MFS WORLD EQUITY 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 Equity 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 Equity 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 [Register Mark] WORLD EQUITY FUND
[Cover Photo: A photo of two men in a window]
<PAGE>
MFS [Register Mark] WORLD EQUITY 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
David Mannheim*
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 generated a
total return of 14.37%, Class B shares 13.86%, and Class C shares 13.92%. These
figures assume the reinvestment of distributions but exclude the effects of any
sales charges, and compare to the 13.63% return for the Morgan Stanley Capital
International World Index (the MSCI), a broad, unmanaged index of global
equities. During the past six months, the world's major markets all produced
positive returns, with Japan ahead 18% (in U.S. dollar terms), according to
Morgan Stanley; the United States ahead 13.76%, as measured by the Standard &
Poor's 500 Composite Index, a popular, unmanaged index of common stock
performance; and Europe up 9%, also according to Morgan Stanley. While country
weightings and the performance of individual markets are fairly easy to discuss,
we believe it is the selection of individual companies (regardless of home
country) in the Fund that is primarily responsible for performance. A discussion
of the Fund's performance may 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 could allow the pattern
of moderate growth to continue and, although structural disinflationary
1
<PAGE>
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.
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
Illustrating the importance of individual stock selection, the Fund benefited
from the strong performance of a number of its larger holdings, including
Astra, Federated Department Stores, Essilor International (which advanced
35%, but was sold during the period), Loral (which was sold following its
takeover by Lockheed-Martin), and Getronics. In addition, a number of smaller
Asian holdings that had been added over the past 12 to 18 months contributed
to performance, including Hong Leong Finance, New Straits Times, Total Access
Communications, and Singapore Press Holdings. The biggest drags on
performance included TV 4, a Swedish television company, which declined 20%
and was sold due to deteriorating fundamentals; PowerGen (an electric utility
in the United Kingdom), which declined 7%, but became the Fund's largest
holding as additional shares were purchased; and Office Depot, which declined
22%, but also became one of the Fund's top 10 holdings as more shares were
purchased.
2
<PAGE>
We continue to adhere to our bottom-up approach to stockpicking, focusing
on quality companies with superior growth prospects trading at attractive
valuations. Country weightings are merely byproducts of where we find the most
attractive investments. As of April 30, 1996, the Fund had holdings in 23
countries, with 36% of its international equity holdings in Europe, 33% in the
Americas, and 31% in Asia/Pacific. Since October 31, 1995, the Fund's weighting
in Europe has decreased slightly from 38% and in Asia/Pacific from 32%, with an
offsetting increase in the Americas.
Globally, we continue to seek better opportunities in "steady earners" that
we believe will perform well regardless of the state of the world's economies.
Recent additions to the Fund along these lines include Kimberly-Clark, a U.S.
consumer products company; Takeda Chemical, a Japanese pharmaceutical company;
and Union des Assurances Federales, a French life insurer. In addition to
PowerGen and Office Depot, we also added to our position in Telecom Italia
Mobile, an Italian cellular telephone operator.
The past 12 months have seen strong performance from most of the world's
equity markets, driven by lower interest rates in Europe and Japan and, prior to
that, lower rates in the United States followed by strong corporate earnings.
Going forward, we believe that while the bulk of the downward move in interest
rates is over, with inflation remaining in check, interest rates could stay
around their current levels. This could support existing valuations and mean
that corporate earnings growth will become increa singly important in achieving
outperformance.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
[Photo of A. Keith Brodkin] [Photo of David Mannheim]
[Signature of A. Keith Brodkin] [Signature of David Mannheim]
A. Keith Brodkin David Mannheim
Chairman and President Portfolio Manager
May 10, 1996
3
<PAGE>
PORTFOLIO MANAGER PROFILE
David Mannheim began his career at MFS in 1988 as a research specialist and was
promoted to Assistant Vice President - Investments in 1991. In 1992, he was
named Vice President - Investments and Portfolio Manager of MFS World Equity
Fund. Mr. Mannheim is a graduate of Amherst College and of Massachusetts In
stitute of Technology's Sloan School of Management.
OBJECTIVE AND POLICIES
The Fund's investment objective is to provide capital appreciation, primarily
through investment in stocks of U.S. and non-U.S. issuers.
