<PAGE>
[LOGO]
INVESTMENT MANAGEMENT
ANNUAL REPORT
FOR YEAR ENDED
October 31, 1996
MFS(R) WORLD TOTAL RETURN FUND
[Graphic Omitted]
AMERICA LEARNS HOW "WE INVENTED THE MUTUAL FUND", (see page 35)
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman ................................................... 1
Portfolio Manager's Overview ............................................... 3
Portfolio Manager's Profile ................................................ 5
Fund Facts ................................................................. 6
Performance Summary ........................................................ 6
Portfolio of Investments ................................................... 9
Financial Statements .......................................................17
Notes to Financial Statements ..............................................23
Independent Auditors' Report ...............................................33
MFS Family of Funds ........................................................34
Trustees and Officers ......................................................37
HIGHLIGHTS
* FOR THE 12 MONTHS ENDED OCTOBER 31, 1996, CLASS A SHARES OF THE FUND
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF 16.06%, CLASS B SHARES
15.29%, AND CLASS C SHARES 15.41%.
* THE EQUITY POSITION OF THE PORTFOLIO IS FULLY INVESTED, WITH 63% OF ITS
ASSETS INVESTED IN U.S. AND FOREIGN STOCKS AND CONVERTIBLE SECURITIES.
FOREIGN HOLDINGS IN 18 COUNTRIES ACCOUNT FOR APPROXIMATELY 66% OF THE
TOTAL EQUITY POSITION.
* WITH MOST OF THE WORLD'S STOCK MARKETS AT OR NEAR EITHER THEIR ALL- TIME
OR RECENT HIGHS, NO COUNTRY, INDUSTRY OR ECONOMIC SECTOR STANDS OUT AS
CLEARLY UNDERVALUED.
* THE TWO BEST PERFORMING FIXED-INCOME MARKETS WERE ITALY, WHICH GAINED
17.52%, AND SPAIN, UP 16.16%, WHILE THE LAGGARDS WERE THE UNITED STATES,
WHICH GAINED 2.02%, AND JAPAN AND THE UNITED KINGDOM, BOTH UP 5.32%.
<PAGE>
LETTER FROM THE CHAIRMAN
Dear Shareholders:
[Photo of A. Keith Brodkin]
As we enter the final months of 1996, the U.S. economy appears to have settled
into a pattern of moderate growth and inflation -- two factors that we think can
be important contributors to a favorable long-term investment climate. During
the first quarter of 1996, real (inflation-adjusted) economic growth was 2.3% on
an annualized basis, followed by a rate of 4.7% in the second quarter. However,
this unexpectedly high level was followed by a more moderate 2.2% pace in the
third quarter. Overall, real growth in gross domestic product has surpassed our
expectations this year, and we now expect that growth for all of 1996 could
exceed 2.5%. Although individual consumers appear to be carrying an excessive
debt load, the consumer sector itself, which represents two-thirds of the
economy, continues to support the automobile and housing markets. Consumer
spending has also been positively impacted by widespread job growth and, more
recently, increasing wages. However, recent statistics appear to show a slowdown
in consumer spending. This is particularly true when considering overall retail
sales, which have been flat for several months. Furthermore, the economies of
Europe and Japan continue to be in the doldrums, weakening U.S. export markets
while subduing the capital spending plans of American corporations. Thus, while
economic growth should continue, we expect it could slacken toward the end of
the year.
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 market this
year. Although we believe the equity market represents fair value at current
levels, the expected slowdown in corporate earnings growth and interest rate
increases earlier in the year have raised some near-term concerns, as was seen
in July's stock market correction. Further interest rate increases and an
acceleration of inflation coupled with an additional slowdown in corporate
earnings growth could have a negative effect on the stock market in the near
term. 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
equity market's longer-term health. 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, while we have some near-term concerns, we remain quite
constructive on the long-term viability of the equity market.
In the bond markets, persistent signs of economic weakness led to decreases in
short-term interest rates by the Federal Reserve Board in late 1995 and early
1996. Should signs of more rapid economic growth and, particularly, of higher
inflation resurface, we would expect the Fed to maintain its anti- inflationary
stance. In the beginning of the year, bond markets traded in a narrow range as
investors shifted between concern for the lack of a budget resolution in
Washington and hope that sluggish economic reports and low inflation might lead
to lower interest rates. Later, fixed-income markets began reacting to
conflicting signals regarding the economy's strength 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 equitably valued.
Outside the United States, we see similar economic backdrops, with slow to
moderate growth and low inflation in the developed countries of Europe and
Japan. We believe the long-term underperformance of many of these markets
relative to the United States has created some attractive valuations. European
markets such as the United Kingdom and Germany have recently eased monetary
policy, a trend which may continue as German and other central banks seek
economic stimulus. Meanwhile, corporate earnings growth is expected to improve
in these markets, which may lead to their outperforming the U.S. market.
Finally, as you may notice, this report to shareholders incorporates a number
of changes which we hope you will find informative and useful. Following the
Portfolio Manager's Overview, we have added new information on the Fund's
holdings, including a chart illustrating the portfolio's concentration in the
types of investments that meet its criteria. Near the back of the report,
telephone numbers and addresses are listed if you would like to contact MFS.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin
--------------------------------
A. Keith Brodkin
Chairman and President
November 12, 1996
<PAGE>
PORTFOLIO MANAGER'S OVERVIEW
Dear Shareholders:
[Photo of Frederick J. Simmons]
For the 12 months ended October 31, 1996, Class A shares of the Fund provided a
total return of 16.06%, Class B shares 15.29%, and Class C shares 15.41%. These
returns assume the reinvestment of distributions but exclude the effects of any
sales charges, and compare to 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 10.14% over the
same period. 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. At the same time, the Fund outperformed the 14.75% return for the
Lipper Global Flexible Fund Index(R) as determined by Lipper Analytical
Services, Inc., an independent firm that reports mutual fund performance.
The strength of the U.S. equity market, relative to other markets, has been
somewhat surprising after its powerful surge in 1995. Thus, the Fund's
approximately 15% reduction in U.S. equities was not as beneficial as expected.
On the other hand, our unwillingness to build up our Japanese and other Far East
holdings benefited the Fund, since most of these markets were significant
underperformers. The Fund's holdings in Japanese stocks are just one-half that
of the MSCI index. Large overweightings in smaller markets such as Sweden and
the Netherlands have been very successful. By industry category, financial
services companies were the best performers, while growth stocks generally
outperformed value-oriented stocks. Almost without regard to these categories,
Japanese stocks were underperformers.
As we enter 1997, the equity position of the portfolio is fully invested, with
63% of its assets invested in U.S. and foreign stocks and convertible
securities. Foreign holdings in 18 countries account for approximately 66% of
the total equity position, higher than earlier in the year.
With most of the world's stock markets at or near either their all-time or
recent highs, stock selection is more important than ever. No country, industry
or economic sector stands out as clearly undervalued. Thus, the portfolio's
equity position has been built up stock by stock, with growth at a reasonable
price, as well as yield, being the objective. As always, every effort is made to
avoid speculative securities.
Despite the fact that the U.S. economy weakened significantly during the third
quarter, most international fixed-income markets continued to outperform the
U.S. bond market. The two best performing markets within the Morgan Index
measured in local currency terms from January 1, 1996 through October 31, 1996,
were Italy and Spain, which gained 19.25% and 16.33%, respectively. Over the
same period, the worst markets were the United States, which gained 2.21%, and
the United Kingdom, up 5.23%. The Fund generally benefited by maintaining
overweighted positions in the better performing European markets while
underweighting the U.S. bond market.
In preparation for monetary union due to commence in January 1999, almost all
European countries have announced tight fiscal budgets, while at the same time
cutting interest rates due to slow growth and low inflation. Within Europe, a
dramatic narrowing of yield spread differentials, or outperformance, began in
earnest during the third quarter with such high-yield countries as Spain, Italy,
and Sweden being the main beneficiaries. Although a good part of this
convergence has now taken place, we anticipate these markets will continue to
overperform as European Monetary Union approaches.
