<PAGE>
[LOGO] M F S SEMIANNUAL REPORT
THE FIRST NAME IN MUTUAL FUNDS APRIL 30, 1995
MFS(R) WORLD TOTAL RETURN FUND
[GRAPHIC OMITTED: art work:
Silhouette of two men talking
in front of a large window.]
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<TABLE>
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<S> <C>
MFS(R) WORLD TOTAL RETURN FUND
TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and President State Street Bank and Trust Company
Richard B. Bailey* - Private Investor; INVESTOR INFORMATION
Former Chairman and Director (until 1991), For MFS stock and bond market outlooks,
Massachusetts Financial Services Company call toll free: 1-800-637-4458 anytime from
a touch-tone telephone.
Marshall N. Cohan - Private Investor
For information on MFS mutual funds,
Lawrence H. Cohn, M.D. - Chief of Cardiac call your financial adviser or, for an
Surgery, Brigham and Women's Hospital; information kit, call toll free:
Professor of Surgery, Harvard Medical School 1-800-637-2929 any business day from
9 a.m. to 5 p.m. Eastern time (or leave
The Hon. Sir J. David Gibbons, KBE - Chief a message anytime).
Executive Officer, Edmund Gibbons Ltd.;
Chairman, Bank of N.T. Butterfield & Son Ltd. INVESTOR SERVICE
MFS Service Center, Inc.
Abby M. O'Neill - Private Investor; P.O. Box 2281
Director, Rockefeller Financial Services, Inc. Boston, MA 02107-9906
(Investment Advisers)
For general information, call toll free:
Walter E. Robb, III - President and Treasurer, 1-800-225-2606 any business day from
Benchmark Advisors, Inc. 8 a.m. to 8 p.m. Eastern time.
(Corporate Financial Consultants)
For service to speech- or hearing-impaired,
Arnold D. Scott* - Senior Executive Vice call toll free: 1-800-637-6576 any business
President and Secretary, Massachusetts Financial day from 9 a.m. to 5 p.m. Eastern time. (To use this
Services Company service, your phone must be equipped with a
Telecommunications Device for the Deaf.)
Jeffrey L. Shames* - President, Massachusetts
Financial Services Company For share prices, account balances and
exchanges, call toll free: 1-800-MFS-TALK
J. Dale Sherratt - President, Insight Resources, Inc. (1-800-637-8255) anytime from a touch-tone
(Acquisition Planning Specialists) telephone.
Ward Smith - Former Chairman (until 1994),
NACCO Industries; Director, Sundstrand
Corporation
INVESTMENT ADVISER
Massachusetts Financial Services Company -------------------------------------------
500 Boylston Street TOP-RATED SERVICE
Boston, Massachusetts 02116-3741 [SEAL] MFS was rated first when securities
firms evaluated the quality of
PORTFOLIO MANAGER service they receive from 40
Frederick J. Simmons* mutual fund companies. MFS got
high marks for answering calls
TREASURER quickly, processing transactions
W. Thomas London* accurately and sending statements
out on time.
ASSISTANT TREASURER (Source: 1994 DALBAR Survey)
James O. Yost* -------------------------------------------
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
During the past six months, declining interest rates and favorable inflation
outlooks have created opportunities in both fixed-income and equity markets
around the world. For the six months ended April 30, 1995, Class A shares of the
Fund provided a total return of +4.65%, Class B shares +4.24%, and Class C
shares +4.33%. These returns assume the reinvestment of distributions but
exclude the effects of any sales charges. A discussion of the Fund's performance
as well as our outlook for the months ahead may be found in the Portfolio
Performance and Strategy section of this letter.
Economic Environment
As the U.S. economy enters its fifth year of expansion, it is evidencing a
decidedly decelerating trend from its robust pace of 1994, when gross domestic
product expanded by 4.1%. Estimated growth in this year's first quarter
diminished to an annual rate of 2.8%, and we expect the economy to continue to
grow at this more subdued pace. We do not anticipate that the slowdown will
deteriorate into a recession and, conversely, we remain mindful of the potential
for a reliquified consumer sector to reassert itself as the year progresses.
Economic recoveries in both Europe and Japan have been inhibited somewhat by
the yen's and deutsche mark's strengthening against the U.S. dollar. Industrial
companies in these export-led expansions are struggling to compete in a global
marketplace in which their products are less competitively priced. At home, the
consumer sectors in these economies have been impaired by relatively high
unemployment rates and continued low growth in domestic money supplies. The
central banks of both Germany and Japan have recently lowered interest rates in
an effort to stimulate domestic demand as well as to arrest the strength of
their currencies against the dollar. Our view is that the global expansion
remains intact, although at a somewhat sluggish pace, yielding equity investment
opportunities in steady earners as a result. Inflationary pressures in the major
overseas economies remain under control, providing fixed-income investors with
opportunities to obtain relatively attractive real (adjusted for inflation)
rates of interest. Recently, the U.S. dollar has stabilized in world currency
markets. Although we believe that over the long term the dollar continues to
represent a sound store of value, in the near term its relative strength will be
restrained by the large U.S. current-account deficit.
Bond Markets
As evidence of a slowdown has continued to mount, the fixed-income markets have
become increasingly convinced that the Federal Reserve Board has concluded its
monetary-tightening initiatives. As a result, long-term U.S. Treasury bond
yields have declined to near 7.00% as of April 30, 1995, down from 7.87% at the
beginning of the year and from their cyclical peak of 8.15% in November 1994.
For the 12 months ended in April of this year, the Consumer Price Index, a
popular measure of change in prices, increased by a still moderate 3.1%.
Although we expect a minor cyclical pickup in inflationary pressure this year,
we believe that inflation will remain in the 3% - 3 1/2% range for 1995.
The decline in U.S. interest rates has been particularly precipitous during
the past month, leaving the market potentially vulnerable to a near-term
correction. However, we believe that continuing moderate growth will result in
interest rates trending near to, and possibly somewhat lower than, present
levels during the balance of this year.
Most global bond markets have performed well so far this year as the rise in
interest rates during 1994, coupled with the secular trend of
stable-to-declining inflation in the major world economies, has resulted in
extremely high real rates of return. Our investments overseas remain
concentrated in Japan and the core markets of Europe.
Stock Markets
The U.S. stock market has rebounded from its uninspiring performance during
1994, posting its strongest quarterly results in four years. Recently, stock
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
remain substantial. Although we expect the economy to slow in 1995, our outlook
for corporate earnings growth remains favorable.
Although the U.S. stock market has performed positively over the past six
months, most foreign stock markets have lagged. This has been due to uncertain
economic outlooks, volatile currencies and volatile interest rates. Now that
interest rates in many markets appear to be moderating, however, we believe that
valuation levels are sustainable, and that corporate earnings growth should be
the key to future performance.
Portfolio Performance and Strategy
The Fund's equity strategy is based upon the premise that the increase in
interest rates around the world will eventually slow economic activity.
Reflecting this assumption, the Fund has very few holdings that respond strongly
to rising economic activity. Our five largest sectors, representing nearly 64%
of our equity position, are financial services, utilities, consumer staples,
energy, and leisure, all of which should do well in a slower growth environment.
