MFS WORLD TOTAL RETURN FUND
(A SERIES OF MFS SERIES TRUST VI)
500 BOYLSTON STREET o BOSTON o MASSACHUSETTS 02116-3741
617 o 954-5000
June 21, 1996
VIA EDGAR
- ---------
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Re: MFS Series Trust VI (File No. 811-6102), on Behalf of
MFS World Total Return Fund
Ladies and Gentlemen:
Pursuant to the requirements of Section 30(b) of the Investment Company Act
of 1940 and Rule 30b2-1 thereunder, we hereby file a copy of the Semiannual
Report to Shareholders dated April 30, 1996 of MFS World Total Return Fund.
Very truly yours,
APRIL ANDERSON
April Anderson
Senior Production Editor
<PAGE>
[MFS LOGO] SEMIANNUAL REPORT
THE FIRST NAME IN MUTUAL FUNDS APRIL 30, 1996
MFS [Registration Mark] WORLD TOTAL RETURN FUND
[A photo of two men in a window]
<PAGE>
MFS [Registration Mark] WORLD TOTAL RETURN FUND
TRUSTEES
A. Keith Brodkin* - Chairman and President
Richard B. Bailey* - Private Investor; Former Chairman and Director (until
1991), Massachusetts Financial Services Company; Director, Cambridge Bancorp;
Director, Cambridge Trust Company
Marshall N. Cohan - Private Investor
Lawrence H. Cohn, M.D. - Chief of Cardiac Surgery, Brigham and Women's
Hospital; Professor of Surgery, Harvard Medical School
The Hon. Sir J. David Gibbons, KBE - Chief Executive Officer, Edmund Gibbons
Ltd.; Chairman, Bank of N.T. Butterfield &Son Ltd.
Abby M. O'Neill - Private Investor; Director, Rockefeller Financial Services,
Inc. (investment advisers)
Walter E. Robb, III - President and Treasurer, Benchmark Advisors, Inc.
(corporate financial consultants); President, Benchmark Consulting Group,
Inc. (office services); Trustee, Landmark Funds (mutual funds)
Arnold D. Scott* - Senior Executive Vice President, Director and Secretary,
Massachusetts Financial Services Company
Jeffrey L. Shames* - President and Director, Massachusetts Financial Services
Company
J. Dale Sherratt - President, Insight Resources, Inc. (acquisition planning
specialists)
Ward Smith - Former Chairman (until 1994), NACCO Industries; Director,
Sundstrand Corporation
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116-3741
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGER
Frederick J. Simmons*
TREASURER
W. Thomas London*
ASSISTANT TREASURER
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
CUSTODIAN
State Street Bank and Trust Company
INVESTOR INFORMATION
For MFS stock and bond market outlooks, call toll free: 1-800-637-4458
anytime from a touch-tone telephone.
For information on MFS mutual funds, call your financial adviser or, for an
information kit, call toll free: 1-800-637-2929 any business day from 9 a.m.
to 5 p.m. Eastern time (or leave a message anytime).
INVESTOR SERVICE
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For general information, call toll free: 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired, call toll free: 1-800-637-6576
any business day from 9 a.m. to 5 p.m. Eastern time. (To use this service,
your phone must be equipped with a Telecommunications Device for the Deaf.)
For share prices, account balances and exchanges, call toll free:
1-800-MFS-TALK (1-800-637-8255) anytime from a touch-tone telephone.
TOP-RATED SERVICE
For the second year in a row, MFS earned a #1 ranking in DALBAR, Inc.'s
Broker/Dealer Survey, Main Office Operations Service Quality category. The
firm achieved a 3.49 overall score - on a scale of 1 to 4 - in the 1995
survey. A total of 71 firms responded, offering input on the quality of
service they receive from 36 mutual fund companies nationwide. The survey
contained questions about service quality in 17 categories, including
"knowledge of phone service contacts," "accuracy of transaction processing,"
and "overall ease of doing business with the firm."
*Affiliated with the Investment Adviser
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
For the six months ended April 30, 1996, Class A shares of the Fund provided
a total return of 9.25%, Class B shares 8.97%, and Class C shares 8.98%.
These returns include the reinvestment of distributions but exclude the
effects of any sales charges. A discussion of the Fund's performance can be
found in the Portfolio Performance and Strategy section of this letter.
U.S. Outlook
We believe the U.S. economy will continue to show moderate growth in 1996,
although this growth may be somewhat uneven as we move from quarter to
quarter. Thus, while one quarter may experience an annualized rate of growth
in gross domestic product of less than 1%, another quarter may see annualized
growth in excess of 3%--but, for the year, we believe growth could stay within
our expected range of 2% to 2-1/2%. While some increase in consumer spending
took place in the early months of this year, consumers, who represent
two-thirds of the economy, remain in a somewhat weakened position, due in
part to an increase in consumer installment debt in excess of 30% over the
past two years. Meanwhile, growth is also being constrained by ongoing
economic doldrums in Europe and Japan, important markets for U.S. exports.
Here again, we are seeing a few tentative signs, particularly in Japan, of
modest recoveries that could lead to improved prospects for U.S. exporters.
Also, the "lag effect" of increases in short-term interest rates by the
Federal Reserve Board in 1994 and into 1995 is helping to keep growth in
check. This lag effect can last up to two years, and although the Fed did
reduce short-term rates late last year and earlier this year, we expect it to
continue its diligent anti-inflationary policies. Finally, it appears that
inflation is likely to remain under control this year, due in part to a
continued moderation in wage pressures and the subdued level of economic
growth. At the same time, we believe the current upward pressure on energy
prices bears close scrutiny, as energy is an important component of the
inflation outlook.
Global Outlook
We believe a "soft" upturn of the global business cycle should allow the
pattern of moderate growth to continue, and although structural
disinflationary forces remain in place, we expect cyclical forces will
continue to apply upward pressure on yields for at least the next few months.
However, we do not expect this moderate uptick in economic growth or slightly
higher interest rates to prevent global equity prices from making further
advances. We remain relatively positive about the outlook for Japan and its
prospects for recovery, thanks in part to a continuing accommodative stance
by the Bank of Japan and signs that Japanese investors are becoming more
positive. At the same time, we are neutral on Europe, favoring the larger
core markets to the secondary markets, and we expect many of the emerging
markets to sustain their recoveries.
1
<PAGE>
LETTER TO SHAREHOLDERS - continued
U.S. Bond Market
Persistent signs of economic weakness led to decreases in short-term interest
rates by the Federal Reserve in late 1995 and early 1996. However, should signs
of economic growth and, particularly, of higher inflation continue, we would
expect the Fed to maintain its anti-inflationary stance. This would likely mean
no further reductions in short-term interest rates, and could lead to some
modest increases. In the beginning of the year, bond markets were trading in a
narrow range, as investors shifted between concern about the lack of a budget
resolution in Washington and hopes that sluggish economic reports and low
inflation might lead to lower interest rates. Later, fixed-income markets began
reacting to conflicting signals regarding the strength of the economy with
more-volatile trading patterns marked by an upward bias in interest rates.
Interest rates may move even higher over the coming months, but we believe the
current rise in bond yields is reaching a point where fixed-income markets are
becoming attractively valued.