The Fund may invest in all types of common stocks and equivalents (such as
convertible debt securities and warrants) and preferred stocks. While the Fund
intends to maintain a portfolio consisting largely of equity securities of
non-U.S. issuers, the Fund may, under normal circumstances, invest up to 50% of
its assets in securities of U.S. and/or Canadian issuers. In addition, for
defensive purposes, the Fund may invest up to 20% of its assets in fixed-income
obligations issued by national governments, their agencies, authorities and
instrumentalities.
PERFORMANCE SUMMARY
Because mutual funds like MFS World Equity 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 9/07/93+-
reinvested distributions) 6 Months 1 Year 4/30/96
================================================================================
Cumulative Total Return* +14.37% +26.01% +42.15%
- --------------------------------------------------------------------------------
Average Annual Total Return* -- +26.01% +14.21%
- --------------------------------------------------------------------------------
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 5.75% on the initial investment for the 1-year period
ended March 31, 1996 and for the period from September 7, 1993 to March 31,
1996, were +17.38% and +10.72%, 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.
4
<PAGE>
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN - continued
Class B Investment Results
(net asset value change 12/29/86+-
including reinvested distributions) 6 Months 1 Year 5 Years 4/30/96
================================================================================
Cumulative Total Return++ +13.86% +24.96% +70.27% +182.37%
- --------------------------------------------------------------------------------
Average Annual Total Retur++ -- +24.96% +11.23% + 11.75%
- --------------------------------------------------------------------------------
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% and
2% for the 1- and 5-year periods ended March 31, 1996, and 0% for the period
from December 29, 1986 to March 31, 1996, were +19.52%, +10.55% and +11.50%,
respectively.
Class C Investment Results
(net asset value change 1/03/94+-
including reinvested distributions) 6 Months 1 Year 4/30/96
================================================================================
Cumulative Total Return $ +13.92% +25.04% +24.77%
- --------------------------------------------------------------------------------
Average Annual Total Return $ -- +25.04% + 9.99%
- --------------------------------------------------------------------------------
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 +23.57% and +8.88%, 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.
$ 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 shares
purchases made on or after April 1, 1996 will be subject to a 1% CDSC if
redeemed within 12 months of purchase.
5
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - April 30, 1996
Common Stocks - 93.1%
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - 29.1%
Aerospace - 2.3%
Allied Signal, Inc. 44,000 $ 2,557,500
Lockheed-Martin Corp. 44,000 3,547,500
------------
$ 6,105,000
- --------------------------------------------------------------------------------
Building Materials - 0.9%
Owens Corning Fiberglass Corp.* 55,000 $ 2,213,750
- --------------------------------------------------------------------------------
Business Services - 2.1%
Alco Standard Corp. 51,000 $ 2,951,625
Ceridian Corp.* 53,000 2,530,750
------------
$ 5,482,375
- --------------------------------------------------------------------------------
Cellular Telephones - 0.9%
AirTouch Communications, Inc.* 76,000 $ 2,375,000
- --------------------------------------------------------------------------------
Chemicals - 1.0%
Praxair, Inc. 66,000 $ 2,549,250
- --------------------------------------------------------------------------------
Computer Software - Systems - 2.2%
BMC Software, Inc.* 53,700 $ 3,268,988
Compuware Corp.* 90,900 2,590,650
------------
$ 5,859,638
- --------------------------------------------------------------------------------
Consumer Goods and Services - 2.1%
Kimberly-Clark Corp. 52,500 $ 3,812,813
Philip Morris Cos., Inc. 18,500 1,667,313
------------
$ 5,480,126
- --------------------------------------------------------------------------------
Entertainment - 1.1%
Viacom, Inc., "B"* 71,251 $ 2,921,291
- --------------------------------------------------------------------------------
Financial Institutions - 1.5%
Federal Home Loan Mortgage Corp. 45,500 $ 3,793,563
- --------------------------------------------------------------------------------
Food and Beverage Products - 0.4%
Ralston-Ralston Purina Group 17,600 $ 1,027,400
- --------------------------------------------------------------------------------
Forest and Paper Products - 0.2%
Fort Howard Corp.* 17,800 $ 391,600
- --------------------------------------------------------------------------------