An important subset of the Fund's equities are major companies that are in the
midst of turnarounds, such as IBM, Storehouse (a retail chain in the United
Kingdom) and Pinault-Printemps (a French retail chain). Approximately two-thirds
of the Fund's equity holdings is foreign, with about 19 countries represented.
Our Latin American holdings had been reduced significantly before Mexico's
problems began and now represent only about 1% of the Fund's assets. Our equity
holdings are not currently hedged and should do better when the dollar is
weaker.
The decline of the U.S. dollar and the improvement in major world bond
markets have benefited the Fund during the past six months. The Fund's largest
currency exposures have been to the yen and the deutsche mark, the primary
beneficiaries of dollar weakness. Given the large moves of the last several
months, the dollar may recover somewhat. Until the U.S. can finance more of its
investment needs internally, however, the dollar will likely remain in a
downward trend. The portfolio weightings may therefore reflect near-term
expectations of a bounce in the U.S. dollar, but, on average, over the next
several months, the Fund will most likely remain underweighted in dollars.
The deflationary environment in Japan has resulted in the Japanese bond
market, where we have maintained a neutral-to-overweight position, being the
best performer in the first quarter of 1995. Within Europe, the Fund has
concentrated on the core markets, such as Germany and the Netherlands. These
markets have led the rally in Europe because of declining inflation and credible
economic policies. Other holdings have included countries such as France, the
United Kingdom and Denmark, where higher yields offer attractive alternatives
without assuming significant fundamental risk. Concerns about increasing
inflation and/or budget deficits in the high-yielding markets have caused them
to underperform most world bond markets and the Fund's lack of exposure to these
markets has proved appropriate. Recently, these markets have recovered, but
continue to lag the performance of the less risky European markets, where the
majority of our exposure is likely to remain.
The strength of the U.S. bond rally also has been reflected in the other
dollar-bloc markets. Our holdings in Australia and New Zealand benefited from
this trend. In addition, the Fund was hedged against the decline of the
Australian dollar, but benefited fully from the rise of the New Zealand dollar.
Given our expectation for a stable or improving U.S. market, we believe that
these markets, along with the Canadian bond market, should continue to perform
well.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
- ----------------------- -----------------------
A 1 1/2" x 1 5/8" photo A 1 1/2" x 1 5/8" photo
of A. Keith Brodkin, of Frederick J. Simmons,
Chairman and President Portfolio Manager
- ----------------------- -----------------------
/s/ A. Keith Brodkin /s/ Frederick J. Simmons
A. Keith Brodkin Frederick J. Simmons
Chairman and President Portfolio Manager
May 17, 1995
PORTFOLIO MANAGER PROFILE
A graduate of Tufts University and the Amos Tuck School of Business
Administration of Dartmouth College, Frederick Simmons has been a member of
the MFS investment staff since 1971. He began his career at MFS as a research
specialist and was named Senior Vice President in 1983. In 1991, he became the
Portfolio Manager for MFS World Total Return Fund.
OBJECTIVE AND POLICIES
The Fund's investment objective is to seek total return from investments in
securities which provide above-average current income, compared to a portfolio
invested entirely in equity securities, and opportunities for long-term growth
of capital and income.
The Fund seeks to achieve its objective by investing primarily in global equity
and fixed-income securities. The Fund will invest no less than 40% of its assets
in equity securities under normal economic and market conditions, but expects
that 60% of its assets will most likely be so invested, with the remainder of
its assets invested in fixed-income securities. The Fund may also enter into
repurchase agreements, engage in options and futures transactions and enter into
forward foreign currency exchange contracts.
PERFORMANCE SUMMARY
Because mutual funds like MFS World 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, Class B, and Class C shares for the applicable
time periods.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
Class A Investment Results
(net asset value change including reinvested distributions)
9/04/90+ -
6 Months 1 Year 4/30/95
- --------------------------------------------------------------------------------
Cumulative Total Return* +4.65% +7.88% +67.71%
- --------------------------------------------------------------------------------
Average Annual Total Return* -- +7.88% +11.75%
- --------------------------------------------------------------------------------
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-year period ended March 31, 1995 and for the period
from September 4, 1990+ to March 31, 1995, were +1.35% and +10.23%,
respectively.
Class B Investment Results
(net asset value change including reinvested distributions)
9/07/93+ -
6 Months 1 Year 4/30/95
- --------------------------------------------------------------------------------
Cumulative Total Return++ +4.24% +7.10% +11.85%
- --------------------------------------------------------------------------------
Average Annual Total Return++ -- +7.10% + 7.05%
- --------------------------------------------------------------------------------
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 September 7, 1993+ to March 31, 1995,
reflecting the current maximum contingent deferred sales charge (CDSC) of 4%,
were +1.65% and +3.45%, respectively.
Class C Investment Results
(net asset value change including reinvested distributions)
1/03/94+ -
6 Months 1 Year 4/30/95
- --------------------------------------------------------------------------------
Cumulative Total Return(S) +4.33% +7.13% +4.17%
- --------------------------------------------------------------------------------
Average Annual Total Return(S) -- +7.13% +3.14%
- --------------------------------------------------------------------------------
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 January 3, 1994+ to March 31, 1995,
were +5.78% and +1.52%, respectively. 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.
* 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.
(S) 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.
