports, we have been managing the
Fund somewhat conservatively due to high stock market valuations and the Federal
Reserve Board's tightening moves, which have made the bond market risky. Our
cash reserves were high, at 20% of the Fund's total net assets, when we entered
this reporting period on October 1, 1994. We subsequently reduced our cash by
purchasing intermediate-term government bonds during the November to January
period. This change has enabled us to increase the monthly dividend. For the six
months ended March 31, 1995, Class A shares of the Fund provided a total return
of +4.41%, Class B shares +3.98%, and Class C shares +4.15%. All of these
returns assume the reinvestment of distributions but exclude the effects of any
sales charges. A discussion of performance and our strategy for the Fund may be
found in the Portfolio Performance and Strategy section below.
Economic Environment
The economic expansion, entering its fifth year, gained firmer underpinnings in
1994 as employers significantly stepped up hiring levels. Increased employment,
stronger capital spending by businesses, and strengthening overseas economies
resulted in 4.1% real (adjusted for inflation) gross domestic product growth
last year. Interest rates rose substantially over the past year, which should
help restrain, but not curtail, the economic expansion. Based on sound economic
fundamentals both here and abroad, we expect the business expansion to continue
well into 1995.
Interest Rates
Despite a stronger economy, inflation at the consumer level has remained
relatively benign at 2.7% in 1994, the fourth straight year of 3.0% or less. Due
to a prolonged period of below-trend-line growth and continued pressure on
corporations to emphasize effective cost controls, wage growth and unit labor
costs have remained subdued. However, as the economy has exhibited continuing
strength, various industrial commodity prices have been rising substantially
faster than consumer prices. Nevertheless, businesses have had difficulty
passing these price increases on to the consumer. With the economy continuing to
expand, we expect some upward movement in inflation from below 3% to the 3 1/2%
range. The Federal Reserve has shown a willingness to raise short-term rates to
slow the economy in order to dampen inflationary pressures, as it raised the
federal funds rate 50 basis points (0.50%) in February, after a 75 basis point
(0.75%) increase in November. We do not expect the central bank to raise
short-term rates in the near term for domestic policy reasons unless it
concludes that current efforts have failed to dampen inflationary expectations.
However, recent data, including a March rise in the unemployment rate and the
first decline in industrial production in six months, indicate the increased
likelihood of a deceleration in the economy. Capacity utilization rates have
also declined for two consecutive months. While recent significant weakness in
the dollar versus the deutsche mark and yen could prompt the Federal Reserve to
raise short-term rates in an effort to prevent further declines in the value of
the U.S. currency, we believe the potential recessionary implications of further
short-term rate increases will constrain Federal Reserve action.
We believe fundamentals are favorable for lower long-term interest rates in
1995, but that further declines may not occur until the dollar stabilizes in
world currency markets.
Stock Market
The stock market has rebounded from its uninspiring performance during 1994,
posting its strongest quarterly results in four years. Recently, prices have
responded to growing confidence that the Federal Reserve is nearing the end of
its tightening initiatives and that gains in corporate earnings may be
substantial. Although we expect the economy to slow in 1995, our outlook for
corporate earnings growth remains favorable. We have been de-emphasizing many
cyclical areas such as autos and basic materials because of their less
attractive earnings outlook, and we have been emphasizing areas such as consumer
and household products. Despite the potential impact on corporate profits from a
slowing economy, we believe stock prices will respond to continued growth in
profitability.
Portfolio Performance and Strategy
During the past six months, our major change in strategy was to boost the bond
sector of the Fund from about 21% on October 1, 1994 to approximately 31% on
March 31, 1995. We made this change in bond allocation, first, because in the
panic sell-off by hedge funds and dealers, bonds had gotten extraordinarily
cheap in relation to inflation. The second consideration attracting us to bonds
was the Federal Reserve's determination to rein in economic growth and keep
inflation in check. Should this resolve change due to the 1996 elections, we
would have to re-evaluate our position. As a result of this increase in our bond
holdings, our cash position was lowered to about 14% of the Fund's total net
assets by the end of this reporting period.
With yields on the Standard & Poor's Composite Index of 500 Stocks and the
Standard & Poor's 400 Industrial Index (popular, unmanaged indices of common
stock performance) of +2.25% and +2.60%, respectively, stocks are still not all
that compelling. As a result, our position in equities is being held to about
44% of the Fund, as opposed to a two-thirds level when we feel stocks are at
bargain levels. We have been concentrating our stock positions in oil companies,
banks, insurance companies and natural gas pipelines, areas we believe are
relatively cheap compared to the general market. Companies in these sectors also
possess dividend yields that are substantially above those of the average
company.
This strategy has enabled us to raise the current monthly dividend to
approximately $0.052 per share from the $0.045 per share average for the 1994
fiscal year.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
A 1 1/2" by 1 5/8" photo of A. Keith Brodkin, Chairman and President.
A 1 1/2" by 1 5/8" photo of Richard E. Bahlberg, Portfolio Manager.
/s/A. Keith Brodkin /s/Richard E. Dahlberg
A. Keith Brodkin Richard E. Dahlberg
Chairman and President Portfolio Manager
April 17, 1995
PORTFOLIO MANAGER PROFILE
Richard Dahlberg joined the MFS Research Department in 1968 as an industry
specialist. A graduate of Northeastern University and the Wharton School of
Finance and Commerce of the University of Pennsylvania, he was promoted to Vice
President - Investments in 1970. In 1982, he was named Senior Vice President,
and in 1985 he became the Portfolio Manager of MFS Total Return Fund. Mr.
Dahlberg is a member and past president of the Boston Security Analysts Society
and is a Chartered Financial Analyst.
OBJECTIVES AND POLICIES
The Fund seeks to provide above-average current income (compared to a portfolio
entirely invested in equity securities) consistent with prudent employment of
capital. As a secondary objective, the Fund seeks opportunities for growth of
capital and income because many securities that offer a better- than-average
yield may possess growth potential.
The Fund's investment policies are to vary its investments in debt and equity
securities in accordance with its interpretation of economic and money market
conditions, fiscal and monetary policies and underlying security values.
Generally, at least 40% of the Fund's assets is invested in equity securities.
The Fund's debt securities include both investment and non-investment grade
bonds. The Fund may also invest in foreign securities.
PERFORMANCE SUMMARY
Because mutual funds like MFS Total Return Fund are designed for investors with
long-term goals, we have provided cumulative results as well as the average
annual total returns for Class A shares for the past 6-month, 1-, 5- and 10-year
periods ended March 31, 1995.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
Class A Investment Results
(net asset value change including reinvested distributions)
6 Months 1 Year 5 Years 10 Years
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Cumulative Total Return* +4.41% +6.33% +59.06% +232.75%
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Average Annual Total Return* -- +6.33% + 9.72% + 12.77%
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The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the Securities and Exchange Commission
(the SEC), with all distributions reinvested and reflecting the maximum sales
charge of 4.75% for the 1-, 5- and 10-year periods ended March 31, 1995, were
+1.28%, +8.66% and +12.23%, respectively.
Class B Investment Results
(net asset value change including reinvested distributions)
8/23/93+ -
6 Months 1 Year 3/31/95
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Cumulative Total Return++ +3.98% +5.46% +3.64%
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Average Annual Total Return++ -- +5.46% +2.25%
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The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the SEC for the 1-year period ended March
31, 1995 and for the period from August 23, 1993+ to March 31, 1995, reflecting
the current maximum contingent deferred sales charge (CDSC) of 4%, were +1.46%
and -0.14, respectively.
Class C Investment Results
(net asset value change including reinvested distributions)
The cumulative total returns for the 6-month period ended March 31, 1995 and for
the period from August 1, 1994+ to March 31, 1995, were +4.15% and +3.72%,
respectively. Class C shares have no initial sales charge or CDSC but, along
with Class B shares, have higher annual fees and expenses than Class A shares.
All results represent past performance and are not necessarily an indication of
future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost. All
Class A share results reflect the applicable expense subsidy which is explained
in the Notes to Financial Statements. Had the subsidy not been in effect, the
results would have been less favorable. The subsidy may be rescinded by MFS at
any time.
* These results do not include the sales charge. If the charge had been
included, the results would have been lower.
++ These results do not include any CDSC. If the charge had been included, the
results would have been lower.
+ Commencement of offering of this class of shares.