Stock Markets
While we do not expect the U.S. stock market to match the extraordinary
performance of 1995, we continue to be positive about the equity markets this
year. Although we believe the equity markets represent fair value at current
levels, the expected slowdown in the growth of corporate earnings and the
increases in interest rates experienced so far this year raise near-term
concerns. Further increases in interest rates, and an acceleration of
inflation coupled with an additional slowdown in corporate earnings growth,
could have a negative effect on the stock markets. However, to the extent
that some earnings disappointments are taken as a sign that the economy is
not overheating, this may prove beneficial for the longer-term health of the
equity markets. We continue to believe that many of the technology-driven
productivity gains that U.S. companies have made in recent years will
continue to enhance corporate America's competitiveness and profitability.
Therefore, we remain quite constructive on the long-term viability of the
equity markets.
Portfolio Performance and Strategy
The Fund's returns of 9.25 % for Class A, 8.97% for Class B and 8.98% for
Class C outperformed that of a benchmark made up of 60% of the Morgan Stanley
Capital International World Index (the MSCI) and 40% of the J.P. Morgan Global
Government Bond Index (the Morgan Index), which returned 8.09% for the six
months ended April 30, 1996. The MSCI is a broad, unmanaged index of global
equities, while the Morgan Index is an aggregate of actively traded government
bonds issued from 13 countries, including the United States, with remaining
maturities of at least one year. However, the Fund underperformed the 10.21%
return for the Lipper Global Flexible Fund Index
2
<PAGE>
LETTER TO SHAREHOLDERS - continued
as determined by Lipper Analytical Services, Inc., an independent firm that
reports mutual fund performance.
As of the Fund's fiscal mid-year, the portfolio had 5% of its assets in
cash versus 8% on November 1, 1995, the beginning of the fiscal year. Stocks and
equity equivalents made up 65% of assets, up from 62%, while fixed-income
securities comprised 30%, a figure which was unchanged.
Foreign stock holdings in 19 countries account for approximately 65% of the
total equity position, higher than the 62% on November 1, and likely to go
higher still since we do not believe the performance of equity markets in the
United States in 1996 is likely to repeat the outperformance of 1995. In
particular, holdings in the Far East, including Japanese stocks, have been
increased, a trend we think is likely to persist.
For some time now, our stock investments have been concentrated in
companies that are not dependent upon the business cycle to outperform.
Approximately 61% of the Fund's equity holdings are in utilities and
communications, financial services, special-situation retailers, consumer
staples, and health care, all of which we believe could perform well in a slow
growth environment. However, we are monitoring the situation closely, since some
of the economic news has been stronger than expected.
The most important factor for the international fixed-income markets over
the last six months has been the better-than-expected strength of the U.S.
economy. Previous market expectations for further interest rate reductions by
the Federal Reserve have shifted to concerns of possible interest rate increases
later this year if growth remains in an above-trend pattern. Long-term interest
rates have also risen, reflecting increased concerns about inflation and
disappointment with the failed attempt to reach an accord on the federal budget.
The rise in U.S. rates has helped push up rates worldwide, although foreign
rates have generally risen less than in the United States. Outperformance has
been most pronounced in some of the higher-yielding European bond markets.
During this challenging period, the Fund's fixed-income position has
generally performed well, as the overweighting in European markets and, in
particular, the higher-yielding markets contributed to performance against the
benchmark. In addition, the Fund's average maturity was shortened in the first
quarter to reduce sensitivity to changes in interest rates.
The stronger-than-expected U.S. economy was also a major factor in the
currency markets. The rise in U.S. interest rates coincided with further
reductions in short-term rates in Europe, causing the yield advantage of U.S.
dollars over German marks to grow even more attractive. The weaker mark also
helped the performance of some of the higher-yielding European currencies.
The Fund has been overweighted in dollars against the mark and has benefited
from the
3
<PAGE>
LETTER TO SHAREHOLDERS - continued
improvement in certain other European currencies. The Japanese yen has not
given ground against the dollar over this period.
Overall, the combination of rising interest rates and a stronger dollar has
translated into negative performance for international bonds. Looking forward,
we believe dollar strength may continue until growth in Europe, and especially
in Germany, rebounds, which we expect to happen in the second half of this year.
The outlook for world growth is continuing to improve and, thus, some caution
regarding bond markets is probably warranted. Given this outlook, we expect the
bond portfolio to emphasize shorter-maturity and higher-yielding issues.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
[Photo of A. Keith Brodkin] [Photo of Frederick J. Simmons]
[Signature of A. Keith Brodkin] [Signature of Frederick J. Simmons]
A. Keith Brodkin Frederick J. Simmons
Chairman and President Portfolio Manager
May 10, 1996
PORTFOLIO MANAGER PROFILE
A graduate of Tufts University and the Amos Tuck School of Business
Administration of Dartmouth College, Frederick Simmons began his career at MFS
in 1971 as a research specialist. He was named Senior Vice President in 1983,
and in 1991 he became the Portfolio Manager for MFS World Total Return Fund.
4
<PAGE>
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. Under normal economic and market conditions, the
Fund will invest not less than 40% and not more than 75% of its assets in equity
securities. Generally, at least 25% of the Fund's assets will be 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 5 Years 4/30/96
================================================================================
Cumulative Total Return* +9.25% +15.49% +79.17% +93.69%
- --------------------------------------------------------------------------------
Average Annual Total Return* -- +15.49% +12.37% +12.39%
- --------------------------------------------------------------------------------
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% on the initial investment for the 1- and 5-year periods ended
March 31, 1996 and for the period from September 4, 1990 to March 31, 1996, were
+10.86%, +11.07%, and +11.31%, respectively.
+ Commencement of offering of this class of shares.
* These results do not include the sales charge. If the charge had been
included, the results would have been lower.
5
<PAGE>
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN - continued
Class B Investment Results
(net asset value change including reinvested distributions) 9/07/93+-
6 Months 1 Year 4/30/96
================================================================================
Cumulative Total Return++ +8.97% +14.73% +28.32%
- --------------------------------------------------------------------------------
Average Annual Total Return++ -- +14.73% + 9.88%
- --------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the SEC, with all distributions
reinvested and reflecting the contingent deferred sales charge (CDSC) of 4% for
the 1-year period ended March 31, 1996, and 3% for the period from September 7,
1993 to March 31, 1996, were +11.56% and +8.55%, respectively.
Class C Investment Results
(net asset value change including reinvested distributions) 1/03/94+-
6 Months 1 Year 4/30/96
================================================================================
Cumulative Total Return [ss] +8.98% +14.74% +19.52%
- --------------------------------------------------------------------------------
Average Annual Total Return [ss] -- +14.74% + 7.98%
- --------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the SEC, with all distributions
reinvested for the 1-year period ended March 31, 1996 and for the period from
January 3, 1994 to March 31, 1996, were +15.57% and +7.56%, respectively.
All results represent past performance and are not 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.
+ Commencement of offering of this class of shares.
++ These results do not include any CDSC. If the charge had been included,
the results would have been lower.
[ss] Class C shares have no initial sales charge but, along with Class B
shares, have higher annual fees and expenses than Class A shares. Class C
share purchases made on or after April 1, 1996 will be subject to a 1%
CDSC if redeemed within 12 months of purchase.