Meanwhile, within the dollar bloc, both Canada and Australia continue to
benefit from low inflation, slow growth, and tight fiscal budgets. For most of
the year, the Fund has benefited by being overweighted in both these markets.
While an underweighted position in U.S. bonds has been beneficial for the year,
the Fund's performance was hindered during the third quarter as the U.S.
position's duration (a measure of interest rate sensitivity) was low in
anticipation of a pickup in U.S. economic growth that never materialized.
For the year, the overall rise in U.S. interest rates, coinciding with
reductions in short-term rates in Europe, has enabled the dollar to appreciate
against the German mark. In addition, the dollar has also benefited from yield
convergence within Europe. The dollar has continued to strengthen versus the
Japanese yen, based primarily on Japan's low interest rates and the government's
policy of engineering a weaker currency in order to stimulate its beleaguered
economy.
Looking forward, we anticipate modest but further central bank lowering of
interest rates in many European countries as well as in Canada, Australia, and
New Zealand, an environment that we believe could be positive for bonds.
However, some caution is warranted as ultimately the effect of lower rates in
these countries could result in a pickup in economic growth and, possibly,
inflation. Moreover, with the U.S. currency benefiting from positive interest
rate differentials, renewed hope for a balanced budget, and movement toward an
inclusive, single European currency, the prospects for a stable dollar remain
favorable.
Respectfully,
/s/ Frederick J. Simmons
- --------------------------------
Frederick J. Simmons
Portfolio Manager
PORTFOLIO MANAGER'S PROFILE
FREDERICK J. SIMMONS IS A SENIOR VICE PRESIDENT OF MASSACHUSETTS
FINANCIAL SERVICES (MFS) AND PORTFOLIO MANAGER OF MFS WORLD TOTAL RETURN
FUND AND MERIDIAN WORLD TOTAL RETURN FUND. MR. SIMMONS JOINED MFS IN
1971 AS AN INVESTMENT OFFICER IN THE RESEARCH DEPARTMENT AND WAS NAMED
ASSISTANT VICE PRESIDENT - INVESTMENTS IN 1974, VICE PRESIDENT -
INVESTMENTS IN 1975 AND SENIOR VICE PRESIDENT IN 1983. HE WAS NAMED
PORTFOLIO MANAGER OF MFS WORLD TOTAL RETURN FUND IN 1991. PREVIOUSLY HE
WAS PORTFOLIO MANAGER OF MFS RESEARCH FUND AND OF MASSACHUSETTS
INVESTORS GROWTH STOCK FUND. MR. SIMMONS GRADUATED WITH HONORS FROM THE
AMOS TUCK SCHOOL OF BUSINESS ADMINISTRATION OF DARTMOUTH COLLEGE. HE IS
A CHARTERED FINANCIAL ANALYST, A MEMBER OF THE BOSTON SECURITY ANALYSTS
SOCIETY, INC. AND PAST PRESIDENT OF THE ELECTRONIC ANALYSTS OF BOSTON.
<PAGE>
FUND FACTS
STRATEGY: THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK TOTAL
RETURN BY INVESTING IN SECURITIES WHICH WILL
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 WILL INVEST
PRIMARILY IN GLOBAL EQUITY AND FIXED-INCOME
SECURITIES.
COMMENCEMENT OF
INVESTMENT OPERATIONS: SEPTEMBER 4, 1990
SIZE: $215.9 MILLION NET ASSETS AS OF OCTOBER 31, 1996
PERFORMANCE SUMMARY
The information below and on the following page illustrates the historical
performance of MFS World Total Return Fund Class A shares in comparison to
various market indicators. Class A share results reflect the deduction of the
4.75% maximum sales charge; benchmark comparisons are unmanaged and do not
reflect any fees or expenses. You cannot invest in an index.
All results are historical and assume the reinvestment of all dividends and
capital gains.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the Period from September 4, 1990 to October 31, 1996)
MFS World
Total Return Consumer Price S&P 500 MSCI
(Class A) Index -- U.S. Composite World Index
------------ -------------- --------- -----------
09/90 9529.00 10000.0 10000.0 9405.00
10/90 9585.00 10144.0 9487.00 10082.0
10/92 12466.0 10775.0 13916.0 11779.0
10/93 14669.0 11071.0 15992.0 14232.0
10/95 16894.0 11679.0 20967.0 16937.0
10/96 19607.0 12031.0 25991.0 19056.0
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1 Year 3 Years 5 Years Life***
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS World Total Return (Class A) at net asset value +16.06% +10.16% +12.22% +12.42%
- -------------------------------------------------------------------------------------------------------------------------------
MFS World Total Return (Class A) including 4.75% sales charge +10.52% + 8.38% +11.13% +11.54%
- -------------------------------------------------------------------------------------------------------------------------------
MFS World Total Return (Class B) without CDSC +15.29% + 9.36% +11.73% +12.03%
- -------------------------------------------------------------------------------------------------------------------------------
MFS World Total Return (Class B) with CDSC +11.29% + 8.52% +11.47% +12.03%
- -------------------------------------------------------------------------------------------------------------------------------
MFS World Total Return (Class C) without CDSC +15.41% + 9.47% +11.80% +12.08%
- -------------------------------------------------------------------------------------------------------------------------------
MFS World Total Return (Class C) with CDSC +14.41% + 9.47% +11.80% +12.08%
- -------------------------------------------------------------------------------------------------------------------------------
60% Morgan Stanley Capital International/
40% J.P. Morgan Global Government Bond +10.14% + 9.44% +10.07% +10.70%
- -------------------------------------------------------------------------------------------------------------------------------
Average global flexible portfolio fund** +13.60% + 7.77% +10.09% + 7.28%
- -------------------------------------------------------------------------------------------------------------------------------
Consumer Price Index* + 3.01% + 2.81% + 2.88% + 3.68%
- -------------------------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Composite
Index++ +23.89% +17.57% +15.47% +14.60%
- -------------------------------------------------------------------------------------------------------------------------------
*The Consumer Price Index is a popular measure of change in prices.
**Source: Lipper Analytical Services.
***Commencement of investment operations September 4, 1990.
++The Standard & Poor's 500 Composite Index is an unmanaged composite of commonly used stock total return performance.
</TABLE>
Class A SEC results include the maximum 4.75% sales charge. Class B SEC results
reflect the applicable contingent deferred sales charge (CDSC), which declines
over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%. Class C shares have no
initial sales charge but, along with Class B shares, have higher annual fees and
expenses than Class A shares. As of April 1, 1996, Class C shares redeemed
within 12 months of purchase will be subject to a 1% CDSC. See the prospectus
for details.
Class B and Class C share performance includes the performance of the Fund's
Class A shares for periods prior to the commencement of offering of Class B
shares on September 7, 1993 and of Class C shares on January 3, 1994. Sales
charges and operating expenses for Class A, Class B, and Class C shares differ.
The Class A share performance, which is included within the Class B and Class C
share SEC performance, has been adjusted to reflect the CDSC generally
applicable to Class B and Class C shares rather than the initial sales charge
generally applicable to Class A shares. Class B and Class C share performance
has not been adjusted, however, to reflect differences in operating expenses
(e.g., Rule 12b-1 fees), which generally are lower for Class A shares.
Investment return and principal value will fluctuate, and shares, when redeemed,
may be worth more or less than their original cost. Past performance is no
guarantee of future results.
<PAGE>
TAX FORM SUMMARY
THE FUND IS ESTIMATED TO HAVE DERIVED APPROXIMATELY 65.11% OF ITS ORDINARY
INCOME FROM DIVIDENDS PAID BY FOREIGN COMPANIES, AND TO HAVE PAID FOREIGN
TAXES EQUIVALENT TO APPROXIMATELY 2.35% OF ITS ORDINARY INCOME.