<PAGE>
PORTFOLIO OF INVESTMENTS - March 31, 1995
Non-Convertible Bonds - 31.2%
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Principal Amount
Issuer (000 Omitted) Value
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Banks and Credit Companies - 0.7%
Capital One Bank, 8.125s, 2000 $ 4,390 $ 4,382,800
Chase Manhattan Corp., 8.8s, 2000 5,440 5,555,926
First USA Bank, 7.65s, 2003 4,500 4,245,255
Hartford National Corp., 9.85s, 1999 5,000 5,339,550
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$ 19,523,531
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Financial Institutions - 0.9%
ADVANTA Corp., 7.04s, 1997 $ 8,515 $ 8,403,454
Ford Motor Credit Co., 7.75s, 2005 5,490 5,450,472
General Motors Acceptance Corp., 5.95s, 1998 4,250 4,009,662
Great Western Financial Corp., 6.375s, 2000 6,500 6,086,145
Household Finance Corp., 8.25s, 2005 1,960 2,014,174
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$ 25,963,907
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Foreign - U.S. Dollar Denominated - 1.3%
Banco Nacional de Commerce, 7.25s, 2004 $ 4,000 $ 1,910,000
Financiara Energie Nacional, 6.625s, 1996## 5,360 5,172,400
Four Seasons Hotels, Inc., 9.125s, 2000## 1,000 957,500
Hidroelectrica Alicura, 8.375s, 1999## 6,000 4,320,000
Korea Electric Power Corp., 7.75s, 2013 7,220 6,522,331
Petroliam Nasional Berhad, 6.875s, 2003## 1,000 932,650
Province of Saskatchewan, Canada,
9.375s, 2020 500 557,025
Republic of Argentina, 4.25s, 2023 1,000 407,500
Republic of Argentina, 5.8125s, 2023 1,000 537,500
Republic of Colombia, 8.75s, 1999 3,640 3,539,900
Republic of Greece, 9.75s, 1999 6,800 7,038,000
Republic of Malta, 7.5s, 2009## 4,490 4,214,987
Tenaga Nasional Berhad, 7.875s, 2004## 2,000 1,983,260
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$ 38,093,053
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Industrials - 8.0%
ADT Operations, Inc., 9.25s, 2003 $ 1,000 $ 976,250
AK Steel Holdings Corp., 10.75s, 2004 2,000 2,017,500
American Home Products, 7.7s, 2000 3,390 3,413,662
American Standard, Inc., 0s, 2005 1,750 1,190,000
Ashland Oil, Inc., 11.125s, 2017 3,500 3,911,460
Bayou Steel Corp., 10.25s, 2001 500 440,000
Black & Decker Corp., 8.44s, 1999 1,690 1,723,090
Black & Decker Corp., 7.5s, 2003 8,600 8,226,760
Borden, Inc., 0s, 1997## 15,200 12,853,500
Borden, Inc., 9.875s, 1997 4,500 4,683,915
Burlington Resources, Inc., 8.2s, 2025 6,000 5,926,440
Canandaigua Wine, Inc., 8.75s, 2003 3,000 2,887,500
Coca-Cola Bottling Group Southwest,
Inc., 9s, 2003 1,000 942,500
Container Corp. of America, 10.75s, 2002 750 772,500
Container Corp. of America, 9.75s, 2003 250 245,000
Eckerd (Jack) Corp., 9.25s, 2004 500 502,500
FHP International Corp., 7s, 2003 3,000 2,774,910
Finlay Enterprises, Inc., 0s, 2005 1,500 930,000
Finlay Fine Jewelry, 10.625s, 2003 1,000 930,000
Foundation Health Corp., 7.75s, 2003 4,100 3,909,473
Geneva Steel Co., 9.5s, 2004 2,250 1,822,500
Georgia-Pacific Corp., 9.5s, 2022 4,425 4,634,347
Georgia-Pacific Corp., 8.125s, 2023 5,550 5,223,882
Gulf Canada Resources Ltd., 9.25s, 2004 1,000 950,000
Huntsman Corp., 10.625s, 2001 1,000 1,042,500
K Mart Corp., 8.8s, 2010 5,550 5,791,369
K Mart Corp., 8.25s, 2022 6,000 5,522,280
Kaiser Aluminum & Chemical Corp.,
9.875s, 2002 1,000 937,500
Koppers Industries, Inc., 8.5s, 2004 2,000 1,810,000
Kroger Co., 9.25s, 2005 5,000 5,187,500
MFS Communications, Inc., 0s, 2004 2,850 1,802,625
Markel Corp., 7.25s, 2003 2,400 2,167,368
McDonnell Douglas Corp., 8.5s, 2000 4,390 4,481,488
NL Industries, Inc., 11.75s, 2003 750 768,750
News America Holdings, Inc., 7.5s, 2000 3,400 3,324,418
News America Holdings, Inc., 10.125s, 2012 5,000 5,384,000
News America Holdings, Inc., 8.25s, 2018 10,000 9,312,700
News America Holdings, Inc., 9.5s, 2024 2,000 2,105,200
Nortek, Inc., 9.875s, 2004 500 458,750
OrNda Healthcorp, 12.25s, 2002 2,250 2,452,500
Oryx Energy Co., 9.3s, 1996 7,150 7,217,353
Oryx Energy Co., 9.5s, 1999 3,500 3,490,585
Owens Corning Fiberglass, 9.9s, 2015## 2,500 2,621,875
Owens-Illinois, Inc., 9.75s, 2004 4,500 4,365,000
Paging Network, Inc., 8.875s, 2006 3,000 2,610,000
RJR Nabisco, Inc., 8.75s, 2005 13,590 13,289,933
Riverwood International Corp., 11.25s, 2002 1,000 1,055,000
Rouse Co., 8.5s, 2003 4,000 4,009,760
Safeway Stores, Inc., 9.65s, 2004 4,000 4,220,000
Seagull Energy Corp., 7.875s, 2003 3,500 3,220,000
Stone Container Corp., 9.875s, 2001 3,400 3,298,000
Stone Container Corp., 10.75s, 2002 2,100 2,163,000
Stop & Shop Cos., Inc., 9.75s, 2002 2,450 2,572,500
Time Warner Entertainment Co., 10.15s, 2012## 5,000 5,317,300
Time Warner, Inc., 9.125s, 2013 10,000 9,503,000
Time Warner, Inc., 9.15s, 2023 12,000 11,253,480
USA Mobile Communication, 9.5s, 2004 500 425,000
USG Corp., 9.25s, 2001 250 247,500
USX-Marathon Group, 8.875s, 1997 5,000 5,120,000
USX-Marathon Group, 9.375s, 2012 5,000 5,146,050
United States Home Corp., 9.75s, 2003 1,000 925,000
Valassis Inserts, 9.375s, 1999 3,900 3,957,798
Weirton Steel Corp., 10.875s, 1999 2,000 1,950,000
Westpoint Stevens, Inc., 9.375s, 2005 2,000 1,830,000
Wheeling Pittsburgh, 9.375s, 2003 1,500 1,297,500
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$ 225,542,271
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Insurance - 0.3%
Americo Life, Inc., 9.25s, 2005 $ 250 $ 221,250
CCP Insurance, Inc., 10.5s, 2004 5,000 4,853,500
Conseco, Inc., 8.125s, 2003 4,050 3,493,125
Phoenix Re Corp., 9.75s, 2003 1,000 1,020,000
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$ 9,587,875
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Mortgage-Backed Pass-Throughs - 0.4%
Merrill Lynch Home Equity Loan, 91-1,
"B", 9.3s, 2016+ $ 3,800 $ 3,832,224
Merrill Lynch Mortgage Investors, Inc.,
9.7s, 2010 602 610,230
Merrill Lynch Mortgage Investors, Inc.,
8.9s, 2011 2,500 2,503,092
Merrill Lynch Mortgage Investors, Inc.,
9s, 2011 1,158 1,165,226
Merrill Lynch Mortgage Investors, Inc.,
9.25s, 2011 420 426,864
Merrill Lynch Mortgage Investors, Inc.,
8.227s, 2021+ 4,000 2,871,240
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$ 11,408,876
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Special Products and Services - 0.2%
Eagle Industries, Inc., 0s, 2003 $ 3,000 $ 1,950,000
IMC Fertilizer Group, 9.25s, 2000 4,000 3,940,000
Mark IV Industries, Inc., 8.75s, 2003 400 388,000
OSI Specialties, Inc., 9.25s, 2003 500 480,000
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$ 6,758,000
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Transportation - 1.1%
Delta Air Lines, Inc., 9.75s, 2021 $ 9,000 $ 9,119,610
Delta Air Lines, Inc., 10.375s, 2022 5,100 5,466,792
NWA Trust, 9.25s, 2014 3,950 4,117,480
Qantas Airways Ltd., 7.5s, 2003## 3,000 2,840,460
United Air Lines, Inc., 9.75s, 2021 5,100 4,966,329
United Air Lines, Inc., 10.25s, 2021 5,000 5,084,850
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$ 31,595,521
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U.S. Government Agencies - 1.2%
Federal National Mortgage Association - 0.8%
FNMA, 8.5s, 2003 $ 82 $ 84,275
FNMA, 8.5s, 2005 17,000 17,467,500
FNMA, 8.5s, 2005 171 174,801
FNMA, 8.5s, 2006 1,444 1,478,306
FNMA, 8.5s, 2007 76 77,342
FNMA, 9s, 2001 67 69,779
FNMA, 9s, 2002 5 5,622
FNMA, 9s, 2004 150 155,234
FNMA, 9s, 2005 619 642,181
FNMA, 9s, 2006 1,141 1,182,991
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$ 21,338,031
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Other - 0.4%
Resolution Funding Corp., 0s, 2020 $90,900 $ 12,878,712
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Total U.S. Government Agencies $ 34,216,743
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U.S. Government Guaranteed - 13.4%
Government National Mortgage Association - 0.1%