6
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - April 30, 1996
Common Stocks - 63.8%
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - 26.2%
Aerospace - 1.5%
General Dynamics Corp. 19,000 $ 1,199,375
Lockheed Martin Corp. 23,200 1,870,500
------------
$ 3,069,875
- --------------------------------------------------------------------------------
Apparel and Textiles - 1.0%
Gucci Group* 35,100 $ 1,908,562
- --------------------------------------------------------------------------------
Banks and Credit Companies - 1.6%
Barnett Banks, Inc. 29,800 $ 1,888,575
Norwest Corp. 34,500 1,246,312
------------
$ 3,134,887
- --------------------------------------------------------------------------------
Biotechnology - 0.5%
Guidant Corp.* 16,423 $ 921,740
- --------------------------------------------------------------------------------
Business Machines - 0.6%
Digital Equipment Corp.* 10,000 $ 597,500
International Business Machines Corp. 6,600 709,500
------------
$ 1,307,000
- --------------------------------------------------------------------------------
Consumer Goods and Services - 2.5%
Philip Morris Cos., Inc. 34,200 $ 3,082,275
Tyco International Ltd. 47,500 1,834,687
------------
$ 4,916,962
- --------------------------------------------------------------------------------
Electrical Equipment - 1.0%
General Electric Co. 25,600 $ 1,984,000
- --------------------------------------------------------------------------------
Electronics - 1.0%
Sony Corp. 32,000 $ 2,064,000
- --------------------------------------------------------------------------------
Financial Institutions - 1.1%
Federal Home Loan Mortgage Corp. 18,300 $ 1,525,762
Roc Communities, Inc. 16,000 378,000
Walden Residential Properties, Inc. 16,400 346,450
------------
$ 2,250,212
- --------------------------------------------------------------------------------
Food and Beverage Products - 0.7%
General Mills, Inc. 25,000 $ 1,387,500
- --------------------------------------------------------------------------------
Insurance - 2.5%
Cigna Corp. 11,700 $ 1,326,487
St. Paul Cos., Inc. 26,400 1,402,500
Transamerica Corp. 30,000 2,280,000
------------
$ 5,008,987
- --------------------------------------------------------------------------------
Machinery - 0.3%
Deere & Co., Inc. 15,000 $ 583,125
- --------------------------------------------------------------------------------
Medical and Health Products - 2.3%
Lilly (Eli) & Co. 18,588 $ 1,096,692
Schering Plough Corp. 32,000 1,836,000
Warner-Lambert Co. 15,000 1,676,250
------------
$ 4,608,942
- --------------------------------------------------------------------------------
7
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) - continued
Common Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - continued
Oils - 4.0%
Amoco Corp. 18,000 $ 1,314,000
British Petroleum PLC, ADR 16,400 1,791,700
Exxon Corp. 10,600 901,000
Mobil Corp. 13,700 1,575,500
Royal Dutch Petroleum Co. 6,300 902,475
USX-Marathon Group 66,000 1,452,000
------------
$ 7,936,675
- --------------------------------------------------------------------------------
Photographic Products - 1.1%
Eastman Kodak Co. 28,800 $ 2,203,200
- --------------------------------------------------------------------------------
Printing and Publishing - 0.5%
Reuters Holdings PLC, ADR 16,000 $ 1,082,000
- --------------------------------------------------------------------------------
Railroads - 0.4%
Canadian National Railway Co. 43,300 $ 822,700
- --------------------------------------------------------------------------------
Restaurants and Lodging - 0.2%
Mandarin Oriental International Ltd. 320,000 $ 454,400
- --------------------------------------------------------------------------------
Telecommunications - 0.3%
Ericsson LM, ADR, "B" 30,000 $ 611,250
- --------------------------------------------------------------------------------
Utilities - Electric - 1.8%
FPL Group, Inc. 28,000 $ 1,207,500
Illinova Corp. 43,000 1,096,500
Portland General Corp. 43,000 1,263,125
------------
$ 3,567,125
- --------------------------------------------------------------------------------
Utilities - Gas - 1.3%
Coastal Corp. 37,000 $ 1,466,125
Westcoast Energy, Inc. 68,000 1,054,000
------------
$ 2,520,125
- --------------------------------------------------------------------------------
Total U.S. Common Stocks $ 52,343,267
- --------------------------------------------------------------------------------
Foreign Stocks - 37.6%
Argentina - 0.3%
Central Costenera, ADR (Utilities - Electric)## 13,167 $ 447,744
Mirgor Sacifia, ADR (Auto Parts)##* 47,930 137,799
------------
$ 585,543
- --------------------------------------------------------------------------------
Australia - 2.6%
Australia & New Zealand Bank Group
(Banks and Credit Cos.) 185,000 $ 884,318
Broken Hill Property (Metals) 100,011 1,540,335
Q.B.E. Insurance Group Ltd. (Insurance) 294,363 1,545,940
Seven Network Ltd. (Entertainment) 412,000 1,230,875
------------
$ 5,201,468
- --------------------------------------------------------------------------------
Chile - 0.7%
Chilectra S.A., ADR (Utilities - Electric) 19,900 $ 1,084,550
Enersis S.A., ADR (Utilities - Electric) 13,600 404,600
------------
$ 1,489,150
- --------------------------------------------------------------------------------
Denmark - 0.8%
Tele Danmark, ADR (Utilities - Telephone) 66,000 $ 1,666,500
- --------------------------------------------------------------------------------
Finland - 0.3%
Huhtamaki Group I Free (Food) 20,000 $ 661,321
- --------------------------------------------------------------------------------
8
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Common Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
Foreign Stocks - continued
France - 3.7%
LVMH Moet-Hennessy (Beverages) 3,000 $ 766,895
Pinault-Printemps S.A. (Retail) 9,900 3,003,597
Television Francaise (Entertainment) 17,500 1,895,001
Total S.A., ADR (Oils) 35,000 1,198,750
Union des Assurances Federales S.A. (Insurance) 4,600 558,600
------------
$ 7,422,843
- --------------------------------------------------------------------------------
Germany - 1.2%
Adidas AG (Apparel and Textiles) 22,300 $ 1,695,679
Hornbach Baumarkt A.G. (Retail) 16,400 620,847
------------
$ 2,316,526
- --------------------------------------------------------------------------------
Greece - 0.4%
Hellenic Telecomm (Telecommunications) 50,300 $ 845,743
- --------------------------------------------------------------------------------
Hong Kong - 1.2%
Giordano International Ltd. (Retail) 1,224,000 $ 1,131,458
Wharf Holdings Ltd. (Real Estate) 225,000 833,409
Wing Hang Bank Ltd. (Banks and Credit Cos ) 119,000 435,396
------------
$ 2,400,263
- --------------------------------------------------------------------------------
Italy - 1.7%
Instituto Nazionale delle Assicurazioni
(Insurance) 522,000 $ 802,049
Luxottica Group (Medical Supplies - Eyewar 13,100 1,054,550
Telecom Italia RNC (Utilities - Telephone) 475,000 787,612
Telecom Italia Mobile DRNC (Telecommunications) 475,000 665,973
------------
$ 3,310,184
- --------------------------------------------------------------------------------
Japan - 7.1%
DDI Corp. (Telecommunications) 139 $ 1,191,466
Dai Nippon Printing Co. Ltd. (Printing) 64,000 1,202,135
Daiwa House Industry Co. (Housing) 37,000 589,149
East Japan Railway Co. (Railway) 135 719,536
Hirose Electric (Electrical Equipment) 7,000 431,159
Hitachi Ltd. (Electrical Equipment) 135,000 1,454,519
Ito Yokado Co. (Retail) 30,000 1,764,874
Kirin Beverage (Beverages) 64,000 903,127
Matsushita Electric Industrial Co.