FOR THE YEAR ENDED OCTOBER 31, 1996, THE AMOUNT OF DISTRIBUTIONS FROM
INCOME ELIGIBLE FOR THE 70% DIVIDENDS-RECEIVED DEDUCTION FOR
CORPORATIONS CAME TO 12.79%.
FEDERAL INCOME TAX INFORMATION ON DISTRIBUTIONS
FOR THE YEAR ENDED OCTOBER 31, 1996 DISTRIBUTIONS FROM LONG-TERM CAPITAL
GAINS ARE $88,525.
PORTFOLIO CONCENTRATION AS OF OCTOBER 31, 1996
LARGEST SECTORS
Other Sectors 42.1%
Utilities & Communications 14.6%
Financial Services 15.3%
Industrial Goods & Services 9.8%
Health Care 9.5%
Consumer Staples 8.7%
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
<S> <C>
PHILIP MORRIS COMPANIES, INC. ABB AB
Tobacco, food, and beverage conglomerate Swiss engineering conglomerate
LION NATHAN EASTMAN KODAK COMPANY
New Zealand brewer Photographic equipment and supplies
ASTRA AB BARNETT BANKS
Swedish pharmaceutical manufacturer Southern U.S. bank holding company
GENERAL ELECTRIC CO. BRITISH PETROLEUM
Diversified manufacturing and Oil exploration and production company
services conglomerate
SCHERING PLOUGH
TYCO INTERNATIONAL LTD. U.S. pharmaceutical company
Manufacturer of fire protection, packaging,
and electronic equipment
</TABLE>
<PAGE>
PORTFOLIO OF INVESTMENTS - October 31, 1996
Common Stocks - 62.2%
- ---------------------------------------------------------------------------
Issuer Shares Value
- ---------------------------------------------------------------------------
U.S. Stocks - 22.3%
Aerospace - 1.0%
General Dynamics Corp. 19,000 $ 1,303,875
Lockheed-Martin Corp. 10,008 896,967
--------------
$ 2,200,842
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Banks and Credit Companies - 1.8%
Barnett Banks, Inc. 59,600 $ 2,272,250
Norwest Corp. 34,500 1,513,688
--------------
$ 3,785,938
- ---------------------------------------------------------------------------
Building - 0.1%
Martin Marietta Materials, Inc. 10,346 $ 245,718
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Business Services
Sabre Group Holding, Inc. 1,300 $ 39,650
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Chemicals - 0.6%
Air Products & Chemicals, Inc. 10,000 $ 600,000
Praxair, Inc. 15,000 663,750
--------------
$ 1,263,750
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Computer Software - Systems - 0.2%
Digital Equipment Corp.* 16,000 $ 472,000
- ---------------------------------------------------------------------------
Consumer Goods and Services - 1.1%
Tyco International Ltd. 47,500 $ 2,357,188
- ---------------------------------------------------------------------------
Electrical Equipment - 1.2%
General Electric Co. 25,600 $ 2,476,800
- ---------------------------------------------------------------------------
Financial Institutions - 2.6%
American Express Co. 25,000 $ 1,175,000
Associates First Capital Corp., "A" 6,700 290,612
Federal Home Loan Mortgage Corp. 9,200 929,200
Philip Morris Cos., Inc. 34,200 3,167,775
--------------
$ 5,562,587
- ---------------------------------------------------------------------------
Food and Beverage Products - 0.4%
McCormick & Co., Inc. 33,000 $ 796,125
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Insurance - 1.4%
Cigna Corp. 14,700 $ 1,918,350
Transamerica Corp. 15,000 1,138,125
--------------
$ 3,056,475
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Machinery - 0.4%
Deere & Co., Inc. 23,000 $ 960,250
- ---------------------------------------------------------------------------
Medical and Health Products - 2.6%
Lilly (Eli) & Co. 18,588 $ 1,310,454
Rhone-Poulenc Rorer, Inc. 19,900 1,335,787
Schering Plough Corp. 32,000 2,048,000
Warner-Lambert Co. 16,000 1,018,000
--------------
$ 5,712,241
- ---------------------------------------------------------------------------
Oils - 2.1%
Exxon Corp. 17,000 $ 1,506,625
Mobil Corp. 13,700 1,599,475
USX-Marathon Group 66,000 1,443,750
--------------
$ 4,549,850
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Pharmaceuticals - 0.5%
Pharmacia & Upjohn, Inc. 28,900 $ 1,040,400
- ---------------------------------------------------------------------------
Photographic Products - 1.1%
Eastman Kodak Co. 28,800 $ 2,296,800
- ---------------------------------------------------------------------------
Printing and Publishing - 0.8%
Gannett Co., Inc. 23,000 $ 1,745,125
- ---------------------------------------------------------------------------
Restaurants and Lodging - 0.3%
Mandarin Oriental 433,000 $ 584,550
- ---------------------------------------------------------------------------
Technology - 0.4%
International Business Machines
Corp. 6,600 $ 851,400
- ---------------------------------------------------------------------------
Utilities - Electric - 2.3%
FPL Group, Inc. 28,000 $ 1,288,000
Illinova Corp. 43,000 1,171,750
Portland General Corp. 26,000 1,137,500
Sierra Pacific Resources 52,000 1,449,500
--------------
$ 5,046,750
- ---------------------------------------------------------------------------
Utilities - Gas - 0.7%
Coastal Corp. 37,000 $ 1,591,000
- ---------------------------------------------------------------------------
Utilities - Telephone - 0.7%
Allstate Corp. 25,000 $ 1,403,125
- ---------------------------------------------------------------------------
Total U.S. Stocks $ 48,038,564
- ---------------------------------------------------------------------------
Foreign Stocks - 39.9%
Argentina - 0.2%
Central Costanera, ADR (Utilities
- Electric)## 13,167 $ 410,646
Mirgor Sacifia, ADR (Auto Parts)## 47,930 76,688
--------------
$ 487,334
- ---------------------------------------------------------------------------
Australia - 1.8%
Australia & New Zealand Banking
Group (Banks and Credit
Companies) 185,000 $ 1,079,853
QBE Insurance Group Ltd.
(Insurance) 377,606 1,997,747
Seven Network Ltd. (Entertainment) 252,000 778,378
--------------
$ 3,855,978
- ---------------------------------------------------------------------------
Canada - 1.4%
Canadian National Railway Co.
(Railroads) 66,600 $ 1,831,500
Westcoast Energy, Inc. (Utilities - Gas) 74,800 1,234,200
--------------
$ 3,065,700
- ---------------------------------------------------------------------------
Chile - 0.4%
Chilectra S.A., ADR (Utilities - Electric) 8,100 $ 439,425
Enersis S.A., ADR (Utilities - Electric) 13,600 399,500
--------------
$ 838,925
- ---------------------------------------------------------------------------
Finland - 1.0%
Huhtamaki Oy (Conglomerates) 38,000 $ 1,648,245
Oy Tamro Ab (Medical and Health Products)## 68,000 494,077
--------------
$ 2,142,322
- ---------------------------------------------------------------------------
France - 2.8%
Pinault-Printemps S.A. (Retail) 5,200 $ 1,956,215
TV Francaise (Entertainment) 17,500 1,857,561
Total S.A., ADR (Oils) 35,000 1,365,000
Union des Assurances Federales
S.A. (Broadcasting) 6,900 774,146
--------------
$ 5,952,922
- ---------------------------------------------------------------------------
Germany - 1.2%
Adidas AG (Apparel and Textiles) 22,300 $ 1,906,811
Henkel Kgaa (Chemicals) 15,000 671,443
--------------
$ 2,578,254
- ---------------------------------------------------------------------------
Greece - 0.4%
Ote Greek Telecom
(Telecommunications) 50,300 $ 886,581
- ---------------------------------------------------------------------------
Hong Kong - 2.5%
Asia Satellite Telecommunications,
ADR (Telecommunications) 10,300 $ 275,525
Cafe de Coral Holding (Electrical Equipment) 1,200,000 353,092
Hong Kong Electric Holdings Ltd.