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - April 30, 1995
Common Stocks - 56.7%
- -----------------------------------------------------------------------------
Issuer Shares Value
- -----------------------------------------------------------------------------
U.S. Common Stocks - 22.3%
Banks and Credit Companies - 1.8%
Barnett Banks, Inc. 25,800 $ 1,206,150
Norwest Corp. 34,500 914,250
Shawmut National Corp. 36,500 967,250
------------
$ 3,087,650
- -----------------------------------------------------------------------------
Business Machines - 1.7%
International Business Machines Corp. 15,000 $ 1,421,250
Xerox Corp. 12,000 1,477,500
------------
$ 2,898,750
- -----------------------------------------------------------------------------
Chemicals - 0.6%
Grace (W.R.) & Co. 18,500 $ 992,063
- -----------------------------------------------------------------------------
Consumer Goods and Services - 2.0%
Colgate-Palmolive Co. 22,000 $ 1,545,500
Philip Morris Cos., Inc. 26,500 1,795,375
------------
$ 3,340,875
- -----------------------------------------------------------------------------
Electrical Equipment - 0.9%
General Electric Co. 25,600 $ 1,433,600
- -----------------------------------------------------------------------------
Financial Institutions - 2.5%
Bay Apartment Communities, Inc. 15,000 $ 270,000
Chateau Properties, Inc. 15,000 309,375
Evans Withycombe Residential, Inc. 20,000 375,000
Federal Home Loan Mortgage Corp. 25,100 1,637,775
Highwoods Properties, Inc. 19,000 418,000
Liberty Property Trust 15,000 279,375
PMC Commercial Trust 20,000 267,500
ROC Communities, Inc. 16,000 322,000
Walden Residential Properties, Inc. 16,400 315,700
------------
$ 4,194,725
- -----------------------------------------------------------------------------
Food and Beverage Products - 1.2%
General Mills, Inc. 15,000 $ 915,000
Universal Foods Corp. 31,000 1,007,500
------------
$ 1,922,500
- -----------------------------------------------------------------------------
Insurance - 2.0%
General Re Corp. 9,000 $ 1,146,375
MBIA, Inc. 14,000 878,500
Transamerica Corp. 22,000 1,245,750
------------
$ 3,270,625
- -----------------------------------------------------------------------------
Machinery - 0.5%
Deere & Co., Inc. 10,000 $ 820,000
- -----------------------------------------------------------------------------
Medical and Health Products - 1.7%
Lilly (Eli) & Co. 14,000 $ 1,046,500
Schering Plough Corp. 9,000 678,375
Warner-Lambert Co. 15,000 1,196,250
------------
$ 2,921,125
- -----------------------------------------------------------------------------
Metals and Minerals - 0.7%
Allegheny Ludlum Corp. 50,000 $ 1,131,250
- -----------------------------------------------------------------------------
Oils - 2.5%
Amoco Corp. 18,000 $ 1,181,250
Atlantic Richfield Co. 8,350 956,075
Exxon Corp. 10,600 738,025
Mobil Corp. 13,700 1,299,788
------------
$ 4,175,138
- -----------------------------------------------------------------------------
Photographic Products - 1.0%
Eastman Kodak Co. 28,800 $ 1,656,000
- -----------------------------------------------------------------------------
Pollution Control - 0.6%
WMX Technologies, Inc. 39,000 $ 1,062,750
- -----------------------------------------------------------------------------
Printing and Publishing - 1.0%
Deluxe Corp. 17,500 $ 540,313
Donnelley (R.R.) & Sons, Inc. 33,000 1,122,000
------------
$ 1,662,313
- -----------------------------------------------------------------------------
Real Estate - 0.1%
Oasis Residential, Inc. 9,000 $ 196,875
- -----------------------------------------------------------------------------
Stores - 0.5%
Federated Department Stores, Inc.* 40,200 $ 849,225
- -----------------------------------------------------------------------------
Utilities - Gas - 1.0%
Pacific Enterprises 25,000 $ 615,625
Westcoast Energy, Inc. 68,000 1,079,500
------------
$ 1,695,125
- -----------------------------------------------------------------------------
Total U.S. Common Stocks $ 37,310,589
- -----------------------------------------------------------------------------
Foreign Stocks - 34.4%
Argentina - 0.3%
Central Costanera, ADR (Utilities - Electric)## 13,167 $ 381,843
Mirgor Sacifia, ADR (Auto Parts)*## 47,930 89,869
------------
$ 471,712
- -----------------------------------------------------------------------------
Australia - 3.1%
Australia & New Zealand Bank Group
Ltd. (Banks and Credit Companies) 215,000 $ 793,462
Broken Hill Proprietary Co. (Metals) 60,000 871,776
Q.B.E. Insurance Group Ltd. (Insurance) 280,000 1,145,223
Seven Network Ltd. (Entertainment) 412,000 1,002,688
Woolworth Ltd., ADR (Retail)## 67,500 1,451,250
------------
$ 5,264,399
- -----------------------------------------------------------------------------
Canada - 0.6%
Hudsons Bay Co. (Stores) 30,000 $ 552,486
Transcanada Pipelines Ltd. (Oils) 35,000 468,125
------------
$ 1,020,611
- -----------------------------------------------------------------------------
Chile - 0.2%
Enersis S.A., ADR (Utilities - Electric) 10,000 $ 280,000
- -----------------------------------------------------------------------------
Denmark - 0.9%
Tele Denmark A/S, ADR (Telecommunications) 59,000 $ 1,548,750
- -----------------------------------------------------------------------------
France - 2.8%
Elf Aquitaine, ADR (Oils) 28,200 $ 1,120,950
LVMH Moet-Hennessy (Food and Beverage) 3,000 569,774
Pinault-Printemps S.A. (Retail) 3,700 835,751
Telvision Francaise (Entertainment) 12,000 1,094,455
Total S.A., ADR (Oils) 35,000 1,098,125
------------
$ 4,719,055
- -----------------------------------------------------------------------------
Germany - 1.5%
Deutsche Bank AG (Banks and Credit
Companies) 3,000 $ 1,469,838
Hornbach Baumarkt AG (Retail)## 320 202,032
Schering AG (Pharmaceuticals) 1,100 815,387
------------
$ 2,487,257
- -----------------------------------------------------------------------------
Hong Kong - 1.7%
China Light & Power Co. (Utilities -
Electric) 72,000 $ 339,491
Consol Electric Power Asia Ltd., ADR
(Utilities - Electric)## 13,600 292,400
National Mutual Asia Ltd. (Insurance) 1,650,000 964,507
Oriental Press Group (Publishing) 900,000 366,232
Wharf Holdings Ltd. (Real Estate) 280,000 839,168
------------
$ 2,801,798
- -----------------------------------------------------------------------------
Italy - 0.6%
Istituto Nazionale delle Assicurazioni
(Insurance)* 392,000 $ 527,333
Telecom Italia S.P.A. (Utilities -
Telephone) 225,000 468,750
------------
$ 996,083
- -----------------------------------------------------------------------------
Japan - 4.7%
DDI Corp. (Broadcasting) 114 $ 1,002,615
Dai Nippon Printing Co., Ltd. (Office
Equipment) 64,000 1,072,498
Daiwa House Industry Co. (Manufacturer
- Housing) 37,000 615,641
East Japan Railway Co. (Railroads) 135 701,153
ITO Yokado Co. (Retail) 8,000 430,711
MOS Food Services (Food Services) 11,000 322,914
Matsushita Electric Industrial Co.