Insurance - 1.2%
CIGNA Corp. 28,500 $ 3,231,188
- --------------------------------------------------------------------------------
Machinery - 1.0%
Ingersoll Rand Co. 67,000 $ 2,596,250
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 2.1%
St. Jude Medical, Inc.* 75,000 $ 2,737,500
United Healthcare Corp. 47,000 2,749,500
------------
$ 5,487,000
- --------------------------------------------------------------------------------
Oils - 2.0%
Mobil Corp. 21,000 $ 2,415,000
USX-Marathon Group 130,000 2,860,000
------------
$ 5,275,000
- --------------------------------------------------------------------------------
Railroads - 2.3%
Burlington Northern Santa Fe 34,500 $ 3,018,750
CSX Corp. 57,500 2,946,875
------------
$ 5,965,625
- --------------------------------------------------------------------------------
Restaurants and Lodging - 0.7%
Host Marriott Corp.* 140,700 $ 1,881,863
- --------------------------------------------------------------------------------
6
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Common Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - continued
Stores - 3.8%
Federated Department Stores, Inc.* 168,000 $ 5,607,000
Office Depot, Inc.* 193,800 4,336,275
------------
$ 9,943,275
- --------------------------------------------------------------------------------
Supermarkets - 0.2%
Vons Cos., Inc.* 17,100 $ 547,200
- --------------------------------------------------------------------------------
Telecommunication Equipment - 1.1%
Cabletron Systems, Inc.* 39,100 $ 2,947,163
- --------------------------------------------------------------------------------
Total U.S. Common Stocks $ 76,073,557
- --------------------------------------------------------------------------------
Foreign Stocks - 64.0%
Argentina - 0.1%
Mirgor Sacifia, ADR (Auto Parts)*+ 97,600 $ 280,600
- --------------------------------------------------------------------------------
Australia - 3.1%
QBE Insurance Group Ltd. (Insurance) 608,709 $ 3,196,828
Seven Network Ltd. (Entertainment) 1,064,000 3,178,764
Sydney Harbour Casino Ltd., Preferred
(Entertainment)* 1,187,100 1,801,265
------------
$ 8,176,857
- --------------------------------------------------------------------------------
Canada - 0.8%
Canadian National Railway Co. (Railroads) 111,000 $ 2,109,000
- --------------------------------------------------------------------------------
Chile - 0.8%
Chilectra S.A., ADR (Utilities - Electric)* 37,400 $ 2,038,300
- --------------------------------------------------------------------------------
Denmark - 0.5%
Novo-Nordisk A/S, "B" (Pharmaceuticals) 10,000 $ 1,298,459
- --------------------------------------------------------------------------------
Finland - 1.1%
Aamulehti Yhtymae Oy II (Publishing) 59,900 $ 1,516,440
Huhtamaki Group, "I" (Food and Beverages) 39,200 1,296,189
------------
$ 2,812,629
- --------------------------------------------------------------------------------
France - 2.0%
Michelin, "B" (Tire and Rubber)* 39,200 $ 1,941,239
Union des Assurances Federales S.A. (Insurance) 28,000 3,400,174
------------
$ 5,341,413
- --------------------------------------------------------------------------------
Germany - 2.1%
Adidas AG (Apparel and Textiles) 40,200 $ 3,056,785
Tarkett AG (Building Materials)*+ 31,600 721,885
Volkswagen AG (Automotive) 4,800 1,655,767
------------
$ 5,434,437
- --------------------------------------------------------------------------------
Greece - 0.6%
Hellenic Telecomm (Telecommunications)* 96,800 $ 1,627,593
- --------------------------------------------------------------------------------
Hong Kong - 3.6%
Cosco Pacific Ltd. (Containers)+* 2,136,000 $ 1,505,042
Dah Sing Financial Group
(Banks and Credit Cos.) 325,600 905,052
Giordano International Ltd. (Retail) 2,343,000 2,165,854
Liu Chong Hing Bank Ltd.
(Banks and Credit Cos.) 1,074,000 1,485,727
Mandarin Oriental International Ltd.
(Lodging) 655,000 930,100
Peregrine Investment Holdings (Finance) 769,000 1,188,079
Wing Hang Bank Ltd.
(Banks and Credit Cos.) 361,000 1,320,823
------------
$ 9,500,677
- --------------------------------------------------------------------------------
7
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Common Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
Foreign Stocks - continued
Italy - 2.0%
Telecom Italia Mobile (Telecommunications) 454,000 $ 1,002,753
Telecom Italia Mobile, Saving Shares
(Telecommunications) 2,995,000 4,199,136
------------
$ 5,201,889
- --------------------------------------------------------------------------------
Japan - 11.7%
Bridgestone Corp. (Tire and Rubber) 137,000 $ 2,534,134
Canon, Inc. (Office Equipment) 44,000 872,616
DDI Corp. (Telecommunications) 742 6,360,202
Daiwa House Industrial Co. (Housing) 80,000 1,273,837
East Japan Railway Co. (Railroads) 372 1,982,723
Kinki Coca-Cola (Beverages) 85,000 1,256,198
Kirin Beverage Corp. (Beverages) 143,000 2,017,925
Matsushita Electric Industrial Co.