(Utilities - Electric) 202,000 646,624
Hong Kong Land Hld (Restaurants) 525,000 1,170,750
Li & Fung (Consumer Goods and Services) 600,000 547,098
Wharf Holdings Ltd. (Real Estate) 489,000 2,017,551
Wing Hang Bank Limited (Banks and
Credit Companies) 119,000 478,666
--------------
$ 5,489,306
- ---------------------------------------------------------------------------
Italy - 1.7%
Gucci Group NV (Apparel and
Textiles) 11,100 $ 765,900
Instituto Nazionale Della
Assicurazioni (Insurance) 522,000 720,415
Luxottica Group S.p.A., ADR
(Consumer Goods and Services) 13,100 831,850
Telecom Italia DRNC (Utilities -
Telephone) 475,000 541,337
Telecom Italia RNC (Utilities -
Telephone) 475,000 904,315
--------------
$ 3,763,817
- ---------------------------------------------------------------------------
Japan - 6.9%
Canon, Inc. (Office Equipment) 47,000 $ 898,063
DDI Corp. (Telecommunications) 139 1,041,678
Dai Nippon Printing (Printing and
Publishing) 64,000 1,077,044
Daiwa House Industrial Co.
(Housing) 37,000 512,402
East Japan Railway Co. (Railroads) 135 618,854
Hirose Electric (Electrical
Equipment) 11,000 651,766
Ito Yokado Co., Ltd. (Retail) 15,000 746,779
Kirin Beverage (Beverages) 96,000 1,278,990
Matsushita Electric (Airlines) 119,000 1,898,326
Murata Manufacturing Co., Ltd.
(Electrical Equipment) 36,000 1,154,878
Osaka Sanso Kogyo (Chemicals) 146,000 482,444
Sony Corporation (Electronics) 32,000 1,932,000
Takeda Chemical Industries
(Chemicals) 68,000 1,162,240
Toyota Motor Corporation
(Automotive) 35,000 825,226
Ushio Incorporated (Electronics) 51,000 531,948
--------------
$ 14,812,638
- ---------------------------------------------------------------------------
Netherlands - 1.7%
Ihc Caland NV (Transportation) 25,000 $ 1,391,583
Koninklijke Ahold NV, ADR (Real
Estate
Investment Trusts) 27,447 1,602,218
Wolters Kluwer (Publishing) 5,701 730,846
--------------
$ 3,724,647
- ---------------------------------------------------------------------------
New Zealand - 2.2%
Lion Nathan Ltd. (Food and
Beverage Products) 1,002,000 $ 2,585,711
Sky City Ltd. (Entertainment) 144,900 829,799
Telecom Corporation of New
Zealand, ADR
(Telecommunications) 15,300 1,273,725
--------------
$ 4,689,235
- ---------------------------------------------------------------------------
Peru - 0.5%
Telefonica del Peru S.A., ADR
(Utilities - Telephone) 47,800 $ 985,875
- ---------------------------------------------------------------------------
Singapore - 0.6%
Hong Leong Finance Ltd. (Financial
Services)+ 199,000 $ 607,742
Singapore Press Holdings
(Publishing) 39,000 648,153
--------------
$ 1,255,895
- ---------------------------------------------------------------------------
South Korea - 0.6%
Korea Electric Power Corp.
(Utilities - Electric) 17,000 $ 501,335
Korea Electric Power Corp., ADR
(Utilities - Electric) 15,000 270,000
Korea Mobile Telecommunications, ADR
(Utilities - Telephone)* 40,000 500,000
--------------
$ 1,271,335
- ---------------------------------------------------------------------------
Spain - 1.6%
Acerinox S.A (Steel) 5,700 $ 681,861
Iberdrola S.A. (Utilities -
Electric) 162,000 1,716,263
Repsol S.A. (Oils) 35,000 1,139,757
--------------
$ 3,537,881
- ---------------------------------------------------------------------------
Sweden - 3.8%
Abb AB (Electrical Equipment) 21,000 $ 2,340,607
Astra AB, Free, "B"
(Pharmaceuticals) 55,500 2,531,742
Enator AB (Computer Software -
Services) 60,000 1,332,015
Ericsson L M Telephone Company,
ADR (Telecommunications) 40,000 1,105,000
Hennes & Mauritz, "B", Free Shares
(Retail) 6,900 913,845
--------------
$ 8,223,209
- ---------------------------------------------------------------------------
Switzerland - 0.6%
Sandoz AG (Pharmaceuticals) 1,100 $ 1,265,932
- ---------------------------------------------------------------------------
United Kingdom - 8.0%
Asda Group, PLC (Stores) 920,000 $ 1,750,765
British Aerospace (Aerospace) 41,300 783,926
British Petroleum PLC, ADR (Oils) 16,546 2,128,229
Jarvis Hotels, PLC,(SD) (Lodging)* 390,200 1,009,110
Kwik-Fit Holdings, PLC (Automotive) 286,700 1,037,043
Lloyds TSB Group, PLC (Banks and
Credit Companies) 240,000 1,520,452
London Electricity, PLC (Utilities
- Electric) 51,428 506,068
PowerGen, PLC, ADR (Utilities -
Telephone) 60,000 2,010,000
PowerGen, PLC (Utilities - Electric) 185,000 1,534,603
Reuters Holdings, PLC, ADR
(Business Services) 16,000 1,190,000
Royal Dutch Petroleum Co. (Oils) 6,300 1,041,863
Storehouse, PLC (Retail) 343,000 1,553,723
Tomkins, PLC (Conglomerates) 300,000 1,258,911
--------------
$ 17,324,693
- ---------------------------------------------------------------------------
Total Foreign Stocks $ 86,152,479
- ---------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $106,020,524) $134,191,043
- ---------------------------------------------------------------------------
Bonds - 27.4%
- ---------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------
Foreign Bonds - 23.0%
Australia - 2.5%
Commonwealth of Australia,
8.75s, 2001 AUD 4,100 $ 3,458,269
Commonwealth of Australia, 9.75s,
2002 2,100 1,856,963
--------------
$ 5,315,232
- ---------------------------------------------------------------------------
Belgium - 1.2%
Kingdom of Belgium, 7.25s, 2004 BEF 20,000 $ 696,297
Kingdom of Belgium, 8.5s, 2007 15,000 563,327
Kingdom of Belgium, 8.75s, 2002 15,000 559,347
Kingdom of Belgium, 9s, 1998 25,000 871,651
--------------
$ 2,690,622
- ---------------------------------------------------------------------------
Canada - 1.2%
Government of Canada, 7.5s, 2003 CAD 3,200 $ 2,584,560
- ---------------------------------------------------------------------------
Denmark - 1.7%
Kingdom of Denmark, 6s, 1999 DKK 4,144 $ 732,244
Kingdom of Denmark, 7s, 2007 2,013 344,369
Kingdom of Denmark, 8s, 2001 13,625 2,557,127
--------------
$ 3,633,740
- ---------------------------------------------------------------------------
Germany - 4.8%
Germany Federal Republic, 6.875s,
1999 DEM 2,655 $ 1,860,074
Germany Federal Republic, 7.125s,
2002 3,047 2,178,866
Germany Federal Unity, 8.75s, 2000 237 177,984
Treuhandanstalt Obligation,
6.375s, 1999 8,857 6,161,391