(Electrical Equipment) 65,000 1,089,256
Nippondenso Co., Ltd. (Auto Parts)* 57,000 1,144,878
Nissen Corp. (Retail) 13,200 417,304
Sony Corp., ADR (Electronics) 19,800 1,007,325
------------
$ 7,804,295
- -----------------------------------------------------------------------------
Korea - 0.6%
Korea Electric Power Corp. (Utilities
- Electric) 17,000 $ 622,196
Korea Electric Power Corp., ADR
(Utilities - Electric) 15,000 315,000
------------
$ 937,196
- -----------------------------------------------------------------------------
Mexico - 0.1%
Grupo Casa Autrey, ADR (Wholesale
Distributors) 14,000 $ 215,250
- -----------------------------------------------------------------------------
Netherlands - 2.5%
Royal Dutch Petroleum Co., ADR (Oils) 11,500 $ 1,426,000
Royal PTT Nederland N.V. (Commercial
Services) 36,000 1,253,443
Wolters Klumer (Publishing) 17,500 1,422,480
------------
$ 4,101,923
- -----------------------------------------------------------------------------
New Zealand - 1.8%
Lion Nathan Ltd. (Food and Beverage) 765,000 $ 1,665,614
Telecom of New Zealand, ADR
(Telecommunications) 20,300 1,355,025
------------
$ 3,020,639
- -----------------------------------------------------------------------------
Spain - 1.3%
Acerinox (Iron and Steel) 5,500 $ 628,444
Aumar (aut Del Mar) (Toll Road) 43,000 489,587
Iberdrola S.A. (Utilities - Electric) 152,000 997,731
------------
$ 2,115,762
- -----------------------------------------------------------------------------
Sweden - 2.6%
Asea, "B" (Electrical Equipment) 15,000 $ 1,260,816
Astra AB, "B" (Pharmaceuticals) 59,500 1,691,595
Hennes & Mauritz AB, "B" (Retail) 13,900 937,358
Stadshypoteki AB, "A" (Banks and
Credit Companies)* 38,000 521,906
------------
$ 4,411,675
- -----------------------------------------------------------------------------
Switzerland - 0.9%
Nestle S.A. (Food and Beverage) 1,600 $ 1,557,547
- -----------------------------------------------------------------------------
United Kingdom - 8.1%
Allied-Lyons (Food and Beverage) 102,538 $ 905,281
British Petroleum PLC, ADR (Oils) 16,400 1,412,450
British Steel PLC, ADR (Iron and
Steel) 33,500 912,875
Invesco Fund Managers (Finance) 160,000 484,614
London Electricity PLC (Utilities -
Electric) 60,000 617,690
Mai PLC (Finance) 120,000 518,125
PowerGen PLC, ADR (Utilities -
Electric) 45,000 1,428,750
Reuters Holdings PLC, ADR (Printing
and Publishing) 27,500 1,251,250
Southern Electric PLC (Utilities -
Electric)* 60,000 638,956
Storehouse PLC (Retail) 365,000 1,446,592
Takare PLC (Medical and Health
Technology and Services)## 300,000 966,650
Tomkins PLC (Conglomerate) 232,000 874,625
Unilever N.V. (Consumer Goods) 72,000 1,423,296
Williams Holdings (Conglomerate) 127,857 679,762
------------
$ 13,560,916
- -----------------------------------------------------------------------------
Venezuela - 0.1%
Mavesa S.A., ADR (Food and Beverage)## 33,333 $ 99,999
- -----------------------------------------------------------------------------
Total Foreign Common Stocks $ 57,414,867
- -----------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $84,863,495) $ 94,725,456
- -----------------------------------------------------------------------------
Convertible Preferred Stocks - 1.2%
- ------------------------------------------------------------------------------
Allstate Corp., 6.76s (Insurance)* 12,500 $ 451,563
Atlantic Richfield Co., 9s (Chemicals) 16,000 412,000
Conitel, 7s, Prides (Utilities -
Telephone)## 6,000 280,500
RJR Nabisco Holdings, $0.6012 (Food
and Beverage) 140,000 840,000
- -----------------------------------------------------------------------------
Total Convertible Preferred Stocks (Identified Cost,
$2,170,874) $ 1,984,063
- -----------------------------------------------------------------------------
Bonds - 28.5%
- ------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- -----------------------------------------------------------------------------
U.S. Dollar Denominated - 5.9%
Foreign - U.S. Dollar Denominated - 0.5%
Republic of Greece, 9.75s, 1999 $ 800 $ 829,600
- -----------------------------------------------------------------------------
U.S. Government Guaranteed - 0.5%
Government National Mortgage Assn.,
8.5s, 2021 $ 805 $ 820,587
- -----------------------------------------------------------------------------
U.S. Treasury Obligations - 4.9%
Stripped Principal Payments, 0s, 2019 $ 7,900 $ 1,314,955
U.S. Treasury Notes, 6.875s, 1997 2,300 2,311,500
U.S. Treasury Notes, 7.125s, 2000 400 403,812
U.S. Treasury Notes, 7.25s, 2004 4,160 4,209,379
------------
$ 8,239,646
- -----------------------------------------------------------------------------
Total U.S. Dollar Denominated $ 9,889,833
- -----------------------------------------------------------------------------
Foreign Bonds - 22.6%
Australia - 2.5%
Commonwealth of Australia, 6.25s, 1999 AUD 950 $ 624,936
Commonwealth of Australia, 8.75s, 2001 2,500 1,759,898
Treasury Corp. of Victoria, 10.25s, 1999 2,200 1,642,209
------------
$ 4,027,043
- -----------------------------------------------------------------------------
Denmark - 2.0%
Kingdom of Denmark, 9s, 1998 DKK 10,470 $ 1,982,676
Kingdom of Denmark, 9s, 2000 7,440 1,408,893
------------
$ 3,391,569
- -----------------------------------------------------------------------------
France - 2.2%
Government of France, 8s, 1998 FRF 7,980 $ 1,656,624
Government of France, 7s, 1999 6,630 1,327,885
Government of France, 7.75s, 2000 3,370 693,783
------------
$ 3,678,292
- -----------------------------------------------------------------------------
Germany - 7.6%
Deutschland Republic, 8.5s, 2000 DEM 2,790 $ 2,187,762
Deutschland Republic, 6.5s, 2003 1,770 1,234,216
Deutschland Republic, 6.75s, 2004 1,250 881,532
German Unity Fund, 8.5s, 2001 930 728,919
Treuhandanstalt Obligationen, 6.375s, 1999 5,950 4,311,874
Treuhandanstalt Obligationen, 7.75s, 2002 4,500 3,387,568
------------
$ 12,731,871
- -----------------------------------------------------------------------------
Ireland - 1.2%
Republic of Ireland, 9s, 2001 IEP 1,200 $ 1,983,026
- -----------------------------------------------------------------------------
Italy - 0.4%
Government of Italy, 9.5s, 1999 ITL 1,315,000 $ 703,603
- -----------------------------------------------------------------------------
Netherlands - 3.1%
Dutch State Loan, 6.25s, 1998 NLG 690 $ 446,737
Dutch State Loan, 7s, 1999 2,150 1,421,064
Netherlands Government, 7.5s, 1999 1,920 1,293,139
Netherlands Government, 7.75s, 2005 3,030 2,036,835
------------
$ 5,197,775
- -----------------------------------------------------------------------------
New Zealand - 1.9%
Government of New Zealand, 8s, 1995 NZD 4,640 $ 3,100,921
- -----------------------------------------------------------------------------
United Kingdom - 1.7%
United Kingdom Treasury, 6s, 1999 GBP 1,440 $ 2,132,184
United Kingdom Treasury, 9.5s, 1999 400 668,600
------------
$ 2,800,784
- -----------------------------------------------------------------------------
Total Foreign Bonds $ 37,614,884
- -----------------------------------------------------------------------------
Total Bonds (Identified Cost, $44,500,835) $ 47,504,717
- -----------------------------------------------------------------------------
Convertible Bonds - 0.7%
- ------------------------------------------------------------------------------
Carter Hawley Hale Stores, Inc., 6.25s, 2000 $ 200 $ 140,000
Piv Investment Finance Cayman LTD.,
4.5s, 2000## 455 327,600
Roche Holdings, Inc., 0s, 2010## 1,600 601,000
- -----------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $1,184,849) $ 1,068,600
- -----------------------------------------------------------------------------