(Electrical Equipment) 119,000 2,099,065
Murata Manufacturing Co. Ltd.
(Electrical Equipment) 30,000 1,161,327
Nippondenso Co. Ltd. (Auto Parts) 57,000 1,239,130
Takeda Chemical Industries (Pharmaceuticals) 34,000 586,765
Toyota Motor Corp. (Automotive) 35,000 797,578
------------
$ 14,139,830
- --------------------------------------------------------------------------------
Mexico - 0.2%
Grupo Casa Autrey, ADR (Wholesale Distributors) 21,000 $ 480,375
- --------------------------------------------------------------------------------
Netherlands - 1.8%
IHC Caland (Transportation - Marine) 25,000 $ 981,622
Royall PTT Nederland N.V. (Telecommunications)* 32,400 1,215,473
Wolters Klumer (Publishing) 12,557 1,372,186
------------
$ 3,569,281
- --------------------------------------------------------------------------------
9
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Common Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
Foreign Stocks - continued
New Zealand - 1.6%
Lion Nathan Ltd. (Food and Beverages) 1,002,000 $ 2,496,251
Telecom Corp. of New Zealand, ADR
(Telecommunications) 11,300 762,750
------------
$ 3,259,001
- --------------------------------------------------------------------------------
Philippines - 0.4%
Pilipino Telephone (Telecommunications) 490,000 $ 722,797
- --------------------------------------------------------------------------------
Singapore - 0.8%
Hong Leong Finance (Financial Services) 199,000 $ 814,123
Singapore Press Holdings
(Publishing - Newspaper) 39,000 738,100
------------
$ 1,552,223
- --------------------------------------------------------------------------------
South Korea - 0.6%
Korea Electric Power Corp.
(Utilities - Electric) 17,000 $ 819,329
Korea Electric Power Corp., ADR
(Utilities - Electric) 15,000 416,250
------------
$ 1,235,579
- --------------------------------------------------------------------------------
Spain - 1.8%
Iberdrola S.A. (Utilities - Electric) 242,000 $ 2,369,564
Repsol S.A. (Oil/Gas Exploration) 32,000 1,174,046
------------
$ 3,543,610
- --------------------------------------------------------------------------------
Sweden - 3.4%
Asea AB, "B" (Electrical Equipment) 21,000 $ 2,128,525
Astra AB, "B" (Pharmaceuticals) 69,500 3,066,568
Hennes & Mauritz AB, "B" (Retail) 6,900 475,736
Nordbanken AB (Banks and Credit Cos.) 31,200 533,192
Volvo AB (Automotive) 30,000 687,262
------------
$ 6,891,283
- --------------------------------------------------------------------------------
Switzerland - 1.7%
Nestle A.G. (Food and Beverage Products) 2,050 $ 2,273,936
Sandoz Ltd. AG-R (Pharmaceuticals) 1,100 1,198,072
------------
$ 3,472,008
- --------------------------------------------------------------------------------
United Kingdom - 5.3%
Asda Group PLC (Stores) 920,000 $ 1,570,894
Dalgety PLC (Food) 95,000 554,522
East Midlands Electricity PLC
(Utilities - Electric) 54,000 508,953
Kwik-Fit Holdings PLC (Automotive) 66,500 227,597
Lloyds TSB Group PLC (Banks and Credit Cos.) 240,000 1,149,963
London Electricity PLC (Utilities - Electric) 51,428 638,288
PowerGen PLC (Utilities - Electric) 60,000 2,070,000
PowerGen PLC, Partly Paid Shares
(Utilities - Electric) 185,000 1,163,352
Storehouse PLC (Retail) 313,000 1,615,108
Tomkins PLC (Conglomerate) 255,000 1,051,124
------------
$ 10,549,801
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 75,315,329
- --------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $100,182,862 $127,658,596
- --------------------------------------------------------------------------------
10
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Non-Convertible Bonds - 27.0%
================================================================================
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------
U.S. Government Guaranteed - 5.0%
U.S. Treasury Obligations
U.S. Treasury Notes, 5.875s, 2005 $ 7,000 $ 6,601,840
U.S. Treasury Notes, 8.875s, 2017 2,300 3,306,250
- --------------------------------------------------------------------------------
Total U.S. Government Guaranteed $ 9,908,090
- --------------------------------------------------------------------------------
Foreign Non-Convertible Bonds - 22.0%
Australia - 2.0%
Commonwealth of Australia, 7s, 1998 AUD 3,200 $ 2,457,975
Commonwealth of Australia, 7s, 2002 1,000 751,607
Commonwealth of Australia, 9.5s, 2003 885 727,097
------------
$ 3,936,679
- --------------------------------------------------------------------------------
Belgium - 1.3%
Kingdom of Belgium, 9s, 1998 BEF 25,000 $ 877,384
Kingdom of Belgium, 8.75s, 2002 15,000 546,837
Kingdom of Belgium, 7.25s, 2004 20,000 670,693
Kingdom of Belgium, 8.5s, 2007 15,000 540,877
------------
$ 2,635,791
- --------------------------------------------------------------------------------
Canada - 3.4%
Government of Canada, 9.5s, 2010 CAD 8,400 $ 6,881,252
- --------------------------------------------------------------------------------
Denmark - 1.8%
Kingdom of Denmark, 8s, 2001 DKK 19,545 $ 3,560,254
- --------------------------------------------------------------------------------
France - 1.6%
Government of France, 7s, 1999 FRF 11,260 $ 2,314,489
Government of France, 7s, 2000 3,890 800,716
------------
$ 3,115,205
- --------------------------------------------------------------------------------
Germany - 3.8%
Republic of Germany, 8.5s, 2001 DEM 1,597 $ 1,182,036
Treuhandanstalt Obligationen,
6.375s, 1999 9,270 6,377,247
------------
$ 7,559,283
- --------------------------------------------------------------------------------
Italy - 0.8%
Republic of Italy, 9.5s, 1999 ITL 1,450,000 $ 945,471
Republic of Italy, 8.5s, 2004 1,080,000 653,047
------------
$ 1,598,518
- --------------------------------------------------------------------------------
New Zealand - 0.8%
Government of New Zealand, 8s, 2001 NZD 2,400 $ 1,593,810
- --------------------------------------------------------------------------------
Spain - 2.7%
Government of Spain, 8.3s, 1998 ESP 479,600 $ 3,800,967
Government of Spain, 10.1s, 2001 200,000 1,669,052
------------
$ 5,470,019
- --------------------------------------------------------------------------------
Sweden - 1.9%
Kingdom of Sweden, 11s, 1999 SEK 4,900 $ 792,050
Kingdom of Sweden, 10.25s, 2000 18,900 3,063,683
------------
$ 3,855,733
- --------------------------------------------------------------------------------
United Kingdom - 1.9%
United Kingdom Gilts, 9s, 2000 GBP 1,150 $ 1,826,303
United Kingdom Treasury, 8s, 2000 1,300 2,001,562
------------
$ 3,827,865
- --------------------------------------------------------------------------------
Total Foreign Non-Convertible Bonds $ 44,034,409
- --------------------------------------------------------------------------------
Total Non-Convertible Bonds (Identified Cost, $54,491,837) $ 53,942,499
- --------------------------------------------------------------------------------
11
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Convertible Bonds - 2.2%
================================================================================
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------
Foreign Convertible Bond
Essilor International, 6.5s, 1999 FRF 76 $ 940,539
- --------------------------------------------------------------------------------
U.S. Convertible Bonds
MBL International Finance Bermuda,
3s, 2002 $ 728 $ 833,560
PIV Investment Finance Cayman Ltd.,
4.5s, 2000## 455 377,650
Roche Holdings, Inc., 0s, 2010##* 3,200 1,404,000
Sandoz Capital BVI Ltd., 2s, 2002## 334 355,710
Tele Communications International,
4.5s, 2006 670 625,624
------------
$ 3,596,544
- --------------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $4,108,613) $ 4,537,083
- --------------------------------------------------------------------------------