--------------
$ 10,378,315
- ---------------------------------------------------------------------------
Ireland - 3.3%
Republic of Ireland, 6.25s, 1999 IEP 1,000 $ 1,632,069
Republic of Ireland, 8s, 2000 3,250 5,611,102
--------------
$ 7,243,171
- ---------------------------------------------------------------------------
Italy - 2.3%
Republic of Italy, 8.313s, 1999 ITL 940,000 $ 649,888
Republic of Italy, 8.313s, 2006 5,965,000 4,270,201
--------------
$ 4,920,089
- ---------------------------------------------------------------------------
Spain - 3.0%
Government of Spain, 8.3s, 1998 ESP 275,000 $ 2,213,546
Government of Spain, 8.4s, 2001 95,120 782,155
Government of Spain, 10.1s, 2001 107,600 935,506
Government of Spain, 8s, 2004 320,600 2,564,299
--------------
$ 6,495,506
- ---------------------------------------------------------------------------
Sweden - 1.2%
Kingdom of Sweden, 11s, 1999 SEK 4,900 $ 828,526
Kingdom of Sweden, 10.25s, 2000 9,700 1,665,659
--------------
$ 2,494,185
- ---------------------------------------------------------------------------
Foreign Bonds - continued
United Kingdom - 1.8%
United Kingdom Treasury, 9s, 2000 GBP 1,100 $ 1,893,708
United Kingdom Treasury, 9.75s,
2002 1,100 1,986,512
--------------
$ 3,880,220
- ---------------------------------------------------------------------------
Total Foreign Bonds $ 49,635,640
- ---------------------------------------------------------------------------
U.S. Government Guaranteed - 4.4%
U.S. Treasury Notes, 7s, 2006 $ 1,600 $ 1,670,496
U.S. Treasury Notes, 0's, 2006 9,600 5,034,240
U.S. Treasury Notes, 0's, 2016 11,200 2,903,488
- ---------------------------------------------------------------------------
Total U.S. Government Guaranteed $ 9,608,224
- ---------------------------------------------------------------------------
Total Bonds (Identified Cost, $58,304,472) $ 59,243,864
- ---------------------------------------------------------------------------
Convertible Bonds - 1.3%
- ---------------------------------------------------------------------------
Mbl International Finance Bermuda,
3s, 2002 $ 728,000 $ 801,710
Italy Republic, 5s, 2001 650,000 650,000
Roche Holdings Incorporated, 2010## 2,200,000 984,500
Sandoz Capital BVI Limited, 2s,
2002## 334,000 367,400
- ---------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $2,578,554) $ 2,803,610
- ---------------------------------------------------------------------------
Call Options Purchased - 0.2%
- ---------------------------------------------------------------------------
Principal Amount
of Contracts
Issuer/Expiration Date/Strike Price (000 Omitted)
- ---------------------------------------------------------------------------
Deutsche Marks/British Pounds/
November/2.2145 DEM 8,265 $ 0
Japanese Government Bond/December/
108.155 JPY 276,000 90,528
Japanese Government Bond/January/
111.279 276,000 91,080
Japanese Government Bond/December/
111.1737 179,000 83,593
Japanese Government Bond/November/
114.355 433,000 153,282
- ---------------------------------------------------------------------------
Total Call Options Purchased(Premiums Paid, $98,349) $ 418,483
- ---------------------------------------------------------------------------
Put Options Purchased - 0.3%
- ---------------------------------------------------------------------------
Deutsche Marks/British Pounds/
January/2.45 DEM 11,646 $ 108,658
Deutsche Marks/British Pounds/
November/2.315 8,640 378,638
Deutsche Marks/January/1.55 13,677 45,845
Swiss Francs/Deutsche Marks/January/
0.829 CHF 4,555 41,364
- ---------------------------------------------------------------------------
Total Put Options Purchased (Premiums Paid, $173,708) $ 574,505
- ---------------------------------------------------------------------------
Short-Term Obligations - 9.3%
- ---------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ---------------------------------------------------------------------------
Eurolira Time Deposit, due 4/21/97 ITL 6,320,000 $ 4,170,034
Federal Home Loan Bank, due 11/08/96 4,200 4,195,786
Federal Home Loan Mortgage Corp.,
due 11/13/96 6,000 5,989,660
Federal Home Loan Mortgage Corp.,
due 11/07/96 290 289,742
Federal National Mortgage Assn., due
11/15/96 3,400 3,393,164
General Electric Capital Corp., due
11/01/96 2,095 2,095,000
- ---------------------------------------------------------------------------
Total Short-Term Obligations (Identified Cost, $20,057,465) $ 20,133,386
- ---------------------------------------------------------------------------
Total Investments (Identified Cost, $187,233,072) $217,364,891
- ---------------------------------------------------------------------------
Call Options Written
- ---------------------------------------------------------------------------
Principal Amount
of Contracts
Issuer/Expiration Date/Strike Price (000 Omitted)
- ---------------------------------------------------------------------------
Deutsche Marks/British Pounds/
November/2.2145 DEM/GBP 8,265 $ 0
Deutsche Marks/British Pounds/ )
January/2.3682 11,257 (20,804
Deutsche Marks/January/1.5065 DEM 13,293 (113,926)
- ---------------------------------------------------------------------------
Total Call Options Written (Premiums Received, $141,474) $ (134,722)
- ---------------------------------------------------------------------------
Put Options Written
- ---------------------------------------------------------------------------
Japanese Bond/December/111.17368 JPY 179,000 $ 0
Japanese Bond/December/108.155 276,000 (1,104)
Japanese Bond/January/111.279 276,000 (2,208)
Japanese Bond/November/114.355 433,000 (433)
- ---------------------------------------------------------------------------
Total Put Options Written (Premiums Received, $97,182) $ (3,745)
- ---------------------------------------------------------------------------
Other Assets, Less Liabilities - (0.7%) (1,347,376)
- ---------------------------------------------------------------------------
Net Assets - 100.0% $215,879,044
- ---------------------------------------------------------------------------
*Non-income producing security.
+Restricted security.