Call Options Purchased - 0.2%
- -----------------------------------------------------------------------------
Principal Amount
of Contracts
Expiration Month/Strike Price (000 Omitted) Value
- -----------------------------------------------------------------------------
Canadian Dollars
July/1.38 CAD 1,447 $ 16,983
Japanese Government Bonds
May/110.07 JPY 204,000 612
June/110.15 238,000 2,618
July/110.16 261,000 23,751
August/100.30 119,000 98,651
August/100.97 341,000 256,432
- -----------------------------------------------------------------------------
Total Call Options Purchased (Premiums Paid, $143,836) $ 399,047
- -----------------------------------------------------------------------------
Put Options Purchased
- -----------------------------------------------------------------------------
Deutsche Marks
May/1.41 DEM 7,194 $ 15,827
Deutsche Marks/British Pounds
July/2.29 2,090 10,490
- -----------------------------------------------------------------------------
Total Put Options Purchased (Premiums Paid, $77,979) $ 26,317
- -----------------------------------------------------------------------------
Short-Term Obligations - 11.8%
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted)
- -----------------------------------------------------------------------------
U.S. Dollar Denominated - 11.5%
Federal Home Loan Mortgage Corp., due
5/16/95 - 5/22/95 $ 6,815 $ 6,794,410
Federal National Mortgage Assn., due 5/05/95 5,096,668
GTE Southwest, Inc., due 5/01/95 - 5/02/95 7,275 7,274,236
------------
$ 19,165,314
- -----------------------------------------------------------------------------
Foreign - 0.3%
New Zealand
New Zealand Treasury Bills, due 12/20/95 NZD 923 $ 555,141
- -----------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 19,720,455
- -----------------------------------------------------------------------------
Total Investments (Identified Cost, $152,662,323) $165,428,655
- -----------------------------------------------------------------------------
Call Options Written - (0.4)%
- -----------------------------------------------------------------------------
Principal Amount
of Contracts
Expiration Month/Strike Price (000 Omitted)
- -----------------------------------------------------------------------------
British Pounds
September/1.64 GBP 2,562 $ (48,165)
Deutsche Marks
May/1.36 DEM 6,954 (8,951)
July/1.42 5,681 (141,719)
Deutsche Marks/British Pounds
July/2.11 1,929 (3,756)
Japanese Government Bonds
August/100.35 JPY 119,000 (98,012)
Japanese Yen
March/78 279,543 (129,703)
July/84 754,264 (255,695)
- -----------------------------------------------------------------------------
Total Call Options Written (Premiums
Received, $539,654) $ (686,001)
- -----------------------------------------------------------------------------
Australian Dollars
July/0.72 AUD 1,683 $ (19,415)
British Pounds
September/1.53 GBP 2,390 (25,658)
Japanese Government Bonds
May/110.07 JPY 204,000 (44,126)
Japanese Yen
March/93 333,301 (35,527)
- -----------------------------------------------------------------------------
Total Put Options Written (Premiums
Received, $146,038) $ (124,726)
- -----------------------------------------------------------------------------
Other Assets, Less Liabilities - 1.4% $ 2,393,022
- -----------------------------------------------------------------------------
Net Assets - 100.0% $167,010,950
- -----------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
Abbreviations have been used throughout this report to indicate amounts shown
in currencies other than the U.S. dollar. A list of abbreviations is shown
below.
AUD = Australian Dollars GBP = British Pounds
CAD = Canadian Dollars IEP = Irish Punts
CHF = Swiss Francs ITL = Italian Lire
DEM = Deutsche Marks JPY = Japanese Yen
DKK = Danish Kroner NLG = Dutch Guilders
ESP = Spanish Pesetas NZD = New Zealand Dollars
FRF = French Francs SEK = Swedish Kronor
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- ------------------------------------------------------------------------------
April 30, 1995
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $152,662,323) $165,428,655
Cash 206,006
Foreign currency, at value (identified cost, $3,027) 3,614
Net receivable for forward foreign currency exchange contracts
purchased 2,703,010
Net receivable for forward foreign currency exchange contracts 119,710
Receivable for investments sold 2,385,918
Receivable for Fund shares sold 257,027
Interest and dividends receivable 1,984,525
Deferred organization expenses 12,712
Other assets 1,165
------------
Total assets $173,102,342
------------
Liabilities:
Payable for investments purchased $ 1,558,636
Payable for Fund shares reacquired 286,539
Net payable for forward foreign currency exchange contracts
sold 3,206,141
Written options outstanding, at value (premiums received,
$685,692) 810,727
Payable to affiliates -
Management fee 11,095
Shareholder servicing agent fee 2,368
Distribution fee 37,921
Accrued expenses and other liabilities 177,965
------------
Total liabilities $ 6,091,392
------------
Net assets $167,010,950
------------
Net assets consist of:
Paid-in capital $154,814,669
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 12,380,068
Accumulated distributions in excess of net realized gain on
investments and foreign currency transactions (1,989,094)
Accumulated undistributed net investment income 1,805,307
------------
Total $167,010,950
------------
Shares of beneficial interest outstanding 15,181,343
------------
Class A shares:
Net asset value and redemption price per share
(net assets of $104,102,165 / 9,447,208 shares of beneficial
interest outstanding) $11.02
------
Offering price per share (100/95.25 of net asset value per
share) $11.57
------
Class B shares:
Net asset value, offering price, and redemption price per share
(net assets of $52,337,048 / 4,770,414 shares of beneficial
interest outstanding) $10.97
------
Class C shares:
Net asset value and offering price per share
(net assets of $10,571,737 / 963,721 shares of beneficial
interest outstanding) $10.97
------
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 (Unaudited)
- -------------------------------------------------------------------------------
Six Months Ended April 30, 1995
- -------------------------------------------------------------------------------
Net investment income:
Income -
Interest $ 2,504,863
Dividends 1,301,322
Foreign taxes withheld (67,614)
-----------
Total investment income $ 3,738,571
-----------
Expenses -
Management fee $ 689,251
Trustees' compensation 16,557
Shareholder servicing agent fee (Class A) 72,897
Shareholder servicing agent fee (Class B) 53,238
Shareholder servicing agent fee (Class C) 7,489
Distribution and service fee (Class A) 170,393
Distribution and service fee (Class B) 241,994
Distribution and service fee (Class C) 49,931
Custodian fee 104,223
Postage 30,138
Printing 28,007
Auditing fees 10,500
Legal fees 6,705
Amortization of organization expenses 1,364
Miscellaneous 115,357
-----------
Total expenses $ 1,598,044
-----------
Net investment income $ 2,140,527
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ (22,790)
Written option transactions 389,553
Foreign currency transactions (25,545)
------------
Net realized gain on investments and foreign currency
transactions $ 341,218
-----------
Change in unrealized appreciation (depreciation) -
Investments $ 4,998,466
Written options 412,057
Translation of assets and liabilities in foreign currencies (690,556)
-----------
Net unrealized gain on investments $ 4,719,967
-----------
Net realized and unrealized gain on investments and foreign
currency $ 5,061,185
-----------
Increase in net assets from operations $ 7,201,712