GNMA, 9s, 2017 $ 269 $ 277,644
GNMA, 9s, 2017 338 349,761
GNMA, 11s, 2014 266 292,644
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$ 920,049
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Small Business Administration
SBA, 8.8s, 2011 $ 577 $ 602,995
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U.S. Treasury Obligations - 13.3%
Stripped Principal Payments, 0s, 2017 $75,000 $ 13,674,000
Stripped Principal Payments, 0s, 2018 75,000 12,437,250
U.S. Treasury Notes, 7.25s, 1996 75,000 75,585,750
U.S. Treasury Notes, 6.5s, 1997 25,000 24,812,500
U.S. Treasury Notes, 8.875s, 1998 50,000 52,953,000
U.S. Treasury Notes, 9.25s, 1998 34,000 36,279,020
U.S. Treasury Notes, 8.875s, 1999 38,500 40,900,090
U.S. Treasury Notes, 7.125s, 2000 12,750 12,767,978
U.S. Treasury Notes, 7.75s, 2000 1,500 1,539,375
U.S. Treasury Notes, 6.25s, 2003 2,700 2,542,644
U.S. Treasury Notes, 7.25s, 2004 9,000 9,001,440
U.S. Treasury Notes, 7.5s, 2005 4,000 4,081,240
U.S. Treasury Bonds, 9.25s, 2016 $35,950 42,252,394
U.S. Treasury Bonds, 7.625s, 2025 48,030 49,065,527
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$ 377,892,208
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Total U.S. Government Guaranteed $ 379,415,252
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Utilities - Electric - 2.4%
Commonwealth Edison Co., 9.5s, 2016 $ 3,090 $ 3,145,280
Commonwealth Edison Co., 8.5s, 2022 3,000 2,790,000
Commonwealth Edison Co., 8.625s, 2022 1,910 1,863,874
First PV Funding Corp., 10.3s, 2014 8,020 8,040,050
First PV Funding Corp., 10.15s, 2016 7,383 7,235,340
Long Island Lighting Co., 7.625s, 1998 5,400 5,358,690
Long Island Lighting Co., 9.625s, 2024 7,600 7,179,264
Louisiana Power & Light Co., 10.67s, 2017 2,065 2,154,662
Midland Cogeneration Venture Corp.,
10.33s, 2002 1,106 1,100,620
Midland Funding Corp. II, "A", 11.75s, 2005 6,000 5,820,000
Niagara Mohawk Power Co., 9.25s, 2001 4,890 5,134,500
PNPP II Funding Corp., 8.51s, 2006 4,424 4,117,682
PNPP II Funding Corp., 9.12s, 2016 5,200 4,574,232
Texas & New Mexico Power Co., 12.5s, 1999 4,105 4,436,766
Texas & New Mexico Power Co., 9.25s, 2000 4,000 4,052,080
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$ 67,003,040
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Utilities - Gas - 1.1%
ANR Pipeline Co., 7.375s, 2024 $ 3,950 $ 3,497,448
California Energy Co., 0s, 2004 4,400 3,267,000
Coastal Corp., 9.75s, 2003 2,575 2,786,716
Coastal Corp., 10.75s, 2010 6,450 7,540,437
GG1B Funding Corp., 7.43s, 2011 5,940 5,274,661
Southern Union Co., 7.6s, 2024 8,400 7,472,136
Texas Eastern Corp., 9s, 1997 1,000 1,028,000
--------------
$ 30,866,398
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Utilities - Telephone - 0.2%
Century Telephone Enterprises, 8.25s, 2024 $ 4,400 $ 4,252,160
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Total Non-Convertible Bonds (Identified Cost, $886,657,147) $ 884,226,627
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Convertible Bonds - 4.5%
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Aktiebolaget, 0s, 2002 (Special
Products and Services)## ECU 18,100 $ 13,073,349
Alza Corp., 0s, 2014 (Medical and
Health Products) $10,000 3,600,000
Banco Nacional de Mexico, 7s, 1999
(Banks and Credit Companies)## 4,000 2,080,000
Bank of New York Co., Inc., 7.5s, 2001
(Banks and Credit Companies) 3,000 4,995,000
Cemex, 4.25s, 1997 (Special Products
and Services)## 5,500 3,355,000
Ciba-Geigy Corp., 5.5s, 1998 (Special
Products and Services) 4,500 5,253,750
Ciba-Geigy Corp., 6.25s, 2016 (Special
Products and Services)## 2,200 2,026,750
Coeur D'Alene Mines, 6.375s, 2004
(Metals and Minerals) 7,600 6,650,000
Coleman Worldwide Corp., 0s, 2013
(Special Products and Services) 6,250 1,812,500
Elan International Finance Ltd., 0s,
2012 (Financial Institutions) 5,000 2,050,000
Empresas ICA Sociedad, ADS, 5s, 2004
(Construction Services) 5,000 1,625,000
Equitable Cos., Inc., 6.125s, 2024
(Insurance) 9,500 9,690,000
Fieldcrest Cannon Industries, 6s, 2012
(Consumer Goods and Services) 3,000 2,325,000
Grand Metropolitan, 6.5s, 2000 (Food
and Beverage Products)## 3,000 3,187,500
IRT Property Co., 7.3s, 2003 (Real
Estate Investment Trusts) 2,800 2,576,000
International Paper Co., 5.75s, 2002
(Forest and Paper Products) 4,750 5,186,406
Liberty Property Trust, 8s, 2001 (Real
Estate Investment Trusts) 6,000 5,850,000
Mascotech, Inc., 4.5s, 2003 (Consumer
Goods and Services) 2,900 2,001,000
Nestle Holdings, Inc., Units, 3.625s,
1999 (Special Products and Services) 5,300 4,982,000
News America Holdings, Inc., 0s, 2013
(Printing and Publishing) 5,000 2,062,500
Roche Holdings, Inc., 0s, 2008 (Medical
and Health Products)## 32,500 19,743,750
Telecomm Malaysia, 4s, 2004
(Telecommunications) 10,000 8,500,000
Time Warner, Inc., 8.75s, 2015
(Entertainment) 5,000 5,025,000
Turner Broadcasting Systems, Inc., 0s,
2007 (Telecommunications)## 6,000 2,460,000
Valhi, Inc., 0s, 2007 (Chemicals) 19,889 6,563,370
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Total Convertible Bonds (Identified Cost, $132,080,176) $ 126,673,875
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Preferred Stocks - 1.0%
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Shares
- ------------------------------------------------------------------------------
Aetna Capital LLC, 9.5% 200,000 $ 5,300,000
Boise Cascade Corp., 9.4% 140,000 3,535,000
Conagra Capital, 9% 200,000 5,250,000
Credit Lyonnais Capital, 9.5%## 160,000 3,200,000
Nevada Power Co., 9.9% 20,000 2,130,000
USX Capital LLC, 8.75% 423,000 10,046,250
- ------------------------------------------------------------------------------
Total Preferred Stocks (Identified Cost, $29,899,330) $ 29,461,250
- ------------------------------------------------------------------------------
Common Stocks - 43.7%
- ------------------------------------------------------------------------------
Aerospace - 0.7%
United Technologies Corp. 277,424 $ 19,176,934
- ------------------------------------------------------------------------------
Automotive - 2.2%
Daimler Benz, ADR 203,500 $ 9,132,062
Dana Corp. 200,000 5,100,000
Ford Motor Co. 675,677 18,243,279
General Motors Corp. 578,269 25,588,403
Goodyear Tire & Rubber Co. 120,000 4,410,000
--------------
$ 62,473,744
- ------------------------------------------------------------------------------
Banks and Credit Companies - 3.3%
Bank of Boston Corp. 451,500 $ 13,432,125
Chase Manhattan Corp. 376,200 13,402,125
Citicorp 260,000 11,050,000
First Bank System, Inc. 250,000 10,093,750
First Union Corp. 120,000 5,205,000
National City Corp. 580,000 15,442,500
NationsBank Corp. 300,000 15,225,000
Northern Trust Co. 300,000 10,537,500
--------------
$ 94,388,000
- ------------------------------------------------------------------------------
Business Machines - 1.4%
Hewlett-Packard Co. 113,000 $ 13,602,375
Texas Instruments, Inc. 150,000 13,275,000
Xerox Corp. 100,000 11,737,500
--------------
$ 38,614,875
- ------------------------------------------------------------------------------
Cellular Telephones - 0.2%
AirTouch Communications, Inc.* 232,812 $ 6,344,127
- ------------------------------------------------------------------------------
Chemicals - 1.2%
Dow Chemical Co. 200,000 $ 14,600,000
Grace (W.R.) & Co. 373,900 19,910,175
--------------
$ 34,510,175
- ------------------------------------------------------------------------------
Conglomerates - 0.8%
Eastern Enterprises 350,000 $ 9,712,500
Textron, Inc. 250,000 14,156,250
--------------
$ 23,868,750
- ------------------------------------------------------------------------------
Consumer Goods and Services - 1.8%
Colgate-Palmolive Co. 300,000 $ 19,800,000