Call Options Purchased - 0.1%
================================================================================
Principal Amount of
Issuer/Expiration Date/Strike Price Contracts (000 Omitted)
- --------------------------------------------------------------------------------
Australian Dollars
July/0.80 AUD 3,824 $ 18,413
Canadian Dollars
October/1.332 CAD 6,586 23,734
Italian Lire/Deutsche Marks
June/1060.0 ITL 1,947,292 40,893
Japanese Government Bonds
May/110.292 JPY 87,000 87
May/115.893 284,000 0
June/96.199 226,000 5,876
June/108.961 178,000 7,476
Japanese Yen
May/106.0 503,322 49,326
Spanish Pesetas/Deutsche Marks
June/83.97 ESP 405,677 23,529
- --------------------------------------------------------------------------------
Total Call Options Purchased (Premiums Paid, $178,128) $169,334
- --------------------------------------------------------------------------------
Put Options Purchased - 0.2%
================================================================================
Deutsche Marks
May/1.5 DEM 7,216 $ 107,076
July/1.55 19,534 115,954
French Francs/Deutsche Marks
July/3.60 FRF 37,704 0
Italian Lire/Deutsche Marks
April/1155.85 ITL 11,140,165 44,561
Japanese Yen
June/107.56 JPY 808,851 37,207
Spanish Pesetas/Deutsche Marks
July/0.805 ESP 3,980 34,773
- --------------------------------------------------------------------------------
Total Put Options Purchased (Premiums Paid, $428,959) $ 339,571
- --------------------------------------------------------------------------------
12
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Short-Term Obligations - 7.0%
================================================================================
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------
Disney Co., due 5/01/96 $ 5,990 $ 5,990,000
Eurolira Time Deposit, due 10/21/96 5,190 3,313,118
Federal Home Loan Mortgage Corp., due 5/06/96 4,560 4,556,726
- --------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 13,859,844
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $173,250,243) $200,506,927
- --------------------------------------------------------------------------------
Call Options Written - (0.1)%
================================================================================
Principal Amount of
Issuer/Expiration Date/Strike Price Contracts (000 Omitted)
- --------------------------------------------------------------------------------
Deutsche Marks
July/1.492 DEM (18,803) $ (84,765)
Italian Lire/Deutsche Marks
April/1015.0 ITL (9,782,643) (68,007)
- --------------------------------------------------------------------------------
Total Call Options Written
(Premiums Received, $164,411) $ (152,772)
- --------------------------------------------------------------------------------
Put Options Written - (0.1)%
================================================================================
Canadian Dollars
June/1.385 CAD (3,789) $ (2,317)
October/1.3858 (6,852) (23,734)
Japanese Government Bonds
May/110.292 JPY (87,000) (9,125)
May/115.893 (284,000) (17,060)
June/96.199 (226,000) (22,626)
June/108.961 (178,000) (23,082)
Japanese Yen
June/109.5 (433,613) (8,367)
Spanish Pesetas/Deutsche Marks
June/86.35 ESP (417,175) (144)
- --------------------------------------------------------------------------------
Total Put Options Written
(Premiums Received, $134,443) $ (106,455)
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities - (0.1)% $ (63,568)
================================================================================
Net Assets - 100.0% $200,184,132
- --------------------------------------------------------------------------------
*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 FIM = Finnish Markaa
BEF = Belgian Francs FRF = French Francs
CAD = Canadian Dollars GBP = British Pounds
CHF = Swiss Francs ITL = Italian Lire
DEM = Deutsche Marks JPY = Japanese Yen
DKK = Danish Kroner NZD = New Zealand Dollars
ESP = Spanish Pesetas SEK = Swedish Kronor
13
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
================================================================================
April 30, 1996
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $173,250,243) $200,506,927
Cash 60,694
Premium receivable on options written 23,734
Receivable for Fund shares sold 377,806
Receivable for investments sold 9,258,680
Net receivable for forward foreign currency
exchange contracts sold 2,828,874
Interest and dividends receivable 2,174,093
Receivable for interest rate swaps 28,907
Other assets 2,111
------------
Total assets $215,261,826
------------
Liabilities:
Payable for Fund shares reacquired $ 69,020
Payable for investments purchased 11,061,543
Written options outstanding, at value
(premiums received, $298,854) 259,227
Net payable for forward foreign currency exchange
contracts purchased 3,330,625
Net payable for forward foreign currency exchange contracts 89,383
Payable for options purchased 5,698
Payable to affiliates -
Management fee 13,259
Shareholder servicing agent fee 2,828
Distribution fee 47,596
Accrued expenses and other liabilities 198,515
------------
Total liabilities $ 15,077,694
------------
Net assets $200,184,132
------------
Net assets consist of:
Paid-in capital $169,872,772
Unrealized appreciation on investments and translation of assets
and liabilities in foreign currencies 26,696,814
Accumulated undistributed net realized gain on investments
and foreign currency transactions 2,868,216
Accumulated undistributed net investment income 746,330
------------
Total $200,184,132
------------
Shares of beneficial interest outstanding 16,481,053
------------
Class A shares:
Net asset value and redemption price per share
(net assets of $121,858,017 / 10,027,868 shares
of beneficial interest outstanding) $12.15
------------
Offering price per share (100/95.25 of
net asset value per share) $12.76
------------
Class B shares:
Net asset value and offering price per share
(net assets of $65,669,990 / 5,410,689 shares
of beneficial interest outstanding) $12.14
------------
Class C shares:
Net asset value, offering price and redemption price
per share (net assets of $12,656,125 / 1,042,496 shares
of beneficial interest outstanding) $12.14
------------
On sales of $100,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B and Class C shares. See notes to financial statements
14
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
================================================================================
Six Months Ended April 30, 1996
- --------------------------------------------------------------------------------
Net Investment Income:
Income -
Interest $ 2,587,703
Dividends 1,587,216
Foreign taxes withheld (67,786)
-----------
Total investment income $ 4,107,133
-----------
Expenses -
Management fee $ 816,095
Trustees' compensation 17,157
Shareholder servicing agent fee (Class A) 86,513
Shareholder servicing agent fee (Class B) 67,338
Shareholder servicing agent fee (Class C) 8,725
Distribution and service fee (Class A) 201,866
Distribution and service fee (Class B) 306,080
Distribution and service fee (Class C) 58,168
Custodian fee 101,741
Postage 29,343
Auditing fees 16,350
Printing 12,660
Miscellaneous 78,805
-----------
Total expenses $ 1,800,841
Fees paid indirectly (5,240)
-----------
Net expenses $ 1,795,601
-----------
Net investment income $ 2,311,532
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 2,814,425
Written option transactions 391,147
Foreign currency transactions 153,230
-----------
Net realized gain on investments and
foreign currency transactions $ 3,358,802
-----------
Change in unrealized appreciation (depreciation) -
Investments $11,570,268
Interest rate swaps 28,907
Written options (39,489)
Translation of assets and liabilities
in foreign currencies (710,430)