-----------
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------
Six Months Ended
April 30, 1995 Year Ended
(Unaudited) October 31, 1994
- -------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,140,527 $ 3,273,968
Net realized gain on investments and foreign
currency transactions 341,218 636,673
Net unrealized gain on investments and foreign
currency transactions 4,719,967 173,343
------------ ------------
Increase in net assets from operations $ 7,201,712 $ 4,083,984
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ -- $ (1,963,576)
From net investment income (Class B) -- (497,186)
From net investment income (Class C) -- (102,055)
From net realized gain on investments and
foreign currency transactions (Class A) -- (2,611,400)
From net realized gain on investments and
foreign currency transactions (Class B) -- (661,218)
From net realized gain on investments and
foreign currency transactions (Class C) -- (135,725)
In excess of net realized gain on investments
and foreign currency transactions (Class A) (453,126) (3,060,839)
In excess of net realized gain on investments
and foreign currency transactions (Class B) (72,338) (775,018)
In excess of net realized gain on investments
and foreign currency transactions (Class C) (13,755) (159,084)
From paid-in capital (Class A) -- (774,051)
From paid-in capital (Class B) -- (195,993)
From paid-in capital (Class C) -- (40,231)
------------ ------------
Total distributions declared to
shareholders $ (539,219) $(10,976,376)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 22,061,425 $109,302,626
Net asset value of shares issued to
shareholders in reinvestment of
distributions 484,566 9,514,906
Cost of shares reacquired (20,647,134) (29,119,416)
------------ ------------
Increase in net assets from Fund share
transactions $ 1,898,857 $ 89,698,116
------------ ------------
Total increase in net assets $ 8,561,350 $ 82,805,724
Net assets:
At beginning of period 158,449,600 75,643,876
------------ ------------
At end of period (including accumulated
undistributed (distributions in excess of)
net investment income of $1,805,307 and
$(335,220), respectively) $167,010,950 $158,449,600
------------ ------------
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months
Ended
April 30, Year Ended October 31,
1995 ---------------------------------------------------------------
(Unaudited) 1994 1993 1992 1991 1990<F1>
- -----------------------------------------------------------------------------------------------------------------
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 $10.58 $11.19 $10.21 $ 9.42 $ 8.55 $ 8.50
------ ------ ------ ------ ------ ------
Income from investment
operations<F5>
Net investment income $ 0.16 $ 0.30 $ 0.28 $ 0.36 $ 0.37 $ 0.08
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions 0.33 0.15 1.42 0.86 0.88 (0.03)
------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.49 $ 0.45 $ 1.70 $ 1.22 $ 1.25 $ 0.05
------ ------ ------ ------ ------ ------
Less distributions
declared to shareholders -
From net investment income $ -- $(0.25) $(0.45) $(0.26) $(0.38) --
From net realized gain on
investments and foreign
currency transactions -- (0.33) (0.27) (0.17) -- --
In excess of net realized
gain on investments
and foreign currency
transactions (0.05) (0.38) -- -- -- --
From paid-in capital -- (0.10) -- -- -- --
------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $(0.05) $(1.06) $(0.72) $(0.43) $(0.38) $ --
------ ------ ------ ------ ------ ------
Net asset value - end of
period $11.02 $10.58 $11.19 $10.21 $ 9.42 $ 8.55
====== ====== ====== ====== ====== ======
Total return<F4> 4.65%<F3> 4.10% 17.78% 13.14% 14.94% 3.76%<F2>
Ratios (to average net assets)/Supplemental data:
Expenses 1.79%<F2> 1.76% 1.92% 1.84% 2.18% 1.57%<F2>
Net investment income 3.02%<F2> 2.81% 2.96% 3.65% 4.05% 3.14%<F2>
Portfolio turnover 60% 118% 112% 72% 134% 2%
Net assets at end of period
(000 omitted) $104,102 $99,870 $71,262 $44,707 $30,847 $12,510
<FN>
- -------------
<F1> For the period from the commencement of investment operations, September 4,
1990 to October 31, 1990.
<F2> Annualized.
<F3> Not annualized.
<F4> Total returns do not include the applicable sales charge. If the charge had
been included, the results would have been lower.
<F5> Per share data for the periods subsequent to October 31, 1993 are based on
average shares outstanding.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months Six Months
Ended Year Ended Ended
April 30, October 31, April 30, Period Ended
1995 -------------------- 1995 October 31,
(Unaudited) 1994 1993<F1> (Unaudited) 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 $10.54 $11.19 $10.84 $10.53 $11.06
------ ------ ------ ------ ------
Income from investment
operations<F5> -
Net investment income $ 0.12 $ 0.25 $ 0.06 $ 0.13 $ 0.27
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions 0.32 0.13 0.35 0.32 (0.29)
------ ------ ------ ------ ------
Total from investment
operations $ 0.44 $ 0.38 $ 0.41 $ 0.45 $ (0.02)
------ ------ ------ ------ ------
Less distributions declared
to shareholders -
From net investment income $ -- $(0.24) $(0.06) $ -- $(0.12)
From net realized gain on
investments and foreign
currency transactions -- (0.32) -- -- (0.16)
In excess of net realized
gain on investments and
foreign currency
transactions (0.01) (0.38) -- (0.01) (0.18)
From paid-in capital -- (0.09) -- -- (0.05)
------ ------ ------ ------ ------
Total distributions
declared to
shareholders $(0.01) $(1.03) $(0.06) $(0.01) $(0.51)
------ ------ ------ ------ ------
Net asset value - end
of period $10.97 $10.54 $11.19 $10.97 $10.53
------ ------ ------ ------ ------
Total return<F6> 4.24%<F4> 3.38% 3.79%<F4> 4.33%<F4> (0.15)%<F4>
Ratios (to average net assets)/Supplemental data:
Expenses 2.51%<F3> 2.49% 2.77%<F3> 2.43%<F3> 2.39%<F3>
Net investment income 2.30%<F3> 2.33% 2.15%<F3> 2.37%<F3> 2.51%<F3>
Portfolio turnover 60% 118% 112% 60% 118%
Net assets at end of
period (000 omitted) $52,337 $47,677 $4,381 $10,572 $10,903
<FN>
- ------------
<F1> For the period from the commencement of offering of Class B shares,
September 7, 1993 to October 31, 1993.
<F2> For the period from the commencement of offering of Class C shares, January
3, 1994 to October 31, 1994.
<F3> Annualized.
<F4> Not annualized.
<F5> Per share data for the periods subsequent to October 31, 1993 are based on
average shares outstanding.
<F6> Total returns do not include the applicable sales charge. If the charge had
been included, the results would have been lower.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) Business and Organization
MFS World Total Return Fund (the Fund) is a non-diversified series of MFS Series
Trust VI (the Trust). The Trust is organized as a Massachusetts business trust
and 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.
Deferred Organization Expenses - Costs incurred by the Fund in connection with
its organization have been deferred and are being amortized on a straight-line
basis over a five-year period beginning on the date of commencement of
operations of the Fund.
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 securities 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 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 futures contracts is designed to
hedge against anticipated future changes in interest rates, exchange rates,
securities prices or for non-hedging purposes. 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 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 April 30, 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 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 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.