##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 FRF = French Francs
BEF = Belgian Francs GBP = British Pounds
CAD = Canadian Dollars IEP = Irish Punts
CHF = Swiss Francs ITL = Italian Lire
DEM = Deutsche Marks JPY = Japanese Yen
DKK = Danish Kroner NLG = Netherland Guilder
ESP = Spanish Pesetas NZD = New Zealand Dollars
FIM = Finnish Markka SEK = Swedish Kroner
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
October 31, 1996
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $187,233,072) $217,364,891
Cash 51,200
Net receivable for interest rate swaps 99,630
Net receivable for forward foreign currency exchange
contracts sold 519,092
Net receivable for forward foreign currency exchange
contracts 37,567
Receivable for Fund shares sold 478,336
Receivable for investments sold 1,234,008
Interest and dividends receivable 1,910,365
Other assets 2,030
------------
Total assets $221,697,119
------------
Liabilities:
Payable for Fund shares reacquired $ 235,250
Payable for investments purchased 3,585,006
Net payable for forward foreign currency exchange contracts
purchased 1,626,120
Written options outstanding, at value (premiums received,
$238,656) 138,471
Payable to affiliates -
Management fee 6,293
Shareholder servicing agent fee 1,024
Distribution fee 62,982
Accrued expenses and other liabilities 162,929
------------
Total liabilities $ 5,818,075
------------
Net assets $215,879,044
============
Net assets consist of:
Paid-in capital $175,324,281
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 29,254,975
Accumulated undistributed net realized gain on investments
and foreign currency transactions 10,271,896
Accumulated undistributed net invesment income 1,027,892
------------
Total $215,879,044
============
Shares of beneficial interest outstanding 16,964,447
==========
Class A shares:
Net asset value and redemption price per share
(net assets of $129,843,139 / 10,197,969 shares of beneficial
interest outstanding) $12.73
======
Offering price per share (100 / 95.25 of net asset value per
share) $13.36
======
Class B shares:
Net asset value and offering price per share
(net assets of $71,788,088 / 5,646,347 shares of beneficial
interest outstanding) $12.71
======
Class C shares:
Net asset value, offering price and redemption price per
share (net assets of $14,247,817 / 1,120,131 shares of
beneficial interest outstanding) $12.72
======
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
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
- ------------------------------------------------------------------------------
Year Ended October 31, 1996
- ------------------------------------------------------------------------------
Net investment income:
Income -
Interest $ 5,226,669
Dividends 3,798,557
Foreign taxes withheld (284,638)
-----------
Total investment income $ 8,740,588
-----------
Expenses -
Management fee $ 1,716,121
Trustees' compensation 37,469
Shareholder servicing agent fee (Class A) 179,978
Shareholder servicing agent fee (Class B) 141,911
Shareholder servicing agent fee (Class C) 18,456
Distribution and service fee (Class A) 419,948
Distribution and service fee (Class B) 645,054
Distribution and service fee (Class C) 123,045
Custodian fee 193,571
Postage 50,393
Printing 37,629
Auditing fees 35,741
Legal fees 2,136
Miscellaneous 167,089
-----------
Total expenses $ 3,768,541
Fees paid indirectly (7,764)
-----------
Net expenses $ 3,760,777
-----------
Net investment income $ 4,979,811
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $10,667,574
Written option transactions 758,742
Foreign currency transactions (1,016,505)
-----------
Net realized gain on investments and foreign currency
transactions $10,409,811
-----------
Change in unrealized appreciation (depreciation) -
Investments $14,545,035
Written options 26,999
Translation of assets and liabilities in foreign currencies (1,164,617)
-----------
Net unrealized gain on investments $13,407,417
-----------
Net realized and unrealized gain on investments and
foreign currency $23,817,228
-----------
Increase in net assets from operations $28,797,039
===========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Year Ended October 31, 1996 1995
- --------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
<S> <C> <C>
Net investment income $ 4,979,811 $ 4,636,931
Net realized gain on investments and foreign currency
transactions 10,409,811 3,749,269
Net unrealized gain on investments and
foreign currency translation 13,407,417 8,187,457
------------ ------------
Increase in net assets from operations $ 28,797,039 $ 16,573,657
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (6,143,145) $ (734,229)
From net investment income (Class B) (2,682,617) (140,223)
From net investment income (Class C) (505,747) (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) (5,382) (13,755)
------------ ------------
Total distributions declared to shareholders $ (9,420,034) $ (1,441,281)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 47,074,888 $ 44,197,817
Net asset value of shares issued to shareholders in
reinvestment of distributions 8,276,937 1,279,372
Cost of shares reacquired (37,251,081) (40,657,870)
------------ ------------
Increase in net assets from Fund share transactions $ 18,100,744 $ 4,819,319
------------ ------------
Total increase in net assets $ 37,477,749 $ 19,951,695
Net assets:
At beginning of year 178,401,295 158,449,600
------------ ------------
At end of year (including accumulated undistributed net
investment income of $1,027,892 and $5,220,666,
respectively) $215,879,044 $178,401,295
============ ============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
- ----------------------------------------------------------------------------------------------------------------------------
Year Ended October 31, 1996 1995 1994 1993 1992 1991 1990*
- ----------------------------------------------------------------------------------------------------------------------------
Class A
- ----------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C> <C>
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 $ 0.34 $ 0.33 $ 0.30 $ 0.28 $ 0.36 $ 0.37 $ 0.08
Net realized and unrealized
gain (loss) on investments
and foreign currency transactions 1.46 0.79 0.15 1.42 0.86 0.88 (0.03)
-------- -------- ------- ------- ------- ------- -------
Total from investment operations $ 1.80 $ 1.12 $ (0.45) $ 1.70 $ 1.22 $ 1.25 $ 0.05
-------- -------- ------- ------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.63) $ (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 shareholder $ (0.62) $ (0.13) $ (1.06) $ (0.72) $ (0.43) $ (0.38) --
-------- -------- ------- ------- ------- ------- -------
Net asset value - end of period $ 12.73 $ 11.57 $ 10.58 $ 11.19 $ 10.21 $ 9.42 $ 8.55
======== ======== ======== ======= ======= ======= =======
Total return** 16.06% 10.63% 4.10% 17.78% 13.14% 14.94% 3.76%+
Ratios (to average net assets)/ Supplemental data:
Expenses## 1.63% 1.77% 1.76% 1.92% 1.84% 2.18% 1.57%+
Net investment income 2.79% 3.06% 2.81% 2.96% 3.65% 4.05% 3.14%+
Portfolio turnover 167% 160% 118% 112% 72% 134% 2%
Average commission rate### $0.0187 -- -- -- -- -- --
Net assets at end of period
(000 omitted) $129,843 $110,294 $99,870 $71,262 $44,707 $30,847 $12,510
*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.
**Total returns do not include the applicable sales charge. If the sales charge had been included, the results would have
been lower.
###Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
- -------------------------------------------------------------------------------
Year Ended October 31, 1996 1995 1994 1993**
- -------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $11.52 $10.54 $11.19 $10.84
------ ------ ------ ------
Income from investment operation# -
Net investment income $ 0.25 $ 0.25 $ 0.25 $ 0.06
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions 1.46 0.77 0.13 0.35
------ ------ ------ ------
Total from investment
operations $ 1.71 $ 1.02 $ 0.38 $ 0.41
------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.47) $(0.03) $(0.24) $(0.06)
In excess of net investment income (0.04) 0.00 0.00 0.00
From net realized gain on
investments and foreign
currency transactions (0.01) (0.01) (0.32) 0.00
In excess of net realized gain
on investments and
foreign currency transactions 0.00 0.00 (0.38) 0.00
From paid-in capital 0.00 0.00 (0.09) 0.00
------ ------ ------ -----
Total distribution declared to
shareholder $(0.52) $(0.04) $(1.03) $(0.06)
------ ------ ------ ------
Net asset value - end of period $12.71 $11.52 $10.54 $11.19
====== ====== ====== ======
Total return+++ 15.29% 9.75% 3.38% 3.79%++
Ratios (to average net assets)
/Supplemental data:
Expenses## 2.34% 2.49% 2.49% 2.77%+
Net investment income 2.07% 2.34% 2.33% 2.15%+
Portfolio turnover 167% 160% 118% 112%
Average commission rate### $0.0187 -- -- --
Net assets at end of period
(000 omitted) $71,788 $57,214 $47,677 $ 4,381
**For the period from the commencement of offering of Class B 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.
+++Total returns do not include the applicable sales charge. If the sales charge
had been included the results would have been lower.
###Average commission rate is calculated for funds with fiscal years beginning
on or after September 1, 1995.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
- -----------------------------------------------------------------------------
Year Ended October 31, 1996 1995 1994 ***
- -----------------------------------------------------------------------------
Class C
- -----------------------------------------------------------------------------
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $11.52 $10.53 $11.06
------ ------ ------
Income from investment operation# -
Net investment income $ 0.26 $ 0.27 $ 0.27
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions 1.46 0.76 (0.29)
------ ------ ------
Total from investment operations $ 1.72 $ 1.03 $(0.02)
------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.51) $(0.03) $(0.12)
From net realized gain on investments
and foreign currency transactions (0.01) (0.01) (0.16)
In excess of net realized gain on
investments and foreign currency
transactions 0.00 0.00 (0.18)
From paid-in capital 0.00 0.00 (0.05)
------ ------ ------
Total distribution declared to
shareholder $(0.52) $(0.04) $(0.51)
------ ------ ------
Net asset value - end of period $12.72 $11.52 $10.53
====== ====== ======
Total return+++ 15.41% 9.84% (0.15)%++
Ratios (to average net assets)
/Supplemental data:
Expenses## 2.27% 2.42% 2.39%+
Net investment income 2.14% 2.41% 2.51%+
Portfolio turnover 167% 160% 118%
Average commission rate### $0.0187 -- --
Net assets at end of period (000
omitted) $14,248 $10,894 $10,903
***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.
+++Total returns do not include the applicable sales charge. If the sales charge
had been included the results would have been lower.