(Electrical Equipment) 128,000 2,257,818
Murata Manufacturing Co., Ltd. (Electronics) 59,000 2,283,944
Omron Tateisi Electronic (Electronics) 150,000 3,375,286
Osaka Sanso Kogyo (Chemicals) 456,000 2,034,783
Takeda Chemical Industries (Pharmaceuticals) 208,000 3,589,626
Teisan K.K. (Chemicals) 102,000 703,146
------------
$ 30,542,238
- --------------------------------------------------------------------------------
Malaysia - 0.8%
New Straits Times Press BHD (Publishing) 381,000 $ 2,047,812
- --------------------------------------------------------------------------------
Netherlands - 3.4%
Getronics NV (Business Services) 62,004 $ 4,304,828
IHC Caland NV (Transportation - Marine)* 42,000 1,649,125
Royal Dutch Petroleum Co. (Oils) 21,800 3,104,656
------------
$ 9,058,609
- --------------------------------------------------------------------------------
New Zealand - 2.9%
Lion Nathan Ltd. (Food and Beverages) 1,882,000 $ 4,684,396
Sky City Ltd. (Entertainment)* 700,000 2,973,737
------------
$ 7,658,133
- --------------------------------------------------------------------------------
Philippines - 1.0%
Alson's Cement Corp. (Construction Services)*+ 2,870,000 $ 1,347,031
C & P Homes, Inc. (Homebuilders) 75,300 64,914
Pilipino Telephone (Telecommunications)* 849,700 1,253,389
------------
$ 2,665,334
- --------------------------------------------------------------------------------
Singapore - 1.9%
Hong Leong Finance Ltd. (Financial Services) 722,000 $ 2,953,753
Singapore Press Holdings (Publishing) 103,000 1,949,342
------------
$ 4,903,095
- --------------------------------------------------------------------------------
South Korea - 3.3%
Hanil Cement Manufacturing Co.
(Building Materials) 21,100 $ 1,247,237
Korea Electric Power (Utilities - Electr 69,230 3,336,598
Korea Mobile Telecom, GDR (Telecommunica 2,295 3,215,713
Shin Won Corp. (Textiles)* 21,670 909,321
------------
$ 8,708,869
- --------------------------------------------------------------------------------
8
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Common Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
Foreign Stocks - continued
Spain - 4.5%
Acerinox S.A. (Iron and Steel) 32,450 $ 3,669,925
Cubiertas Y Mzov S.A. (Engineering - Construction) 39,000 2,493,669
Fabrica Autom Renault de Esp (Automotive)* 36,000 802,674
Iberdrola S.A. (Utilities - Electric) 193,000 1,889,776
Repsol S.A. (Oil/Gas) 77,500 2,843,394
------------
$ 11,699,438
- --------------------------------------------------------------------------------
Sweden - 8.0%
Asea AB, "B" (Electrical Equipment) 48,000 $ 4,865,199
Astra AB, "B" (Pharmaceuticals) 153,000 6,750,862
Marieberg Tidnings, "A" (Publishing) 67,000 1,569,433
Nobelpharma AB (Medical Supplies) 65,000 1,034,208
Sparbanken Svergie AB, "A" (Banks and Credit Cos.) 270,900 3,053,103
Telefonaktiebolaget LM Ericsson,
ADR, "B" (Telecommunication Equipment) 68,000 1,385,500
Tornet Fastighets AB (Real Estate)* 270,900 199,549
Volvo AB (Automotive) 90,000 2,061,787
------------
$ 20,919,641
- --------------------------------------------------------------------------------
Thailand - 0.8%
Total Access Communications Public Co., Ltd.