The Fund uses the effective interest method for reporting interest income on
payment-in-kind (PIK) bonds, whereby interest income on PIK bonds is recorded
ratably by the Fund at a constant yield to maturity. Legal fees and other
related expenses incurred to preserve and protect the value of a security owned
are added to the cost of the security; other legal fees are expensed. Capital
infusions, which are generally non-recurring, incurred to protect or enhance the
value of high-yield debt securities, are reported as an addition to the cost
basis of the security. Costs that are incurred to negotiate the terms or
conditions of capital infusions or that are expected to result in a plan of
reorganization are considered workout expenses and are reported as realized
losses. Ongoing costs incurred to protect or enhance an investment, or costs
incurred to pursue other claims or legal actions, are reported as operating
expenses.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
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 September 7, 1993 and January 3, 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
0.65% of average daily net assets and 5.0% of investment income, amounted to
$689,251.
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 $2,557 for the six months ended April 30, 1995.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$24,370 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. Fees incurred under the distribution plan during the
period ended April 30, 1995 were 0.35% of average daily net assets attributable
to Class A shares on an annualized basis and amounted to $170,393 (of which MFD
retained $18,489).
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 period ended April 30, 1995 were 1.00% of average daily net assets
attributable to Class B and Class C shares on an annualized basis and amounted
to $241,994 and $49,931, respectively (of which MFD retained $2,179 and $4,421,
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 share
redemption within 12 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 period ended April 30, 1995 were $155 and $46,332 for Class A and
Class B shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earned
$72,897, $53,238 and $7,489 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 $19,181,614 $33,717,879
----------- -----------
Investments (non-U.S. government securities) $64,922,431 $61,129,521
----------- -----------
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 $152,662,323
------------
Gross unrealized appreciation $ 15,049,446
Gross unrealized depreciation (2,283,114)
------------
Net unrealized appreciation $ 12,766,332
------------
(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>
Six Months Ended Year Ended
April 30, 1995 October 31, 1994
------------------------------ ----------------------------
Class A Shares Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,124,312 $ 11,674,363 4,057,858 $44,108,242
Shares issued to shareholders in
reinvestment of distributions 40,084 408,836 650,058 7,016,535
Shares reacquired (1,156,506) (12,015,066) (1,634,278) (17,703,592)
---------- ----------- ---------- -----------
Net increase 7,890 $ 68,133 3,073,638 $33,421,185
---------- ----------- ---------- -----------
<CAPTION>
Six Months Ended Year Ended
April 30, 1995 October 31, 1994
------------------------------ ----------------------------
Class B Shares Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 848,388 $ 8,769,834 4,787,651 $52,159,264
Shares issued to shareholders in
reinvestment of distributions 6,376 64,929 201,731 2,142,482
Shares reacquired (608,742) (6,275,118) (856,456) (9,240,107)
---------- ----------- ---------- -----------
Net increase 246,022 $ 2,559,645 4,132,926 $45,061,639
---------- ----------- ---------- -----------
<CAPTION>
Six Months Ended Year Ended
April 30, 1995 October 31, 1994*
------------------------------ ----------------------------
Class C Shares Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 155,955 $ 1,617,228 1,206,568 $13,035,120
Shares issued to shareholders in
reinvestment of distributions 1,063 10,801 33,846 355,889
Shares reacquired (228,481) (2,356,950) (205,230) (2,175,717)
---------- ----------- ---------- -----------
Net increase (decrease) (71,463) $ (728,921) 1,035,184 $11,215,292
---------- ----------- ---------- -----------
* For the period ended from the commencement of offering of Class C shares,
January 3, 1994 to October 31, 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
period ended April 30, 1995 was $1,210.
(7) Financial Instruments
The Fund trades financial instruments with off-balance sheet risk in the normal
course of its investing activities in order to manage exposure to market risks
such as interest rates and foreign currency exchange rates. These financial
instruments include written options and forward foreign currency exchange
contracts. The notional or contractual amounts of these instruments represent
the investment the Fund has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered. A summary of
obligations under these financial instruments at April 30, 1995, is as follows:
Written Option Transactions
1995 Calls 1995 Puts
-------------------------- ---------------------------------
Principal Amounts Principal Amounts
of Contracts of Contracts
(000 Omitted) Premiums (000 Omitted) Premiums
- -------------------------------------------------------------------------------
OUTSTANDING, BEGINNING OF PERIOD -
Deutsche Marks 14,075 $178,737 7,555 $ 21,587
Japanese Yen 731,609 93,043 321,000 34,499
Options written -
Australian Dollars 1,595 12,166 5,220 64,054
British Pounds 2,562 44,204 2,390 44,204
Canadian Dollars -- -- 4,786 19,572
Deutsche Marks 41,848 186,325 20,438 147,213
Deutsche Marks/
British Pounds 1,929 12,526 8,335 28,494
Italian Lire/
Deutsche Marks 5,635,210 51,568 -- --
Japanese Yen 1,644,307 413,799 2,588,792 244,732
Spanish Pesetas/
Deutsche Marks -- -- 230,690 15,118
Swedish Kronor/
Deutsche Marks 8,093 6,111 -- --
Swiss Francs/
Deutsche Marks 2,841 11,963 -- --
United States Dollars -- -- 4,100 54,133
Options terminated in closing
transactions -
Australian Dollars (1,595) (12,166) (3,537) (40,870)
Canadian Dollars -- -- (4,786) (19,572)
Deutsche Marks (9,006) (44,697) (20,438) (147,213)
Deutsche Marks/
British Pounds -- -- (8,335) (28,494)
Japanese Yen (1,071,967) (104,743) (2,372,491) (200,581)
Spanish Pesetas/
Deutsche Marks -- -- (230,690) (15,118)
Swedish Kronor/
Deutsche Marks (8,093) (6,111) -- --
United States Dollars -- -- (4,100) (54,133)
Options exercised -
Deutsche Marks (19,434) (195,865) -- --
Swiss Francs/
Deutsche Marks (2,841) (11,963) -- --
Options expired -
Deutsche Marks (14,848) (19,643) (7,555) (21,587)
Italian Lire/
Deutsche Marks (5,635,210) (51,568) -- --
Japanese Yen (151,142) (24,032) -- --
---------- -------- ---------- --------
OUTSTANDING,
END OF PERIOD - 1,169,933 $539,654 541,374 $146,038
---------- -------- ---------- --------
Written Option Transactions
1995 Calls 1995 Puts
-------------------------- ---------------------------------
Principal Amounts Principal Amounts
of Contracts of Contracts
(000 Omitted) Premiums (000 Omitted) Premiums
- -------------------------------------------------------------------------------
OPTIONS OUTSTANDING,
END OF PERIOD
CONSIST OF -
Australian Dollars -- $ -- 1,683 $ 23,184
---------- -------- ---------- --------
British Pounds 2,562 $ 44,204 2,390 $ 44,204
---------- -------- ---------- --------
Deutsche Marks 12,635 $104,857 -- $ --
---------- -------- ---------- --------
Deutsche Marks/
British Pounds 1,929 $ 12,526 -- $ --
---------- -------- ---------- --------
Japanese Yen 1,152,807 $378,067 537,301 $ 78,650
---------- -------- ---------- --------
At April 30, 1995, the Fund had sufficient cash and/or securities at least equal
to the value of the written options.