Gillette Co. 50,000 4,081,250
Philip Morris Cos., Inc. 395,400 25,799,850
--------------
$ 49,681,100
- ------------------------------------------------------------------------------
Electrical Equipment - 1.3%
Alcatel Alsthom Compagnie, ADR 350,000 $ 6,343,750
Emerson Electric Co. 100,000 6,650,000
General Electric Co. 215,372 11,657,010
Honeywell, Inc. 300,000 11,212,500
--------------
$ 35,863,260
- ------------------------------------------------------------------------------
Electronics - 0.6%
AMP, Inc. 282,000 $ 10,152,000
Perkin-Elmer Corp. 230,000 6,698,750
--------------
$ 16,850,750
- ------------------------------------------------------------------------------
Financial Institutions - 0.7%
Bear Stearns Cos., Inc. 281,419 $ 5,206,267
Dean Witter Discover & Co., Inc. 225,796 9,201,187
Federal Home Loan Mortgage Corp. 80,000 4,840,000
--------------
$ 19,247,454
- ------------------------------------------------------------------------------
Food and Beverage Products - 1.7%
Anheuser Busch Cos. 180,000 $ 10,552,500
CPC International, Inc. 300,000 16,237,500
Coca-Cola Co. 200,000 11,300,000
PepsiCo, Inc. 290,000 11,310,000
--------------
$ 49,400,000
- ------------------------------------------------------------------------------
Forest and Paper Products - 0.9%
Bowater, Inc. 227,914 $ 8,147,926
Georgia-Pacific Corp. 100,000 7,975,000
Weyerhaeuser Co. 260,000 10,107,500
--------------
$ 26,230,426
- ------------------------------------------------------------------------------
Insurance - 3.6%
Aetna Life & Casualty Co. 460,600 $ 26,254,200
American General Corp. 400,000 12,900,000
CIGNA Corp. 324,800 24,278,800
MBIA, Inc. 160,000 10,060,000
Reliastar Financial Corp. 275,000 9,350,000
Travelers, Inc. 241,269 9,319,015
UNUM Corp. 206,000 9,321,500
USF&G Corp. 108,781 1,522,942
--------------
$ 103,006,457
- ------------------------------------------------------------------------------
Machinery - 0.4%
Caterpillar, Inc. 179,008 $ 9,957,320
- ------------------------------------------------------------------------------
Medical and Health Products - 1.5%
American Home Products Corp. 225,000 $ 16,031,250
Lilly (Eli) & Co. 245,000 17,915,625
SmithKline Beecham PLC, ADR 240,000 9,000,000
--------------
$ 42,946,875
- ------------------------------------------------------------------------------
Metals and Minerals - 0.7%
Cyprus Amax Minerals 300,000 $ 8,512,500
Phelps Dodge Corp. 192,560 10,951,850
--------------
$ 19,464,350
- ------------------------------------------------------------------------------
Oil Services - 0.5%
Dresser Industries, Inc. 100,000 $ 2,125,000
McDermott International, Inc. 150,000 4,106,250
Schlumberger Ltd. 139,512 8,318,403
--------------
$ 14,549,653
- ------------------------------------------------------------------------------
Oils - 6.8%
Amoco Corp. 233,000 $ 14,824,625
Atlantic Richfield Co. 102,300 11,764,500
British Petroleum PLC, ADR 204,546 17,156,296
Chevron Corp. 245,400 11,779,200
Exxon Corp. 270,836 18,078,303
Mobil Corp. 200,000 18,525,000
Occidental Petroleum Corp. 700,000 15,312,500
Royal Dutch Petroleum Co., ADR 260,000 31,200,000
Sun, Inc. 250,000 7,125,000
Total S.A., ADR 343,000 10,290,000
USX-Marathon Group 590,000 10,325,000
Ultramar Corp. 280,000 7,280,000
YPF Sociedad Anonima, ADR 1,000,000 19,000,000
----------------
$ 192,660,424
- ------------------------------------------------------------------------------
Photographic Products - 0.6%
Eastman Kodak Co. 310,000 $ 16,468,750
- ------------------------------------------------------------------------------
Pollution Control - 0.2%
WMX Technologies, Inc. 200,000 $ 5,500,000
- ------------------------------------------------------------------------------
Precious Metals and Minerals - 0.2%
Freeport - McMoRan Copper & Gold, Inc. 274,683 $ 6,008,691
- ------------------------------------------------------------------------------
Printing and Publishing - 0.1%
Gannett Co., Inc. 30,000 $ 1,601,250
- ------------------------------------------------------------------------------
Railroads - 0.5%
CSX Corp. 130,000 $ 10,237,500
Illinois Central Corp. 120,000 4,140,000
--------------
$ 14,377,500
- ------------------------------------------------------------------------------
Real Estate Investment Trusts - 1.2%
Beacon Properties Corp. 216,400 $ 4,300,950
Equity Residential Property Trust 88,000 2,288,000
Health Care Property Investors, Inc. 107,400 3,181,725
Kimco Realty Corp. 86,800 3,330,950
Meditrust 254,800 7,580,300
National Health Investors, Inc. 300,000 7,575,000
Oasis Residential 75,000 1,706,250
Omega Healthcare Investors 80,000 1,900,000
Sun Communities, Inc. 85,800 1,930,500
--------------
$ 33,793,675
- ------------------------------------------------------------------------------
Special Products and Services - 0.5%
Minnesota Mining & Manufacturing Co. 200,000 $ 11,625,000
Pennsylvania Enterprises, Inc. 105,000 3,268,125
--------------
$ 14,893,125
- ------------------------------------------------------------------------------
Stores - 1.4%
May Department Stores Co. 509,760 $ 18,861,120
Penney (J.C.), Inc. 120,000 5,385,000
Sears, Roebuck & Co. 301,800 16,108,575
--------------
$ 40,354,695
- ------------------------------------------------------------------------------
Utilities - Electric - 2.0%
CMS Energy Corp. 300,000 $ 7,012,500
Entergy Corp. 75,000 1,565,625
FPL Group, Inc. 420,000 15,277,500
General Public Utilities Co. 100,000 2,912,500
Niagara Mohawk Power Corp. 173,200 2,381,500
Pacific Gas & Electric Co. 300,600 7,477,425
Peco Energy Co. 400,000 10,050,000
Rochester Gas & Electric Corp. 71,800 1,480,875
Texas Utilities Co. 300,000 9,525,000
--------------
$ 57,682,925
- ------------------------------------------------------------------------------
Utilities - Gas - 3.5%
British Gas PLC, ADR 250,000 $ 11,687,500
El Paso Natural Gas Co. 20,000 572,500
Enron Corp. 100,000 3,300,000
Equitable Resources, Inc. 114,750 3,198,656
Pacific Enterprises 600,000 14,850,000
Panhandle Eastern Corp. 218,000 5,014,000
Sonat, Inc. 400,000 12,000,000
Tenneco, Inc. 350,000 16,493,750
UGI Corp. 410,000 7,841,250
Williams Cos., Inc. 796,912 24,401,699
--------------
$ 99,359,355
- ------------------------------------------------------------------------------
Utilities - Telephone - 2.8%
American Telephone & Telegraph Co. 466,000 $ 24,115,500
Ameritech Corp. 241,416 9,958,410
GTE Corp. 504000 16,758,000
NYNEX Corp. 238,800 9,462,450
Southwestern Bell Corp. 126,600 5,333,025
Sprint Corp. 477,900 14,456,475
--------------
$ 80,083,860
- ------------------------------------------------------------------------------
Foreign - 0.4%
France - 0.1%
Assurance Generale (Insurance) 100,000 $ 3,377,820
- ------------------------------------------------------------------------------
Spain - 0.2%
Iberdrola (Utilities - Electric) 750,000 $ 4,464,225
- ------------------------------------------------------------------------------
United Kingdom - 0.1%
National Power PLC (Utilities - Electric) 832,000 $ 2,222,438
PowerGen PLC (Utilities - Electric) 350,000 1,048,915
--------------
$ 3,271,353
- ------------------------------------------------------------------------------
Total Foreign $ 11,113,398
- ------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $964,484,745) $1,240,471,898
- ------------------------------------------------------------------------------
Convertible Preferred Stocks - 5.5%
- ------------------------------------------------------------------------------
AK Steel Holdings Corp., 7% (Steel) 216,500 $ 6,224,375
American Expresss Co., 6.25% (Financial
Institutions) 225,000 10,096,875
Atlantic Richfield Co., 9% (Oils) 449,551 11,238,775
Bowater, Inc., "B", 7% (Forest and