(Telecommunications) 232,200 $ 2,043,360
- --------------------------------------------------------------------------------
United Kingdom - 9.0%
Asda Group PLC (Retail) 1,915,400 $ 3,270,533
Capital Radio PLC (Broadcasting) 140,200 1,446,889
Dalgety PLC (Food and Beverages) 394,600 2,303,308
Kwik-Fit Holdings PLC (Retail) 128,000 438,081
Lloyds TSB Group PLC (Banks and Credit Cos.) 269,000 1,288,917
New London Capital PLC (Insurance)+ 670,000 947,471
PowerGen PLC (Utilities - Electric) 380,654 3,195,419
PowerGen PLC, Partly Paid Shares
(Utilities - Electric)* 1,368,700 8,606,920
Storehouse PLC (Retail) 389,200 2,008,307
------------
$ 23,505,845
- --------------------------------------------------------------------------------
Total Foreign Stocks $167,574,228
- --------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $198,857,377) $243,647,785
- --------------------------------------------------------------------------------
Short-Term Obligations - 5.9%
================================================================================
Principal Amount
(000 Omitted)
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Assn., due 5/06/96 $ 6,805 $ 6,800,123
General Electric Capital, due 5/01/96 8,570 8,570,000
- --------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 15,370,123
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $214,227,500) $259,017,908
Other Assets, Less Liabilities - 1.0% 2,752,570
================================================================================
Net Assets - 100.0% $261,770,478
- --------------------------------------------------------------------------------
* Non-income producing security.
+ SEC Rule 144A restriction.
See notes to financial statements
9
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
================================================================================
April 30, 1996
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $214,227,500) $259,017,908
Cash 54,052
Foreign currency, at value (identified cost, $12,097) 12,636
Net receivable for forward foreign currency
exchange contracts purchased 62,786
Receivable for investments sold 3,078,324
Receivable for Fund shares sold 841,074
Dividends receivable 767,577
Other assets 57,937
------------
Total assets $263,892,294
------------
Liabilities:
Payable for investments purchased $ 1,216,860
Payable for Fund shares reacquired 226,722
Net payable for forward foreign currency
exchange contracts sold 285,417
Payable to affiliates -
Management fee 21,337
Shareholder servicing agent fee 4,234
Distribution fee 66,969
Accrued expenses and other liabilities 300,277
------------
Total liabilities $ 2,121,816
------------
Net assets $261,770,478
============
Net assets consist of:
Paid-in capital $202,812,428
Unrealized appreciation on investments and
translation of assets and liabilities in foreign currencies 44,564,898
Accumulated undistributed net realized gain
on investments and foreign currency transactions 14,881,150
Accumulated net investment loss (487,998)
------------
Total $261,770,478
============
Shares of beneficial interest outstanding 14,491,200
============
_________________________
Class A shares:
Net asset value and redemption price per share
(net assets of $76,586,709 / 4,236,926 shares of
beneficial interest outstanding) $18.08
============
Offering price per share (100/94.25) $19.18
============
Class B shares:
Net asset value and offering price per share
(net assets of $179,918,058 / 9,960,781 shares of
beneficial interest outstanding) $18.06
============
Class C shares:
Net asset value, offering price, and redemption price
per share (net assets of $5,265,711 / 293,493 shares
of beneficial interest outstanding) $17.94
============
On sales of $50,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B and Class C shares.
See notes to financial statements
10
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
================================================================================
Six Months Ended April 30, 1996
- --------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 1,996,487
Interest 369,803
Foreign taxes withheld (189,271)
------------
Total investment income $ 2,177,019
------------
Expenses -
Management fee $ 1,149,921
Trustees' compensation 19,190
Shareholder servicing agent fee (Class A) 46,837
Shareholder servicing agent fee (Class B) 180,094
Shareholder servicing agent fee (Class C) 2,860
Distribution and service fee (Class A) 78,061
Distribution and service fee (Class B) 818,611
Distribution and service fee (Class C) 19,065
Custodian fee 104,973
Postage 29,615
Printing 24,342
Auditing fees 22,108
Miscellaneous 112,196
------------
Total expenses $ 2,607,873
Fees paid indirectly (14,311)
------------
Net expenses $ 2,593,562