###Average commission rate is calculated for funds with fiscal years beginning
on or after September 1, 1995.
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(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
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 changes
in each country's legal, political 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. 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, income and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Written Options - The Fund may write covered call or put options for which
premiums are received and are recorded as liabilities, and are subsequently
adjusted to the current value of the options written. Premiums received from
writing options which expire are treated as realized gains. Premiums received
from writing options which are exercised or are closed are offset against the
proceeds or amount paid on the transaction to determine the realized gain or
loss. If a put option is exercised, the premium reduces the cost basis of the
security purchased by the Fund. The Fund, as writer of an option, may have no
control over whether the underlying 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 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 into 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
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.
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.
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 reported as realized losses. Ongoing costs incurred to
protect or enhance an investment, or costs incurred to pursue other claims or
legal actions, are reported as operating expenses.
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 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. During the year ended October 31, 1996, $493,440 was reclassified from
paid-in capital to accumulated undistributed net realized gain on investments
and foreign currency transactions and $18,154 was reclassified from paid-in
capital to accumulated undistributed net investment income due to differences
between book and tax accounting for foreign currency and foreign tax credits.
This change had no effect on the net assets or net asset value per share.
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 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 0.65% of
average daily net assets and 5.00% 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 $6,994 for the year ended
October 31, 1996.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$53,235 for the year ended October 31, 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 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 $46,796 for the year
ended October 31, 1996. Fees incurred under the distribution plan during the
year ended October 31, 1996 were 0.35% 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 $18,388 and $7,831 for Class B and Class C
shares, respectively, for the year ended October 31, 1996. Fees incurred under
the distribution plans during the year ended October 31, 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 in the event
of a shareholder redemption 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 shareholder 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 year ended
October 31, 1996 were $2,201, $88,243 and $566 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 purchased option transactions and
short-term obligations, were as follows:
Purchases Sales
- ------------------------------------------------------------------------------
U.S. government securities $ 58,241,533 $ 70,418,267
============ ============
Investments (non-U.S. government securities) $231,089,918 $212,649,862
============ ============
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 $187,233,072
============
Gross unrealized appreciation $ 32,693,003
Gross unrealized depreciation (2,561,184)
------------
Net unrealized appreciation $ 30,131,819
============
(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:
Class A Shares
Year Ended October 31, 1996 October 31, 1995
-------------------------- --------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,084,100 $25,150,733 2,123,469 $22,961,533
Shares issued to
shareholders in
reinvestment of
distributions 468,643 5,535,276 98,593 1,061,212
Shares reacquired (1,890,835) (22,849,389) (2,125,319) (22,992,718)
---------- ----------- ---------- -----------
Net increase 661,908 $ 7,836,620 96,743 $ 1,030,027
========== =========== ========== ===========
Class B Shares
Year Ended October 31, 1996 October 31, 1995
-------------------------- --------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,371,364 $16,563,323 1,673,616 $18,044,111
Shares issued to
shareholders in
reinvestment of
distributions 199,482 2,357,194 17,272 186,186
Shares reacquired (889,762) (10,770,246) (1,250,017) (13,498,802)
---------- ----------- ---------- -----------
Net increase 681,084 $ 8,150,271 440,871 $ 4,731,495
========== =========== ========== ===========
Class C Shares
Year Ended October 31, 1996 October 31, 1995
-------------------------- --------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares sold 442,641 $ 5,360,832 296,274 $ 3,192,173
Shares issued to
shareholders in
reinvestment of
distributions 32,507 384,467 2,966 31,974
Shares reacquired (300,333) (3,631,446) (389,108) (4,166,350)
---------- ----------- ---------- -----------
Net increase 174,815 $ 2,113,855 (89,868) $ (942,203)
========== =========== ========== ===========
(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 year ended October 31,
1996 was $2,138.
(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, forward foreign currency exchange contracts
and futures 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 October 31, 1996, is
as follows:
Written Option Transactions
<TABLE>
<CAPTION>
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
British Pounds
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
British Pounds
Canadian Dollars 6,496 6,668 10,641 32,215
Deutsche Marks 46,276 251,914 7,707 21,156
Deutsche Marks/British Pounds 47,350 179,096
Finnish Markkaa/Deutsche Marks
Italian Lire/Deutsche Marks 9,782,643 76,823
Japanese Yen 491,451 6,173 4,162,613 360,687
Japanese Yen/Deutsche Marks 1,206,800 43,022
New Zealand Dollar 10,506 15,622
Spanish Pesetas/Deutsche Marks 926,725 22,990
Swiss Francs/Deutsche Marks
U.S. Dollars
Options terminated in closing transactions -
Australian Dollars (5,532) $ (44,528) (1,405) $ (8,584)
British Pounds
Canadian Dollars
Deutsche Marks (32,983) (185,735) (12,268) (33,340)
Deutsche Marks/British Pounds (21,326) (87,554)
Italian Lire/Deutsche Marks (19,723,963) (241,576) (9,941,320) (366,050)
Japanese Yen (819,813) (63,308) (2,676,000) (249,885)
Japanese Yen/Deutsche Marks (1,206,800) (43,022)
New Zealand Dollar (10,506) (15,622)
Spanish Pesetas/Deutsche Marks
Options exercised -
Deutsche Marks
Italian Lire/Deutsche Marks
Swiss Francs/Deutsche Marks
U.S. Dollars
Options expired -
Australian Dollars (1,904) (24,410)
British Pounds
Canadian Dollars (6,496) (6,668) (10,641) (32,215)
Deutsche Marks (5,388) (14,445) (7,070) (25,832)
Deutsche Marks/British Pounds (11,812) (50,325)
Finnish Markkaa/Deutsche Marks
Italian Lire/Deutsche Marks
Japanese Yen (756,814) (41,158)
SpanishPesetas/Deutsche Marks (926,725) (22,990)
Swedish Kronor/Deutsche Marks
----------- --------- ---------- ---------
OUTSTANDING, END OF PERIOD 32,815 $ 141,474 1,164,000 $ 97,182
=========== ========= ========== =========
OPTIONS OUTSTANDING AT END OF PERIOD
CONSIST OF -
Canadian Dollars
Deutsche Marks 13,293 66,179
Deutsche Marks/British Pounds 19,522 75,295
Spanish Pesetas/Deutsche Marks
Italian Lire/Deutsche Marks
Japanese Yen 1,164,000 97,182
----------- --------- ---------- ---------
OUTSTANDING, END OF PERIOD 32,815 $ 141,474 1,164,000 $ 97,182
=========== ========= ========== =========
</TABLE>
At October 31, 1996, the Fund had sufficient cash and/or securities at least
equal to the value of the written options.
(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 October 31, 1996, the
Fund owned the following restricted securities (constituting 0.75% 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.