-----------
Net unrealized gain on investments $10,849,256
-----------
Net realized and unrealized gain on
investments and foreign currency $14,208,058
-----------
Increase in net assets from operations $16,519,590
-----------
See notes to financial statements
15
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
================================================================================
Six Months Ended Year Ended
April 30, 1996 October 31,
(Unaudited) 1995
- --------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,311,532 $ 4,636,931
Net realized gain on investments
and foreign currency transactions 3,358,802 3,749,269
Net unrealized gain on investments
and foreign currency translation 10,849,256 8,187,457
------------ ------------
Increase in net assets from operations $ 16,519,590 $ 16,573,657
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (4,433,895) $ (734,229)
From net investment income (Class B) (1,980,594) (140,223)
From net investment income (Class C) (371,379) (27,610)
From net realized gain on investments and
foreign currency transactions (Class A) (54,351) (453,126)
From net realized gain on investments and
foreign currency transactions (Class B) (28,792) (72,338)
From net realized gain on investments and
foreign currency transactions (Class C) (5,383) (13,755)
------------ ------------
Total distributions declared
to shareholders $ (6,874,394) $ (1,441,281)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 23,907,861 $ 44,197,817
Net asset value of shares issued to
shareholders in reinvestment
of distributions 6,033,363 1,279,372
Cost of shares reacquired (17,803,583) (40,657,870)
------------ ------------
Increase in net assets from Fund
share transactions $ 12,137,641 $ 4,819,319
------------ ------------
Total increase in net assets $ 21,782,837 $ 19,951,695
Net assets:
At beginning of period $178,401,295 158,449,600
------------ ------------
At end of period (including accumulated
undistributed net investment income of
$746,330 and $5,220,666, respectively) $200,184,132 $178,401,295
------------ ------------
See notes to financial statements
16
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
====================================================================================================================================
Six Months
Ended
April 30, Year Ended October 31,
1996 ----------------------------------------------------------------
(Unaudited) 1995 1994 1993 1992 1991 1990*
- ------------------------------------------------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value -
beginning of period $ 11.57 $ 10.58 $ 11.19 $ 10.21 $ 9.42 $ 8.55 $ 8.50
-------- -------- ------- ------- ------- ------- -------
Income from investment operations# -
Net investment income $ 0.16 $ 0.33 $ 0.30 $ 0.28 $ 0.36 $ 0.37 $ 0.08
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 0.88 0.79 0.15 1.42 0.86 0.88 (0.03)
-------- -------- ------- ------- ------- ------- -------
Total from investment
operations $ 1.04 $ 1.12 $ 0.45 $ 1.70 $ 1.22 $ 1.25 $ 0.05
-------- -------- ------- ------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.45) $ (0.08) $ (0.25) $ (0.45) $ (0.26) $ (0.38) $ --
From net realized gain on investments and
foreign currency transactions (0.01) (0.05) (0.33) (0.27) (0.17) -- --
In excess of net realized gain on investments
and foreign currency transactions -- -- (0.38) -- -- -- --
From paid-in capital -- -- (0.10) -- -- -- --
-------- -------- ------- ------- ------- ------- -------
Total distributions
declared to shareholders $ (0.46) $ (0.13) $ (1.06 $ (0.72) $ (0.43) $ (0.38) $ --
-------- -------- ------- ------- ------- ------- -------
Net asset value - end of period $ 12.15 $ 11.57 $ 10.58 $ 11.19 $ 10.21 $ 9.42 $ 8.55
-------- -------- ------- ------- ------- ------- -------
Total return++ 9.25% 10.63% 4.10% 17.78% 13.14% 14.94% 3.76%
Ratios (to average daily net assets)/Supplemental data:
Expenses## 1.63% 1.77% 1.76% 1.92% 1.84% 2.18% 1.57%
Net investment income 2.70% 3.06% 2.81% 2.96% 3.65% 4.05% 3.14%
Portfolio turnover 86% 160% 118% 112% 72% 134% 2%
Average commission rate### $ 0.0210 -- -- -- -- -- --
Net assets at end of period (000 omitted) $121,858 $110,294 $99,870 $71,262 $44,707 $30,847 $12,510
<FN>
* For the period from September 4, 1990 (commencement of investment operations) to October 31, 1990.
+ Annualized.
# Per share data for the periods subsequent to October 31, 1993 is based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
### Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
++ Total returns for Class A shares 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
17
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
====================================================================================================================================
Six Months Six Months
Ended Year Ended Ended Year Ended
April 30, October 31, April 30, October 31,
1996 ----------------------------- 1996 -------------------
(Unaudited) 1995 1994 1993** (Unaudited) 1995 1994***
- ------------------------------------------------------------------------------------------------------------------------------------
Class B Class C
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value -
beginning of period $ 11.52 $ 10.54 $ 11.19 $ 10.84 $ 11.52 $ 10.53 $ 11.06
-------- -------- ------- ------- ------- ------- -------
Income from investment operations#-
Net investment income $ 0.12 $ 0.25 $ 0.25 $ 0.06 $ 0.12 $ 0.27 $ 0.27
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 0.89 0.77 0.13 0.35 0.88 0.76 (0.29)
-------- -------- ------- ------- ------- ------- -------
Total from investment
operations $ 1.01 $ 1.02 $ 0.38 $ 0.41 $ 1.00 $ 1.03 $ (0.02)
-------- -------- ------- ------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.38) $ (0.03) $ (0.24) $ (0.06) $ (0.37) $ (0.03) $ (0.12)
From net realized gain on investments and
foreign currency transactions (0.01 (0.01) (0.32) -- (0.01) (0.01) (0.16)
In excess of net realized gain on investments and
foreign currency transactions -- -- (0.38) -- -- -- (0.18)
From paid-in capital -- -- (0.09) -- -- -- (0.05)
-------- -------- ------- ------- ------- ------- -------
Total distributions
declared to shareholders $ (0.39) $ (0.04) $ (1.03) $ (0.06) $ (0.38) $ (0.04) $ (0.51)
-------- -------- ------- ------- ------- ------- -------
Net asset value - end of period $ 12.14 $ 11.52 $ 10.54 $ 11.19 $ 12.14 $ 11.52 $ 10.53
-------- -------- ------- ------- ------- ------- -------
Total return 8.97% 9.75% 3.38% 3.79% 8.98% 9.84% (0.15)%
Ratios (to average daily net assets)/Supplemental data:
Expenses## 2.35% 2.49% 2.49% 2.77% 2.28% 2.42% 2.39%
Net investment income 1.99% 2.34% 2.33% 2.15% 2.05% 2.41% 2.51%
Portfolio turnover 86% 160% 118% 112% 86% 160% 118%
Average commission rate### $ 0.0210 -- -- -- $0.0210 -- --
Net assets at end of period
(000 omitted) $ 65,670 $ 57,214 $47,677 $ 4,381 $12,656 $10,894 $10,903
<FN>
** For the period from commencement of offering of Class B shares, September 7, 1993 to October 31, 1993.
*** For the period from commencement of offering of Class C shares, January 3, 1994 to October 31, 1994.
+ Annualized.
++ Not annualized.
# Per share data for the periods subsequent to October 31, 1993 is based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
### Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
</FN>
</TABLE>
See notes to financial statements
18
<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 is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates. Investments in foreign
securities are vulnerable to the effects of changes in the relative values of
the local currency and the U.S. dollar and to the effects of changes in each
country's legal and economic environment.