------------
Net investment loss $ (416,543)
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 16,176,003
Foreign currency transactions (1,204,554)
------------
Net realized gain on investments and
foreign currency transaction $ 14,971,449
Change in unrealized appreciation -
Investments $ 15,004,708
Translation of assets and liabilities
in foreign currencies 1,594,405
------------
Net unrealized gain on investments and
foreign currency translation $ 16,599,113
------------
Net realized and unrealized gain
on investments and foreign currency $ 31,570,562
------------
Increase in net assets from operations $ 31,154,019
------------
See notes to financial statements
11
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
========================================================================================
Six Months Ended Year Ended
April 30, 1996 October 31,
(Unaudited) 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (416,543) $ (391,803)
Net realized gain on investments and
foreign currency transactions 14,971,449 9,883,882
Net unrealized gain on investments and
foreign currency translation 16,599,113 9,058,497
------------ ------------
Increase in net assets from operations $ 31,154,019 $ 18,550,576
------------ ------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $ (3,152,132) $ (2,000,929)
From net realized gain on investments and foreign
currency transactions (Class B) (6,611,169) (15,860,996)
From net realized gain on investments and foreign
currency transactions (Class C) (153,959) (151,274)
------------ ------------
Total distributions declared to shareholders $ (9,917,260) $(18,013,199)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $127,536,871 $150,342,597
Net asset value of shares issued to shareholders
in reinvestment of distributions 9,123,964 16,618,722
Cost of shares reacquired (107,484,818) (149,986,942)
Increase in net assets from
Fund share transactions $ 29,176,017 $ 16,974,377
------------ ------------
Total increase in net assets $ 50,412,776 $ 17,511,754
------------ ------------
Net assets:
At beginning of period 211,357,702 193,845,948
------------ ------------
At end of period (including accumulated
net investment loss of $487,998 and
$71,455, respectively) $261,770,478 $211,357,702
============ ============
</TABLE>
See notes to financial statements
12
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
================================================================================
Six Months Six Months Year
Ended Ended Ended
April 30, Year Ended October 31, April 30, October
1996 ---------------------------------- 1996 31,
(Unaudited) 1995 1994 1993* (Unaudited) 1995
- ----------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 16.68 $ 16.95 $ 16.56 $ 15.71 $ 16.55 $ 16.78
-------- -------- -------- -------- -------- --------
Income from investment operations# -
Net investment income (loss) $ 0.02 $ 0.09 $ 0.03 $ 0.01 $ (0.06) $ (0.05)
Net realized and unrealized gain
on investments and foreign
currency transactions 2.28 1.37 1.13 0.84 2.28 1.37
-------- -------- -------- -------- -------- --------
Total from investment operations $ 2.30 $ 1.46 $ 1.16 $ 0.85 $ 2.22 $ 1.32
-------- -------- -------- -------- -------- --------
Less distributions declared to shareholders -
In excess of net investment income $ -- $ -- $ (0.07) $ -- $ -- $ --
From net realized gain on investments
and foreign currency transactions (0.90) (1.73) (0.70) -- (0.71) (1.55)
-------- -------- -------- -------- -------- --------
Total distributions declared
to shareholders $ (0.90) $ (1.73) $ (0.77) -- $ (0.71) $ (1.55)
-------- -------- -------- -------- -------- --------
Net asset value - end of period $ 18.08 $ 16.68 $ 16.95 $ 16.56 $ 18.06 $ 16.55
======== ======== ======== ======== ======== ========
Total return+++ 14.37%++ 10.16% 7.03% 5.41%++ 13.86%++ 9.07%
Ratios (to average net assets)/
Supplemental data:
Expenses## 1.66%+ 1.61% 1.54% 1.68%+ 2.47%+ 2.55%
Net investment income (loss) 0.26%+ 0.58% 0.15% 0.94%+ (0.59)%+ (0.35)%
Portfolio turnover 54% 73% 99% 70% 54% 73%
Average commission rate### $ 0.0179 -- -- -- $ 0.0179 --
Net assets at end of period
(000 omitted) $ 76,587 $ 52,164 $ 16,968 $ 2,076 $179,918 $156,286
<FN>
* For the period from the commencement of offering of Class A shares, September 7, 1993 to October 31, 1993.
+ 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.
+++ 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.
[ss] The distributor did not impose a portion of its fee for Class A shares amounting to $0.0072 per share for the year ended
October 31, 1995. If this fee had been incurred by the Fund, the ratio of expenses and net investment income to average net
assets would have been 1.66% and 0.53%, respectively.