Paper Products) 218,000 6,758,000
Burlington Northern, Inc., 6.25%
(Railroads) 76,000 4,892,500
Catellus Development Corp., "A", $3.75
(Real Estate Investment Trusts) 81,900 3,920,962
Catellus Development Corp., "B", $3.625
(Real Estate Investment Trusts)## 70,000 2,642,500
Ceridian Corp., 5.5% (Special Products
and Services) 68,000 5,236,000
Citicorp, 10.75% (Banks and Credit
Companies) 100,000 11,750,000
Cointel, 7% (Utilities - Telephone)## 269,800 13,287,650
Corning Delaware L.P., 6% (Consumer
Goods and Services) 148,000 7,881,000
First Chicago Corp., 5.75% (Financial
Institutions) 176,100 9,025,125
Freeport - McMoRan Copper & Gold, Inc.,
5% (Precious Metals and Minerals) 200,000 4,500,000
Freeport - McMoRan Copper & Gold, Inc.,
7% (Precious Metals and Minerals) 120,000 3,015,000
General Motors Corp., "C", $3.25
(Automotive) 110,000 6,325,000
Mascotech, Inc., $1.20 (Building) 160,900 2,071,587
Occidental Petroleum Corp., $3.875
(Oils)## 130,000 6,955,000
RJR Nabisco Holdings, $0.6012 (Food and
Beverage Products) 1,982,700 12,639,712
Reading & Bates Corp., $1.625 (Oil
Services) 135,000 3,476,250
Reynolds Metals Co., $3.31 (Metals and
Minerals) 132,400 6,305,588
Security Capital Pacific, "A", $1.75
(Real Estate Investment Trusts) 164,000 3,690,000
Southdown, Inc., "D", $2.875
(Construction Services)++ 100,000 3,737,500
Transco Energy Co., $3.50 (Utilities -
Gas)## 58,000 3,161,000
Washington Mutual, Inc., $6.00 (Banks
and Credit Companies) 52,000 4,628,000
Wellsford Residential Property Trust,
7% (Real Estate Investment Trusts) 90,000 1,743,750
Western Gas Resources, Inc., $2.625
(Utilities - Gas) 61,000 2,257,000
- ------------------------------------------------------------------------------
Total Convertible Preferred Stocks
(Identified Cost, $147,376,029) $ 157,459,149
- ------------------------------------------------------------------------------
Short-Term Obligations - 13.7%
- ------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- ------------------------------------------------------------------------------
du Pont (E.I.) de Nemours & Co., due 4/19/95 $10,800 $ 10,767,924
Duke Power Co., due 4/06/95 5,300 5,295,620
Federal Farm Credit Bank, due 4/05/95 -
6/02/95 25,520 25,379,969
Federal Home Loan Bank, due 4/03/95 -
5/03/95 30,900 30,826,587
Federal Home Loan Mortgage Corp., due
4/04/95 - 6/26/95 74,288 73,945,307
Federal National Mortgage Assn., due 4/11/95
- 6/23/95 96,265 95,788,156
Ford Motor Credit Co., due 4/20/95 - 5/23/95 61,700 61,334,406
Heinz (H.J.) Co., due 4/06/95 - 5/01/95 19,625 19,555,008
PepsiCo, Inc., due 4/07/95 - 4/26/95 36,025 35,931,139
Pitney Bowes, Inc., due 4/05/95 9,000 8,994,040
Toys "R" Us, Inc., due 4/25/95 6,400 6,374,656
Transamerica Corp., due 4/12/95 12,000 11,978,110
Weyerhaeuser Co., due 4/05/95 2,500 2,498,339
- ------------------------------------------------------------------------------
Total Short-Term Obligations (Identified Cost, $388,669,261) $ 388,669,261
- ------------------------------------------------------------------------------
Total Investments (Identified Cost, $2,549,166,688) $2,826,962,060
Other Assets, Less Liabilities - 0.4% 10,841,719
- ------------------------------------------------------------------------------
Net Assets - 100.0% $2,837,803,779
- ------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
+ Restricted security.
++ Affiliated issuers are those in which the Fund's holdings of an issuer
represent 5% or more of the outstanding voting securities of the issuer.
ECU=Principal amount of security denominated in European Currency Units.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
March 31, 1995
- ------------------------------------------------------------------------------
Assets:
Investments, at value
Unaffiliated issuers (identified cost, $2,543,964,627) $2,823,224,560
Affiliated issuers (identified cost, $5,202,061) 3,737,500
--------------
Total investments, at value (identified cost,
$2,549,166,688) $2,826,962,060
Cash 95,717
Receivable for investments sold 13,719,476
Receivable for Fund shares sold 5,865,011
Interest and dividends receivable 23,281,418
Other assets 52,861
--------------
Total assets $2,869,976,543
--------------
Liabilities:
Distributions payable $ 1,596,806
Payable for investments purchased 23,293,742
Payable for Fund shares reacquired 5,670,959
Payable to affiliates -
Management fee 27,013
Shareholder servicing agent fee 10,973
Distribution fee 1,241,436
Accrued expenses and other liabilities 331,835
--------------
Total liabilities $ 32,172,764
--------------
Net assets $2,837,803,779
--------------
Net assets consist of:
Paid-in capital $2,528,978,026
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 277,796,043
Accumulated undistributed net realized gain on investments
and foreign currency transactions 35,870,521
Accumulated distributions in excess of net investment
income (4,840,811)
--------------
Total $2,837,803,779
--------------
Shares of beneficial interest outstanding 217,522,570
--------------
Class A shares:
Net asset value and redemption price per share
(net assets of $1,942,377,763 / 148,890,051 shares of
beneficial interest outstanding) $13.05
-----
Offering price per share (100/95.25) $13.70
-----
Class B shares:
Net asset value, offering price, and redemption price per
share (net assets of $888,974,841 / 68,139,007 shares of
beneficial interest outstanding) $13.05
-----
Class C shares:
Net asset value, offering price, and redemption price per
share (net assets of $6,451,175 / 493,512 shares of
beneficial interest outstanding) $13.07
-----
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 and
Class B shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
- ------------------------------------------------------------------------------
Six Months Ended March 31, 1995
- ------------------------------------------------------------------------------
Net investment income:
Income -
Interest $ 49,309,047
Dividends (including $71,875 received from
affiliated issuers) 27,780,553
Foreign taxes withheld (77,403)
--------------
Total investment income $ 77,012,197
--------------
Expenses -
Management fee $ 5,291,020
Trustees' compensation 45,181
Shareholder servicing agent fee (Class A) 1,060,951
Shareholder servicing agent fee (Class B) 863,852
Shareholder servicing agent fee (Class C) 2,649
Distribution and service fee (Class A) 3,261,339
Distribution and service fee (Class B) 4,243,621
Distribution and service fee (Class C) 17,663
Custodian fee 252,957
Postage 193,317
Printing 79,455
Auditing fees 38,400
Legal fees 7,061
Miscellaneous 822,822
--------------
Total expenses $ 16,180,288
Preliminary reduction of expenses by distributor (926,273)
--------------
Net expenses $ 15,254,015
--------------
Net investment income $ 61,758,182
--------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 55,529,323
Foreign currency transactions 65,916
--------------
Net realized gain on investments $ 55,595,239
--------------
Change in unrealized appreciation (depreciation) -
Investments $ (2,205,993)
Translation of assets and liabilities in foreign currencies (88,442)
--------------
Net unrealized loss on investments $ (2,294,435)
--------------
Net realized and unrealized gain on investments and
foreign currency $ 53,300,804
--------------
Increase in net assets from operations $ 115,058,986
--------------
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------
Six Months Ended Year Ended
March 31, 1995 September 30, 1994
- ------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
Net investment income $ 61,758,182 $ 100,428,299
Net realized gain (loss) on
investments and foreign currency
transactions 55,595,239 (27,333,507)