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 market 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 closin g 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.
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
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
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 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.
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.
Swap Agreements - The Fund may enter into swap agreements. A swap is an exchange
of cash payments between the Fund and another party which is based on a specific
financial index. Cash payments are exchanged at specified intervals and the
expected income or expense is recorded on the accrual basis. The value of the
swap is adjusted daily and the change in value is recorded as unrealized
appreciation or depreciation. Risks may arise upon entering into these
agreements from the potential inability of counterparties to meet the terms of
their contract and from unanticipated changes in the value of the financial
index on which the swap agreement is based. The Fund uses swaps for both hedging
and non-hedging purposes. For hedging purposes, the Fund may use swaps to reduce
its exposure to interest and foreign exchange rate fluctuations. For non-hedging
purposes, the Fund may use swaps to take a position on anticipated changes in
the underlying financial index.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
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 rea lized
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.
Fees Paid Indirectly - The Fund's custodian bank calculates its fee based on the
Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
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 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 tax return of
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
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. The three classes of shares differ in their
respective shareholder servicing agent, distribution and service fees. 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.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an effective annual rate of
0.65% of average daily net assets and 5.0% of investment income. 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 and Mr. Bailey. Included in Trustees' compensation
is a net periodic pension expense of $3,157 for the period ended April 30, 1996.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$27,086 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%
per annum of its average daily net assets attributable to Class A shares 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 retains the service fee for accounts
not attributable to a securities dealer, which amounted to $19,853 for the
period ended April 30, 1996. Fees incurred under the distribution plan during
the period ended April 30, 1996 were 0.35% of average daily net assets
attributable to Class A shares on an annualized basis.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
The Class B and Class C distribution plans provide that the Fund will pay MFD a
distribution fee of 0.75% per annum, and a 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. The service fee is currently suspended on Class B shares held over one
year. 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. MFD retains the service fee for accounts not
attributable to a securities dealer which amounted to $6,480 and $2,552 for
Class B and Class C shares, respectively, for the six months ended April 30,
1996. Fees incurred under the distribution plans during the period ended April
30, 1996 were 1.00% of average daily net assets attributable to Class B and
Class C shares on an annualized basis.
Purchases over $1 million of Class A shares and certain purchases into
retirement plans are subject to a contingent deferred sales charge imposed on
shareholder redemptions within 12 months following such 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. A contingent
deferred sales charge is imposed on redemptions of Class C shares in the event
of a shareholder redemption within 12 months of purchases made on or after April
1, 1996. MFD receives all contingent deferred sales charges. Contingent deferred
sales charges imposed during the period ended April 30, 1996 were $379 and
$39,106 for Class A and Class B shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee 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.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
(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 $ 41,990,213 $ 46,345,351
============ ============
Investments (non-U.S. government securities) $116,521,037 $106,148,085
============ ============
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 $ 173,308,539
=============
Gross unrealized appreciation $ 29,245,320
Gross unrealized depreciation (2,093,434)
-------------
Net unrealized appreciation $ 27,151,886
=============
(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
April 30, 1996 October 31, 1995
------------------------- --------------------------
Shares Amount Shares Amount
============================================================================================
<S> <C> <C> <C> <C>
Shares sold 1,094,904 $ 12,984,458 2,123,469 $ 22,961,533
Shares issued to shareholders in
reinvestment of distributions 343,711 4,011,115 98,593 1,061,212
Shares reacquired (946,808) (11,239,829) (2,125,319) (22,992,718)
--------- ------------ --------- ------------
Net increase 491,807 $ 5,755,744 96,743 $ 1,030,027
========= ============ ========= ============
</TABLE>
<TABLE>
<CAPTION>
Class A Shares Six Months Ended Year Ended
April 30, 1996 October 31, 1995
------------------------- --------------------------
Shares Amount Shares Amount
============================================================================================
<S> <C> <C> <C> <C>
Shares sold 709,438 $ 8,394,018 1,673,616 $ 18,044,111
Shares issued to shareholders in
reinvestment of distributions 149,022 1,740,572 17,272 186,186
Shares reacquired (413,034) (4,896,109) (1,250,017) (13,498,802)
--------- ------------ --------- ------------
Net increase 445,426 $ 5,238,481 440,871 $ 4,731,495
========= ============ ========= ============
</TABLE>
<TABLE>
<CAPTION>
Class C Shares Six Months Ended Year Ended
April 30, 1996 October 31, 1995
------------------------- --------------------------
Shares Amount Shares Amount
============================================================================================
<S> <C> <C> <C> <C>
Shares sold 213,565 $ 2,529,385 296,274 $ 3,192,173
Shares issued to shareholders in
reinvestment of distributions 24,095 281,676 2,966 31,974
Shares reacquired (140,480) (1,667,645) (389,108) (4,166,350)
--------- ------------ --------- ------------
Net increase (decrease) 97,180 $ 1,143,416 (89,868) $ (942,203)
========= ============ ========= ============
</TABLE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by 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,
1996 was $1,053.
(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, 1996, is as follows:
<TABLE>
<CAPTION>
Written Option Transactions
1996 Calls 1996 Puts
---------------------------- -----------------------------
Principal Amounts Principal Amounts
of Contracts of Contracts
(000 Omitted) Premiums (000 Omitted) Premiums
===========================================================================================
<S> <C> <C> <C> <C>
Outstanding, beginning of period -
Australian Dollars 1,953 $ 23,731 1,904 $ 24,410
Deutsche Marks 5,388 14,445 11,631 38,016
Deutsche Marks/British Pounds 5,310 34,078 -- --
Italian Lire/Deutsche Marks 9,941,320 164,753 9,941,320 366,050
Japanese Yen 328,362 57,135 434,201 27,538
Options written -
Australian Dollars 3,579 20,797 1,405 8,584
Canadian Dollars 6,496 6,668 10,641 32,215
Deutsche Marks 25,654 153,497 -- --
Deutsche Marks/British Pounds 6,872 30,553 -- --
Italian Lire/Deutsche Marks 9,782,643 76,823 -- --
Japanese Yen 910,451 64,137 1,449,613 119,166
Japanese Yen/Deutsche Marks -- -- 1,206,800 43,022
New Zealand Dollars -- -- 10,506 15,622
Spanish Pesetas/Deutsche Marks -- -- 417,175 10,092
</TABLE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
<TABLE>
<CAPTION>
Written Option Transaction - continued
1996 Calls 1996 Puts
---------------------------- -----------------------------
Principal Amounts Principal Amounts
of Contracts of Contracts
(000 Omitted) Premiums (000 Omitted) Premiums
===========================================================================================
<S> <C> <C> <C> <C>
Options terminated in closing transactions -
Australian Dollars (5,532) $(44,528) (1,405) $ (8,584)
Deutsche Marks (6,851) (65,909) (4,561) (12,184)
Deutsche Marks/British Pounds (8,746) (49,354) -- --
Italian Lire/Deutsche Marks (9,941,320) (164,753) (9,941,320) (366,050)
Japanese Yen (1,238,813) (121,272) (352,000) (39,149)
Japanese Yen/Deutsche Marks -- -- (1,206,800) (43,022)
New Zealand Dollars -- -- (10,506) (15,622)
Options expired -
Australian Dollars -- -- (1,904) (24,410)
Canadian Dollars (6,496) (6,668) -- --
Deutsche Marks (5,388) (14,445) (7,070) (25,832)
Deutsche Marks/British Pounds (3,436) (15,277) -- --
Japanese Yen -- -- (323,201) (15,419)
--------- -------- --------- --------
Outstanding, end of period 9,801,446 $164,411 1,636,429 $134,443
========= ======== ========= ========
Options outstanding at end of period
consist of -
Canadian Dollars -- $ -- 10,641 $ 32,215
Deutsche Marks 18,803 87,588 -- --
Italian Lire/Deutsche Marks 9,782,643 76,823 -- --
Japanese Yen -- -- 1,208,613 92,136
Spanish Pesetas/Deutsche Marks -- -- 417,175 10,092
--------- -------- --------- --------
Outstanding, end of period 9,801,446 $164,411 1,636,429 $134,443
========= ======== ========= ========
</TABLE>
At April 30, 1996, the Fund had sufficient cash and/or securities at least
equal to the value of the written options.