</FN>
</TABLE>
See notes to financial statements
13
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
====================================================================================================================================
Year Ended
October 31, Year Ended November 30,
---------------------- ------------------------------------------------
1994 1993* 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 16.53 $ 13.50 $ 12.40 $ 12.94 $ 12.96 $ 11.21
-------- -------- -------- -------- -------- --------
Income from investment operations# -
Net investment income (loss) $ (0.17) $ (0.10) $ (0.04) $ 0.17 $ 0.13 $ 0.09
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions 1.13 3.28 1.17 (0.37) 0.14 2.03
-------- -------- -------- -------- -------- --------
Total from investment operations $ 0.96 $ 3.18 $ 1.13 $ (0.20) $ 0.27 $ 2.12
-------- -------- -------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ -- $-- $-- $ (0.21)
In excess of net investment income (0.01) -- -- -- -- --
From net realized gain on investments
and foreign currency transactions (0.70) (0.15) (0.03) (0.15) (0.29) (0.12)
From paid-in capital -- -- -- (0.19) -- (0.04)
-------- -------- -------- -------- -------- --------
Total distributions declared
to shareholders $ (0.71) $ (0.15) $ (0.03) $ (0.34) $ (0.29) $ (0.37)
-------- -------- -------- -------- -------- --------
Net asset value - end of period $ 16.78 $ 16.53 $ 13.50 $ 12.40 $ 12.94 $ 12.96
-------- -------- -------- -------- -------- --------
Total return 5.91% 23.80%++ 9.13% (1.57) 2.02% 19.58%
Ratios (to average net assets)/
Supplemental data:
Expenses 2.58% 2.66%+ 2.91% 2.88% 2.93% 3.05%
Net investment income (loss) (1.01)% (0.71)%+ (0.31)% 1.35% 1.07% 0.77%
Portfolio turnover 99% 70% 110% 160% 173% 190%
Net assets at end of period (000 omitted) $175,438 $145,575 $101,550 $ 82,890 $ 81,505 $ 50,827
<FN>
* For the eleven months ended October 31, 1993.
+ Annualized.
++ Not annualized.
# Per share data for the periods subsequent to October 31, 1993 is based on average shares outstanding.
</FN>
</TABLE>
See notes to financial statements
14
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
====================================================================================================================================
Six Months
Year Ended Ended Year Ended
November 30, April 30, October 31,
--------------------- 1996 ---------------------
1988 1987** (Unaudited) 1995 1994***
- ------------------------------------------------------------------------------------------------------------------------------------
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 $ 10.12 $ 8.47 $ 16.53 $16.80 $16.75
------- ------- ------- ------ ------
Income from investment operations# -
Net investment income (loss) $ 0.14 $ (0.02) $ (0.04) $(0.05) $(0.09)
Net realized and unrealized gain
on investments and foreign
currency transactions 0.95 1.67 2.25 1.37 0.14
------- ------- ------- ------ ------
Total from investment operations $ 1.09 $ 1.65 $ 2.21 $ 1.32 $ 0.05
------- ------- ------- ------ ------
Less distributions declared to shareholders
from net realized gain on investments
and foreign currency transactions $ -- $ -- $ (0.80) $(1.59) $ --
------- ------- ------ ------ ------
Total distributions declared
to shareholders $ -- $ -- $(0.80) $(1.59) $ --
------- ------- ------ ------ ------
Net asset value - end of period $ 11.21 $ 10.12 $17.94 $16.53 $16.80
======= ======= ====== ====== ======
Total return 10.77% 19.48%++ 13.92%++ 9.20% 0.30%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.48% 2.50%+ 2.41%+ 2.49% 2.55%+
Net investment income (loss) 1.29% (0.29)%+ (0.45)%+ (0.31)% (0.72)%+
Portfolio turnover 276% 272% 54% 73% 99%
Average commission rate### -- -- $0.0179 -- --
Net assets at end of period (000 omitted) $42,806 $37,248 $ 5,266 $ 2,908 $ 1,440
------- ------- ------- ------- -------
<FN>
** For the period from the commencement of investment operations, December 29, 1986 to November 30, 1987.
*** For the period from the 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
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) Business and Organization
MFS World Equity Fund (the Fund) is a 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
reporting 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 the
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 closing daily exchange rate. 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, 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.
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
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
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 adjus ted 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 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.
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 distribu tions 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. The Fund
expects to pass through to shareholders foreign income taxes paid. The election
increases the taxable distributions of the Fund by the amount of the foreign
taxes paid. An individual shareholder who itemizes deductions, or a corporate
shareholder, will be able to claim an offsetting deduction or a tax credit (but
not
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
both) on their federal income tax returns. Individuals who do not itemize
deductions may claim a foreign tax credit but not a deduction. The foreign sou
rce income is considered passive income for the purpose of computing the
foreign tax credit limitations. 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 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 annual rate of 1.00% of
average daily net assets.
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 of its independent Trustees and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $5,190 for the period ended
April 30, 1996.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$13,876 for the period ended April 30, 1996, 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
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
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 retain the
service fee for accounts not attributable to a securities dealer which amounted
to $7,453 for the period ended April 30, 1996. Payment of the 0.10% per annum
Class A distribution fee will commence on such date as the Trustees of the Trust
may determine. Fees incurred under the distribution plan during the six months
ended April 30, 1996 were 0.25% of average daily net assets attributable to
Class A shares on an annualized basis.