Forward Foreign Currency Exchange Contracts
<TABLE>
<CAPTION>
Net Unrealized
Contracts to Contracts Appreciation
Settlement Date Deliver/Receive In Exchange for at Value (Depreciation)
- -------------------------------------------------------------------------------- ---------------
<S> <C> <C> <C> <C> <C>
Sales 6/09/95 - 7/05/95 AUD 6,775,829 $ 4,997,737 $ 4,911,643 $ 86,094
6/09/95 - 7/10/95 CHF 9,505,010 8,258,390 8,307,311 (48,921)
6/06/95 - 8/16/95 DEM 64,964,969 45,352,919 46,967,915 (1,614,996)
5/08/95 DKK 17,469,981 3,184,872 3,207,785 (22,913)
6/21/95 - 7/10/95 ESP 687,779,504 5,266,241 5,546,410 (280,169)
5/02/95 - 8/02/95 FRF 36,192,306 7,271,452 7,331,719 (60,267)
5/05/95 - 7/07/95 GBP 1,497,226 2,386,897 2,409,791 (22,894)
5/04/95 - 8/04/95 IEP 2,176,499 3,499,902 3,548,722 (48,820)
5/26/95 - 7/10/95 JPY 1,210,024,848 13,535,576 14,487,915 (952,339)
5/04/95 - 6/26/95 NLG 13,329,212 8,453,377 8,597,363 (143,986)
6/09/95 NZD 2,880,604 1,840,706 1,930,313 (89,607)
7/13/95 SEK 4,826,318 652,322 659,645 (7,323)
------------ ------------ -----------
$104,700,391 $107,906,532 $(3,206,141)
------------ ------------ -----------
Purchases 7/05/95 AUD 1,715,241 $ 1,304,099 $ 1,242,232 $ (61,867)
7/07/95 - 8/01/95 CAD 2,657,850 1,903,995 1,950,909 46,914
6/09/95 - 7/10/95 CHF 9,510,792 8,235,633 8,312,367 76,734
5/05/95 - 8/16/95 DEM 86,065,618 61,406,635 62,202,074 795,439
6/21/95 - 7/10/95 ESP 599,098,748 4,672,006 4,831,601 159,595
5/02/95 - 5/04/95 FRF 13,139,684 2,706,939 2,668,987 (37,952)
5/05/95 - 6/21/95 GBP 1,765,396 2,797,855 2,841,973 44,118
5/04/95 IEP 1,088,249 1,776,893 1,775,966 (927)
6/09/95 ITL 283,691,447 170,355 168,229 (2,126)
5/08/95 - 8/01/95 JPY 2,858,984,675 32,567,833 34,222,510 1,654,677
5/04/95 - 6/26/95 NLG 5,189,054 3,317,966 3,345,113 27,147
6/09/95 NZD 505,179 338,975 338,524 (451)
7/13/95 SEK 4,826,318 657,938 659,647 1,709
------------ ------------ -----------
$121,857,122 $124,560,132 $ 2,703,010
------------ ------------ -----------
</TABLE>
Forward foreign currency purchases and sales under master netting arrangements
and closed forward foreign currency exchange contracts, excluded from above,
amounted to a net receivable of $119,710 at April 30, 1995.
At April 30, 1995, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
(8) Restricted Securities
The Fund may invest not more than 15% of its net assets in securities which are
subject to legal or contractual restrictions on resale. At April 30, 1995, the
Fund owned the following restricted securities (constituting 2.8% 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. All of these securities may be offered and sold
to "qualified institutional buyers" under Rule 144A of the 1933 Act.
<TABLE>
<CAPTION>
Description Date of Acquisition Share/Par Amount Cost Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Central Costanera, ADR 12/17/93 13,167 $ 316,008 $ 381,843
Conitel 7s, Prides 2/24/94 6,000 432,000 280,500
Consol Electric Power Asia Ltd., ADR 11/29/93 13,600 220,364 292,400
Hornbach Baumarkt AG 11/10/93 320 168,391 202,032
Mavesa S.A., ADR 10/27/93 33,333 204,000 99,999
Mirgor Sacifia, ADR 10/20/94 47,930 431,370 89,869
Piv Investment Finance Cayman Ltd.,
4.5s, 2000 1/26/94 455,000 413,600 327,600
Roche Holdings, Inc., 0s, 2010 4/12/95 1,600,000 571,249 601,000
Takare PLC 8/27/93 - 4/13/94 300,000 986,284 966,650
Woolworth Ltd., ADR 7/12/93 67,500 1,407,227 1,451,250
----------
$4,693,143
----------
</TABLE>
<PAGE>
THE MFS FAMILY OF FUNDS(R) -- AMERICA'S OLDEST MUTUAL FUND GROUP
The members of the MFS Family of Funds are grouped below according to the types
of securities in their portfolios. For free prospectuses containing more
complete information, including the exchange privilege and all charges and
expenses, please contact your financial adviser or call the MFS Service Center
at 1-800-225-2606 any business day from 8 a.m. to 8 p.m. Eastern time. This
material should be read carefully before investing or sending money.
<TABLE>
<CAPTION>
<S> <C>
STOCK LIMITED MATURITY BOND
Massachusetts Investors Trust MFS(r) Government Limited Maturity Fund
Massachusetts Investors Growth Stock Fund MFS(r) Limited Maturity Fund
MFS(r) Capital Growth Fund MFS(r) Municipal Limited Maturity Fund
MFS(r) Emerging Growth Fund WORLD
MFS(r) Gold & Natural Resources Fund MFS(r) World Asset Allocation Fund
MFS(r) Growth Opportunities Fund MFS(r) World Equity Fund
MFS(r) Managed Sectors Fund MFS(r) World Governments Fund
MFS(r) OTC Fund MFS(r) World Growth Fund
MFS(r) Research Fund MFS(r) World Total Return Fund
MFS(r) Value Fund NATIONAL TAX-FREE BOND
STOCK AND BOND MFS(r) Municipal Bond Fund
MFS(r) Total Return Fund MFS(r) Municipal High Income Fund
MFS(r) Utilities Fund (closed to new investors)
BOND MFS(r) Municipal Income Fund
MFS(r) Bond Fund STATE TAX-FREE BOND
MFS(r) Government Mortgage Fund Alabama, Arkansas, California, Florida,
MFS(r) Government Securities Fund Georgia, Louisiana, Maryland, Massachusetts,
MFS(r) High Income Fund Mississippi, New York, North Carolina,
MFS(r) Intermediate Income Fund Pennsylvania, South Carolina Tennessee, Texas,
MFS(r) Strategic Income Fund Virginia, Washington, West Virginia
(formerly MFS(r) Income & Opportunity Fund) MONEY MARAKET
MFS(r) Cash Reserve Fund
MFS(r) Government Money Market Fund
MFS(r) Money Market Fund
</TABLE>
<PAGE>
MFS(R) WORLD TOTAL -------------
RETURN FUND [LOGO: NUMBER 1 VALUE BULK RATE
TOP RATED SERVICE] U.S. POSTAGE
PAID
500 Boylston Street PERMIT #55638
Boston, MA 02116 BOSTON, MA
-------------
[LOGO: M F S
THE FIRST NAME IN MUTUAL FUNDS]
MWT-3 6/95 25M 24/224/324