Net unrealized loss on investments
and foreign currency (2,294,435) (106,132,819)
-------------- -------------
Increase (decrease) in net
assets from operations $ 115,058,986 $ (33,038,027)
-------------- -------------
Distributions declared to shareholders -
From net investment income (Class A) $ (39,485,876) $ (73,642,097)
From net investment income (Class B) (14,767,236) (22,924,892)
From net investment income (Class C) (64,154) (2,881)
From net realized gain on
investments and foreign currency
transactions (2,145,562) (17,865,655)
In excess of net investment income
(Class A) (3,519,240) --
In excess of net investment income
(Class B) (1,315,852) --
In excess of net investment income
(Class C) (5,719) --
In excess of net realized gain on
investments and foreign
currency transactions -- (18,424,770)
-------------- --------------
Total distributions declared to
shareholders $ (61,303,639) $ (132,860,295)
-------------- --------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 271,300,519 $ 875,180,059
Net asset value of shares issued
to shareholders in reinvestment
of distributions 51,925,527 109,317,882
Cost of shares reacquired (240,612,873) (351,427,892)
-------------- --------------
Increase in net assets from Fund
share transactions $ 82,613,173 $ 633,070,049
-------------- --------------
Total increase in net assets $ 136,368,520 $ 467,171,727
Net assets:
At beginning of period 2,701,435,259 2,234,263,532
-------------- --------------
At end of period (including
accumulated distributions in
excess of net investment income
of $4,840,811 and $7,440,916,
respectively) $2,837,803,779 $2,701,435,259
-------------- --------------
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended September 30,
March 31, ------------------------------------------------------
1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $12.80 $13.70 $12.42 $ 11.82 $10.25
------ ------ ------ ------ ------
Income from investment operations<F3> -
Net investment income $ 0.30 $ 0.54 $ 0.45 $ 0.65 $ 0.67
Net realized and unrealized gain (loss)
on investments 0.25 (0.69) 1.74 0.75 1.57
------ ------ ------ ------ ------
Total from investment operations $ 0.55 $(0.15) $ 2.19 $ 1.40 $ 2.24
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.27) $(0.54) $(0.59) $(0.66)<F5> $(0.61)<F5>
In excess of net investment income (0.02) -- --<F4> -- --
From net realized gain on investments (0.01) (0.10) (0.32) (0.14) (0.06)
In excess of net realized gain on investments -- (0.11) -- -- --
------ ------ ------ ------ ------
Total distributions declared to shareholders $(0.30) $(0.75) $(0.91) $(0.80) $(0.67)
------ ------ ------ ------ ------
Net asset value - end of period $13.05 $12.80 $13.70 $12.42 $11.82
------ ------ ------ ------ ------
Total return<F1> 4.41% (1.07)% 18.32% 12.26% 22.25%
Ratios (to average net assets)/Supplemental data:
Expenses 0.87%<F2> 0.85% 0.84% 0.84% 0.87%
Net investment income 4.83%<F2> 4.26% 4.51% 5.40% 5.89%
Portfolio turnover 50% 91% 95% 84% 74%
Net assets at end of period (000,000 omitted) $1,942 $1,857 $1,702 $1,198 $ 909
<FN>
<F1> Total returns for Class A shares do not include the applicable sales charge (except for reinvestment dividends prior to
October 1, 1989). If the charge had been included, the results would have been lower.
<F2> Annualized.
<F3> Per share data for the periods subsequent to September 30, 1993 are based on average shares outstanding.
<F4> For the year ended September 30, 1993, the per share distribution in excess of net investment income was $0.0035.
<F5> For the years ended September 30, 1992 and 1991, $0.0508 and $0.0596, respectively, of per share distributions from net
investment income have been redesignated as distributions from capital gains.
</FN>
The distributor waived a portion of its distribution fee for the periods indicated. If these fees had been incurred by the Fund,
the net investment income per share and the ratios would have been:
Net investment income $ 0.29 $ 0.52 -- -- --
Ratios (to average net assets):
Expenses 0.97%<F2> 0.95% -- -- --
Net investment income 4.73%<F2> 4.16% -- -- --
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------------------------------------------
1990 1989 1988 1987 1986 1985
- -----------------------------------------------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $11.58 $10.13 $11.47 $ 9.77 $ 8.73 $ 8.33
------ ------ ------ ------ ------ ------
Income from investment operations -
Net investment income $ 0.64 $ 0.65 $ 0.62 $ 0.56 $ 0.60 $ 0.61
Net realized and unrealized gain (loss)
on investments (1.25) 1.71 (1.07) 2.07 1.91 0.97
------ ------ ------ ------ ------ ------
Total from investment operations $(0.61) $ 2.36 $(0.45) $ 2.63 $ 2.51 $ 1.58
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.66) $(0.63) $(0.60) $(0.56) $(0.59) $(0.62)
From net realized gain on investments (0.06) (0.28) (0.08) (0.36) (0.88) (0.56)
From paid-in capital -- -- (0.21) (0.01) --<F2> --<F2>
------ ------ ------ ------ ------ ------
Total distributions declared to shareholders $(0.72) $(0.91) $(0.89) $(0.93) $(1.47) $(1.18)
------ ------ ------ ------ ------ ------
Net asset value - end of period $10.25 $11.58 $10.13 $11.47 $ 9.77 $ 8.73
------ ------ ------ ------ ------ ------
Total return<F1> (5.59)% 23.46% (3.93)% 26.81% 28.45% 18.58%
Ratios (to average net assets)/Supplemental data:
Expenses 0.85% 0.72% 0.71% 0.63% 0.67% 0.78%
Net investment income 5.71% 5.97% 6.06% 5.05% 5.67% 6.73%
Portfolio turnover 50% 53% 52% 58% 94% 71%
Net assets at end of period (000,000 omitted) $ 707 $ 628 $ 508 $ 551 $ 309 $ 216
<FN>
<F1> Total returns for Class A shares do not include the applicable sales charge (except for reinvestment dividends prior to
October 1, 1989). If the charge had been included, the results would have been lower.
<F2> For the years ended September 30, 1986 and 1985, the per share distributions from paid-in capital were $0.0037
and $0.0016, respectively.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended Six Months Year
Ended September 30, Ended Ended
March 31, ------------------------- March 31, September 30,
1995 1994 1993<F1> 1995 1994<F2>
- -----------------------------------------------------------------------------------------------------------------------------------
Class B Class C
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $12.80 $13.70 $13.53 $12.80 $12.92
------ ------ ------ ------ ------
Income from investment operations<F4> -
Net investment income $ 0.25 $ 0.39 $ 0.06 $ 0.28 $ 0.08
Net realized and unrealized gain (loss) on investments 0.25 (0.65) 0.16 0.24 (0.13)
------ ------ ------ ------ ------
Total from investment operations $ 0.50 $(0.26) $ 0.22 $ 0.52 $(0.05)
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.22) $(0.43) $(0.05) $(0.22) $(0.07)
In excess of net investment income (0.02) -- -- (0.02) --
From net realized gain on investments (0.01) (0.10) -- (0.01) --
In excess of net realized gain on investments -- (0.11) -- -- --
------ ------ ------ ------ ------
Total distributions declared to shareholders $(0.25) $(0.64) $(0.05) $(0.25) $(0.07)
------ ------ ------ ------ ------
Net asset value - end of period $13.05 $12.80 $13.70 $13.07 $12.80
------ ------ ------ ------ ------
Total return 3.98% (1.93)% 15.24%<F3> 4.15% (0.41)%
Ratios (to average net assets)/Supplemental data:
Expenses 1.71%<F3> 1.70% 1.75%<F3> 1.69%<F3> 1.76%<F3>
Net investment income 3.99%<F3> 3.45% 3.98%<F3> 4.61%<F3> 4.08%<F3>
Portfolio turnover 50% 91% 95% 50% 91%
Net assets at end of period (000,000 omitted) $ 889 $ 843 $ 532 $ 6 $ 1
<FN>
<F1> For the period from the commencement of offering of Class B shares, August 23, 1993 to September 30, 1993.