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. 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. MFD retains the service fee for accounts not attributable to a
securities dealer, which amounted to $19,793 and $105 for Class B and Class C
shares, respectively, for the period ended April 30, 1996. Fees incurred under
the distribution plans during the six months 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 into Class A shares and certain purchases into
retirement plans are subject to a contingent deferred sales charge in the event
of a shareholder redemption within twelve 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 shareholder redemptions of
Class C shares in the event of a shareholder redemption within twelve 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 $2,074, $93,740 and $0 for Class A, Class B and Class C
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.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions and short-term obligations, aggregated
$105,539,617 and $102,323,220, respectively.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
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 $ 214,227,500
=============
Gross unrealized appreciation $ 49,353,355
Gross unrealized depreciation (4,562,947)
-------------
Net unrealized appreciation $ 44,790,408
=============
(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 3,109,137 $ 53,195,016 4,007,859 $ 63,217,135
Shares issued to shareholders in
reinvestment of distributions 172,355 2,799,047 129,779 1,883,186
Shares reacquired (2,171,848) (37,229,202) (2,011,280) (32,143,857)
---------- ----------- ---------- -----------
Net increase 1,109,644 $ 18,764,861 2,126,358 $ 32,956,464
========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Class B Shares
Six Months Ended Year Ended
April 30, 1996 October 31, 1995
---------------------------- -----------------------------
Shares Amount Shares Amount
====================================================================================================
<S> <C> <C> <C> <C>
Shares sold 4,208,281 $ 71,632,043 5,493,342 $ 85,113,083
Shares issued to shareholders in
reinvestment of distributions 380,885 6,200,847 1,006,721 14,610,342
Shares reacquired (4,073,042) (69,417,066) (7,507,506) (117,113,709)
---------- ----------- ---------- ------------
Net increase (decrease) 516,124 $ 8,415,824 (1,007,443) $(17,390,284)
========== =========== ========== ===========
</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 159,058 $ 2,709,812 128,767 $ 2,012,379
Shares issued to shareholders in
reinvestment of distributions 7,678 124,070 8,646 125,194
Shares reacquired (49,191) (838,550 (47,177) (729,376)
---------- ----------- ---------- ------------
Net increase 117,545 $ 1,995,332 90,236 $ 1,408,197
========== =========== ========== ===========
</TABLE>
(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 $1,328.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
(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>
Forward Foreign Currency Exchange Contracts
Net Unrealized
Settlement Contracts to Contracts Appreciation
Date Deliver/Receive In Exchange for at Value (Depreciation)
===================================================================================================
<S> <C> <C> <C> <C> <C>
Sales 5/31/96 CAD 2,394,003 $ 1,758,757 $ 1,758,979 $ (222)
5/28/96 ESP 1,247,651,158 9,976,421 9,796,557 179,864
5/02/96 SEK 261,540,140 38,029,073 38,494,132 (465,059)
------------ ------------ ---------
$ 49,764,251 $ 50,049,668 $(285,417)
------------ ------------ ---------
Purchases 5/02/96 SEK 130,770,070 $ 19,202,653 $ 19,265,439 $ 62,786
------------ ------------ ---------
</TABLE>
Abbreviations have been used above to indicate amounts shown in currencies
other than the U.S. Dollar. A list of abbreviations is shown below.
CAD = Canadian Dollars ESP = Spanish Pesetas SEK = Swedish Kronor
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 1.83% 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 or, if not available, in
good faith by or at the direction of the Trustees. These securities may be
offered and sold to "qualified institutional buyers" under Rule 144A of the 1933
Act.
Date of Share
Description Acquisition Amount Cost Value
================================================================================
Alson's Cement Corp. 2/23/96 - 4/02/96 2,870,000 $1,252,359 $1,347,031
Cosco Pacific Ltd. 11/07/95 2,136,000 1,223,830 1,505,042
Mirgor Sacifia, ADR 10/20/94 97,600 878,400 280,600
New London Capital PLC 11/12/93 670,000 993,945 947,471
Tarkett AG 6/27/95 31,600 759,383 721,885
==========
$4,802,029
==========
------------------------------------------------------------
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.
21
<PAGE>
MFS [Register Mark] WORLD BULK RATE
EQUITY FUND U.S. POSTAGE
PAID
500 Boylston Street PERMIT #55638
Boston, MA 02116 BOSTON, MA
MWE-3 6/96 40M 04/204/304
<PAGE>