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
<TABLE>
<CAPTION>
Forward Foreign Currency Exchange Contracts
Net Unrealized
Settlement Contracts to Contracts at In Exchange Appreciation
Date Deliver/Receive Value for (Depreciation)
===========================================================================================
<S> <C> <C> <C> <C> <C> <C>
Sales 5/20/96 AUD 6,240,204 $ 4,900,925 $ 4,896,454 $ (4,471)
5/22/96 BEF 85,611,138 2,724,489 2,772,112 47,623
5/31/96 - 11/01/96 CAD 10,637,567 7,821,484 7,825,640 4,156
5/28/96 - 5/31/96 CHF 15,179,167 12,225,814 13,115,430 889,616
5/28/96 - 4/28/97 DEM 103,747,303 67,968,875 69,495,021 1,526,146
5/31/96 DKK 25,587,242 4,337,549 4,446,450 108,901
5/28/96 ESP 705,192,621 5,537,172 5,637,617 100,445
8/02/96 FIM 17,356,986 3,603,796 3,595,142 (8,654)
5/31/96 FRF 55,723,774 10,788,568 11,035,595 247,027
5/31/96 GBP 3,066,085 4,610,257 4,670,577 60,320
5/06/96 - 8/06/96 ITL 35,712,190,031 22,763,768 22,623,643 (140,125)
5/07/96 - 7/25/96 JPY 3,239,313,670 31,066,463 31,073,929 7,466
8/02/96 SEK 18,349,981 2,698,220 2,688,644 (9,576)
------------ ------------ -----------
$181,047,380 $183,876,254 $ 2,828,874
============ ============ ===========
Purchases 5/20/96 AUD 2,642,857 $ 2,075,644 $ 2,080,763 $ (5,119)
5/28/96 - 5/31/96 CHF 6,819,460 5,492,403 5,726,529 (234,126)
5/28/96 - 8/29/96 DEM 120,013,267 78,520,969 81,405,634 (2,884,665)
5/31/96 DKK 4,371,875 741,120 755,465 (14,345)
5/28/96 ESP 528,323,487 4,148,396 4,283,645 (135,249)
8/02/96 FIM 5,783,457 1,200,808 1,197,594 3,214
5/31/96 FRF 70,710,694 13,690,156 14,002,491 (312,335)
5/31/96 GBP 3,441,805 5,175,202 5,241,091 (65,889)
5/06/96 - 4/28/97 ITL 41,350,448,345 26,314,038 26,098,557 215,481
5/31/96 - 8/29/96 JPY 3,082,963,127 29,577,955 29,475,547 102,408
------------ ------------ -----------
$166,936,691 $170,267,316 $(3,330,625)
============ ============ ===========
</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 payable of $89,383 at April 30, 1996.
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
<TABLE>
<CAPTION>
Interest Rate Swaps
Rate Type
----------------------------
Payments Payments Unrealized
Swap Notional Termination made received Appreciation
Counterparty Amount Date by the Trust by the Trust (Depreciation)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
J.P. Morgan 5,190,000,000 ITL 4/20/99 Fixed - 9.535% $ 45,520
3,313,118 USD Floating -
6M Libor (16,613)
-------
$ 28,907
========
</TABLE>
At April 30, 1996, 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, 1996, the
Fund owned the following restricted securities (constituting 1.36% of net
assets) which may not be publicly sold without registration under the Securities
Act of 1933 (the 1933 Act). 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>
Date of Share/Par
Description Acquisition Amount Cost Value
========================================================================================
<S> <C> <C> <C> <C>
Central Costenera, ADR 12/17/93 13,167 $316,008 $ 447,744
Mirgor Sacifia, ADR 10/20/94 47,930 431,370 137,799
PIV Investment Finance
Cayman Ltd., 4.5s, 2000 1/26/94 - 9/29/94 455,000 413,600 377,650
Roche Holdings, Inc., 0s, 2010 4/12/95 - 7/26/95 3,200,000 571,249 1,404,000
Sandoz Capital BVI Ltd., 2s, 2002 9/28/95 334,000 271,107 355,710
----------
</TABLE>
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.
28
<PAGE>
THE MFS FAMILY OF FUNDS [Registration Mark]
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 MFS at 1-800-637-2929
any business day from 9 a.m. to 5 p.m. Eastern time (or leave a message
anytime). This material should be read carefully before investing or sending
money.
Stock
================================================================================
Massachusetts Investors Trust
- --------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Capital Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Emerging Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Gold & Natural Resources Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Growth Opportunities Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Managed Sectors Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] OTC Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Research Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Value Fund
- --------------------------------------------------------------------------------
Stock and Bond
================================================================================
MFS [Registration Mark] Total Return Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Utilities Fund
- --------------------------------------------------------------------------------
Bond
================================================================================
MFS [Registration Mark] Bond Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Government Mortgage Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Government Securities Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] High Income Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Intermediate Income Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Strategic Income Fund
- --------------------------------------------------------------------------------
Limited Maturity Bond
================================================================================
MFS [Registration Mark] Government Limited Maturity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Limited Maturity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Municipal Limited Maturity Fund
- --------------------------------------------------------------------------------
World
================================================================================
MFS [Registration Mark]/Foreign & Colonial Emerging Markets Equity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark]/Foreign & Colonial International Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark]/Foreign & Colonial International Growth and Income Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Asset Allocation Fund [Service Mark]
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Equity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Governments Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Total Return Fund
- --------------------------------------------------------------------------------
National Tax-Free Bond
================================================================================
MFS [Registration Mark] Municipal Bond Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Municipal High Income Fund
(closed to new investors)
- --------------------------------------------------------------------------------
MFS [Registration Mark] Municipal Income Fund
- --------------------------------------------------------------------------------
State Tax-Free Bond
================================================================================
Alabama, Arkansas, California, Florida, Georgia, Maryland, Massachusetts,
Mississippi, New York, North Carolina, Pennsylvania, South Carolina, Tennessee,
Virginia, West Virginia
- --------------------------------------------------------------------------------
Money Market
================================================================================
MFS [Registration Mark] Cash Reserve Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Government Money Market Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Money Market Fund
- --------------------------------------------------------------------------------
<PAGE>
MFS [Registration Mark] WORLD DALBAR LOGO Bulk Rate
TOTAL RETURN FUND U.S. Postage
PAID
500 Boylston Street Permit #55638
Boston, MA 02116 Boston, MA
[MFS LOGO]
THE FIRST NAME IN MUTUAL FUNDS
MWT-3 6/96/25M 24/224/324
<PAGE>