<F2> For the period from the commencement of offering of Class C shares, August 1, 1994 to September 30, 1994.
<F3> Annualized.
<F4> Per share data for the periods subsequent to September 30, 1993 are based on average shares outstanding.
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Total Return Fund (the Fund) is a diversified series of MFS Series Trust V
(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
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations which mature in 60 days or less), including listed issues
and forward contracts, are valued on the basis of valuations furnished by
dealers or by a pricing service with consideration to factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon exchange or over-the-counter prices.
Short-term obligations, which mature in 60 days or less, are valued at amortized
cost, which approximates value. Non-U.S. dollar denominated short-term
obligations are valued at amortized cost as calculated in the base currency and
translated into U.S. dollars at the closing daily exchange rate. Futures
contracts, options and options on futures contracts listed on commodities
exchanges are valued at closing settlement prices. Over-the- counter options are
valued by brokers through the use of a pricing model which takes into account
closing bond valuations, implied volatility and short-term repurchase rates.
Securities for which there are no such quotations or valuations are valued at
fair value as determined in good faith by or at the direction of the Trustees.
Repurchase Agreements - The Fund may enter into repurchase agreements with
institutions that the Fund's investment adviser has determined are creditworthy.
Each repurchase agreement is recorded at cost. The Fund requires that the
securities purchased 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 securities transferred to ensure that the value,
including accrued interest, of the securities under each repurchase agreement is
greater than amounts owed to the Fund under each such repurchase agreement.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments and 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.
Written Options - The Fund may write covered call or put options for which
premiums are received and are recorded as liabilities, and are subsequently
adjusted to the current value of the options written. Premiums received from
writing options which expire are treated as realized gains. Premiums received
from writing options which are exercised or are closed are offset against the
proceeds or amount paid on the transaction to determine the realized gain or
loss. If a put option is exercised, the premium reduces the cost basis of the
security purchased by the Fund. The Fund, as writer of an option, may have no
control over whether the underlying security may be sold (call) or purchased
(put) and, as a result, bears the market risk of an unfavorable change in the
price of the securities underlying the written option. In general, written call
options may serve as a partial hedge against decreases in value in the
underlying securities to the extent of the premium received. Written options may
also be used as a part of an income-producing strategy reflecting the view of
the Fund's management on the direction of interest rates.
Futures Contracts - The Fund may enter into financial futures contracts for the
delayed delivery of securities, 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 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
underlying security, and are recorded for financial statement purposes as
unrealized gains or losses by the Fund. The Fund's investment in financial
futures contracts is designed to hedge against anticipated future changes in
interest or exchange rates or securities prices. For example, interest rate
futures may be used in modifying the duration of the portfolio without incurring
the additional transaction costs involved in buying and selling the underlying
securities. Should interest or exchange rates or securities prices move
unexpectedly, the Fund may not achieve the anticipated benefits of the financial
futures contracts and may realize a loss.
Security Loans - The Fund may lend its securities to member banks of the Federal
Reserve System and to member firms of the New York Stock Exchange or
subsidiaries thereof. The loans are collateralized at all times by cash or
securities with a market value at least equal to the market value of securities
loaned. As with other extensions of credit, the Fund may bear the risk of delay
in recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. The Fund receives compensation for lending its
securities in the form of fees or from all or a portion of the income from
investment of the collateral. The Fund would also continue to earn income on the
securities loaned. At March 31, 1995, the Fund had no securities on loan.
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 these contracts from the potential inability of counterparties to meet
the terms of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. The Fund will enter into forward
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.
It 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 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 for financial statement purposes as unrealized until the contract
settlement date.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount are amortized or accreted for both financial statement
and tax reporting purposes as required by federal income tax regulations.
Dividend income is recorded on the ex-dividend date for dividends received in
cash. 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.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is provided. The Fund files a tax return annually
using tax accounting methods required under provisions of the Code which may
differ from generally accepted accounting principles, the basis on which these
financial statements are prepared. Accordingly, the amount of net investment
income and net realized gain reported on these financial statements may differ
from that reported on the Fund's tax return and, consequently, the character of
distributions to shareholders reported in the financial highlights may differ
from that reported to shareholders on Form 1099-DIV. Foreign taxes have been
provided for on interest and dividend income earned on foreign investments in
accordance with the applicable country's tax rates and to the extent
unrecoverable are recorded as a reduction of investment income. Distributions to
shareholders are recorded on the ex-dividend date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a return of
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers Class A,
Class B and Class C shares. Class B and Class C shares were first offered to the
public on August 23, 1993 and August 1, 1994, respectively. The three classes of
shares differ in their respective shareholder servicing agent, distribution and
service fees. Shareholders of each class also bear certain expenses that pertain
only to that particular class. All shareholders bear the common expenses of the
Fund pro rata based on the average daily net assets of each class, without
distinction between share classes. Dividends are declared separately for each
class. No class has preferential dividend rights; differences in per share
dividend rates are generally due to differences in separate class expenses,
including distribution and shareholder service fees.
(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, computed daily and paid monthly at an effective annual rate of
0.21% of average daily net assets and 3.14% of investment income, amounted to
$5,291,020.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain of the officers and Trustees of
the Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD) and
MFS Service Center, Inc. (MFSC). The Fund has an unfunded defined benefit plan
for all its independent Trustees. Included in Trustees' compensation is a net
periodic pension expense of $12,831 for the six months ended March 31, 1995.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$407,096 as its portion of the sales charge on sales of Class A shares of the
Fund.
The Trustees have adopted separate distribution plans for Class A, Class B and
Class C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
The Class A Distribution Plan provides that the Fund will pay MFD up to 0.35% of
its average daily net assets attributable to Class A shares annually in order
that MFD may pay expenses on behalf of the Fund related to the distribution and
servicing of its shares. These expenses include a service fee to each securities
dealer that enters into a sales agreement with MFD of up to 0.25% per annum of
the Fund's average daily net assets attributable to Class A shares which are
attributable to that securities dealer, a distribution fee to MFD of up to 0.10%
per annum of the Fund's average daily net assets attributable to Class A shares,
commissions to dealers and payments to MFD wholesalers for sales at or above a
certain dollar level, and other such distribution-related expenses that are
approved by the Fund. MFD is waiving the 0.10% distribution fee (amounting to
$926,273) for an indefinite period. Fees under the distribution plan during the
six months ended March 31, 1995 were 0.35% of average daily net assets
attributable to Class A shares on an annualized basis and amounted to $3,261,339
(of which MFD retained $357,803).
The Class B and Class C Distribution Plans provide that the Fund will pay MFD a
monthly distribution fee, equal to 0.75% per annum, and a quarterly service fee
of up to 0.25% per annum, of the Fund's average daily net assets attributable to
Class B and Class C shares. MFD will pay to securities dealers that enter into a
sales agreement with MFD, all or a portion of the service fee attributable to
Class B and Class C shares, and will pay to such securities dealers all of the
distribution fee attributable to Class C shares. The service fee is intended to
be additional consideration for services rendered by the dealer with respect to
Class B and Class C shares. Fees incurred under the distribution plans during
the six months ended March 31, 1995 were 1.00% of average daily net assets
attributable to Class B and Class C shares on an annualized basis and amounted
to $4,243,621 and $17,663, respectively (of which MFD retained $46,799 and $76,
respectively).
A contingent deferred sales charge is imposed on shareholder redemptions of
Class A shares, on purchases of $1 million or more, in the event of a
shareholder redemption within twelve months following the share purchase. A
contingent deferred sales charge is imposed on shareholder redemptions of Class
B shares in the event of a shareholder redemption within six years of purchase.
MFD receives all contingent deferred sales charges. Contingent deferred sales
charges imposed during the six months ended March 31, 1995 were $5,638 and
$980,532 for Class A and Class B shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earned
$1,060,951, $863,852 and $2,649 for Class A, Class B and Class C shares,
respectively, for its services as shareholder servicing agent. The fee is
calculated as a percentage of the average daily net assets of each class of
shares at an effective annual rate of up to 0.15%, up to 0.22% and up to 0.15%
attributable to Class A, Class B and Class C shares, respectively.