Date of Shares/
Description Acquisition Par Amount Cost Value
- --------------------------------------------------------------------------------
Jarvis Hotel PLC 6/21/96 - 9/18/96 390,200 $1,034,237 $1,009,110
Hong Leong Finance Ltd. 5/19/95 - 9/27/95 199,000 700,342 607,742
----------
$1,616,852
==========
Forward Foreign Currency Exchange Contracts
<TABLE>
<CAPTION>
NET UNREALIZED
CONTRACTS TO CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN EXCHANGE FOR AT VALUE DEPRECIATION)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales 2/20/97 AUD 6,181,354 $ 4,832,582 $ 4,879,969 $ (47,387)
2/24/97 BEF 85,611,138 2,818,010 2,757,792 60,218
11/01/96 - 2/20/97 CAD 17,402,157 12,830,882 13,017,126 (186,244)
2/07/96 CHF 18,448,836 15,442,760 14,665,902 776,859
11/04/96 - 4/28/97 DEM 135,934,096 90,018,881 89,748,990 269,892
2/03/97 DKK 21,215,367 3,719,254 3,656,553 62,700
11/15/96 ESP 330,186,379 2,585,945 2,580,407 5,538
11/06/96 - 2/24/97 GBP 8,972,063 14,245,441 14,576,221 (330,780)
2/24/97 IEP 4,498,344 7,215,335 7,317,133 (101,798)
11/06/96 - 4/28/97 ITL 32,070,649,032 20,988,115 21,083,404 (95,289)
1/29/97 - 2/28/97 JPY 970,567,293 8,845,903 8,625,565 220,338
2/03/97 NLG 2,879,271 1,758,441 1,702,789 55,651
12/13/96 NZD 9,516,940 6,541,465 6,699,697 (158,232)
2/03/97 SEK 18,798,263 2,851,692 2,864,066 (12,374)
------------ ------------ ------------
$194,694,706 $194,175,614 $ 519,092
============ ============ ============
Purchases 2/20/97 AUD 3,148,616 $ 2,481,110 $ 2,485,726 $ 4,616
11/01/96 - 2/20/97 CAD 18,216,452 13,506,586 13,629,152 122,566
1/31/97 - 2/07/97 CHF 16,225,920 13,513,129 12,897,590 (615,539)
11/04/96 - 4/28/97 DEM 147,993,286 98,640,016 97,721,285 (918,731)
2/03/97 DKK 8,489,755 1,462,117 1,463,243 1,126
11/15/96 ESP 312,741,290 2,453,508 2,444,073 (9,435)
2/07/97 FIM 18,996,841 4,209,434 4,208,921 (513)
2/07/97 FRF 17,790,450 3,522,861 3,490,095 (32,766)
11/06/96 GBP 5,039,980 8,037,236 8,197,170 159,934
11/06/97 - 4/28/97 ITL 26,050,772,949 16,984,363 17,110,022 125,659
1/21/97 - 2/28/97 JPY 1,816,325,953 16,740,631 16,132,612 (608,019)
2/03/97 NLG 3,041,777 1,786,836 1,798,894 12,058
12/13/96 NZD 9,541,365 6,596,312 6,716,893 120,581
2/03/97 SEK 12,690,150 1,921,104 1,933,447 12,343
------------ ------------ ------------
$191,855,243 $190,229,123 $ (1,626,120)
============ ============ ============
</TABLE>
Forward foreign currency exchange contract purchases and sales under master
netting arrangements and closed forward foreign currency exchange contracts
excluded from above, amounted to a net receivable of $37,567 at October 31,
1996.
At October 31 1996, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
Interest Rate Swaps
<TABLE>
<CAPTION>
Unrealized
Notional Principal Cash Flows Cash Flows Appreciation
Expiration Amount of Contract Paid by the Fund Received by the Fund (Depreciation)
- -------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
10/22/01 ITL 6,320,000,000 Fixed - 8.055% Floating - 6M Libor $99,630
</TABLE>
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees of MFS Series Trust VI and Shareholders of MFS World Total
Return Fund:
We have audited the accompanying statement of assets and liabilities of MFS
World Total Return Fund, including the schedule of portfolio of investments, as
of October 31, 1996 and the related statement of operations for the year then
ended, the statement of net assets for each of the two years in the period then
ended, and financial highlights for each of the three years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the three years in the period ended
October 31, 1993, and for the period September 4, 1990 (commencement of
investment operations) to October 31, 1990 for Class A shares, and for the
period September 7, 1993 (commencement of investment operations) to October 31,
1993 for Class B shares, were audited by other auditors whose report dated
December 16, 1993 expressed an unqualified opinion on those statements and
financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian and brokers or by other
appropriate auditing procedures where replies from brokers were not received. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of MFS
World Total Return Fund at October 31, 1996, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and its financial highlights for each of the three years
in the period then ended, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 12, 1996
--------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
<PAGE>
MFS(R) WORLD TOTAL RETURN FUND
<TABLE>
<CAPTION>
<S> <C>
TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and President State Street Bank and Trust Company
Richard B. Bailey* - Private Investor;
Former Chairman and Director (until 1991), AUDITOR
Massachusetts Financial Services Company; Ernst & Young LLP
Director, Cambridge Bancorp;
Director, Cambridge Trust Company INVESTOR INFORMATION
Marshall N. Cohan - Private Investor For MFS stock and bond market outlooks,
Lawrence H. Cohn, M.D. - Chief of Cardiac call toll free: 1-800-637-4458 anytime from
Surgery, Brigham and Women's Hospital; a touch-tone telephone.
Professor of Surgery, Harvard Medical School
The Hon. Sir J. David Gibbons, KBE - Chief For information on MFS mutual funds,
Executive Officer, Edmund Gibbons Ltd.; call your financial adviser or, for an
Chairman, Bank of N.T. Butterfield & Son Ltd. information kit, call toll free:
Abby M. O'Neill - Private Investor; 1-800-637-2929 any business day from
Director, Rockefeller Financial Services, Inc. 9 a.m. to 5 p.m. Eastern time (or leave
(investment advisers) a message anytime).
Walter E. Robb, III - President and Treasurer,
Benchmark Advisors, Inc. (corporate financial INVESTOR SERVICE
consultants); President, Benchmark Consulting MFS Service Center, Inc.
Group, Inc. (office services); Trustee, P.O. Box 2281
Landmark Funds (mutual funds) Boston, MA 02107-9906
Arnold D. Scott* - Senior Executive Vice
President, Director and Secretary, For general information, call toll free:
Massachusetts Financial Services Company 1-800-225-2606 any business day from
Jeffrey L. Shames* - President and Director, 8 a.m. to 8 p.m. Eastern time.
Massachusetts Financial Services Company
J. Dale Sherratt - President, Insight For service to speech- or hearing-impaired,
Resources, Inc. call toll free: 1-800-637-6576 any business
(acquisition planning specialists) day from 9 a.m. to 5 p.m. Eastern time.
Ward Smith - Former Chairman (until 1994), (To use this service, your phone must be equipped
NACCO Industries; Director, Sundstrand with a Telecommunications Device for the Deaf.)
Corporation
For share prices, account balances and
INVESTMENT ADVISER exchanges, call toll free: 1-800-MFS-TALK
Massachusetts Financial Services Company (1-800-637-8255) anytime from a touch-tone
500 Boylston Street telephone.
Boston, MA 02116-3741
WORLD WIDE WEB
DISTRIBUTOR www.mfs.com
MFS Fund Distributors, Inc.
500 Boylston Street TOP RATED SERVICE
Boston, MA 02116-3741 For the third year in a row,
[DALBAR MFS earned a #1 ranking in
PORTFOLIO MANAGER LOGO] DALBAR, Inc.'s Broker/Dealer
Frederick J. Simmons* Survey, Main Office Operations
Service Quality category. The
TREASURER firm achieved a 3.48 overall score - on a
W. Thomas London* scale of 1 to 4 - in the 1996 survey. A total
of 110 firms responded, offering input on the
ASSISTANT TREASURER quality of service they received from 29
James O. Yost* mutual fund companies nationwide. The survey
contained questions about service quality in
SECRETARY 15 categories, including "knowledge of phone
Stephen E. Cavan* service contracts," "accuracy of transaction
processing," and "overall ease of doing
ASSISTANT SECRETARY business with the firm."
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
MFS(R) WORLD TOTAL -------------
RETURN FUND [DALBAR BULK RATE
LOGO] U.S. POSTAGE
TOP-RATED SERVICE P A I D
PERMIT #55638
500 Boylston Street BOSTON, MA
Boston, MA 02116 -------------
[LOGO]
INVESTMENT MANAGEMENT
WE INVENTED THE MUTUAL FUNDSM
(C)1996 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116
MWT-2 12/96 35M 24/224/324