(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 $728,074,811 $554,869,836
------------- -------------
Investments (non-U.S. government securities) $633,554,436 $513,405,410
------------- -------------
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Fund, as computed on a federal income tax basis, are as follows:
Aggregate cost $ 2,549,166,688
---------------
Gross unrealized appreciation $ 334,629,055
Gross unrealized depreciation 56,833,683
---------------
Net unrealized appreciation $ 277,795,372
---------------
<PAGE>
At September 30, 1994, the Fund, for federal income tax purposes, had a capital
loss carryforward of $1,540,652, which may be applied against any net taxable
realized gains of each succeeding year until the earlier of its utilization or
expiration on September 30, 2002.
(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 (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
Six Months Ended Year Ended
March 31, 1995 September 30, 1994
----------------------------------- -----------------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 12,930,728 $163,588,477 32,302,120 $426,179,879
Shares issued to shareholders
in reinvestment of
distributions 2,919,371 36,999,431 6,185,236 80,887,784
Shares reacquired (12,050,030) (152,243,612) (17,636,558) (231,605,258)
---------- ------------ ----------- ------------
Net increase 3,800,069 $ 48,344,296 20,850,798 $275,462,405
---------- ------------ ----------- ------------
Class B Shares
<CAPTION>
Six Months Ended Year Ended
March 31, 1995 September 30, 1994
----------------------------------- -----------------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 8,075,521 $102,058,343 33,915,337 $447,401,529
Shares issued to shareholders
in reinvestment of
distributions 1,172,561 14,858,949 2,174,267 28,427,804
Shares reacquired (6,932,441) (87,623,396) (9,135,051) (119,511,014)
---------- ------------ ----------- ------------
Net increase 2,315,641 $ 29,293,896 26,954,553 $356,318,319
---------- ------------ ----------- ------------
Class C Shares
<CAPTION>
Six Months Ended Year Ended
March 31, 1995 September 30, 1994<F1>
----------------------------------- -----------------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 447,179 $ 5,653,699 123,851 $ 1,598,651
Shares issued to shareholders
in reinvestment of
distributions 5,267 67,147 178 2,294
Shares reacquired (58,753) (745,865) (24,211) (311,620)
---------- ------------ ----------- ------------
Net increase 393,693 $ 4,974,981 99,818 $ 1,289,325
---------- ------------ ----------- ------------
<FN>
<F1> For the period from the commencement of offering of Class C shares, August 1, 1994 to September 30, 1994.
</TABLE>
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by MFS, or an affiliate of MFS, in an unsecured line of credit
with a bank which permits borrowings up to $350 million, collectively.
Borrowings may be made to temporarily finance the repurchase of Fund shares.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the bank's base rate. In addition, a commitment fee, based on the average daily
unused portion of the line of credit, is allocated among the participating funds
at the end of each quarter. The commitment fee allocated to the Fund for the six
months ended March 31, 1995 was $20,732.
(7) Transactions in Securities of Affiliated Issuers Affiliated issuers, as
defined under the Investment Company Act of 1940, are those in which the Fund's
holdings of an issuer represent 5% or more of the outstanding voting securities
of the issuer. A summary of the Fund's transactions in the securities of these
issuers during the six months ended March 31, 1995 is as follows:
<TABLE>
<CAPTION>
Acquisitions Dispositions
Beginning --------------------- --------------------- Ending Realized
Share Share Share Share Gain Dividend Ending
Affiliate Amount Amount Cost Amount Cost Amount (Loss) Income Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Southdown, Inc., "D", $2.875 100,000 -- -- -- -- 100,000 -- $71,875 $3,737,500
---------
</TABLE>
(8) Restricted Securities
The Fund may invest not more than 15% of its total assets in securities which
are subject to legal or contractual restrictions on resale. At March 31, 1995,
the Fund owned the following restricted securities (constituting 4.34% of net
assets) which may not be publicly sold without registration under the Securities
Act of 1933. The Fund does not have the right to demand that such securities be
registered. The value of these securities is determined by valuations supplied
by a pricing service or brokers or, if not available, in good faith by or at the
direction of the Trustees. Certain of these securities may be offered and sold
to "qualified institutional buyers" under Rule 144A of the 1933 Act.
<TABLE>
<CAPTION>
Date of
Description Acquisition Share/Par Amount Cost Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aktiebolaget, 0s, 2002<F1> 5/02/92 - 2/16/94 18,100,000 $10,629,461 $ 13,073,349
Banco Nacional de Mexico, 7s, 1999<F1> 12/01/92 4,000,000 4,000,000 2,080,000
Borden, Inc., 0s, 1997<F1> 12/21/94 - 1/26/95 15,200,000 12,221,830 12,853,500
Catellus Development Corp., "B", $3.625<F1> 10/29/93 70,000 3,500,000 2,642,500
Cemex, 4.25s, 1997<F1> 9/28/94 5,500,000 5,500,000 3,355,000
Ciba-Geigy Corp., 6.25s, 2016<F1> 11/12/91 - 1/22/92 2,200,000 3,010,000 2,026,750
Cointel, 7%<F1> 2/24/94 269,800 19,245,600 13,287,650
Credit Lyonnais Capital, 9.5%<F1> 7/12/93 - 8/23/93 160,000 4,000,000 3,200,000
Financiara Energie Nacional,6.625s, 1996<F1> 3/22/95 - 3/23/95 5,360,000 5,145,600 5,172,400
Four Seasons Hotels, Inc.,9.125s, 2000<F1> 1/26/94 1,000,000 959,100 957,500
Grand Metropolitan, 6.5s, 2000<F1> 1/17/95 3,000,000 3,000,000 3,187,500
Hidroelectrica Alicura, 8.375s, 1999<F1> 4/08/94 6,000,000 5,647,500 4,320,000
Merrill Lynch Home Equity Loan,91-1, "B", 9.3s, 2016 12/16/92 3,800,000 3,814,250 3,832,224
Merrill Lynch Mortgage Investors , Inc., 8.227s, 2021 6/22/94 4,000,000 2,772,500 2,871,240
Occidental Petroleum Corp., $3.875<F1> 2/11/93 130,000 6,500,000 6,955,000
Owens Corning Fiberglass, 9.9s, 2015<F1> 3/07/95 2,500,000 2,500,000 2,621,875
Petroliam Nasional Berhad, 6.875s, 2003<F1> 6/22/93 1,000,000 1,000,000 932,650
Qantas Airways Ltd., 7.5s, 2003<F1> 6/24/93 3,000,000 2,976,600 2,840,460
Republic of Malta, 7.5s, 2009<F1> 3/17/94 - 3/03/95 4,490,000 4,423,043 4,214,987
Roche Holdings, Inc., 0s, 2008<F1> 9/16/93 32,500,000 16,071,900 19,743,750
Tenaga Nasional Berhad, 7.875s, 2004<F1> 6/15/94 2,000,000 1,992,720 1,983,260
Time Warner Entertainment Co., 10.15s, 2012<F1> 11/15/94 5,000,000 5,155,350 5,317,300
Transco Energy Co., $3.50<F1> 10/27/93 58,000 2,900,000 3,161,000
Turner Broadcasting Systems, Inc., 0s, 2007<F1> 12/18/92 - 3/08/93 6,000,000 2,092,500 2,460,000
------------
$123,089,895
------------
<FN>
<F1>SEC Rule 144A restriction.
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of MFS Series Trust V and Shareholders of MFS Total Return Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS Total Return Fund (one of the series
constituting MFS Series Trust V) as of March 31, 1995, the related statement of
operations for the six months then ended, the statement of changes in net assets
for the six months then ended and the year ended September 30, 1994, and the
financial highlights for the six months ended March 31, 1995 and for each of the
years in the ten-year period ended September 30, 1994. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
March 31, 1995 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MFS Total Return
Fund at March 31, 1995, the results of its operations, the changes in its net
assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 5, 1995
---------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
<PAGE>
MFS(R) TOTAL
RETURN FUND NUMBER 1 DALBAR BULK RATE
TOP-RATED SERVICE U.S. POSTAGE
500 Boylston Street PAID
Boston, MA 02116 PERMIT #55638
BOSTON, MA
[Logo] MFS
THE FIRST NAME IN MUTUAL FUNDS
MTR-3 5/95/227M 15/215/315
